Boardwalk Real Estate Investment Trust T.BEI.UN

RBC

[retiredcf]

November 5, 2024

Boardwalk REIT
A solid Q3 likely to be brushed aside

TSX: BEI.UN | CAD 71.91 | Outperform | Price Target CAD 98.00

Sentiment: Neutral

First Look: Boardwalk REIT (“BEI”) reported FFO/unit of $1.11, +16% y/y, vs. RBC/consensus of $1.09/$1.10. The 2% positive variance to our estimate was due mainly to higher NOI. Overall, it was a solid quarter with guidance inched up slightly. Leasing spreads remain healthy though moderated slightly. That said, we expect a neutral response to earnings as the market will likely look to commentary surrounding rent growth and leasing spreads in 2025 in the context of flattish population growth.

Key points:

• 2024 FFO midpoint guidance +0.5%: $4.15 to $4.23 (Mid $4.19) vs. $4.11 to $4.23 (mid $4.17) prior, based on SP NOI growth of +12.5% to +14.5%(unchanged)

• SP NOI growth: +13.5% (SP-Rev +9.5%; SP-Exp +2.6%). NOI margin: 65.3%, +260 bps y/y

• Average occupied rent: $1,493, +10% y/y, +2% q/q

• Average occupancy: 98.6% (+18 bps y/y, -10 bps q/q); Occupancy in Nov was 98%.

• Leasing spreads: Sep new lease spreads +10.9% (+13.1% in Q2); renewal +7.9% (+8.7% in Q2)

• MTM opportunity (market rent vs. occupied rent): +10% (vs. +12% in Q2)

• Debt to total assets: 40.1%, -70 bps q/q; Debt/EBITDA 10.3x (-0.5x q/q)

• Reported NAV/unit: $94.64 (+2% q/q), based on 5.09% (+0bps) stabilized cap rate utilized.