Boardwalk REIT Announces Fourth Quarter Financial Results

Rental revenues decreased through the summer turnover season and carried into the second half of 2016 as the onset of new purpose built rental supply in the Trust's Alberta markets provided renters with additional choices, which resulted in increased vacancies and lower rental rates.  Operating costs increased mainly as a result of higher property taxes, though this was partially offset by a decrease in operating G&A. 

Over the long term, Alberta rents have increased by three to four percent per annum, and historically revert back to the mean as housing supply and demand re-balances.  Building permits and starts continue to trend downwards, and is a positive leading indicator for the re-balancing of supply and demand of the rental market.  The construction of additional purpose-built rental housing in Alberta has also slowed with limited new construction expected in 2017.

The impact of the Fort McMurray fires to both the Alberta and overall Canadian economies have tapered.  Signs of macro economic recovery are beginning to show in Alberta, economic indicators of a downturn are levelling off and oil prices have stabilized above $50 USD per barrel.  The recent pipeline approvals add to optimism in Alberta and, as a result, the labour market has seen a similar stabilization. Job layoffs in the province have slowed, with many companies planning to add staff in 2017.  The Alberta Treasury Board has forecasted GDP growth of 2.3% in 2017, compared to negative GDP in each of the last two years.    

The Trust is positioning itself to create value through the re-balancing of the housing market by utilizing this exceptional opportunity to accomplish its long term strategic goal of high-grading its portfolio by developing new assets, investing in suite renovations and upgrades, and acquiring newly built assets at price levels near construction cost.  As the rental market moves towards equilibrium, Boardwalk's investments in suite renovations are positioning the Trust to begin reducing both incentives and vacancy.  These newly renovated suites, combined with Boardwalk's commitment to quality and service, will allow the Trust to gain market share, regardless of market conditions, and reduce its incentives and vacancy.

Positioning for the Market Recovery

The Trust carried higher vacancy into the latter part of 2016, in part as a result of its commitments associated with the Fort McMurray fire disaster, and continues to offer short-term incentives to remain competitive and to optimize Net Operating Income.  Incentives for the 12 months of 2016 totalled $22.3 million, while vacancy was $21.2 million. There is a significant opportunity for the Trust to re-capture higher revenues through the reduction of incentives and improving occupancy.

By investing in its suite renovation program, Boardwalk will have newly renovated homes available for Residents. Boardwalk's Suite Renovation Package offers various levels of suite renovations to new and existing Resident Members.  These renovations may include new flooring, baseboards, kitchen cabinets, countertops, appliances, tiling, lighting, and fixtures in exchange for lower incentives for our new and existing Residents. These efforts will further add to Boardwalk's mission of providing the best value in housing and support sustainable and growing Unitholder value creation.  To date, the Trust has seen some success as a result of its suite renovation program, and continues to offer incentives to decrease vacancy.  In the first two months of 2017, vacancy has decreased approximately 1% from December of 2016.  By decreasing vacancy and the availability of units, the Trust is well positioned to reduce incentives moving forward.

The quality of Boardwalk's communities continues to drive long-term revenue growth and stability.  The Trust invested $102.6 million during the twelve months of 2016 to maintain and further enhance the curb appeal and quality of the Trust's assets.  In addition, the Trust invested approximately $6.2 million in the development of its Pines Edge project and to explore other development opportunities on excess land the Trust currently owns.

Boardwalk's vertically integrated structure allows many repair and maintenance functions, including landscaping, painting, and among others, suite renovations, to be internalized.  A continued focus on completing more of these functions in-house has resulted in improved quality, productivity, effective use of resources, and overall execution of the Trust's capital improvement program, leading to better value for our Resident Members and long-term growth for Unitholders.

The Trust's focus for the first half of 2017 is to continue to position itself for a market recovery by offering incentives to maximize occupancy. Boardwalk will continue to provide its Resident Members with high quality housing, which includes value added renovation packages on new lease terms.

Since 2000, Boardwalk has invested over $1 billion in its own portfolio in the form of capital improvements and, by focusing on suite renovations, will provide Resident Members with additional value and a superior product.

Continued Financial Strength and Liquidity to Capitalize on Opportunities

Since the previous economic downturn, the Trust had taken measures to further strengthen its balance sheet to maintain financial strength and flexibility. This action, coupled with historically low interest rates, has positioned Boardwalk with the flexibility to act on opportunities to deploy capital in support of Unitholder value creation. Examples of these opportunities include value added capital expenditures such as the new suite-renovation program, acquisitions, development of new assets, joint ventures, and a continued investment in the Trust's own portfolio through value-added capital expenditures.

At the end of 2016, the Trust had approximately $482 million in short-term availability that it could deploy towards accretive opportunities.

Interest rates remain low and have benefitted the Trust's mortgage program as the Trust has continued to renew existing CMHC insured mortgages at interest rates well below the maturing rates.  As of December 31, 2016, the Trust's total mortgage principal outstanding totaled $2.52 billion at a weighted average interest rate of 2.78%, compared to $2.35 billion at a weighted average interest rate of 3.01% reported for December 31, 2015.

Over 99% of the Trust's mortgages are CMHC insured, providing the benefit of lower interest rates and limiting the renewal risk of these mortgage loans for the entire amortization period, which can be up to 40 years.  The Trust's total debt had an average term to maturity of approximately 4.8 years, with a remaining amortization of 30 years.  The Trust's debt (net of cash) to reported asset value ratio was approximately 43% as of December 31, 2016.

The Trust successfully completed its 2016 mortgage program with a reduction of the interest rate on its 2016 mortgages maturities from 3.92% to 2.14%, while also extending the maturity of these mortgages to over 7 years.  The estimated annualized interest savings on the renewed principal is estimated to be $4.4 million.  In addition, the Trust has raised $197.2 million in additional upfinancing to assist in the execution of the Trust's strategic initiatives.

The Trust continues to undertake a balanced strategy to its mortgage program.  Current 5 and 10-year CMHC Mortgage Rates are estimated to be 2.00% and 2.70%, respectively.  The Trust's interest coverage ratio, excluding gain or loss on sale of assets, for the most recent completed four quarters ended December 31, 2016, was 3.14 times, from 3.64 times for the same period a year ago.

Boardwalk's financial strength, conservative balance sheet and historically low interest rates has positioned Boardwalk to actively explore options to deploy capital in support of unitholder value creation, including value added capital expenditures, Boardwalk's suite renovation program, acquisitions, joint ventures, and the development of new assets to maximize Unitholder value.

Counter-Cyclical Acquisitions and Solid Development Pipeline

Demand for Multi-Family Investment Properties in Canada continues to be strong.  As a result, capitalization rates continue to remain low and high prices for Multi-Family assets continue to be the trend.  Recent transactions on existing assets have shown that the appetite for Multi-Family Investment Properties continues to be high, and transaction capitalization rates continue to decrease.  Private and institutional buyers are taking a longer term approach to evaluations, using higher stabilized rents, normalized vacancy and lower cap rates, reflecting record low Government of Canada 10 year treasury yields and the continued difficulty in finding apartment rental assets.  There continues to be a significant disconnect between the implied value of Boardwalk's apartment assets as represented by the implied value of Boardwalk REIT Trust Units and the evaluation of comparable apartments in Western Canada that have recently sold.

The addition of newly constructed rental communities is consistent with the high-grading of Boardwalk's portfolio.  The acquisition of these newly built assets at a cost similar to the Trust's cost of developing its own projects provides a unique opportunity for the Trust to continue to decrease the average age and increase the quality of its portfolio, while taking advantage of Boardwalk's operational and leasing expertise to maximize the returns on these assets both in the short and long term.  Leasing of these new acquisitions remain on schedule and as they stabilize, will add to the Trust's overall performance.  Details of the acquisitions are as follows:

2016 Acquisition Summary
Project Name	Address	City	# Units	Purchase Price		Price / Door		Price Sq Ft		Year 2 Cap Rate	Closing Date
Vita Estates	18120 – 78 Street NW	Edmonton	162	$	29,605,500	$	182,750	$	219	5.75%	07-Jun-16
Auburn Landing	20 & 30 Auburn Bay Street SE	Calgary	238	$	51,170,000	$	215,000	$	244	5.43%	22-Jun-16
Axxess	908 – 156 Street NW	Edmonton	165	$	30,153,750 Werbung Mehr Nachrichten zur Boardwalk Real Estat Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 05:14 - PR Newswire Asia Wealth Group Holdings Ltd - Result of AGM 04:49 - PR Newswire Norges Bank - Form 8.3 - BHP Group Limited 02:00 - PR Newswire BlackRock Throgmorton Trust Plc - Total Voting Rights Sehen Sie sich dieses Unternehmen an:    Foto: andreas160578 - Pixabay Rasanter Aufstieg, Branchenrevolution und Jahresumsatz von 50 Mio. $ weiterlesen» Anzeige wo-site-teaser-box-16764_site-teaser-box_2024-04-26_09%253A00%253A00_2024-04-27_09%253A00%253A59