November 15, 2002 Conference Call Web Page
Q3 2002 Webcast and Conference Call Information
TSE SYMBOL: BEI NYSE SYMBOL: BEI November 15, 2002
Boardwalk Reports Record Operating Results For Third Quarter Of 2002
17% Increase In FFO Per Share From Rental Operations In Third Quarter
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BOARDWALK 2002 Q3
Third Quarter Report 2002
(160K - Acrobat PDF File)
CALGARY, Nov. 15 /CNW/ - Boardwalk Equities Inc. ("BEI" - TSX, NYSE) is
pleased to report strong financial results for the third quarter of 2002. For
the third quarter ended September 30, 2002, the Company reported Total
Revenues of $63.6 million and Funds From Operations ("FFO"), a key performance
measurement for real estate companies, of $17.3 million. FFO per share for the
third quarter was $0.34 on a diluted basis.
Funds From Operations ("FFO") is a generally accepted measure of
operating performance of real estate companies, however is a non-GAAP
measurement. The Company calculates FFO by taking Net Earnings and adding non
cash items including Future Income Taxes and Amortization. The amount is
currently referenced on Boardwalk's Consolidated Statement of Cash Flows. The
determination of this amount may differ from that of other real estate
companies.
Highlights of the Company's third quarter 2002 financial results include:
- Rental revenues of $63.6 million, an increase of 23.6% compared to
$51.5 million for the three-month period ended September 30, 2001.
- Net operating income of $44.1 million, representing a 21.5% increase
from $36.3 million in the same period last year.
- Funds From Operations (FFO) of $17.3 million, an increase of 16.3%
compared to $14.9 million for the three-month period ended September
30, 2001. FFO from rental operations, which excludes any gains on
property dispositions, of $17.3 million, an increase of 17.1% compared
to $14.8 million for the three-month period ended September 30, 2001.
- FFO per share of $0.34 on a diluted basis, compared to $0.30 for the
three-month period ended September 30, 2001, representing a 13.3%
increase. FFO per share from rental operations, which excludes gains,
was $0.34 on a diluted basis, up 17.2% compared to $0.29 for the three-
month period ended September 30, 2001.
Highlights of the Company's financial results for the first nine months
of 2002 include:
- Rental revenues of $178.0 million, an increase of 17.2% compared to
$151.8 million for the nine-month period ended September 30, 2001.
- Net operating income of $123.0 million, representing a 19.1% increase
from $103.3 million in the same period last year.
- Funds From Operations (FFO) of $49.6 million, an increase of 7.9%
compared to $45.9 million for the nine-month period ended September 30,
2001. FFO excluding gains of $48.6 million, an increase of 26.8%
compared to $38.3 million for the nine-month period ended September 30,
2001.
- FFO per share of $0.99 on a diluted basis, compared to $0.91 for the
nine-month period ended September 30, 2001, representing a 8.8%
increase. FFO per share from rental operations, which excludes gains,
was $0.97 on a diluted basis, up 27.6% compared to $0.76 for the nine-
month period ended September 30, 2001.
Commenting on the Company's third quarter results, Sam Kolias, President
and C.E.O., said "We are very pleased to report continued strong results from
our rental operations which has enabled the Company to report record financial
results for the quarter. Notwithstanding the continued strength and activity
in the new and resale home markets, the fundamentals for the multi-family
rental sector in Canada remain attractive with very limited new supply and low
vacancy rates. Boardwalk's portfolio is concentrated in healthy markets which
has enabled us to deliver solid internal growth. While we have experienced a
slight rise in turnover rates, we have been very proactive in our leasing and
marketing efforts and have been able to maintain or reduce our vacancy rate in
most of our markets."
"In addition, we continue to be very pleased with the performance to date
of our Nuns' Island portfolio acquisition in Montreal which has enabled the
Company to deliver strong external growth."
The third quarter results include a higher than normal level of
amortization of deferred financing costs in the current year reflecting higher
than average mortgage refinancing activity. This expense was approximately
$1 million, or $0.02 per share, above normal quarterly amounts.
Operational Highlights
The average vacancy rate across the Company's portfolio for the third
quarter of 2002 was 4.35%, down slightly from 4.63% in the third quarter of
last year. The Company's overall average vacancy rate as of October 2002 was
4.43% compared to 4.02% as of October of 2001.
The average monthly rent realized in the third quarter of 2002 was $724
per unit, up $54, or 8% from $670 per unit for the same period last year.
Management estimates that market rents for its properties at the end of
September, 2002 averaged $787 per unit per month which compares to an average
in-place rent per occupied unit of $744 for the nine months ended September
30, 2002. This translates into an estimated "loss-to-lease" of approximately
$14 million, maintaining existing occupancy rates.
Same-Property Results
Boardwalk continued to show solid performance in its stabilized
properties (defined as properties owned for over 24 months). The
"same-property" results for the Company's stabilized portfolio for the three
month period ended September 30, 2002 showed rental growth of 4.18% and NOI
growth of 3.81% compared to the same period last year. For the nine month
period ended September 30, 2002, the stabilized property portfolio had rental
growth of 5.95% and NOI growth of 7.45% compared to the same period last year.
A total of 24,454 units, representing approximately 84% of Boardwalk's total
portfolio, were classified as stabilized as at September 30, 2002.
<<
Same-Property Results - Stabilized Portfolio
Three Months Ended September 30, 2002 vs. Three Months Ended
September 30, 2001
-------------------------------------------------------------------------
Rental % of total NOI
Rental Operating (stabilized
Revenues Expenses NOI portfolio)
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Calgary 0.97% 4.76% -0.42% 24.35
Edmonton 7.58% 4.43% 8.96% 43.35
Other Alberta -0.75% -1.44% -0.49% 6.15
Ontario 4.57% 10.07% 1.19% 12.96
Saskatchewan 1.64% 3.32% 0.66% 13.19
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4.18% 5.00% 3.81% 100.00
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Same-Property Results - Stabilized Portfolio
Nine Months Ended September 30, 2002 vs. Nine Months Ended
September 30, 2001
-------------------------------------------------------------------------
Rental % of total NOI
Rental Operating (stabilized
Revenues Expenses NOI portfolio)
-------------------------------------------------------------------------
Calgary 4.08% 7.73% 2.88% 24.91
Edmonton 8.76% -0.97% 12.87% 44.11
Other Alberta 1.84% 4.16% 1.03% 6.22
Ontario 6.30% 0.52% 11.31% 11.92
Saskatchewan 2.59% 7.88% -0.51% 12.84
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5.95% 2.73% 7.45% 100.00
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Acquisition Activity
Subsequent to the end of the third quarter of 2002, the Company closed on
the acquisition of 5-8 Place de Merici at Les Jardins de Merici in Quebec
City. The luxury residential rental property consists of four concrete
high- rise buildings with a total of 341 residential units with a total
rentable area of approximately 300,000 square feet. The acquisition price was
$27.1 million, which equates to approximately $79,400 per unit and $90 per
square foot, which is significantly below replacement cost. The acquisition
closed on November 3, 2002.
Year-to-date, Boardwalk has acquired a total of over 3,500 units,
increasing its portfolio to over 29,300 units. This represents a 13% increase
in the Company's portfolio from the end of 2001.
Continued Financial Strength
The Company maintained its strong financial position in the quarter.
Boardwalk's total mortgage debt was $1.26 billion as at September 30, 2002, up
from $1.11 billion at December 31, 2001. As of September 30, 2002, the
Company's debt had an average maturity of 5.0 years with a weighted average
interest rate of 5.9%, and the Company's debt-to-total-market-capitalization
ratio was 62.7%. The Company's interest coverage ratio excluding gains for the
nine month period ended September 30, 2002 was 1.97 times compared to 1.86
times in the same period last year.
On November 1, 2002, Boardwalk successfully completed the refinancing of
the 3,100-unit Nun's Island portfolio that it had acquired on May 1, 2002. The
new first mortgage on the Nuns' Island properties totals $152.6 million, is
NHA-insured, and has a five-year term maturing on November 1, 2007 bearing an
interest rate of 5.23%. In part, the proceeds of the refinancing were used to
repay the $107.4 million outstanding balance of prior first and second
mortgages on the property which had an overall weighted average interest rate
of 9.3%, and for the pre-payment penalty of approximately $18.8 million to
discharge those mortgages.
Outlook and Earnings Guidance
Commenting on the outlook for the Company, Sam Kolias, said "Boardwalk
remains well positioned to show continued improvement in results for the
balance of the year, driven by both internal and external growth. We continue
to demonstrate solid same-property performance with our portfolio which is
concentrated in healthy markets. In addition, the acquisition of the Nuns'
Island portfolio in Montreal earlier this year together with the recent
refinancing of that portfolio will continue to make a strong contribution to
results for the balance of the year."
"With the entry into the Montreal and Quebec City markets in 2002, we
have expanded our geographic presence into major market areas that are close
to two and a half times larger in terms of the universe of rental units than
all of our previous major markets combined. This should provide us with even
greater abilities over time to explore growth opportunities and we remain
active in assessing additional opportunities."
Rob Geremia, Senior Vice President, Finance and CFO, stated "We are
reiterating our previous fiscal 2002 guidance for FFO per share, excluding
gains, of between $1.23 and $1.25, and for total FFO per share of between
$1.25 and $1.27. For 2003, we are introducing our guidance for FFO per share
of between $1.40 and $1.44, which does not include any contribution from
property sales."
Supplementary Information
Boardwalk produces Quarterly Supplemental Information that provides
detailed information regarding the Company's activities during the quarter.
The Third Quarter Supplemental Information is available on the INVESTOR
section of our website (www.bwalk.com).
Teleconference on Third Quarter, 2002 Financial Results
We invite you to participate in the teleconference that will be held to
discuss the Company's third quarter 2002 results this morning at 11:15am EST.
Senior management will speak to the financial results and provide a corporate
update. Presentation materials and a Supplementary Information Package for the
third quarter of 2002 will be made available on the INVESTOR section of our
website (www.bwalk.com) prior to the call.
Participation & Registration: For participation and registration for the
conference call please RSVP to Investor Relations at 403-531-9255 or by email
to investor@bwalk.com.
Teleconference Dial-In Numbers: The telephone numbers for the conference
are: 416-640-4127 (within Toronto) or toll-free 1-888-881-4892 (outside
Toronto).
Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting http://investor.bwalk.com 15 min.
prior to the start of the call. An information page will be provided for
software needed and system requirements. The live audiocast will also be
available at http://www.newswire.ca/webcast/pages/BoardwalkEquities20021115/.
Replay: An audio recording of the teleconference will be available
approximately one hour after the call until 11:59pm EST on November 22nd,
2002. You can access it by dialing 416-640-1917 and using the following
passcode, 217344 followed by the pound key. An audio archive will also be
available on our Investor site (http://investor.bwalk.com) approximately two
hours after the conference call until November 22nd, 2002.
Corporate Profile
Boardwalk Equities Inc. is Canada's largest owner/operator of
multi- family rental properties. Boardwalk currently owns in excess of 250
properties with approximately 29,300 units totalling approximately 25 million
net rentable square feet. The company's portfolio is concentrated in the
provinces of Alberta, Saskatchewan, Ontario and Quebec. Boardwalk is
headquartered in Calgary and its shares are listed on both the Toronto Stock
Exchange and the New York Stock Exchange and trade under the symbol BEI. The
Company has a total market capitalization of approximately $2.0 billion.
Additional information is available at Boardwalk's web site at
www.bwalk.com. Recent investor information can be found on the Internet at
http://investor.bwalk.com/.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking
statements are statements that involve risks and uncertainties, including, but
not limited to, changes in the demand for apartment and town home rentals, the
effects of economic conditions, the impact of competition and competitive
pricing, the effects of the Company's accounting policies and other matters
detailed in the Company's filings with Canadian and United States securities
regulators available on SEDAR in Canada and by request through the Securities
and Exchange Commission in the United States, including matters set forth in
the Company's Annual Report to Shareholders under the heading "Management's
Discussion and Analysis". Because of these risks and uncertainties, the
results, expectations, achievements, or performance described in this release
may be different from those currently anticipated by the Company.
Consolidated Balance Sheets
(CDN.$ Thousands)
As At
September 30, December 31,
2002 2001
-------------------------------
(Unaudited) (Audited)
Assets
Revenue producing properties $ 1,576,497 $ 1,381,541
Properties held for resale 6,999 6,630
Mortgages and accounts
receivable 14,218 22,325
Other assets 13,695 11,846
Tenants' security deposits 9,440 8,320
Deferred financing costs 33,288 32,957
Cash and short term
investments - 25,672
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$ 1,654,137 $ 1,489,291
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Liabilities
Mortgages payable $ 1,258,942 $ 1,108,406
Accounts payable and accrued
liabilities 16,636 19,525
Bank indebtedness 674 -
Refundable tenants' security
deposits and other 10,896 10,418
Capital lease obligations 4,852 7,203
Future income taxes 63,798 58,755
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$ 1,355,798 $ 1,204,307
Shareholders' Equity
Share capital 265,250 258,202
Retained earnings 33,089 26,782
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298,339 284,984
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$ 1,654,137 $ 1,489,291
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Consolidated Statement of Earnings (Loss) - For the nine and
three months ended
(CDN.$ Thousands, except per share amounts) (Unaudited)
September 30 September 30 September 30 September 30
2002 2001 2002 2001
(9 months) (9 months) (3 Months) (3 Months)
Revenue
Rental income $ 177,969 $ 151,804 $ 63,641 $ 51,490
Sales - properties
held for resale 7,498 18,244 - 232
-------------------------------------------------
$ 185,467 $ 170,048 $ 63,641 $ 51,722
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Expenses
Revenue producing properties
Operating expenses $ 18,664 $ 16,483 $ 6,867 $ 4,907
Utilities 22,374 21,239 6,377 5,428
Utility rebate (3,303) (4,060) - (327)
Property taxes 17,253 14,883 6,334 5,205
Cost of sales - properties
held for resale 6,531 10,646 - 121
Administration 14,371 12,284 4,681 3,967
Financing costs 55,149 48,916 19,767 16,235
Deferred financing costs
amortization 2,501 1,395 1,478 538
Amortization 34,001 38,611 11,487 13,329
-------------------------------------------------
$ 167,541 $ 160,397 $ 56,991 $ 49,403
-------------------------------------------------
Operating earnings
before the following $ 17,926 $ 9,651 $ 6,650 $ 2,319
Provision for loss on
technology investments - 27,515 - 27,515
-------------------------------------------------
Operating earnings
(loss) before future
income taxes $ 17,926 ($17,864) $ 6,650 ($25,196)
Large corporations
taxes 2,347 2,333 824 755
Future income taxes 6,216 (10,689) 2,383 (8,672)
-------------------------------------------------
Net earnings (loss)
for the period $ 9,363 ($9,508) $ 3,443 ($17,279)
-------------------------------------------------
-------------------------------------------------
Net earnings (loss) per share
Basic $ 0.19 ($0.19) $ 0.07 ($0.34)
Diluted $ 0.19 ($0.19) $ 0.07 ($0.34)
-------------------------------------------------
-------------------------------------------------
Consolidated Statement of Retained Earnings - As at
(CDN.$ Thousands, except per share amounts) (Unaudited)
September September
2002 2001
(9 Months) (9 Months)
Retained earnings, beginning of period $ 26,782 $ 47,788
Net earnings (loss) 9,363 (9,508)
Dividends paid (2,477) (2,496)
Premium on share repurchases (579) (333)
-----------------------
Retained earnings, end of period $ 33,089 $ 35,451
-----------------------
-----------------------
Consolidated Statement of Cash Flows- For the nine and three
months ended
(CDN $Thousands, except per share amounts) (Unaudited)
September 30 September 30 September 30 September 30
Cash obtained from 2002 2001 2002 2001
(applied to): (9 months) (9 months) (3 months) (3 months)
Operating activities
Net earnings (loss) $ 9,363 $ (9,508) $ 3,443 $ (17,279)
Income taxes 6,216 (10,689) 2,383 (8,672)
Amortization 34,001 38,611 11,487 13,329
Provision for loss on
technology investments - 27,515 - 27,515
-------------------------------------------------
Funds from operations 49,580 45,929 17,313 14,893
Net change in operating
working capital 2,032 (8,637) (1,506) 1,936
Net change in properties
held for resale 5,741 9,657 (116) (87)
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Total operating cash
flows $ 57,353 $ 46,949 $ 15,691 $ 16,742
-------------------------------------------------
Financing activities
Issue of common shares
for cash (net of issue
costs) $ 7,515 $ 1,941 $ 1,931 $ 486
Stock repurchase program (1,045) (613) - (608)
Dividends paid (2,477) (2,496) - -
Financing of revenue
producing properties 130,629 96,583 29,746 25,146
Repayment of debt on
revenue producing
properties (112,435) (96,188) (36,506) (25,066)
Deferred financing costs (1,167) (1,542) 687 95
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$ 21,020 $ (2,315) $ (4,142) $ 53
-------------------------------------------------
Investing activities
Purchase of revenue
producing properties $ (75,442) $ (14,542) $ (625) $ (7,804)
Project improvements to
revenue producing
properties (26,786) (39,349) (11,840) (10,667)
Technology (2,491) (10,353) (1,818) (4,565)
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$(104,719) $ (64,244) $ (14,283) $ (23,036)
-------------------------------------------------
Decrease in cash and cash
equivalents balance
during period $ (26,346) $ (19,610) $ (2,734) $ (6,241)
Cash and cash equivalents,
beginning of period 25,672 21,055 2,060 7,686
-------------------------------------------------
Cash and cash equivalents
(indebtedness), end
of period $ (674) $ 1,445 $ (674) $ 1,445
-------------------------------------------------
-------------------------------------------------
Funds from operations
per share
Basic $ 1.00 $ 0.92 $ 0.35 $ 0.30
Diluted $ 0.99 $ 0.91 $ 0.34 $ 0.30
-------------------------------------------------
Taxes Paid $ 2,347 2,670 824 846
-------------------------------------------------
-------------------------------------------------
Interest Paid $ 54,262 48,833 20,775 16,539
-------------------------------------------------
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Corporate Profile
Boardwalk Equities Inc. is Canada’s largest owner/operator
of multi-family rental properties.
Boardwalk currently owns in excess of 250 properties
with approximately 29,000 units totalling approximately
25 million net rentable square feet.
The company’s portfolio is concentrated in the provinces of
Alberta, Saskatchewan, Ontario and Quebec.
Boardwalk is headquartered in Calgary and its shares are
listed on both the Toronto Stock Exchange
and the New York Stock Exchange
and trade under the symbol BEI.
The Company has a total market capitalization
of approximately $2.0 billion.
For further information please contact:
Sam Kolias,
President and CEO,
(403) 531-9255;
Mike Hough,
Senior Vice President,
(416) 364-0849;
Roberto Geremia,
Senior Vice President, Finance
and Chief Financial Officer,
(403) 531-9255;
Paul Moon,
Director of Corporate Communications,
(403) 531-9255.
Information can also be found on the Internet at
http://www.bwalk.com.
