TSX SYMBOL: BEI.UN May 10, 2005
Boardwalk Announces First Quarter Financial Results
DOWNLOAD Q1-2005 May 10, 2005 PRESS RELEASE (Printer Friendly PDF File - 141 Kb)
SUPPLEMENTAL NOTES - Q1-2005 (Printer Friendly PDF File - 700 Kb)
Calgary, Alberta – May 10, 2005
- Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX)
Boardwalk Real Estate Investment Trust ("Boardwalk REIT" or the "Trust")
today announced solid financial results for the first quarter of 2005. For the
three-month period ended March 31, 2005, the Trust reported Funds From
Operations ("FFO") from continuing operations of $16.4 million and FFO from
continuing operations per unit of $0.31 on a diluted basis, compared to FFO
from continuing operations of $16.5 million and FFO from continuing operations
per unit of $0.32 for the same period last year. Distributable income ("DI")
for the quarter was $17.3 million and DI per unit was $0.33 on a diluted
basis, compared to $17.2 million and $0.33 per unit for the same period last
year.
Funds from operations ("FFO") is a generally accepted measure of
operating performance of real estate investment trusts and companies, however
is a non-GAAP measurement. The Trust calculates FFO by taking net earnings
after discontinued operations and adding non-cash items including future
income taxes and amortization. The determination of this amount may differ
from that of other real estate investment trusts and companies. Distributable
income ("DI") is calculated based on the definition as set out in the Trust's
declaration of trust and is computed by taking FFO from continuing operations
and adding back amortization on any deferred financing charges incurred prior
to May 3, 2004 as well as adjusting for any discounts or premiums relating to
the amortization of mark-to-market debt adjustment incurred subsequent to the
real estate investment trust conversion date of May 3, 2004.
Highlights of the Trust's first quarter 2005 financial results include:
- Rental revenues of $73.6 million, an increase of 5.6% compared to
$69.7 million for the three-month period ended March 31, 2004.
- Net operating income of $44.6 million, representing a 3.2% increase
from $43.2 million in the same period last year.
- FFO from continuing operations of $16.4 million, a decrease of 0.6%
compared to $16.5 million for the three-month period ended
March 31, 2004.
- FFO from continuing operations per unit was $0.31 on a diluted basis,
down 3.1% compared to $0.32 for the three-month period ended
March 31, 2004.
- DI was $0.33 per unit, unchanged from $0.33 for the three months ended
March 31, 2004.
Commenting on the Trust's first quarter results, Sam Kolias, President
and C.E.O., said, "Demand for our rental units remained strong during the
first quarter. Total rentals versus move-outs for the three-month period were
3,569 and 3,123, respectively, for total positive absorption of 446 rental
units. This compares to an absorption figure of 157 rental units during this
same period last year, a very positive increase further pointing to improving
fundamentals going forward."
"Following a successful but very competitive year in 2004, 2005 is also
expected to present various challenges going forward. We are confident we can
continue to generate solid results as leading fundamentals point to an
improving year for landlords. We are very pleased to see a continuing trend of
lower resident turnovers into the spring accompanied with solid rentals.
Springtime is typically a seasonally soft period for landlords; however, this
spring has been the exception."
Operational Highlights
The average vacancy rate across the Trust's portfolio for the first
quarter of 2005 was 5.19%, up from 4.22% in the fourth quarter of 2004, and up
from 4.32% in the first quarter of 2004.
The average monthly rent realized in the first quarter of 2005 was $746
per unit, an increase of $5 from $741 per unit for the three-month period
ended March 31, 2004. Management estimates that market rents for its
properties at the end of March, 2005 averaged $808 per unit per month, which
compares to an average in-place monthly rent per occupied unit of $785 for the
same period. This translates into an estimated "loss-to-lease" of
approximately $8.7 million, maintaining existing occupancy rates.
Same-Property Results
Boardwalk showed slight negative NOI performance in its stabilized
properties (defined as properties owned for over 24 months). The "same-
property" results for the Trust's stabilized portfolio for the three-month
period ended March 31, 2005 had rental growth of 0.3%, an increase in total
expenses by 5.8% resulting in a decrease in NOI of 3.1%, compared to the same
period last year. A total of 30,417 units, representing approximately 91% of
Boardwalk's total portfolio, were classified as stabilized as at
March 31, 2005.
<<
Same-Property Results - Stabilized Portfolio
Three Months Ended March 31, 2005 vs. Three Months Ended March 31, 2004
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Rental Total % of
Revenues Expenses NOI NOI
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Calgary 1.1% -0.1% 1.6% 20%
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Edmonton -0.6% -0.4% -0.7% 35%
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Other Alberta 4.4% 14.9% -0.8% 6%
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Saskatchewan -0.9% 7.5% -7.2% 11%
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Ontario -0.4% 16.0% -14.5% 10%
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Quebec 1.3% 9.1% -3.3% 17%
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Total 0.3% 5.8% -3.1% 100%
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Acquisition/Disposition Activity
During the first quarter of 2005, the Trust has closed on an additional
1,325 rental units, at a total purchase price of $115.2 million, in a series
of new acquisitions spanning the provinces of Alberta, British Columbia and
Quebec. The properties acquired were:
- Alberta and British Columbia portfolio - This 848-unit portfolio had
an acquisition price of approximately $83.1 million, which equates to
approximately $97,900 per unit and approximately $137.9 per rentable
square foot. The acquisition price, per door and per rentable square
foot, includes commercial space within the Surrey property described
below consisting of 40,137 square feet of rentable area at a price of
approximately $98.62 per square foot. This transaction closed on
February 1, 2005 and the acquisition had a going in cap rate of 6.39%.
Further information on this transaction, including how the purchase of
this portfolio was funded, is detailed in Boardwalk REIT's
January 10, 2005 press release. The properties in the portfolio are:
- Sarcee Trail Place - Calgary, AB - a property consisting of two
high-rise buildings and one mid-rise building with a total of 376
units. There are 188 one-bedroom and 188 two-bedroom unit types
within the property.
- Horizon Towers - Vancouver (Burnaby), BC - Horizon Towers has two
13-storey high-rise buildings with a total of 206 units. There are
153 one-bedroom and 53 two-bedroom unit types within the property.
- Surrey Village - Vancouver (Surrey), BC - Surrey Village consists
of one 18-storey high-rise building with a total of 266 apartment
units. There are 60 bachelor, 163 one-bedroom and 43 two-bedroom
unit types within the property. The property also includes a
3-storey stand-alone commercial property with 40,137 square feet of
rentable area.
- Varsity Place Apartments - Calgary, AB - Varsity Place is a 3-storey
walk-up wood frame property consisting of 30 one-bedrooms and 40
two-bedrooms for a total of 70 apartment units. The property had a
purchase price of $5.3 million, which equates to approximately $75,000
per unit and approximately $111.4 per rentable square foot. The
purchase was funded using cash on hand. The going-in cap rate on the
acquisition was approximately 6.86%, and the transaction closed on
February 1, 2005.
- Christie Point Apartments - Victoria, B.C. - The Christie Point
property consists of nine 2-storey townhouse and apartment style
complexes with either two or three-bedroom types, for a total of 161
rental units. The property had a purchase price of $16.8 million,
which equates to approximately $104,000 per unit and approximately
$107.8 per rentable square foot. The purchase was funded using cash on
hand. The going-in cap rate on the acquisition was approximately
6.39%, and the transaction closed on February 16, 2005. Christie Point
is located on an ocean front peninsula providing an extraordinary
setting for apartment and townhouse living.
- Place Chamonix / Place Sully - Quebec City (Charlesbourg), QC - Not
previously disclosed, these two properties consist of 2-storey
townhouse units with either two or three bedroom types for a total of
246 rental units. These properties had a purchase price of
$10.2 million, which equates to approximately $41,400 per unit and
approximately $43.0 per rentable square foot. The purchase was funded
by a combination of cash on hand and the assumption of a $5.35 million
first mortgage with a fixed interest rate of 6.1% due on January 1,
2009. The going-in cap rate on the acquisition was 9.38%, and the
transaction closed on March 10, 2005.
The Trust has unconditionally sold one property located in Edmonton,
Alberta, which is expected to close on June 30, 2005. The property to be sold
is Village Acres, a 186-unit, 2 1/2-storey wood-frame project in the north
east area of Edmonton. The sale price is for $9.53 million or $51,250 per
door, with a cap rate of 5.78%.
Continued Financial Strength
The Trust maintained its solid financial position in the first quarter of
2005. Boardwalk's total mortgage debt was $1.44 billion as at March 31, 2005,
up from $1.39 billion at March 31, 2004, reflecting the additional debt on
acquisitions completed during the year. On January 21, 2005, Boardwalk REIT
completed the issuance of unsecured debentures in a public offering in the
aggregate amount of $120 million. The debentures are rated "BBB" with a stable
trend by Dominion Bond Rating Services, carry a coupon rate of 5.31% and will
mature on January 23, 2012. Net proceeds of approximately $119 million was be
used to fund acquisitions, repay operating lines of credit and for general
trust purposes.
As at March 31, 2005, the Trust's total debt had an average maturity of
3.8 years with a weighted average interest rate of 5.42%, and the Trust's
total debt-to-total-market-capitalization ratio was 61.4%.
The Trust's interest coverage ratio, excluding gains, for the three-month
period ended March 31, 2005 was 1.86 times compared to 1.93 times in the same
period last year.
Outlook and 2005 Earnings Guidance
Commenting on the outlook for the Trust, Rob Geremia, Senior Vice
President, Finance and CFO, said, "We are reaffirming our fiscal 2005 guidance
for FFO and distributable income of between $1.42 to $1.49 and $1.46 to $1.53,
respectively. These forecasts are based on the assumptions of approximately
0.0% to 1.0% stabilized NOI growth and new property acquisitions of between
1,000 to 2,000 new residential units for the year."
Supplementary Information
Boardwalk produces Quarterly Supplemental Information that provides
detailed information regarding the Trust's activities during the quarter. The
Fourth Quarter 2003 Supplemental Information is available on the INVESTOR
section of our website (www.bwalk.com).
Teleconference on the First Quarter Financial Results
We invite you to participate in the teleconference that will be held to
discuss these results this morning at 9:30 am ET. Senior management will speak
to the financial results and provide an update. Presentation materials will be
made available on our website (http://www.boardwalkreit.com/) prior to the
call.
Participation & Registration: Please RSVP to Investor Relations at
403-531-9255 or by email to investor@bwalk.com.
Teleconference: The telephone numbers for the conference are:
416-640-4127 (within Toronto) or toll-free 1-800-814-4857 (outside Toronto).
Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting http://www.boardwalkreit.com/ 15
min. prior to the start of the call. An information page will be provided for
any software needed and system requirements. The live audiocast will also be
available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1098680.
Replay: An audio recording of the teleconference will be available from
12:30 pm ET on May 10th, 2005 until 11:59 pm ET on May 18th, 2005. You can
access it by dialing 416-640-1917 and using the passcode 21122186 followed by
the pound sign. An audio archive will also be available on our website
(http://www.boardwalkreit.com/) approximately two hours after the conference
call.
Corporate Profile
Boardwalk REIT is Canada's largest owner/operator of multi-family rental
communities. Boardwalk REIT currently owns and operates in excess of 260
properties with over 33,000 rental units totalling approximately 28 million
net rentable square feet. The Trust's portfolio is concentrated in the
provinces of Alberta, British Columbia, Saskatchewan, Ontario and Quebec.
Boardwalk REIT's Trust units are listed on the Toronto Stock Exchange, trading
under the symbol BEI.UN. The Trust's total market capitalization at
December 31, 2004 was $2.4 billion.
Forward Looking Information
This press release may contain forward-looking statements. These
statements relate, but are not limited to, Boardwalk REIT's expectations,
intentions, plans and beliefs. These forward-looking statements can generally
be identified by the use of words "anticipated", "expected" or the negative
thereof or other comparable terminology. You should be aware that these
statements are subject to known and unknown risks, uncertainties and other
factors, including the risks discussed under the heading "Risk Factors" in the
Management Information Circular of Boardwalk Equities Inc. available on
www.sedar.com. Actual events or results may differ materially from those
suggested by any forward-looking statements. You should not place undue
reliance on any forward-looking statements contained in this press release.
By their nature, forward-looking statements involve numerous assumptions,
inherent risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, forecasts, projections and various
future events will not occur. Although management of Boardwalk REIT believes
that the expectations reflected in the forward-looking statements are
reasonable, there can be no assurances that future results, levels of
activity, performance or achievements will occur as anticipated. None of
Boardwalk REIT nor any other person assumes responsibility for the accuracy
and completeness of any forward-looking statements, and no one has any
obligations to update or revise any forward-looking statement, whether as a
result of new information, future events or such other factors which affect
this information, except as required by law.
CONSOLIDATED BALANCE SHEETS
(CDN$ THOUSANDS)
As at March 31, December 31,
2005 2004
--------------------------
(Unaudited) (Audited)
Assets
Revenue producing properties $1,834,640 $1,733,026
Properties held for resale 8,025 7,906
Deferred financing costs 41,747 39,056
Other assets 13,419 14,125
Future income taxes 596 547
Mortgages and accounts receivable 7,179 8,019
Segregated tenants' security deposits 6,841 6,460
Cash and cash equivalents 26,086 -
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$1,938,533 $1,809,139
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Liabilities
Mortgages payable $1,443,616 $1,414,122
Debentures 120,000 -
Accounts payable and accrued liabilities 27,619 27,151
Refundable tenants' security deposits and other 10,087 9,543
Capital lease obligations 21 84
Bank indebtedness - 2,723
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$1,601,343 $1,453,623
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Unitholders' Equity
Unitholders' capital 293,941 293,503
Accumulated earnings 43,249 62,013
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$337,190 $355,516
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$1,938,533 $1,809,139
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CONSOLIDATED STATEMENTS OF EARNINGS
(CDN$ THOUSANDS, EXCEPT PER UNIT AMOUNTS)
3 months 3 months
ended ended
March 31, March 31,
2005 2004
--------------------------
(Unaudited) (Unaudited)
Revenue
Rental income $73,586 $69,689
--------------------------
Expenses
Revenue producing properties:
Operating expenses 9,404 8,383
Utilities 12,250 12,229
Utility rebate (636) (812)
Property taxes 7,946 6,732
Administration 6,860 5,915
Financing costs 20,234 19,255
Deferred financing costs amortization 929 701
Amortization of capital assets 18,537 17,332
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75,524 69,735
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Loss from continuing operations before
income taxes (1,938) (46)
Large corporations taxes 245 792
Future income taxes (recovery) (88) 354
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Loss from continuing operations (2,095) (1,192)
Earnings (loss) from discontinued operations,
net of tax 64 (35)
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Net loss $(2,031) $(1,227)
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--------------------------
Basic earnings (loss) per unit
- from continuing operations $(0.04) $(0.02)
- from discontinued operations - -
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Basic earnings (loss) per unit $(0.04) $(0.02)
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--------------------------
Diluted earnings (loss) per unit
- from continuing operations $(0.04) $(0.02)
- from discontinued operations - -
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Diluted earnings (loss) per unit $(0.04) $(0.02)
--------------------------
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CONSOLIDATED STATEMENTS OF ACCUMULATED EARNINGS
(CDN$ THOUSANDS)
3 months 3 months
ended ended
March 31, March 31,
2005 2004
--------------------------
(Unaudited) (Unaudited)
Accumulated earnings, beginning of period $62,013 $32,993
Net loss (2,031) (1,227)
Distributions declared on units (16,733) (3,938)
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Accumulated earnings, end of period $43,249 $27,828
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(CDN$ THOUSANDS)
3 months 3 months
ended ended
March 31, March 31,
2005 2004
--------------------------
(Unaudited) (Unaudited)
Operating activities
Net loss $(2,031) $(1,227)
Loss (earnings) from discontinued operations,
net of tax (64) 35
Future income taxes (recovery) (88) 354
Amortization of capital assets 18,537 17,332
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Funds from continuing operations 16,354 16,494
Funds from discontinued operations 103 (6)
Net change in operating working capital 4,649 (2,414)
Net change in properties held for resale (119) (108)
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Total operating cash flows 20,987 13,966
--------------------------
Financing activities
Issue of trust units (net of issue costs) 357 22,477
Restructuring costs 81 -
Distributions paid (16,737) (3,938)
Issue of debentures 120,000
Financing of revenue producing properties 46,468 35,199
Repayment of debt on revenue producing
properties (29,814) (36,495)
Capital lease obligations (63) (310)
Deferred financing costs incurred
(net of amortization) (2,825) (1,463)
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117,467 15,470
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Investing activities
Purchases of revenue producing properties (103,289) (9,174)
Project improvements to revenue producing
properties (5,961) (6,087)
Technology for real estate operations (395) (447)
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(109,645) (15,708)
--------------------------
Net increase (decrease) in cash and cash
equivalents balance 28,809 (13,728)
Cash and cash equivalents (bank indebtedness),
beginning of period (2,723) 10,123
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Cash and cash equivalents, end of period $26,086 $23,851
--------------------------
--------------------------
Supplementary cash flow information:
Taxes paid (received) $(10) $906
Interest paid $19,001 $19,390
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>>
%SEDAR: 00020684E
For further information please contact:
Boardwalk REIT
Sam Kolias,
President and CEO,
(403) 531-9255;
Roberto Geremia,
Senior Vice President, Finance
and Chief Financial Officer,
(403) 531-9255;
Paul Moon,
Director of Corporate Communications,
(403) 531-9255.
