TSX SYMBOL: BEI.UN February 16, 2006
Boardwalk REIT Announces February 2006 Distribution, New Property Acquisitions in
Montréal, and Solid Full Year 2005 Financial Results with Fourth Quarter Same Store
Revenues Accelerating Past Same Store Expenses.
DOWNLOAD Q4-2005 February 16, 2006 PRESS RELEASE (Printer Friendly PDF File - 283Kb)
SUPPLEMENTAL NOTES - Q4-2005 (Printer Friendly PDF File - 1.0Mb)
Calgary, Alberta – February 16, 2006
- Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX)
CALGARY, Feb. 16 /CNW/ - Boardwalk Real
Estate Investment Trust ("Boardwalk REIT" or the "Trust") today announced solid
financial results for both fiscal 2005 and the fourth quarter of 2005.
For the fourth quarter ended December 31, 2005, the
Trust reported Funds From Operations ("FFO") from continuing operations of $17.9 million and FFO from continuing operations per
unit of $0.34 on a diluted basis, compared to FFO from
continuing operations of $17.7 million and FFO from
continuing operations per unit of $0.33 for the same
period last year. Distributable income ("DI") from continuing operations for the
quarter was $18.8 million and DI from continuing
operations per unit was $0.35 on a diluted basis,
compared to $18.6 million and $0.35 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, adjusting for gains or losses on disposal of
discontinued operation assets and extraordinary items, 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 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 fourth quarter 2005 financial results include:
- Rental revenues of $75.8 million, an increase of 7.1% compared to
$70.8 million for the three-month period ended December 31, 2004.
- Net operating income of $46.3 million, representing an 8.1% increase
from $42.8 million in the same period last year.
- FFO of $17.9 million, an increase of 0.6% compared to $17.7 million
for the three-month period ended December 31, 2004.
- FFO per unit was $0.34 on a diluted basis, up 0.4% compared to $0.33
last year for the three-month period ended December 31, 2004.
- DI was $0.35 per unit, consistent with the $0.35 for the three months
ended December 31, 2004.
Highlights of the Trust's financial results for fiscal 2005 include:
- Rental revenues of $297.5 million, an increase of 6.7% compared to
$278.7 million for the twelve-month period ended December 31, 2004.
- Net operating income of $188.0 million, representing a 5.6% increase
from $178.0 million in the same period last year.
- FFO from continuing operations of $74.8 million, a decrease of 1%
compared to $75.5 million for the twelve-month period ended
December 31, 2004.
- FFO per unit from continuing operations was $1.41 on a diluted basis,
down 1.5% compared to $1.43 for the twelve-month period ended
December 31, 2004.
- DI from continued operations was $1.46 per unit, down 2.0% compared to
$1.49 for the twelve months ended December 31, 2004.
Commenting on the Trust's fiscal 2005 results, Sam Kolias, President and
C.E.O., said
"We are pleased to report on a solid fourth quarter and positive fiscal year,
during which Boardwalk posted financial results in line with our predictions.
Our fourth quarter results continue to reflect a turn around in our rental
market fundamentals witnessed earlier this year in the spring and summer
periods. The Trust's strong operating results are driven in large part by
Boardwalk's nationally diversified property portfolio, superior operating
platform, and the continued strength and improvement in many of our major rental
markets across the country."
"New rentals continue to outpace lower turnovers, resulting in higher
occupancy levels and revenue growth through reduced customer incentives. The
combined amount of customer incentives and vacancy loss is dropping on a
quarterly and year over year basis. Revenues are rising as we continue to
benefit from our three-pronged internal rental revenue strategy (focus on
vacancy, timely adjustment of market rental rates and short term incentives to
maximize revenues), as well as accretive acquisitions, strong financial
positioning, and an on-going focus on our people, operations and assets. Our
experienced team and elaborate IT systems enable us to identify and adjust for
changing market fundamentals on a continual basis, ensuring our gross rental
revenues are maximized."
Operational Highlights
The average vacancy rate across the Trust's portfolio for the fourth quarter
of 2005 was 3.73%, down from 4.54% in the third quarter of 2005, and down from
4.22% in the fourth quarter of 2004.
The average monthly rent realized in fiscal 2005 was $747 per unit, an increase of $6, or 1%, from $741 per unit
for the twelve-months ended December 31, 2004.
Management estimates that market rents for its properties at the end of
December, 2005 averaged $803 per unit per month, which
compares to an average in-place monthly rent per occupied unit of
$814 for the twelve-months ended December
31, 2005. This translates into an estimated "loss-to-lease" of
approximately $4 million, maintaining existing
occupancy rates.
More detail on our operations can be found in our conference call
presentation and is posted on our web site:
www.boardwalkreit.com/FinancialReports/r2005/). The conference call audio for
this presentation is found on our web site:
www.boardwalkreit.com/FinancialReports/r2005/05_4_screen.asp
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 Trust's stabilized portfolio for the twelve-month period ended December 31, 2005 had rental growth of 1.3% and NOI
decline of 0.8% compared to the same period last year. For the three months
ended December 31, 2005 same store revenues were up by
2.2% and NOI increased by 0.8%. A total of 31,058 units, representing
approximately 93% of Boardwalk's total portfolio, were classified as stabilized
as of December 31, 2005.
Same-Property Results - Stabilized Portfolio
<<
Three Months Ended December 31, 2005 vs. December 31, 2004
-------------------------------------------------------------------------
Operating
Units Revenue Expenses NOI % of NOI
-------------------------------------------------------------------------
Calgary 4,887 5.0% 10.2% 2.7% 19.3%
Edmonton 10,369 2.2% 5.9% -0.2% 31.6%
Montreal 3,278 1.8% -8.2% 8.3% 13.0%
Ontario 4,136 -1.7% 0.3% -3.5% 10.7%
Other Alberta 1,604 6.3% 19.8% 0.7% 6.0%
Other Quebec 2,124 2.7% -4.5% 7.5% 7.3%
Saskatchewan 4,660 1.1% 14.8% -6.3% 12.0%
-------------------------------------------------------------------------
Total 31,058 2.2% 4.5% 0.8% 100.0%
-------------------------------------------------------------------------
Twelve Months Ended December 31, 2005 vs. December 31, 2004
-------------------------------------------------------------------------
Operating
Units Revenue Expenses NOI % of NOI
-------------------------------------------------------------------------
Calgary 4,887 2.3% 7.3% 0.3% 18.9%
Edmonton 10,369 1.3% 2.8% 0.5% 32.9%
Montreal 3,278 0.6% 7.6% -2.8% 12.8%
Ontario 4,136 -0.3% 6.1% -5.6% 10.4%
Other Alberta 1,604 5.2% 15.5% 0.9% 5.9%
Other Quebec 2,124 2.1% 0.0% 3.3% 7.4%
Saskatchewan 4,660 0.5% 6.1% -2.7% 11.7%
-------------------------------------------------------------------------
Total 31,058 1.3% 5.3% -0.8% 100.0%
-------------------------------------------------------------------------
Commenting on Boardwalk's same-property results, President and CEO, Sam Kolias, said: "In the fourth quarter, we were
pleased to see revenue growth accelerating more quickly than expense increases
on a same store basis for the first time in 2005."
Acquisition/Disposition Activity
There were no new acquisitions announced in Q4 2005. In 2005, the Trust
closed on 1,325 rental units in a series of acquisitions spanning the provinces
of Alberta, British Columbia and Quebec. These
previously announced acquisitions had a total purchase price of
$115.2 million, and in aggregate, a going-in cap rate
of 6.68%. Disposition activity in Q4 2005 involved one commercial property in Calgary totaling 78,000 rentable square feet
which sold for $10.5 million. Further details on the
Trust's acquisition and disposition activities can be found in the supplemental
information package available on Boardwalk REIT's website, located at
www.boardwalkreit.com.
Commenting on the Trust's future property acquisitions, Bill Chidley, Senior
Vice President, Corporate Development, said, "The acquisition market for
multi-family rentals in Canada continues to be a
highly competitive "seller's market" characterized by aggressive vendor
expectations and compression in Cap Rates. We are currently in discussion on a
number of properties; however, we cannot be certain of closing on any of these
transactions. While market forces are making acquisitions more difficult, cap
rate compression has had a positive effect on the overall valuation of our
current holdings. Cap rates, spurred by increased investor interest in Canadian
multi-family real estate, are expected to decline still further, resulting in a
substantial increase in our portfolio's value as we look forward."
Continued Financial Strength
The Trust maintained its solid financial position in the fourth quarter of
2005. Boardwalk's total mortgage debt was $1.54 billion
as of December 31, 2005, up from $1.41 billion at
December 31, 2004, reflecting the additional debt on acquisitions completed
during the year, as well as the addition of $120 million unsecured debenture issued in January of 2005. As of
December 31, 2005, the Trust's debt had an average maturity of 3.6 years with a
weighted average interest rate of 5.38%, and the Trust's debt-to-total-market
capitalization ratio was 57%.
The Trust's interest coverage ratio, excluding gains, for the twelve- month
period ended December 31, 2005 decreased to 1.95 times compared to 2.05 times in
the same period last year. During 2005, Boardwalk successfully completed
approximately $146.3 million in mortgage refinancings
and renewals.
Outlook and 2006 Earnings Guidance
Commenting on the outlook for the Trust, Rob Geremia, Senior Vice President, Finance and CFO, said "Our fiscal
2006 guidance for FFO and distributable income is between $1.37 to
$1.46 and $1.41 to $1.51, respectively.
These forecasts are based on the assumptions of approximately 0.0% stabilized
NOI growth and new property acquisitions of between 1,000 to 2,000 new
residential units for the year."
New Property Acquisitions and Dispositions
The Trust has entered into an unconditional contract to acquire 322 units in Montreal. This portfolio consists of one
10-storey and two 6-storey concrete buildings in the Montreal suburb of St. Laurent. The
$24 million purchase price equates to
$74,500 per unit, $87 per
square foot and a cap rate of 7.10%. This purchase is expected to close on March
15, 2006.
The Trust has also entered into unconditional contracts to sell two Calgary projects. Leighton House, a thirty-eight
suite mid rise building, will sell for $4,000,000 which
equates to $100,000 per suite and $146 per square foot and represents a 5.4%
capitalization rate. Glamis Green, a 156 unit townhouse project, sold for $107,000 per suite and $96 per
square foot and represents a 5.5% capitalization rate.
February 2005 Monthly Distribution
The Trust has declared its February 2006 distribution in the amount of 10.5
cents per unit ($1.26 annualized). The February
distribution will be payable on March 15, 2006 to unitholders of record on
February 28, 2006. To encourage participation and reward unitholders, investors
registered in the Distribution Reinvestment Plan ("DRIP") will continue to
receive a "bonus" distribution of additional Trust Units representing 3% of the
amount of their cash distributions reinvested pursuant to the Plan. A full copy
of the DRIP can be found on Trust's website at www.boardwalkREIT.com.
Supplementary Information
Boardwalk produces Quarterly Supplemental Information that provides detailed
information regarding the Trust's activities during the quarter. The Fourth
Quarter 2004 Supplemental Information is available on the INVESTOR section of
our website (www.bwalk.com).
Teleconference on Fourth Quarter and Year End Financial Results
We invite you to participate in the teleconference that will be held to
discuss these results this same morning at 11:00 am EST. Senior management will
speak to the fourth quarter financial results and provide a corporate update.
Presentation materials will be made available on the INVESTOR section of our
website (www.bwalk.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: 416-644-3423
(within Toronto) or toll-free 1-800-814-4859
(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=1006500.
Replay: An audio recording of the teleconference will be available from
1:00pm ET on February 16, 2006 until 11:59pm ET on February 23, 2006. You can
access it by dialing 416-640-1917 and using the passcode 21172563 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 an open-ended real estate investment trust formed to
acquire all of the assets and undertakings of Boardwalk Equities Inc. Boardwalk
REIT's principal objectives are to provide its unitholders with monthly cash
distributions, partially on a Canadian income tax-deferred basis, and to
increase the value of its units through the effective management of its
residential multi-family revenue producing properties and the acquisition of
additional properties. Boardwalk REIT currently owns and operates in excess of
260 properties with over 33,000 units totalling approximately 28 million net
rentable square feet, and is Canada's largest owner/operator of multifamily
rental communities. Boardwalk REIT's portfolio is concentrated in the provinces
of Alberta, British Columbia, Saskatchewan, Ontario and Quebec.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements relating to our
operations and the environment in which we operate, which are based on our
expectations, estimates, forecast and projections, which we believe are
reasonable as of the current date. These statements are not guarantees of future
performance and involve risks and uncertainties that are difficult to control or
predict. For more exhaustive information on these risks and uncertainties you
should refer to our most recently filed annual information form which is
available at www.sedar.com. Actual outcomes and results may differ materially
from those expressed in these forward-looking statements. Readers, therefore,
should not place undue reliance on any such forward- looking statements.
Further, a forward-looking statement speaks only as of the date on which such
statement is made and should not be relied upon as of any other date. While we
may elect to, we undertake no obligation to publicly update any such statement
to reflect new information or the occurrence of future events or circumstances
at any particular time.
CONSOLIDATED BALANCE SHEETS
(CDN$ THOUSANDS)
As at December 31, December 31,
2005 2004
---------------------------
(Audited) (Audited)
Assets
Revenue producing properties $1,787,878 $1,740,932
Deferred financing costs 43,029 39,056
Other assets 11,328 14,125
Future income taxes 929 547
Mortgages and accounts receivable 9,039 8,019
Segregated tenants' security deposits 7,280 6,460
Cash and cash equivalents 11,145 -
Discontinued operations 12,758 -
-------------------------------------------------------------------------
$1,883,386 $1,809,139
---------------------------
---------------------------
Liabilities
Mortgages payable $1,415,400 $1,414,122
Debentures 120,000 -
Accounts payable and accrued liabilities 32,196 27,235
Refundable tenants' security deposits and other 10,486 9,543
Bank Indebtedness - 2,723
Discontinued operations 9,562 -
-------------------------------------------------------------------------
$1,587,644 $1,453,623
---------------------------
Unitholders' Equity
Unitholders' capital 295,696 293,503
Accumulated earnings 46 62,013
-------------------------------------------------------------------------
$295,742 $355,516
-------------------------------------------------------------------------
$1,883,386 $1,809,139
---------------------------
---------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2004 COMBINES INFORMATION
FROM BOARDWALK REAL ESTATE INVESTMENT TRUST AND ITS PREDECESSOR
(CDN$ THOUSANDS, EXCEPT NUMBER OF UNITS AND PER UNIT AMOUNTS)
3 Months 3 Months
Ended Ended Year ended Year ended
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
-----------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)
Revenue
Rental income $75,791 $70,783 $297,478 $278,721
-----------------------------------------------------
Expenses
Revenue producing
properties:
Operating expenses 10,639 10,105 39,026 35,266
Utilities 11,723 10,196 39,754 37,078
Utility rebate (1,213) (492) (1,835) (1,304)
Property taxes 8,359 8,176 32,514 29,671
Administration 6,652 5,689 27,787 23,865
Financing costs 20,532 18,819 82,039 75,020
Deferred financing
costs
amortization 1,248 920 3,963 3,111
Amortization of
capital assets 19,071 18,446 74,896 71,452
-------------------------------------------------------------------------
77,011 71,859 298,144 274,159
-----------------------------------------------------
Earnings (loss) from
continuing operations
before the following (1,220) (1,076) (666) 4,562
Recovery of write-
down on technology
business unit - - (739) -
-------------------------------------------------------------------------
Earnings (loss) from
continuing operations
before income taxes (1,220) (1,076) 73 4,562
Large corporations
taxes 243 165 613 1,620
Future income
taxes (recovery) 311 (138) (493) (1,669)
-------------------------------------------------------------------------
Earnings (loss) from
continuing operations (1,774) (1,103) (47) 4,611
Earnings from
discontinued
operations, net
of tax 2,977 212 5,077 168
-------------------------------------------------------------------------
Net earnings (loss) 1,203 (891) $ 5,030 $ 4,779
-----------------------------------------------------
-----------------------------------------------------
Basic earnings (loss)
per unit
- from continuing
operations $(0.04) $(0.02) $(0.01) $0.09
- from discontinued
operations 0.06 - 0.10 -
-------------------------------------------------------------------------
Basic earnings
(loss) per unit $0.02 $(0.02) $0.09 $0.09
-----------------------------------------------------
-----------------------------------------------------
Diluted earnings
(loss) per unit
- from continuing
operations $(0.04) $(0.02) $(0.01) $0.09
- from discontinued
operations 0.06 - 0.10 -
------------------------------------------------------------------------
Diluted earnings
(loss) per unit $0.02 $(0.02) $0.09 $0.09
-----------------------------------------------------
-----------------------------------------------------
Weighted average
number of units 53,213,332 53,102,959 53,167,640 52,750,208
-----------------------------------------------------
-----------------------------------------------------
CONSOLIDATED STATEMENTS OF ACCUMULATED EARNINGS
(CDN$ THOUSANDS)
Year ended Year ended
December 31, December 31,
2005 2004
---------------------------
Accumulated earnings, beginning of year $62,013 $32,993
Net earnings (loss) 5,030 4,779
Distributions on units (66,997) (47,915)
Premium on unit repurchases - (1,397)
Elimination of future income taxes on
conversion to trust - 73,553
-------------------------------------------------------------------------
Accumulated earnings, end of year $46 $62,013
---------------------------
---------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
INFORMATION FOR THE YEAR DECEMBER 31, 2004 COMBINES INFORMATION FROM
BOARDWALK REAL ESTATE INVESTMENT TRUST AND ITS PREDECESSOR
(CDN$ THOUSANDS)
3 Months 3 Months
Ended Ended Year ended Year ended
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
-----------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)
Operating activities
Net earnings (loss) $1,203 $(891) $5,030 $4,779
Earnings from
discontinued
operations,
net of tax (2,977) (212) (5,077) (168)
Future income taxes
(recovery) 311 (138) (493) (1,669)
Amortization of
capital assets 19,071 18,446 74,896 71,452
Recovery of write-
down on technology
business unit - - (739) -
-----------------------------------------------------------------------
Funds from continuing
operations 17,608 17,205 73,617 74,394
Funds from
discontinued
operations 233 529 1,178 1,126
Net change in
operating working
capital 6,289 1,624 6,401 7,099
-----------------------------------------------------------------------
Total operating
cash flows 24,130 19,358 81,196 82,619
-----------------------------------------------------
Financing activities
Issue of trust units
(net of issue costs) 405 165 2,202 28,934
Unit repurchase
program - - - (2,163)
Restructuring costs (9) (654) (9) (10,174)
Distributions paid (16,760) (16,505) (66,990) (42,333)
Issue of debentures - - 120,000 -
Financing of revenue
producing properties 18,656 42,901 146,245 138,241
Repayment of debt on
revenue producing
properties (25,483) (38,877) (149,361) (131,523)
Capital lease
obligations - (61) (84) (3,431)
Deferred financing
costs incurred (net
of amortization) 227 (348) (4,545) (1,488)
-------------------------------------------------------------------------
(22,964) (13,379) 47,458 (23,937)
-----------------------------------------------------
Investing activities
Purchases of revenue
producing properties 215 (17,949) (103,074) (40,212)
Improvements to
revenue producing
properties (11,176) (7,617) (29,676) (30,492)
Net cash proceeds
from sale of
properties 10,318 - 19,723 -
Technology for real
estate operations (235) (284) (1,759) (824)
-------------------------------------------------------------------------
(878) (25,850) (114,786) (71,528)
-----------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents balance 288 (19,871) 13,868 (12,846)
Cash and cash equivalents
(Bank indebtedness),
beginning of period 10,857 17,148 (2,723) 10,123
-------------------------------------------------------------------------
Cash and cash equivalents
(bank indebtedness),
end of period $11,145 $(2,723) $11,145 $(2,723)
-----------------------------------------------------
-----------------------------------------------------
Supplementary cash
flow information:
Taxes paid (received) $250 $(92) $1,100 $1,150
Interest paid $22,256 $19,075 $79,787 $76,300
-----------------------------------------------------
-----------------------------------------------------
>>
%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;
