TSX SYMBOL: BEI.UN November 3, 2006
Boardwalk Response To Government Of Canada’s Income Trust Announcement
Calgary, Alberta – November 3, 2006 – Boardwalk Real
Real Estate Investment Trust ("Boardwalk" or the "Trust")
wishes to address any confusion that the
Government of Canada’s Income Trust Announcement of
Tuesday, October 31, 2006 (the ‘Announcement’) may have
caused in relation to the application of the new tax
rules to Boardwalk. As we understand them, the new
rules on taxation, as proposed in the Announcement, are
meant to apply to a clearly defined set of publicly
traded flow-through entities (“FTEs”) or, as they are
more commonly known, “Income Trusts”. These clearly
defined FTEs are to be known, according to the Federal
Department of Finance (“Finance”), as “specified
investment flow-throughs” or “SIFTs”. Generally, under
the proposed regime, the tax treatment of SIFTs will be
more like that of corporations, and investors in a SIFT
will be treated more like shareholders of a corporation.
Finance has announced that these changes will generally
take effect beginning with the 2007 taxation year for
trusts that begin to be publicly-traded after October 2006,
but will only apply beginning with the 2011 taxation year
for those SIFTs that are already publicly-traded.
Real Estate Investment Trusts
Finance has announced that certain trusts that would
otherwise be SIFTs will be excluded from the SIFT
definition. These are trusts (commonly known as real
estate investment trusts or REITs) that meet a series
of conditions relating to the nature of their income
and investments. Boardwalk REIT understands that those
conditions are similar to the conditions that the United
States applies to US real estate investment trusts, and
like the US rules this exception recognizes the unique
history and role of collective real estate investment vehicles.
To benefit from this exception (i.e. to be a REIT) for a given
taxation year, Finance has announced that a trust must:
• At no time in the year hold any non-portfolio property
other than real properties situated in Canada;
• Have as not less than 95% of its income for the year
income from properties (whether in Canada or abroad,
and including dividends, interest, rents, etc. and taxable
capital gains from dispositions of real properties);
• Have as not less than 75% of its income for the year income
that is directly or indirectly attributable to rents from,
mortgages on, or gains from the disposition of, real properties
situated in Canada; and
• Hold throughout the year real properties situated in Canada, cash,
and debt or other obligations of Governments in Canada (including
Crown corporations, etc.) with a total fair market value that is
not less than 75% of its equity value.
Boardwalk believes that it meets these criteria based on
current finance publications.
THE ABOVE SUMMARY IS NOT INTENDED TO BE, NOR SHOULD IT BE
CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY UNITHOLDER OR
PROSPECTIVE UNITHOLDER OF BOARDWALK. UNITHOLDERS AND
PROSPECTIVE UNITHOLDERS SHOULD CONSULT WITH THEIR TAX
ADVISORS FOR ADVICE WITH RESPECT TO THE TAX CONSEQUENCES
TO THEM OF INVESTING IN UNITS OF BOARDWALK HAVING REGARD
TO THEIR OWN PARTICULAR CIRCUMSTANCES. IN ADDITION,
NOTWITHSTANDING THAT THE ABOVE SUMMARY WAS TAKEN DIRECTLY
FROM FINANCE’S ANNOUNCEMENT, THERE CAN BE NO ASSURANCE THAT
THE NEW TAXATION REGIME ANNOUNCED FOR SIFTs (INCLUDING THE
ABOVE NOTED EXEMPTION FOR REITs), AS PROPOSED BY FINANCE,
WILL NOT BE CHANGED PRIOR TO ACTUAL CODIFICATION OF THE
PROPOSED RULES IN LEGISLATION.
For more information, Boardwalk encourages unitholders and the
public to view the information available from the following sources:
http://www.fin.gc.ca/newsde/06-061e.html,
specifically pages 9 and 10 thereof.
http://designersi.com/users/12415//images/
11_01_2006_REITsExcludedFromIncomeTrustTax.pdf
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 33,900 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.
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;
