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2008 Boardwalk REIT Press Release

Boardwalk Rental Communities

May, 2008

Boardwalk REIT Announces Solid First Quarter 2008 Financial Results; FFO Per Unit Up 25.0% and DI Per Unit up 21.4% YOY; and its May 2008 Distribution

2008 Q1 Press ReleaseDOWNLOAD Q1-2008 May 14, 2008 PRESS RELEASE (Printer Friendly PDF File)

2008 Q1 Supplemental NotesSUPPLEMENTAL NOTES - Q1-2008 May 14, 2008 (Printer Friendly PDF File)

CALGARY, May 14 /CNW/ - Boardwalk Real Estate Investment Trust
("Boardwalk REIT" or the "Trust") today announced solid financial results for
the first quarter of 2008; FFO per unit up 25.0% and DI per unit up 21.4% YOY
and its May 2008 Distribution.
    For the first quarter ended March 31, 2008, the Trust reported Funds From
Operations(1) ("FFO") of $27.7 million and FFO per unit of $0.50 on a diluted
basis, compared to FFO of $22.8 million and FFO per unit of $0.40 for the same
period last year. Distributable income ("DI") for the quarter was
$28.3 million and DI per unit was $0.51 on a diluted basis, compared to
$23.6 million and $0.42 per unit for the same period last year.

    Highlights of the Trust's first quarter 2008 financial results include:

    -   Rental revenues of $102.2 million, an increase of 16.7%, compared to
        $87.6 million for the three-month period ended March 31, 2007.

    -   Net operating income of $60.5 million, representing a 18.6% increase,
        from $51.0 million in the same period last year.

    -   FFO of $27.7 million, an increase of 21.7%, compared to $22.8 million
        for the three-month period ended March 31, 2007.

    -   FFO per unit was $0.50 on a diluted basis, up 25.0%, compared to
        $0.40 for the three-month period ended March 31, 2007.

    -   DI per unit was $0.51 per unit, up 21.4%, from the $0.42 per unit for
        the three months ended March 31, 2007.

    Commenting on the Trust's Q1 2008 results, Sam Kolias, C.E.O. and
Chairman of the Board, said: "We are pleased to report on a strong first
quarter of 2008 for the Trust. Our Western Canadian markets continued to
generate solid revenue growth again this quarter, garnering strength from
impressive market fundamentals in Saskatchewan, and still strong, though less
robust than in 2006 and 2007, fundamentals in Alberta."
    "Over the first quarter, market fundamentals in Saskatchewan continued to
break regional records, driven by a vibrant economy and rising commodity
prices for Saskatchewan produced products. The strength of the province
yielded strong revenue growth for the Trust, particularly in Saskatoon,
Saskatchewan's largest centre. Monthly occupied rent in our property portfolio
increased approximately $21 in Saskatchewan in March 2008 over December 2007
and increased approximately $125 year-over-year. Average market rents in
Saskatchewan increased $14 at the end of March 2008 compared to the end of
December 2007 and increased $234 year-over-year."
    "Our Alberta portfolio, which makes up approximately 54% of our portfolio
overall, continued to perform over the first quarter. Despite a tempering in
some market fundamentals, Alberta continues to exhibit great economic
strength, fuelled by the province's thriving energy sector and strong
employment opportunities. Especially strong fundamentals in Edmonton, our
largest market, contributed to strong revenue growth for the Trust in the
first quarter."
    Roberto Geremia, President, added: "In the last month of Q4 2007 and the
first month of Q1 2008, there was a weaker seasonal rental demand in Alberta,
and we believe that it was partially a result of reported market rental rates
that were too high. We quickly adjusted our market rents downward and with the
support of our strong operations team, realized an increase in occupancy,
supporting our assumption that high price was the primary contributor of the
lower demand. In April, we are pleased to note a continued increase in
occupancy in the Alberta portfolio. As a result of the adjustments outlined
above, average market rents were down approximately $17 in Edmonton and up
approximately $11 in Calgary at the end of March 2008 compared to the end of
December 2007. In Edmonton and Calgary, occupied rents increased approximately
$78 and $52, respectively, in March 2008 compared to December 2007."
    "In both Calgary and Edmonton, the resale housing market recorded an
increase in inventory over the first quarter of 2008, tempering the growth
rate of housing prices. Though the expense gap between buying a house and
renting remains significant, consumers now have increased housing options. We
currently believe that in the short-term, a more incremental approach to
market rents and a focus on increasing occupancy is the most effective way to
maximize revenue and retain Customer loyalty. By focusing on occupancy, we
believe that we will increase revenues, promote Customer satisfaction and
support sustainability for the Trust. While we work to increase occupancy, we
believe that a certain level of vacancy is a necessary aspect of revenue
maximization. We continue to implement our three-pronged revenue maximization
strategy, in which we actively monitor occupancy, adjust price and apply
suite-specific incentives when necessary. In order to maximize revenues, we
seek to achieve the optimal balance of price and occupancy."

    Operational Highlights

    -   The average vacancy rate across the Trust's portfolio for the first
        quarter of 2008 was 5.65%, up from 4.69% in the fourth quarter of
        2007, and up from 4.39% for the first quarter of 2007.

    -   The average monthly rent realized in the first quarter of 2008 was
        $931 per rental unit, up $89 from $842 per rental unit for the same
        period last year.

    -   The average market rent for the Trust's properties at the end of
        March 2008 was an estimated $1,051 per rental unit per month, which
        compares to an average in-place monthly rent per occupied unit of
        $994 at the end of March 2008. This translates to an estimated 'loss-
        to-lease' of approximately $23.7 million on an annualized basis, or
        $0.43 per outstanding Trust Unit, given existing occupancy levels.

    -   For the first quarter, 'same-property' (or properties owned for a
        period of 24 months or greater than) rental revenue grew by 9.6%
        compared to the same period last year, overall operating costs
        increased by 10.3%, resulting in same-property NOI increase of 9.1%.
        A total of 33,574 units, representing approximately 92% of Boardwalk
        REIT's total portfolio, were classified as stabilized as of March 31,

    More detail on our operations will be found in our conference call
presentation to be posted on our web site today at The conference call audio for
this presentation can also be found on our web site at following the call.

    Amendment to Declaration of Trust

    At its special meeting of Unitholders on May 13, 2008, Boardwalk REIT
Unitholders voted to adopt the previously announced amendment to its
Declaration of Trust to change the definition of "Gross Book Value" to
increase the asset bump by an additional $410 million, from $231 million to
$641 million. It is the Trust's intention to now approach its bondholders for
approval of this change to the bondholders' trust deed. Boardwalk REIT is of
the opinion that the proposed amendment to the definition of Gross Book Value
will give the Trust increased flexibility to implement its strategic plan,
which includes the purchase of accretive multi-family assets in the current
competitive acquisition environment and, at the same time, execute its Trust
Unit buy-back program.

    Same-Property Results

    Boardwalk continued to show solid performance in its stabilized
properties (defined as properties owned for 24 months or longer). The
"same-property" results for the Trust's stabilized portfolio for the
three-month period ended March 31, 2008 showed rental revenue growth of 9.6%
on a year-over-year basis. Operating expenses increased 10.3%, resulting in an
increase in NOI of 9.1% compared to the same period last year. A total of
33,574 units, representing approximately 92.0% of Boardwalk's total portfolio,
were classified as stabilized as at March 31, 2008.

    Same-Property Results - Stabilized Portfolio

                                                     %      % Net
    Mar 31 2008                           %  Operating  Operating
     - 3 M                     No.  Revenue    Expense     Income          %
                            Units    Growth     Growth     Growth     of NOI
    Calgary                 4,973       9.1%      19.9%       4.8%      20.7%
    Edmonton               10,369      16.3%      17.1%      15.8%      35.8%
    Other Alberta           1,680       5.6%      18.2%      -0.4%       6.1%
    British Columbia          871       6.2%      11.1%       2.9%       2.5%
    Ontario                 4,265       0.6%      -2.3%       4.3%       7.7%
    Quebec                  6,756       2.7%      -1.0%       5.8%      17.5%
    Saskatchewan            4,660      16.0%      17.8%      14.2%       9.7%
                           33,574       9.6%      10.3%       9.1%     100.0%

    Commenting on Boardwalk REIT's same-property results, William Wong, Chief
Financial Officer, said, "For the first quarter of 2008, same-property revenue
increased by 9.6% compared to the same period in the prior year. Despite
rental expenses increasing by 10.3%, net operating income growth improved
overall by 9.1%. The increase in reported stabilized revenue was driven mainly
by the Trust's Alberta operations, which account for approximately 63% of the
Trust's reported stabilized net operating income. The majority of the reported
increase in rental operating expenses for the three months ended March 31,
2008 was due to higher operating costs in Alberta and higher utility costs in
the first quarter of 2008, as compared to the first quarter of 2007."

    Sequential Revenue Analysis

                                    Q1 2008    Q4 2007    Q3 2007    Q2 2007
    Stabilized                       vs. Q4     vs. Q3     vs. Q2     vs. Q1
     Revenue Growth     No. Units      2007       2007       2007       2007
    Calgary                 4,973       3.3%       0.4%       0.8%       4.2%
    Edmonton               10,369       5.3%       1.8%       3.9%       4.5%
    Other Alberta           1,680       3.2%       1.9%       0.8%     (0.4)%
    British Columbia          871       4.1%     (1.9)%       2.6%       1.8%
    Ontario                 4,265      -0.4%       2.1%     (1.4)%       0.4%
    Quebec                  6,756       0.0%       0.2%       2.3%       0.6%
    Saskatchewan            4,660       2.7%       4.6%       5.5%       2.3%
                           33,574       2.9%       1.5%       2.4%       2.6%

    Commenting on Boardwalk REIT's sequential stabilized revenue growth,
William Wong, Chief Financial Officer, said, "On a sequential basis,
stabilized revenues grew 2.9% from Q4 2007 to Q1 2008, 1.5% from Q3 2007 to Q4
2007, 2.4% from Q2 2007 to Q3 2007 and 2.6% from Q1 2007 to Q2 2007."

    New Property Development

    Commenting on the Trust's property acquisitions and dispositions,
Bill Chidley, Senior Vice President, Corporate Development, said, "We continue
to explore the possibility of developing new multi-family rental product in
select markets in Western Canada, focusing on several of our existing
buildings in Calgary, Edmonton and Fort McMurray that feature excess density.
The planning consultants estimate that in Calgary, an additional density of
6,200 to 12,700 apartment units could be achieved with re-zoning. In the
Edmonton area the consultants estimate 11,900 to 14,400 additional units could
be achieved, along with 450 additional units in Fort McMurray."
    It is important to note that we are in the early stages of this process,
with the earliest completion of any new development between 2011 and 2012. As
part of this investigation, we are considering a number of ways to surface
this densification value, including direct development, joint venture and the
sale of excess density. Though we are excited by this potential, it is
important to note that in order to obtain the estimated maximum density, it
will be necessary to demolish existing rental units. It is our belief that the
key to this development is to find the optimal trade-off between maximizing
density and retaining as much of the existing rental stock as possible.
Boardwalk believes that being prepared for all future opportunities is a key
to our on-going success.

    Unit Buyback

    We continue to believe that one of the best investments we can make is
purchasing our Trust Units at current levels. For the quarter ended March 31,
2008, the Trust purchased in the public market 620,800 Trust Units for a total
of $23.0 million, or an average purchase price of $37.06 per Trust Unit. As of
May 01, 2008, Boardwalk REIT have purchased a cumulative total of
$65.68 million in Trust Units in the public market, representing 1,584,347
Trust Units with an average price of $41.46 per Trust Unit.

    Continued Financial Strength

    The Trust built upon its solid financial position throughout the first
quarter of 2008. Boardwalk REIT's total principal mortgage and debt
outstanding was $2.1 billion as of March 31, 2008, as compared to $1.7 billion
as of March 31, 2007. As of March 31, 2008, the Trust's total debt had an
average maturity of 3 years with a weighted average interest rate of 5.02%.
The Trust's debt-to-total enterprise value ratio was 49.0%.
    We currently estimate that by the end of this fiscal year, if desired,
the Trust could have access to approximately $450 million of available capital
in the form of cash on hand, secured, undrawn acquisition and operating
facility and estimated additional mortgage proceeds for the remainder of the
year. The Trust's interest coverage ratio,excluding gains, for the three-month
period ended March 31, 2008 was 2.14 times, compared to 2.11 times in the same
period last year.

    Subsequent Event

    Subsequent to March 31, 2008, Boardwalk REIT acquired a property in
Calgary, Alberta, totaling 297 apartment units from an unrelated third party
for an aggregate purchase price of $48.8 million. The transaction is scheduled
to close June 13, 2008 and will be funded using cash-on-hand.

    Outlook and 2008 Financial Guidance

    In its 2007 Annual Report, Boardwalk REIT outlined specific targets for
its fiscal 2008 overall financial performance. The Trust on a quarterly basis
reviews the key assumptions used in determining this guidance and if
warranted, makes adjustments. Based on this review, we are maintaining our
2008 full year guidance for both FFO and DI per Unit; however, we are lowering
our stabilized buildings NOI growth from the initial guidance of 8.0% - 14.0%
to 8.0% - 12.0%. The reduction in our NOI has not resulted in a revision in
either FFO or DI full year expectations, as we anticipate that this decrease
will be compensated by lower overall expected financing charges and increased
return on acquisitions. We are currently taking a more conservative approach
to acquisitions, as we feel our normal course issuer bid will provide us with
better value in the current year. We are reducing our new acquisition targets
from the previously stated 1,000 - 2,000 units to 500 - 1,000 units.

                                               2008                2008
                                       Original Objectives   Revised Guidance
    FFO Rental Operations                 $2.35 to $2.50      $2.35 to $2.50
    Distributable Income                  $2.37 to $2.52      $2.37 to $2.52
    New Unit Acquisitions                 1,000 to 2,000        500 to 1,000
    Stabilized Buildings NOI growth          8% to 14%           8% to 12%

    May 2008 Monthly Distribution

    The Trust has declared its May 2008 distribution in the amount of
15.00 cents per trust unit ($1.80 on an annualized basis). The May
distribution will be payable on June 16, 2008 to unitholders of record on
May 30, 2008.

    Supplementary Information

    Boardwalk produces Quarterly Supplemental Information that provides
detailed information regarding the Trust's activities during the quarter. The
First Quarter 2008 Supplemental Information is available on our investor
website at

    Teleconference on First Quarter 2008 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 first quarter financial results and provide a corporate
update. Presentation materials will be made available on our investor website
at prior to the call.

    Participation & Registration: Please RSVP to Investor Relations at
403-206-6758 or by email to

    Teleconference: The telephone numbers for the conference are: (416)
644-3414 (within Toronto) or toll-free (800) 733-7560 (outside Toronto).

    Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting
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

    Replay: An audio recording of the teleconference will be available from
1:00 pm ET on Wednesday, May 14, 2008 until 11:59 pm ET on Wednesday, May 21,
2008. You can access it by dialling 416-640-1917 and using the passcode
21265024 followed by the pound (number) sign. An audio archive will also be
available on our website ( 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 36,480 units totalling approximately 40 million net
rentable square feet, and is Canada's largest owner/operator of multi-family
rental communities. Boardwalk REIT's portfolio is concentrated in the
provinces of Alberta, British Columbia, Saskatchewan, Ontario and Quebec.

    (1) Funds From Operations ("FFO") is a generally accepted measure of
        operating performance of real estate investment trusts and companies;
        however, it is a non-GAAP measure. 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 expenses 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.


    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 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

    As at                                              March 31, December 31,
                                                           2008         2007
                                                     (Unaudited)    (Audited)


    Revenue producing properties (NOTE 4)           $ 2,138,794  $ 2,149,853
    Other assets (NOTE 5)                                16,503       15,776
    Mortgages and accounts receivable                    10,067       10,071
    Segregated tenants' security deposits                13,309       12,935
    Cash and cash equivalents                            91,675          960
    Discontinued operations (NOTE 6)                      7,577        6,293
                                                    $ 2,277,925  $ 2,195,888


    Mortgages payable                               $ 1,892,239  $ 1,770,015
    Debentures (NOTE 7)                                 118,844      118,768
    Accounts payable and accrued liabilities             44,983       48,279
    Refundable tenants' security deposits and other      16,591       16,186
                                                      2,072,657    1,953,248
    Future income taxes (NOTES 3 and 11)                102,668      100,287
                                                      2,175,325    2,053,535

    Unitholders' Equity

    Unitholders' equity                                 102,600      142,353
                                                    $ 2,277,925  $ 2,195,888

    Commitments and contingencies (NOTE 14)



                                                       3 months     3 months
                                                          ended        ended
                                                       March 31,    March 31,
                                                           2008         2007
                                                     (Unaudited)  (Unaudited)
      Rental income                                 $   102,209  $    87,570
      Revenue producing properties:
        Operating expenses                               18,559       15,541
        Utilities                                        16,724       13,862
        Utility rebate (NOTE 14)                         (1,258)        (925)
        Property taxes                                    7,679        8,068
      Administration                                      5,754        5,291
      Financing costs                                    25,595       21,669
      Deferred financing costs amortization               1,468        1,279
      Amortization of capital assets                     19,999       18,136
      Amortization of intangibles                         1,939        1,198
                                                         96,459       84,119

    Earnings from continuing operations
     before income taxes                                  5,750        3,451
      Current income taxes                                    4            -
      Future income taxes (recovery) (NOTE 11)            2,381         (232)
    Earnings from continuing operations                   3,365        3,683

    Earnings (loss) from discontinued operations,
     net of tax (NOTE 6)                                  2,267          (52)
    Net earnings                                          5,632        3,631

    Other comprehensive income                                -            -

    Comprehensive income                            $     5,632  $     3,631

    Basic earnings per unit (NOTE 10)
      - from continuing operations                  $      0.06  $      0.06
      - from discontinued operations                       0.04         0.00
    Basic earnings per unit                         $      0.10  $      0.06

    Diluted earnings per unit (NOTE 10)
      - from continuing operations                  $      0.06  $      0.06
      - from discontinued operations                       0.04         0.00
    Diluted earnings per unit                       $      0.10  $      0.06



                                                       3 months     3 months
                                                          ended        ended
                                                       March 31,    March 31,
                                                           2008         2007
                                                     (Unaudited)  (Unaudited)

    Trust units (NOTE 9)
    Balance, beginning of period                    $   338,084  $   365,744
    Units issued under equity financing,
     net of issue costs                                       -         (136)
    Units issued under distribution
     reinvestment plan                                    2,121        2,450
    Deferred unit plan (NOTE 8)                             461          630
    Unit purchased and cancelled (NOTE 9)               (23,009)           -
    Balance, end of period                          $   317,657  $   368,688

    Cumulative earnings
    Balance, beginning of period                    $    95,591  $   154,917
    Net earnings for the period                           5,632        3,631
    Balance, end of period                          $   101,223  $   158,548

    Accumulated other comprehensive income
    Balance, beginning of period                    $         -  $         -
    Other comprehensive income for the period                 -            -
    Balance, end of period                          $         -  $         -

    Cumulative distributions to unitholders
    Balance, beginning of period                    $  (291,322) $  (201,794)
    Distributions declared to unitholders (NOTE 10)     (24,958)     (20,861)
    Balance, end of period                          $  (316,280) $  (222,655)

    Total unitholders' equity                       $   102,600  $   304,581

    Units issued and outstanding                     55,144,852   56,411,163



                                                       3 months     3 months
                                                          ended        ended
                                                       March 31,    March 31,
                                                           2008         2007
                                                     (Unaudited)  (Unaudited)

    Operating activities
      Net earnings                                  $     5,632  $     3,631
      Loss (earnings) from discontinued
       operations, net of tax                            (2,267)          52
      Future income taxes (recovery)                      2,381         (232)
      Amortization of capital assets                     19,999       18,136
      Amortization of intangibles                         1,939        1,198
      Amortization of deferred financing costs            1,468        1,279
                                                         29,152       24,064
      Cash from discontinued operations                       -          (28)
      Net change in operating working capital            (5,273)        (155)
      Total operating cash flows                         23,879       23,881

    Financing activities
      Issue of trust units (net of issue costs)
       (NOTE 9)                                           2,121        2,313
      Distributions paid                                (25,012)     (20,854)
      Unit repurchase program (NOTE 9)                  (23,009)           -
      Financing of revenue producing properties         209,387      246,140
      Repayment and maturity of debt on revenue
       producing properties                             (81,362)    (109,701)
      Deferred financing costs incurred                  (7,022)      (5,175)
                                                         75,103      112,723
    Investing activities
      Purchases of revenue producing properties
       (NOTE 4)                                               -     (160,191)
      Improvements to properties                        (16,325)     (14,370)
      Net cash proceeds from sale of properties
       (NOTE 4)                                           8,381            -
      Additions to corporate technology assets             (323)        (335)
                                                         (8,267)    (174,896)
    Net increase (decrease) in cash and cash
     equivalents balance                                 90,715      (38,292)

    Cash and cash equivalents (bank indebtedness),
     beginning of period                                    960       (4,042)

    Cash and cash equivalents (bank indebtedness),
     end of period                                  $    91,675  $   (42,334)

    Supplementary cash flow information:
    Taxes paid                                      $         4  $         -
    Interest paid                                   $    26,542  $    21,064

    Net change in operating working capital:
    Net change in mortgages and accounts receivable $         4  $      (666)
    Net change in other assets                           (2,012)        (829)
    Net change in tenants' security deposits                 31          189
    Net change in accounts payable and accrued
     liabilities                                         (3,296)       1,151
                                                    $    (5,273) $      (155)


    Three months ended March 31, 2008


        Boardwalk Real Estate Investment Trust ("Boardwalk REIT" or the
        "Trust") is an unincorporated, open-ended real estate investment
        trust created pursuant to the Declaration of Trust, dated January 9,
        2004 and as amended and restated on May 3, 2004, May 10, 2006 and May
        10, 2007, under the laws of the Province of Alberta. Boardwalk REIT
        was created to invest in revenue producing multi-family residential
        properties or interests within Canada, initially through the
        acquisition of operations of Boardwalk Equities Inc. (the
        "Corporation"), which was acquired on May 3, 2004.


        These unaudited interim consolidated financial statements have been
        prepared in accordance with the recommendations of the handbook of
        the Canadian Institute of Chartered Accountants ("CICA Handbook") and
        are consistent with those used in the audited consolidated financial
        statements as at and for the year ended December 31, 2007, except as
        disclosed in Note 3 below. These interim financial statements do not
        include all of the disclosures required by Canadian generally
        accepted accounting principles ("Canadian GAAP") applicable to annual
        financial statements and, therefore, they should be read in
        conjunction with the audited consolidated financial statements.

        The preparation of financial statements in accordance with Canadian
        GAAP requires management to make estimates and assumptions that
        affect the reported amounts of assets and liabilities, and to make
        disclosure of contingent assets and liabilities at the date of the
        financial statements, and the reported amounts of revenues and
        expenses during the reporting period. Actual results may differ from
        those estimates.

        Due to seasonality, the operating results for the three months ended
        March 31, 2008 are not necessarily indicative of the results that may
        be expected for the full year ending December 31, 2008 due to
        seasonal variations in utility costs and other factors. Historically,
        Boardwalk REIT has experienced higher utility expenses in the first
        quarter as a result of the winter months, resulting in variations in
        the quarterly results.

        Certain comparative figures have been reclassified to conform to the
        presentation of the current period, or as a result of accounting


        On January 1, 2008, the Trust adopted four new accounting standards
        issued by the CICA as outlined below:

        a) Section 1535 - Capital Disclosures

        b) Section 3031 - Inventories

        c) Section 3862 - Financial Instruments - Disclosure

        d) Section 3863 - Financial Instruments - Presentation

        Section 1535 - Capital Disclosures requires the disclosure of both
        qualitative and quantitative information, which allows the users of
        financial statements to evaluate the entity's objective, policies and
        processes for managing capital.

        Section 3031 - Inventories, which replaced Section 3030 -
        Inventories, provides guidelines on the measurement and costing of
        inventories, as well as allows for the reversal of inventory values
        previously written-down. This new section also enhances disclosure
        requirements for inventory to include accounting policies and
        carrying amounts used to value inventory, inventory amounts
        recognized as an expense and disclosure of any write-downs or the
        reversal of any inventory write-downs previously recorded.

        Section 3862 - Financial Instruments-Disclosure and Section 3863 -
        Financial Instruments-Presentation, which replaced Section 3861 -
        Financial Instruments Presentation and Disclosure, revises and
        enhances the disclosure requirements for financial instruments and
        carry forward unchanged the presentation requirements for financial
        instruments. Section 3862 requires entities to provide disclosures in
        their financial statements which allow the users to evaluate both the
        significance of financial instruments for the entity's financial
        position and performance; and the nature and extent of risks arising
        from financial instruments to which the entity is exposed during the
        period and at the balance sheet date, and how the entity manages
        those risks. The purpose of Section 3863 is to enhance financial
        statement users' understanding of the significance of financial
        instruments to an entity's financial position, performance and cash

        Impact of Adoption of Sections 1535, 3031, 3862 and 3863

        Our consolidated financial statements include additional disclosures
        on capital management (NOTE 12) and financial instruments (NOTE 13).

        There was no material impact to the consolidated financial statements
        on adoption of Section 3031 by the Trust.

        Bill C-52

        On June 22, 2007, Bill C-52 received Royal Assent in Canada. As a
        result of this, under Canadian GAAP, once a bill is enacted, it is a
        requirement to record the income tax implications effective on that
        date. In accordance with Bill C-52, the assumption being made is
        that, effective January 1, 2011, Boardwalk REIT will no longer
        qualify as a Real Estate Investment Trust ("REIT") in accordance with
        the definition contained in that legislation, and will remain within
        certain "normal growth" limits such that it will be subject to income
        tax pursuant to this new legislation.

        Impact of Bill C-52

        The impact of our interpretation of Bill C-52 on Boardwalk REIT was
        that, based on a detailed review of the legislation, at this time it
        may be interpreted that the Trust does not qualify as a REIT, which
        would be exempt from the specified investment flow-through ("SIFT")
        rules, and as such has recorded an estimate of its the future income
        tax liability at December 31, 2007 based on it being subject to the
        tax prescribed by the SIFT rules on January 1, 2011. The result is
        that the Trust recorded a future income tax liability at December 31,
        2007 of $99.9 million, which was revised upward by $2.8 million to
        $102.7 million at March 31, 2008. At a future time, once it has been
        deemed that the Trust would be in compliance with the SIFT rules, the
        amount of the adjustment will be reversed. Although the adjustment to
        earnings and cumulative earnings at March 31, 2008 is significant, it
        is not large enough to affect any existing debt covenants currently
        in place, including those stipulated for Boardwalk REIT's unsecured
        debentures. At this time, it is the belief of the Trust that it will
        be in compliance with the existing and or amended legislation prior
        to the effective date of January 1, 2011.

        At March 31, 2008, the technical amendments announced in late
        December 2007 had not received Royal Assent. However, if these
        amendments receive Royal Assent, as was the case with Bill C-52, it
        is believed that Boardwalk REIT would qualify as a REIT and will
        reverse the future income tax liability reported in these financial

        Hedging Relationships

        During the three months ended March 31, 2008, the Trust entered into
        a forward bond transaction with a major Canadian financial
        institution. In total, the transaction, which comprised of bond
        forward contracts on specific mortgages set to mature in 2008, was
        for $101.6 million with a weighted average term and interest rate of
        7.2 years and 3.63%, respectively. Subsequent to entering into this
        transaction, the Trust initiated changes to the terms of one of the
        contracts in the transaction and negotiated a settlement amount of
        $100,000 related to the changes. The contract was assessed to be
        ineffective and the settlement amount of $100,000 has been included
        in financing costs. The balance of the remaining contracts in the
        transaction have been assessed as effective.

        During the three months ended March 31, 2008, the Trust entered into
        an interest rate swap agreement on the mortgages of specific
        properties within its portfolio in an effort to hedge the variability
        in cash flows attributed to fluctuating interest rates. These
        interest rate swap agreements were designated as cash flow hedges on
        March 11, 2008. The effective date of the hedge is May 1, 2008 and
        will continue to be designated as such until May 1, 2015. Settlements
        on both the fixed and variable portion of the interest rate swap will
        occur on a monthly basis. The fixed interest rate is 4.15%, plus a
        stamping fee, while the total amount of the mortgage debt subject to
        the interest rate swap is $91.5 million. Hedge accounting will be
        applied to these agreements in accordance with CICA Handbook section

        The Trust has assumed that there is no ineffectiveness in the hedge
        of its interest rate exposure. The effectiveness of the hedging
        relationship will be reviewed on a quarterly basis and measured at
        fair value. The portion of the gain or loss on the swap transaction
        that is determined to be an effective hedge will be recognized in
        other comprehensive income ("OCI"). The ineffective portion of the
        gain or loss on the swap transaction will be recognized immediately
        in net earnings. On recognition of the financial liability of the
        hedged item on the balance sheet, the associated gains or losses that
        were recognized in OCI will be reclassified into net earnings in the
        same period or periods during which the interest payments of the
        hedged item affected net earnings. However, if all or a portion of
        the net loss recognized in OCI will not be recovered in one or more
        future periods, the amount not expected to be recovered will be
        immediately reclassified into net earnings.

        Future Changes in Significant Accounting Policies

        Boardwalk REIT monitored the recently issued CICA accounting
        pronouncements to assess the applicability and impact, if any, of
        these new pronouncements on our consolidated financial statements and
        note disclosures. The CICA issued one new accounting standard that is
        effective for the Trust's fiscal year commencing January 1, 2009:

        a) Section 3064 - Goodwill and Intangible Assets

        Section 3064 - Goodwill and Intangible Assets, which replaces Section
        3062 - Goodwill and Other Intangible Assets and Section 3450 -
        Research and Development Costs, establishes standards for the
        recognition, measurement, presentation and disclosure of goodwill
        subsequent to its initial recognition and of intangible assets by
        profit-oriented enterprises. Standards concerning goodwill remain
        unchanged from the standards included in the previous Section 3062.
        The new section will be applicable to financial statements relating
        to fiscal years beginning on or after October 1, 2008.

        The new accounting pronouncement is not expected to have any material
        impact to the consolidated financial statements on adoption.



                                                       3 months     3 months
                                                          ended        ended
                                                       March 31,    March 31,
                                                           2008         2007

        Cash paid                                   $         -  $   160,191
        Debt assumed                                          -       31,209

        Total purchase price                                  -      191,400
        Fair value adjustments to debt                        -          376

        Book value                                  $         -  $   191,776

        Allocation of book value to revenue
         producing properties                       $         -      185,949
        Allocation of book value to other assets    $         -        5,827

                                                    $         -  $   191,776

        Multi-family units acquired                           -        1,543


                                                       3 months     3 months
                                                          ended        ended
                                                       March 31,    March 31,
                                                           2008         2007

        Cash received                               $     8,381  $         -
        Cost of dispositions                                  -            -

        Total proceeds                                    8,381            -
        Net book value                                    6,114            -

        Gain on dispositions                        $     2,267  $         -

        Multi-family units sold                              24            -

        Included in dispositions are the sales and closings of 24 units in a
        90-unit property located in Calgary, Alberta that is being developed
        into condominium units for sale (see NOTE 6). Under the percentage of
        completion method, sales of $8.4 million for the three months ended
        March 31, 2008 were recorded against cost of sales of $6.1 million.


        As at                                          March 31, December 31,
                                                           2008         2007

        Corporate technology assets
         (net of accumulated amortization)          $     3,138  $     3,100
        Head office building
         (net of accumulated amortization)                2,421        2,307
        Deposits on potential property acquisitions         250            -
        Prepaid parts and supplies                        2,701        2,791
        In-place lease and customer relationship
         intangibles (net of accumulated
         amortization)                                    1,747        3,686
        Prepaid property taxes                            3,143        1,312
        Prepaid and other                                 3,103        2,580
                                                    $    16,503  $    15,776


        During the end of the third quarter of 2006, a revenue producing
        property consisting of 90 units in Calgary was classified as
        discontinued operations as a result of the Trust initiating an active
        program to dispose of this property. This property is being
        developed into condominium units for sale at a price that is
        reasonable in relation to its current fair value (See NOTE 4). This
        Calgary property formed part of our Alberta segment in our segmented
        information disclosure.

        During the first quarter of 2007, the Trust acquired a property in
        Edmonton, Alberta, consisting of two buildings totalling
        51 apartments. Prior to the closing of the acquisition, the Trust
        received an unsolicited offer to sell this property to an unrelated
        third party, which the Trust accepted. This property was, therefore,
        classified as discontinued operations upon acquisition.

        The following tables set forth the results of operations as well as
        the assets and liabilities associated with the discontinued

                                                      3 months      3 months
                                                         ended         ended
                                                      March 31,     March 31,
                                                          2008          2007

          Rental income                            $         -   $       188

          Revenue producing properties:
            Operating expenses                               -            87
            Utilities                                        -            45
            Utility rebate                                   -            (5)
            Property taxes                                   -            23
          Administration                                     -            53
          Financing costs                                    -            13
          Amortization of capital assets                     -            24
                                                             -           240

                                                             -           (52)
          Gain on dispositions                           2,267             -

        Earnings (loss) from
         discontinued operations                   $     2,267   $       (52)

                                                      March 31,  December 31,
                                                          2008          2007
        Discontinued Assets
          Properties held for
           redevelopment and sale                  $     7,577   $     6,293


        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 were used to fund acquisitions, repay operating lines of
        credit and for general trust purposes. In conjunction with the
        debenture issue, the Trust also entered into a bond forward contract
        to hedge the risk of interest rate fluctuations prior to the final
        pricing of the debenture. The bond forward contract was settled when
        the debentures were issued for the settlement amount of $0.7 million.
        The settlement amount will be amortized over the term of the
        unsecured debentures. At March 31, 2008 the Trust was in compliance
        with all the covenants reported in the debenture, the covenants are
        discussed in NOTE 13(c).


        During 2006, the Trust implemented a deferred unit plan. The plan
        entitles trustees and officers, at the participant's option, to
        receive deferred units in consideration for trustee fees or executive
        bonuses, respectively, with the Trust matching the number of units
        received. The deferred units vest 50% on the third anniversary and
        25% on each of the fourth and fifth anniversaries, subject to
        provisions for earlier vesting in certain events. The deferred units
        earn additional deferred units for the distributions that would
        otherwise have been paid on the deferred units (i.e., had they
        instead been issued as Trust Units on the date of grant). Once
        vested, participants are entitled, at their option, to receive an
        equivalent number of Trust Units or the equivalent value in cash of
        the vested deferred units and the corresponding additional deferred
        units. The deferred unit plan was approved by unitholders on May 10,
        2006. The deferred units had a weighted average fair value of
        $38.87 per unit at the grant dates in 2008 (2007 - $45.87; 2006 -
        $25.48). For the quarter ended March 31, 2008, total compensation
        costs of $0.5 million (2007 - $0.6 million) were recognized in income
        related to employee awards under the deferred unit plan.

        The status of the outstanding deferred units is as follows:

        Summary of Deferred Unit Plan              Outstanding        Vested

        December 31, 2006                               73,746             -

        Deferred units granted                          51,722             -
        Additional deferred units
         earned on unvested units                        3,487             -
        Deferred units cancelled                       (10,478)            -

        December 31, 2007                              118,477             -

        Deferred units granted                          24,781             -
        Additional deferred units
         earned on unvested units                        1,548             -

        March 31, 2008                                 144,806             -


        The Plan of Arrangement (the "Arrangement") to convert Boardwalk
        Equities Inc. from a share corporation to a real estate investment
        trust was completed on May 3, 2004. Under the Arrangement, the former
        shareholders of Boardwalk Equities Inc. received Boardwalk REIT units
        or Class B Limited Partnership ("LP Class B") units of a controlled
        limited partnership of the Trust, Boardwalk REIT Limited Partnership.

        The LP Class B units are non-transferable, except under certain
        circumstances, but are exchangeable, on a one-for-one basis, into
        Boardwalk REIT units at any time at the option of the holder. Prior
        to such exchange, distributions will be made on the exchangeable
        units in an amount equivalent to the distributions which would have
        been made had the units of Boardwalk REIT been issued. Each LP
        Class B unit was accompanied by a Special Voting unit, which will
        entitle the holder to receive notice of, attend and vote at all
        meetings of unitholders. There is no value assigned to the Special
        Voting units. The LP Class B units issued are included in the
        unitholders' capital contributions on the balance sheet. The changes
        in unitholders' capital contribution are as follows:

        Summary of Unitholders' Capital
         Contributions                                   Units        Amount

        December 31, 2006                           56,351,783   $   365,744

        Units issued under distribution
         reinvestment plan                             205,185         8,917
        Issue costs                                          -          (151)
        Deferred unit plan                                   -         1,750
        Units issued for vested deferred
         units (NOTE 8)                                  8,413           400
        Units purchased and cancelled (NOTE 8)        (856,447)      (38,576)

        December 31, 2007                           55,708,934   $   338,084

        Units issued under distribution
         reinvestment plan                              56,718         2,121
        Deferred unit plan (NOTE 8)                          -           461
        Units purchased and cancelled                 (620,800)      (23,009)

        March 31, 2008                              55,144,852   $   317,657

        In August of 2007 Boardwalk REIT filed an application for a normal
        course issuer bid (the "Bid"), which received regulatory approval
        from the Toronto Stock Exchange on August 10, 2007. The Bid allows
        Boardwalk REIT to purchase and cancel up to 4,267,048 trust units,
        representing 10% of the public float of its trust units at the time
        of the TSX approval. The Bid will terminate on the earlier of one
        year from the date of commencement of the Bid on August 17, 2007 or
        at such time as purchases under the Bid are complete.

        Under the Bid, the Trust has purchased and cancelled 620,800 REIT
        units in the first quarter of 2008, representing a total market value
        of approximately $23.0 million, or an average of $37.06 per trust

        The Declaration of Trust authorizes Boardwalk REIT to issue an
        unlimited number of units for the consideration and on terms and
        conditions established by the Trustees without the approval of any
        unitholders. The interests in Boardwalk REIT are represented by two
        classes of units: a class described and designated as "REIT Units"
        and a class described and designated as "Special Voting Units". The
        beneficial interest of the two classes of units is as follows:

        (a) REIT Units

        REIT Units represent an undivided beneficial interest in Boardwalk
        REIT and in distributions made by Boardwalk REIT. The REIT Units are
        freely transferable, subject to applicable securities regulatory
        requirements. Each REIT Unit entitles the holder to one vote at all
        meetings of unitholders. Except as set out under the redemption
        rights below, the REIT Units have no conversion, retraction,
        redemption or pre-emptive rights.

        REIT Units are redeemable at any time, in whole or in part, on demand
        by the holders. Upon receipt by Boardwalk REIT of a written
        redemption notice and other documents that may be required, all
        rights to and under the REIT Units tendered for redemption shall be
        surrendered and the holder shall be entitled to receive a price per
        REIT Unit equal to the lesser of:

        i)  90% of the "market price" of the REIT Units on the principal
            market on which the REIT Units are quoted for trading during the
            twenty - day period ending on the trading day prior to the day on
            which the REIT Units were surrendered to Boardwalk REIT for
            redemption; and

        ii) 100% of the "closing market price" of the REIT Units on the
            principal market on which the REIT Units are quoted for trading
            on the redemption date.

        (b) Special Voting Units

        The Declaration of Trust provides for the issuance of an unlimited
        number of Special Voting Units that will be used to provide voting
        rights to holders of LP Class B units or other securities that are,
        directly or indirectly, exchangeable for REIT Units.

        Each Special Voting Unit entitles the holder to the number of votes
        at any meeting of unitholders, which is equal to the number of REIT
        Units that may be obtained upon surrender of the LP Class B unit to
        which the Special Voting Unit relates. The Special Voting Units do
        not entitle or give any rights to the holders to receive
        distributions or any amount upon liquidation, dissolution or winding-
        up of Boardwalk REIT.

        The breakdown of trust units of Boardwalk REIT by class is as

                                                         Units        Amount
        Boardwalk REIT Units                        50,669,852
        Special Voting Units issued to holders
         of LP Class B units                         4,475,000
        Total trust units                           55,144,852   $   317,657


        Distributable income per unit

        Boardwalk REIT makes distributions to unitholders on a monthly basis
        on or about the 15th day of the following month. The reported
        distributable income is defined under the Trust's Declaration of
        Trust ("DOT"). Under the DOT, as amended and restated, the Trust is
        required to distribute, at a minimum, its reported taxable income.
        The reconciliation of distributable income and per unit information
        begins with total operating cash flows calculated in accordance with
        Canadian generally accepted accounting principles and as defined in
        the Declaration of Trust for Boardwalk REIT. However, distributable
        income and the per unit information are non-GAAP measures that do not
        have any standardized meaning prescribed by Canadian GAAP and they
        are, therefore, unlikely to be comparable to similar measures
        presented by other real estate companies and trusts.

                                                      3 months      3 months
                                                         ended         ended
                                                      March 31,     March 31,
                                                          2008          2007

        Total operating cash flows                 $    23,879   $    23,881
        Net change in operating working capital          5,273           155

          Deferred financing costs
           amortization post May 2, 2004                  (731)         (326)
          Amortization of net premium on long-term
           debt assumed after  May 2, 2004                (124)          (89)

        Distributable income                       $    28,297   $    23,621
        Distributions declared to unitholders      $    24,958   $    20,861
        Distributable income withheld              $     3,339   $     2,760
                                                   $    28,297   $    23,621

        Weighted average units outstanding -
         basic and diluted                          55,424,413    56,387,144

        Distributable income earned per unit       $     0.511   $     0.419
        Actual distributions declared per unit     $     0.450   $     0.370

        Earnings per unit

                                                      3 months      3 months
                                                         ended         ended
                                                      March 31,     March 31,
                                                          2008          2007
          Earnings from continuing operations      $     3,365   $     3,683
          Earnings (loss) from discontinued
           operations                              $     2,267   $       (52)
          Denominator for basic earnings per unit
           - weighted average units                 55,424,413    56,387,144
          Denominator for diluted earnings per
           unit adjusted for weighted average
           units and assumed conversion             55,424,413    56,387,144
        Earnings per unit from continuing
          Basic                                    $      0.06   $      0.06
          Diluted                                  $      0.06   $      0.06

        Earnings per unit from discontinued
          Basic                                    $      0.04   $      0.00
          Diluted                                  $      0.04   $      0.00


        Boardwalk REIT is a "mutual fund trust" as defined under the Income
        Tax Act (Canada) and, accordingly, is not taxable on its income to
        the extent that its income is distributed to its unitholders. This
        exemption does not extend to the corporate subsidiaries of Boardwalk
        REIT that are subject to income tax. On June 22, 2007, Bill C-52
        received royal assent (see Note 3 for further details). As such, the
        Trust, to be in compliance with Canadian GAAP, was required to
        estimate what the impact of the reported tax amount would be on
        January 1, 2011. This estimate is reviewed quarterly and adjusted, if

                                                      3 months      3 months
                                                         ended         ended
                                                      March 31,     March 31,
                                                          2008          2007

        Continuing operations                      $     2,381   $      (232)

        Total future income taxes (recovery)       $     2,381   $      (232)
        Future income taxes (recovery)
         consist of the following:

                                                      3 months      3 months
                                                         ended         ended
                                                      March 31,     March 31,
                                                          2008          2007

        Tax expense based on expected rate         $        60   $       109
        Adjustment to future income
         tax liabilities                                 2,321          (341)
        Future income taxes (recovery)             $     2,381   $      (232)
        The future income tax liability
         is calculated as follows:

        As at                                         March 31,  December 31,
                                                          2008          2007

        Tax asset (liability) related
         to operating losses                       $       334   $       (90)
        Tax liability related to differences
         in tax and book basis                        (103,002)     (100,197)
        Future income tax liability                $  (102,668)  $  (100,287)


        The Trust defines capital resources as the aggregate of unitholders'
        equity, debt (both secured and unsecured), internally generated funds
        and cash on hand. The Trust's capital management framework is
        designed to maintain a level of capital that allows it to implement
        its business strategy while complying with investment and debt
        restrictions pursuant to Boardwalk's DOT as well as existing debt
        covenants while continuing to build long-term Unitholder value. The
        main components of the Trust's capital allocation are approved by its
        unitholders as stipulated in the Trust's DOT and on a regular basis
        by its Board of Trustees ("Board") through their annual review of the
        Trust's strategic plan and budget, supplemented by periodic Board and
        Board Committee meetings. Capital adequacy is monitored by the Trust
        by assessing performance against the approved annual plan throughout
        the year, which is updated accordingly, and by monitoring adherence
        to investment and debt restrictions contained in the DOT and debt
        covenants. Boardwalk REIT's DOT provides for maximum total debt
        levels up to 70% of Gross Book Value ("GBV") as defined in the DOT as
        total assets plus accumulated amortization of income properties as
        recorded by the Trust (and calculated in accordance with GAAP) and to
        this amount an additional amount of $231 million ("Bump") is added as
        was previously approved by the Trust's Unitholders. As a matter of
        internal policy the Trust has a target of total debt levels not to
        exceed 65% of GBV, however, subsequent to the current quarter ended
        the Trust has requested its Unitholders to vote and approve an
        additional bump to its existing GBV (see NOTE 17). The following
        table highlights Boardwalk REIT's existing leverage ratio:

        As at                                         March 31,  December 31,
                                                          2008          2007


        Total assets                               $ 2,277,925   $ 2,195,888
        Amortization                                   533,123       513,514
        Exchange value bump                            231,460       231,460
                                                   $ 3,042,508   $ 2,940,862
        Mortgages payable                          $ 1,892,239   $ 1,770,015
        Unsecured debentures                           118,844       118,768
        Adjustment to debt                               8,005        10,560
                                                   $ 2,019,088   $ 1,899,343
        Adjusted Debt-to-GBV                               66%           65%

        With a DOT limit not to exceed 70% on Adjusted Debt-to-Gross Book
        Value, Boardwalk REIT has the ability to add additional leverage on
        its existing portfolio. Additionally, the Trust's DOT contains
        provisions that have the effect of limiting capital expended by the

        As outlined in NOTE 13(d), both the debenture agreement and the
        credit facility agreement contain financial covenants.

        Boardwalk REIT's available capital is comprised of long-term fixed
        rate debt (both secured and unsecured), unitholders' capital and
        drawings under lines of credit and totalled $2.3 billion as at March
        31, 2008 (December 31, 2007 - $2.3 billion). As at March 31, 2008,
        the Trust was in compliance with all covenants in both its DOT and
        all existing debt facilities.


        Fair Value of Financial Instruments

        The Trust's financial instruments consist of mortgages and accounts
        receivable, tenants' security deposits, cash or bank indebtedness,
        mortgages payable, debentures and accounts payable and accrued
        liabilities. All of the Trust's financial instruments were classified
        as either held for trading (cash), loans and receivables (carried at
        amortized cost) or other financial liabilities (carried at amortized
        cost using the effective interest rate method). The fair values of
        the Trust's financial instruments were determined as follows:

          i)  The carrying amounts of mortgages and accounts receivable,
              tenants' security deposits, cash or bank indebtedness and
              accounts payable and accrued liabilities approximate their fair
              values due to their short-term nature.

          ii) The fair values of the Trust's mortgages payable and debentures
              are estimates made at a specific point in time, based on
              relevant market information. These estimates are based on
              quoted market prices for the same or similar issues or on the
              current rates offered to the Trust for similar financial
              instruments subject to similar risks and maturities. These
              estimates are subjective in nature and involve uncertainties
              and matters of significant judgement and therefore cannot be
              determined with precision. Changes in estimates could
              significantly affect fair values. The significant financial
              instruments of Boardwalk REIT and their carrying values as at
              March 31, 2008 are as follow:

        As at                                                       March 31,
        Mortgages and accounts receivable
          Carrying value                                         $    10,067
          Fair market value                                      $    10,067
        Mortgages payable and debentures
          Carrying value                                         $ 2,011,083
          Fair market value                                      $ 2,060,062

        At January 1, 2008 and for the three months ended March 31, 2008, the
        Trust had no embedded derivatives requiring separate recognition.

        The nature of these financial instruments and the Trust's operations
        expose the Trust to certain principal financial risks. The main
        objective of the Trust's risk management process is to properly
        identify financial risks and minimize the exposure to potential
        losses arising from those risks. The principal financial risks to
        which the Trust is exposed are described below.

        Risk Management

        a)  Interest rate risk

        The Trust is exposed to interest rate risk as a result of its
        mortgages payable, debentures and credit facilities, however this
        risk is minimized through the Trust's current strategy of having the
        majority of its mortgage payable and debentures in fixed terms
        arrangements. As such, the Trust's cashflows are not significantly
        impacted by a change in market interest rates. In addition, the Trust
        structures its financings so as to stagger the maturities of its
        debt, thereby minimizing the Trust's exposure to interest rates in
        any one year. The majority of the Trust's mortgages are also insured
        by CMHC under the NHA mortgage program. This added level of insurance
        offered to lenders allows the Trust to receive the best possible
        financing and interest rates, and significantly reduces the potential
        for a lender to call a loan prematurely. In addition, management is
        constantly reviewing its credit facility (floating-rate debt) and, if
        market conditions warrant, the Trust has the ability to convert its
        existing floating-rate debt to fixed rate debt.

        As at March 31, 2008, the Trust had zero credit facility debt
        outstanding and as such of the Trust's total debt at March 31, 2008,
        100% is fixed-rate debt and 0% is floating-rate debt. For the three
        months ended March 31, 2008, all else being equal, the increase or
        decrease in net earnings for each 1% change in interest rates amounts
        to $0.

        b)  Credit risk

        The Trust is exposed to credit risk as a result of its mortgages and
        accounts receivable. This balance is comprised of mortgage holdbacks
        and refundable mortgage fees, accounts receivable from significant
        customers and tenant receivables. As at March 31, 2008, no balance
        relating to mortgage holdbacks, refundable mortgage fees or accounts
        receivable from significant customers was past due.

        In relation to mortgage holdbacks and refundable mortgage fees, the
        Trust's exposure to credit risk is low given the nature of these
        balances. These funds will be advanced when the Trust has met the
        conditions pursuant to the mortgage agreement (in the case of the
        mortgage holdback) or when financing is completed (in the case of
        refundable mortgage fees), both of which are expected to occur.

        Similar to mortgage holdbacks and refundable mortgage fees, the Trust
        assesses the credit risk on accounts receivable to be low due to the
        assured collection of these balances. The majority of the balance
        relates to money owing from an energy provider as a result of the
        Alberta government natural gas rebate program and the Trust's revenue
        sharing initiatives. Given the Trust's collection history and the
        nature of these customers, credit risk is assessed as low. An amount
        was owing pursuant to the unit sales (see NOTE 4) all of which was
        collected subsequent to March 31, 2008. Additionally, an amount is
        owed by insurance companies in relation to current outstanding
        claims. In all circumstances, the insurance deductible has been paid
        and amounts incurred and owing for reimbursement are due to an
        insurable event. Recoverability may differ from the amount owing
        solely due to discrepancies between the Trust and the insurance
        provider regarding the value of replacement costs. The remainder of
        the balance relates to a property tax adjustment which was collected
        subsequent to March 31, 2008.

        With tenant receivables, credit risk arises from the possibility that
        tenants may experience financial difficulty and be unable to fulfill
        their lease term commitments. The maximum exposure to credit risk is
        equal to the carrying value of the financial assets.

        As stated above, the carrying amount of tenant receivables reflects
        management's assessment of the credit risk associated with its
        tenants; however, the Trust mitigates this risk of credit loss by
        geographically diversifying its existing portfolio, by limiting its
        exposure to any one tenant and by conducting thorough credit checks
        with respect to all new rental leasing arrangements. In addition,
        where legislation allows, the Trust obtains a security deposit from a
        tenant to assist in the recovery of monies owed to the Trust.

        Past due receivables are reviewed by management on a monthly basis
        and tenant receivables are considered for impairment on a case-by-
        case basis. The Trust takes into consideration the tenant's payment
        history, their credit worthiness and the current economic environment
        however tenant receivable balances exceeding 60 days are typically
        written off to bad debt expense as the Trust does not utilize an
        allowance for doubtful accounts. The amount of the loss is recognized
        in the consolidated statement of earnings and comprehensive income
        within operating expenses. Subsequent recoveries of amounts
        previously written off are credited against operating expenses during
        the period of settlement. As tenant receivables are typically written
        off after 60 days, none of the balance is considered to be past due
        by the Trust.

        c)  Liquidity risk

        Liquidity risk is the risk that the Trust will not be able to meet
        its financial obligations as they become due. The Trust maintains
        what it believes to be a conservatively leveraged balance sheet and
        can finance any future growth through one or a combination of
        internally generated cash flows, borrowing under existing credit
        facility, the issuance of debt or the issuance of equity, according
        to its capital management objectives. In addition, the Trust
        structures its financings so as to stagger the maturities of its
        debt, thereby minimizing the Trust's exposure to liquidity risk in
        any one year. In addition, cash flow projections are completed on a
        regular basis to ensure the Trust has sufficient cash flows to make
        its monthly distributions to its Unitholders. Given the Trust's
        currently available liquid resources (from both financial assets and
        on-going operations) as compared to its contractual obligations,
        management assesses the Trust's liquidity risk to be low.

        d)  Debt covenants

        As outlined in its mortgages payable agreements, the Trust is
        required to make equal monthly payments of principal and interest
        based on the respective amortization period. Additionally, the Trust
        must ensure that all property taxes have been paid in full when they
        become due and that no arrears exist.

        CMHC provides mortgage loan insurance in connection with mortgages
        made to Boardwalk REIT. In an agreement dated September 13, 2002 and
        as amended and restated on January 19, 2005 and April 25, 2006, the
        Trust agreed to provide certain financial information to the CMHC and
        be subject to certain restrictive covenants, including limitation on
        additional debt, payment of distributions in respect to unitholders'
        capital in the event of default, and maintenance of certain financial
        ratios. In the event of default, the Trust's total financial
        liability under this Agreement is limited to a one-time penalty
        payment of $250 thousand under a Letter of Credit issued in favour of

        Per the debenture agreement, the Trust is required to pay semi-annual
        interest instalments on January 23 and July 23 of each year. The
        Trust is also required to maintain in good condition, repair and
        working order all of the properties owned by it or any or its
        Subsidiaries while maintaining property and liability insurance.

        The debenture agreement contains three financial covenants as

        i)    the Trust will maintain a Consolidated Earnings Before
              Interest, Taxes, Depreciation and Amortization ("EBITDA") to
              Consolidated Interest Expense of not less than 1.50 to 1. As at
              March 31, 2008, this ratio was 2.1 to 1 and as such the Trust
              is in compliance.

        ii)   the Trust will not incur or assume any indebtedness unless the
              quotient obtained by dividing the Adjusted Consolidated
              Indebtedness by the Adjusted Gross Book Value would be less
              than or equal to 70%. As outlined in NOTE 12, as at March 31,
              2008, this amount was 66% and as such the Trust is in

        iii)  the Trust will maintain at all times, an Adjusted Unitholders'
              Equity of at least $300 million. Adjusted Unitholders' Equity
              was $859 million as at March 31, 2008.

        The Trust has a credit facility in the form of an acquisition and
        operating line with a major financial institution. This credit
        facility was secured by a first or second mortgage charge of specific
        real estate assets (carrying value of $292 million). The maximum
        amount varies with the value of the pledged assets to a maximum not
        to exceed $200 million.

        The credit facility contains three financial covenants as follows:

        i)    the Trust will maintain an overall Debt Service Coverage Ratio
              of at least 1.20. As at December 31, 2007, this ratio was 1.68
              and as such the Trust is in compliance.

        ii)   the Trust will maintain a Debt Service Coverage Ratio, specific
              to the Security Portfolio of at least 1.15. As at December 31,
              2007, this ratio was 1.29 and as such the Trust is in

        iii)  Total indebtedness of the Trust will not exceed 70% of the GBV
              of all assets as defined in the DOT. As outlined in NOTE 12, as
              at March 31, 2008, this amount was 66% and as such the Trust is
              in compliance.

        As at March 31, 2008, the Trust was in compliance with all covenants.

        e) Utility risk

        The trust is exposed to utility risk as a result of fluctuations in
        the prices of natural gas and electricity service charges. As
        outlined in NOTE 14, the Trust has committed to utility contracts to
        reduce the risk of exposure to adverse changes in commodity prices.


        At March 31, 2008, the Trust had a long-term supply arrangement with
        one electrical utility company to supply the Trust with its
        electrical power needs for its southern Alberta properties for the
        next nine months at a blended rate of approximately $0.068/kwh. The
        agreement provides that the Trust purchase its power for all southern
        Alberta properties under contract for the upcoming months.

        Beginning in November 2003, the Alberta government implemented a
        natural gas rebate program covering the winter usage months of
        November through March. In October 2005, the natural gas rebate
        program was extended to cover the month of October. In January of
        2006, the Alberta government announced a three-year extension to the
        program covering the winter months of October through March. The
        extension of the natural gas rebate program will end March 31, 2009.
        The rebate program becomes active when the natural gas consumer price
        charged by two of the three major gas companies in Alberta exceeds
        $5.50/GJ for any individual winter usage month. For January through
        March 2007, Boardwalk REIT was eligible for estimated rebates
        totalling approximately $0.9 million. For January to March 2008,
        Boardwalk REIT was eligible for rebates totalling approximately
        $1.3 million.

        The Trust also entered into one natural gas supply contract, which
        provides a degree of price certainty for natural gas usage in the
        province of Saskatchewan. The contract covers between 75 - 100% of
        the Trust's natural gas requirements for this province. The physical
        supply agreement for Saskatchewan covered the period from November 1,
        2006 to October 31, 2007, and has been extended to October 21, 2008.
        The supply contract provides the commodity at a price of $8.95/GJ.

        Boardwalk REIT, in the normal course of operations, will become
        subject to a variety of legal and other claims against the Trust.
        Management and the Trust's legal counsel evaluate all claims on their
        apparent merits, and accrue management's best estimate of the
        estimated costs to satisfy such claims. Management believes that the
        outcome of legal and other claims filed against the Trust or its
        predecessor will not be material to Boardwalk REIT.


        In the normal course of business, various agreements may be entered
        that may contain features that meet the AcG-14 definition of a
        guarantee. AcG-14 defines a guarantee to be a contract (including an
        indemnity) that contingently requires an entity to make payments to
        the guaranteed party based on (i) changes in an underlying interest
        rate, foreign exchange rate, equity or commodity instrument, index or
        other variable, that is related to an asset, a liability or an equity
        security of the counterparty, (ii) failure of another party to
        perform under an obligating agreement or (iii) failure of a third
        party to pay its indebtedness when due.

        In connection with the sales of properties, a mortgage assumed by the
        purchaser will have an indirect guarantee provided to the lender
        until the mortgage is refinanced by the purchaser. In the event of
        default by the purchaser, the seller would be liable for the
        outstanding mortgage balance. Boardwalk REIT's maximum exposure at
        March 31, 2008 is approximately $4.9 million (March 31, 2007 -
        $5.4 million). In the event of default, Boardwalk REIT's recourse for
        recovery includes the sale of the respective building asset.
        Boardwalk REIT expects that the proceeds from the sale of the
        building will cover, and in most likelihood exceed, the maximum
        potential liability associated with the amount being guaranteed.
        Therefore, at March 31, 2008, no amounts have been recorded in the
        consolidated financial statements with respect to the above noted
        indirect guarantees.


        Boardwalk REIT specializes in multi-family residential housing and
        operates primarily within one business segment in five provinces
        located in Canada. The following summary presents segmented financial
        information for Boardwalk REIT's business by geographic location.

                                                      3 months      3 months
                                                         ended         ended
                                                      March 31,     March 31,
                                                          2008          2007
          Revenue                                  $    61,119   $    49,166
            Operating                                   10,483         7,536
            Utilities                                    8,865         6,648
            Utility rebates                             (1,255)         (922)
            Property taxes                               3,491         3,196
                                                        21,584        16,458
          Net operating income                     $    39,535   $    32,708

          Revenue                                  $    10,682   $     9,212
            Operating                                    1,664         1,594
            Utilities                                    2,363         1,725
            Property taxes                               1,132         1,171
                                                         5,159         4,490
          Net operating income                     $     5,523   $     4,722

          Revenue                                  $     9,435   $     9,376
            Operating                                    1,593         1,515
            Utilities                                    2,012         2,028
            Property taxes                               1,573         1,756
                                                         5,178         5,299
          Net operating income                     $     4,257   $     4,077

        British Columbia
          Revenue                                  $     2,966   $     2,771
            Operating                                      620           621
            Utilities                                      497           401
            Property taxes                                 150           148
                                                         1,267         1,170
          Net operating income                     $     1,699   $     1,601

          Revenue                                  $    17,470   $    17,014
            Operating                                    3,563         2,965
            Utilities                                    2,892         2,994
            Property taxes                               1,303         1,889
                                                         7,758         7,848
          Net operating income                     $     9,712   $     9,166

          Net operating income                     $    60,726   $    52,274
          Unallocated revenue(*)                           537            31
          Unallocated expenses(xx)                     (55,631)      (48,674)
          Net earnings for the period              $     5,632   $     3,631

                                                      March 31,  December 31,
        As at                                             2008          2007
          Identifiable assets
            Revenue producing properties           $ 1,242,355   $ 1,244,328
            Mortgages and accounts receivable            5,378         5,863
            Tenants' security deposits                  10,579        10,385
                                                   $ 1,258,312   $ 1,260,576
          Identifiable assets
            Revenue producing properties           $   167,885   $   168,581
            Mortgages and accounts receivable              189           202
            Tenants' security deposits                   2,264         2,096
                                                   $   170,338   $   170,879
          Identifiable assets
            Revenue producing properties           $   205,203   $   206,366
            Mortgages and accounts receivable              205           237
                                                   $   205,408   $   206,603
          Identifiable assets
            Revenue producing properties           $   419,958   $   421,473
            Mortgages and accounts receivable            1,444           800
                                                   $   421,402   $   422,273
        British Columbia
          Identifiable assets
            Revenue producing properties           $   104,817   $   104,491
            Mortgages and accounts receivable            1,064         1,049
            Tenants' security deposits                     456           444
                                                   $   106,337   $   105,984

        Total assets
            Identifiable assets                    $ 2,161,797   $ 2,166,315
            Unallocated assets(xxx)                    116,128        29,573
                                                   $ 2,277,925   $ 2,195,888

        (*)   Unallocated revenue includes property sales, interest income,
              revenue from discontinued operations and other non-rental

        (xx)  Unallocated expenses include cost of property sales, operating
              expenses from discontinued operations, non-rental operating
              expenses, corporate administration, financing costs,
              amortization, income taxes and other provisions.
        (xxx) Unallocated assets include discontinued assets, cash and cash
              equivalents and other assets.


        Subsequent to March 31, 2008, Boardwalk REIT acquired a property in
        Calgary, Alberta, totaling 297 apartment units from an unrelated
        third party for an aggregate purchase price of $48.8 million. The
        transaction is scheduled to close June 13, 2008 and will be funded
        using cash-on-hand.

    %SEDAR: 00020684E

For further information please contact:

Boardwalk REIT

Sam Kolias, 
(403) 531-9255;

Roberto Geremia, 
(403) 531-9255; 

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