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NOTE CORRECTION RE: ANNUAL DIVIDEND ANNOUNCEMENT
TSE SYMBOL: BEI NYSE SYMBOL: BEI FEBRUARY 20, 2002 - 08:01 EST Boardwalk Equities Reports Strong Fourth Quarter And Full Year 2001 Results CALGARY, ALBERTA--Boardwalk Equities Inc. ("BEI" - NYSE, TSE) is pleased to report strong financial results for 2001 and for the fourth quarter of 2001, which exceeded consensus estimates. For the fourth quarter ended December 31, 2001, the Company reported Total Revenues of $57.2 million, Funds From Operations ["FFO"] of $12.0 million and FFO per share of $0.24. For the year ended December 31, 2001, the Company reported Total Revenues of $227.3 million, FFO of $57.9 million and FFO per share of $1.16. Effective December 31, 2000, the Company changed its fiscal period end to December 31 from May 31. Due to this change, an identical period for comparative purposes is not available. For illustrative purposes only, where applicable, we have presented the Company's unaudited results for the three-month and twelve-month periods ended November 30, 2000. Readers are cautioned that these results are not for identical comparable periods and that the real estate industry is subject to seasonal fluctuations that will affect straight comparisons of these amounts. Highlights of the Company's fourth quarter 2001 financial results include: * Rental revenues of $53.5 million, an increase of 12.4% compared to $47.6 million for the three-month period ended November 30, 2000. * Net operating income of $33.6 million, representing a 5.7% increase from $31.8 million for the three-month period ended November 30, 2000. * Funds from operations (FFO) of $12.0 million, compared to $23.3 million for the three-month period ended November 30, 2000. FFO excluding gains totalled $11.6 million, compared to $11.2 million for the three-month period ended November 30, 2000. * FFO per share of $0.24 on a fully diluted basis, compared to $0.47 for the three-month period ended November 30, 2000. FFO per share excluding gains was $0.23 on a fully diluted basis, compared to $0.23 for the three-month period ended November 30, 2000. Highlights of the Company's fiscal 2001 financial results include: * Rental revenues of $205.3 million, an increase of 9.6% compared to $187.3 million for the twelve-month period ended November 30, 2000. * Net operating income of $136.1 million, representing a 10.7% increase from $122.9 million for the twelve-month period ended November 30, 2000. * Funds from operations (FFO) of $57.9 million, up 2.5% compared to $56.5 million for the twelve-month period ended November 30, 2000. FFO excluding gains totalled $49.9 million, up 24.1% compared to $40.2 million for the twelve-month period ended November 30, 2000. * FFO per share of $1.15 on a fully diluted basis, an increase of 1.8% compared to $1.13 for the twelve-month period ended November 30, 2000. FFO per share excluding gains totalled $0.99 on a fully diluted basis, an increase of 23.8% compared to $0.80 for the twelve-month period ended November 30, 2000. Commenting on the Company's fourth quarter and fiscal 2001 results, Sam Kolias, President and C.E.O. said "We are pleased to report that our core real estate operations have continued to show strong results. The fundamentals for the multi-family rental sector in Canada remain healthy, and our core markets remain particularly strong." The average vacancy rate across the Company's portfolio for the fourth quarter of 2001 was 3.9% down from 5.2% in the third quarter, and from 4.1% in the same period last year. As of December, 2001, the vacancy rate was 3.9%, compared to 5.1% for the same date last year. Average monthly rent realized in fiscal 2001 was $664 per unit, up $27, or 4.2 %, from $637 per unit for the 7 months ended December 31, 2000. Management estimates that market rents for its properties at the end of December, 2001 averaged $744 which compares to an average in-place rent per occupied unit of $698 at year-end. This indicates an estimated current "loss-to-lease" on the portfolio of approximately $14 million on an annualized basis. Same-Property Results Boardwalk continued to show solid improvement in its stabilized properties (defined as properties owned for over 24 months). A total of 23,717 units were classified as stabilized for the fourth quarter, representing 91% of Boardwalk's total portfolio. The "same-property" results for the Company's stabilized portfolio for the twelve month period continued to show improved results with rental revenue growth of 8.4% and NOI growth of 10.3% versus the twelve months ended December 31, 2000. /T/ Same-property results - stabilized portfolio - Twelve months ended December 31, 2001 vs. twelve months ended December 31, 2000 --------------------------------------------------------------------- Rental Rental % of Stabilized Revenues Expenses NOI NOI --------------------------------------------------------------------- Edmonton +9.5% +3.2% +12.7% 42.4% --------------------------------------------------------------------- Calgary +7.6% +0.0% +10.5% 25.7% --------------------------------------------------------------------- Other Alberta +11.8% +6.7% +13.8% 8.0% --------------------------------------------------------------------- Ontario +12.7% +8.3% +17.1% 9.9% --------------------------------------------------------------------- Saskatoon +0.5% +10.2% -5.0% 5.6% --------------------------------------------------------------------- Regina +3.3% +9.2% -0.2% 8.4% --------------------------------------------------------------------- Total Stabilized +8.4% +4.9% +10.3% 100% --------------------------------------------------------------------- /T/ Acquisitions/Dispositions The fourth quarter 2001 results include operating profits of $0.4 million generated from the sale of two small properties, which were sold for a total of $3.7 million. This compares to operating profits of $12.0 million generated on sales totalling $36.3 million in the three months ended November 30, 2000. The Company completed the previously announced acquisition of one property in the fourth quarter totaling 120 units at a cost of $7.0 million. The Company completed the acquisition of a total of 1,362 units in 2001, which increased its portfolio to 25,889 units at year-end. Subsequent to December 31, 2001, the Company closed on the acquisition of a 60-unit townhouse complex in London, Ontario at a purchase price of $2.8 million. Continued Balance Sheet Strength The Company maintained its strong financial position in the quarter. Boardwalk's mortgage debt totaled $1.11 billion as at December 31, 2001, up marginally from $1.03 billion at December 31, 2000. As of December 31, 2001, the Company's long-term debt had an average maturity of 5.3 years and a weighted average interest rate of 6.15%. As of December 31, 2001, the Company's debt-to-total-market-capitalization ratio was 66% and the interest coverage ratio for the twelve month period ended December 31, 2001 was 1.91 times. The Company's liquidity remains strong, with cash and undrawn credit facilities currently in excess of $55 million. This is expected to increase to over $70 million as of the end of the first quarter of 2002 upon completion of several refinancings and mortgage draw downs. Share Repurchase Activity Under the Company's normal course issuer bid, Boardwalk bought back a total of 828,400 shares in the fourth quarter of 2001 at an average price of $11.70. In all of fiscal 2001, Boardwalk acquired a total of 879,600 shares at an average price of $11.72 per share. Subsequent to the end of the fourth quarter of 2001 through to February 15, 2002 , Boardwalk acquired a further 88,100 shares at an average price of $11.70 per share. Dividend Yesterday, the Board of Directors declared an annual dividend of $0.05 per common share. The dividend is payable on March 1, 2002 to all common shareholders of record as of February 20, 2002. Outlook and Summary Commenting on the outlook for the Company, Sam Kolias, said "Boardwalk remains well positioned to continue to show improved results. Despite the slowdown in the economy, our core markets have remained strong with continuing attractive demand/supply characteristics for the multi-family rental sector. Our two largest markets, Edmonton and Calgary were among the top cities in Canada with respect to economic growth in 2001, and economic forecasts show them continuing to be among the leading economies in the country over the next several years. With our portfolio concentrated in strong geographic market areas, we believe we will be able to continue to deliver solid results driven by strong internal growth over the next several years." Rob Geremia, Senior Vice President and CFO stated we are expecting that we can deliver improved results for 2002 despite the impact of an above the market natural gas contract that will adversely effect our first quarter 2002 by an estimated 5 cents per outstanding common share. This contract will expire on March 31, 2002 and we expect to be able to achieve significant savings moving forward. Current market expectations of 2002 FFO, excluding gains on sales of properties range from $1.02 to $1.15 and including gains $1.02 to 1.35. Management is comfortable and would guide toward the middle of both of these ranges. With respect to the first quarter 2002 current market expectations range from $0.19 to $0.25. Management is more comfortable with the lower end of this range given the significant impact on the quarter of the existing gas contract. Supplementary Information Boardwalk produces Quarterly Supplemental Information that provides detailed information regarding the Company's activities during the quarter. The Fourth Quarter Supplemental Information is available on the INVESTOR section of our website (www.bwalk.com). Teleconference on Fourth Quarter and Full Year Fiscal 2001 Financial Results We invite you to participate in the teleconference that will be held to discuss the Company's fourth quarter and full year fiscal 2001 results this morning at 11:15am EST. Sam Kolias, President and CEO, Rob Geremia, Senior Vice President, Finance and CFO, and Mike Hough, Senior Vice President, will speak to the financial results and provide a corporate update. Presentation materials will be made available on the INVESTOR section of our website (www.bwalk.com) prior to the call. Participation & Registration: Please RSVP to Paul Moon 403-508-6208 or by email to investor@bwalk.com. Teleconference: The telephone numbers for the conference are: 416-640-4127 (within Toronto) or toll-free 1-888-881-4892 (outside Toronto). Webcast: Investors will be able to listen to the call and view our slide presentation over the Internet by visiting http://investor.bwalk.com 15 min. prior to the start of the call. An information page will be provided for software needed and system requirements. The live audiocast will also be available at http://www.newswire.ca/webcast/pages/BoardwalkEquities20020220/. Replay: An audio recording of the teleconference will be available approximately one hour after the call until 11:59pm EST on February 27th, 2002. You can access it by dialing 416-640-1917 and using the following passcode, 171253#. An audio archive will also be available on our Investor site (http://investor.bwalk.com) two hours after the conference call until February 27th, 2002. Corporate Profile Boardwalk Equities Inc. is Canada's largest owner/operator of multi-family rental properties. Boardwalk currently owns and operates in excess of 200 properties with over 25,900 units totaling over 21 million net rentable square feet. The company's portfolio is concentrated in the provinces of Alberta, Saskatchewan and Ontario. Boardwalk is headquartered in Calgary and its shares are listed on both the Toronto Stock Exchange and the New York Stock Exchange and trade under the symbol BEI. The company has a total market capitalization of $1.6 billion. Additional information is available at Boardwalk's web site at www.bwalk.com. Recent investor information can be found on the Internet at http://investor.bwalk.com/. Forward-Looking Statements This release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements are statements that involve risks and uncertainties, including, but not limited to, changes in the demand for apartment and town home rentals, the effects of economic conditions, the impact of competition and competitive pricing, the effects of the Company's accounting policies and other matters detailed in the Company's filings with Canadian and United States securities regulators available on SEDAR in Canada and by request through the Securities and Exchange Commission in the United States, including matters set forth in the Company's Annual Report to Shareholders under the heading ``Management's Discussion and Analysis''. Because of these risks and uncertainties, the results, expectations, achievements, or performance described in this release may be different from those currently anticipated by the Company. /T/ Consolidated Balance Sheets (Cdn.$ Thousands) Audited, As At Dec 31, 2001 Dec 31, 2000 May 31, 2000 ------------------------------------------ Assets Revenue producing properties (NOTE 2) $ 1,381,541 $ 1,328,702 $ 1,321,081 Properties held for resale 6,630 6,692 6,365 Mortgages and accounts receivable (NOTE 3) 22,325 17,230 26,506 Other assets (NOTE 4) 14,423 14,637 7,586 Deferred financing costs 32,957 31,460 30,337 Technology (NOTE 5) 5,743 24,058 5,018 Cash and short term investments 25,672 21,055 1,135 ---------------------------------------------------------------------- $ 1,489,291 $ 1,443,834 $ 1,398,028 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Liabilities Mortgages payable (NOTE 6) $ 1,108,406 $ 1,034,444 $ 1,009,526 Accounts payable and accrued liabilities 19,525 24,795 18,522 Refundable security deposits and other 10,418 9,953 8,494 Capital lease obligations (NOTE 5) 7,203 8,404 - Future income taxes (NOTE 8) 58,755 64,864 75,673 ---------------------------------------------------------------------- 1,204,307 1,142,460 1,112,215 Contingencies (NOTE 11) Shareholders' Equity Share capital (NOTE 7) 258,202 253,586 253,472 Retained earnings 26,782 47,788 32,341 ---------------------------------------------------------------------- 284,984 301,374 285,813 ---------------------------------------------------------------------- $ 1,489,291 $ 1,443,834 $ 1,398,028 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Consolidated Statements of (Loss) Earnings Audited (Cdn. $ Thousands, except per share amounts) 12 Months 7 Months 12 Months December 31, December 31, May 31, 2001 2000 2000 --------------------------------------- Revenue Rental income $205,281 $ 110,771 $ 178,147 Sales - properties held for resale 21,988 36,311 39,824 --------------------------------------------------------------------- 227,269 147,082 217,971 --------------------------------------------------------------------- Expenses Revenue producing properties: Operating expenses 22,865 14,121 22,471 Utilities 31,549 14,713 20,140 Utility rebate (NOTE 1 (i) (iii)) (4,967) - - Property taxes 19,743 11,004 18,431 Cost of sales - properties held for resale 13,939 24,258 24,017 Administration 15,586 8,924 16,891 Financing costs 67,367 37,835 58,212 Amortization (NOTE 1) 53,584 27,401 38,177 --------------------------------------------------------------------- 219,666 138,256 198,339 --------------------------------------------------------------------- Operating earnings before the following: 7,603 8,826 19,362 Provision for loss on technology investments (NOTE 5) 29,837 - - --------------------------------------------------------------------- Operating (loss) earnings before income taxes (22,234) 8,826 19,632 Large corporations taxes 3,246 1,913 2,881 Income taxes (recovery) (NOTE 8) (12,678) (8,652) 6,306 --------------------------------------------------------------------- Net (loss) earnings for the period $ (12,802) $ 15,565 $ 10,445 --------------------------------------------------------------------- --------------------------------------------------------------------- Net (loss) earnings per share (NOTE 1) - Basic $ (0.26) $ 0.32 $ 0.21 --------------------------------------------------------------------- --------------------------------------------------------------------- - Diluted $ (0.26) $ 0.31 $ 0.21 --------------------------------------------------------------------- --------------------------------------------------------------------- Consolidated Statements of Retained Earnings Audited (Cdn.$ Thousands) Year ended Seven months ended Year ended December 31, December 31, May 31, 2001 2000 2000 -------------------------------------------- Retained earnings, as previously stated $47,788 $ 32,341 $ 26,581 Adjustment for retroactive adoption of future income taxes (NOTE 1(g)) - - (1,223) --------------------------------------------------------------------- Retained earnings, beginning of period as restated 47,788 32,341 25,358 Net (loss) earnings (12,802) 15,565 10,445 Dividends paid (2,496) - - Premium on share repurchases (NOTE 7) (5,708) (118) (3,462) --------------------------------------------------------------------- Retained earnings, end of period $26,782 $ 47,788 $ 32,341 --------------------------------------------------------------------- --------------------------------------------------------------------- Consolidated Statement of Cash Flows Audited (Cdn. $ Thousands) 12 Months 7 Months 12 Months December 31, December 31, May 31, 2001 2000 2000 --------------------------------------- Cash obtained from (applied to): Operating activities Net (loss) earnings $(12,802) $ 15,565 $ 10,445 Income taxes (12,678) (8,652) 6,306 Amortization 53,584 27,401 38,177 Provision for loss on technology investments (NOTE 5) 29,837 - - --------------------------------------------------------------------- Funds from operations 57,941 34,314 54,928 --------------------------------------------------------------------- Net change in operating working capital (9,516) 6,589 3,547 Net change in properties held for resale 12,139 22,789 (611) --------------------------------------------------------------------- Total operating cash flows $ 60,564 $ 63,692 $ 57,864 --------------------------------------------------------------------- Financing activities Issue of common shares for cash (net of issue costs) $ 2,097 $ 241 $ 45,295 Stock repurchase program (10,305) (244) (6,885) Dividends paid (2,496) - - Financing of revenue producing properties 169,067 113,771 314,238 Repayment of debt on revenue producing properties (128,681) (92,701) (219,020) Deferred financing costs (2,557) (2,809) (8,810) --------------------------------------------------------------------- $ 27,125 $ 18,258 $ 124,818 --------------------------------------------------------------------- Investing activities Purchases of revenue producing properties (NOTE 2) (15,543) $ (11,367) $ (84,784) Project improvement to revenue producing properties (52,938) (42,957) (83,379) Technology (14,591) (7,706) (8,996) --------------------------------------------------------------------- $ (83,072) $ (62,030) $(177,159) --------------------------------------------------------------------- Increase in cash balance during the period $ 4,617 $ 19,920 $ 5,523 Cash and cash equivalents (indebtedness), beginning of period $ 21,055 1,135 (4,388) --------------------------------------------------------------------- Cash and cash equivalents, end of period $ 25,672 $ 21,055 $ 1,135 --------------------------------------------------------------------- --------------------------------------------------------------------- Funds from operations per share - Basic $ 1.16 $ 0.70 $ 1.12 - Diluted $ 1.15 $ 0.69 $ 1.12 Taxes paid $ 3,477 $ 2,841 $ 2912 --------------------------------------------------------------------- --------------------------------------------------------------------- Interest paid $ 65,342 $ 37,321 $ 57,098 --------------------------------------------------------------------- --------------------------------------------------------------------- Consolidated Statements of (Loss) Earnings - 3 Months (Cdn. $ Thousands, except per share amounts) 3 Months 3 Months December 31, November 30, 2001 2000 (Audited) (Unaudited) ------------------------------ Revenue Rental income $53,477 $ 47,605 Sales - properties held for resale 3,744 36,311 -------------------------------------------------------------------- 57,221 83,916 -------------------------------------------------------------------- Expenses Revenue producing properties: Operating expenses 5,623 5,614 Utilities 10,310 5,568 Utility rebate (907) - Property taxes 4,860 4,646 Cost of sales - properties held for resale 3,317 24,263 Administration 4,037 3,746 Financing costs 17,056 15,940 Amortization 14,973 12,045 -------------------------------------------------------------------- 59,269 71,822 -------------------------------------------------------------------- Operating (loss) earnings before the following: (2,048) 12,094 Provision for loss on technology investments 2,322 - -------------------------------------------------------------------- Operating (loss) earnings before income taxes (4,370) 12,094 Large corporations taxes 913 888 Income taxes (recovery) (1,989) (2,566) -------------------------------------------------------------------- Net (loss) earnings for the period $ (3,294) $ 8,640 -------------------------------------------------------------------- -------------------------------------------------------------------- Net (loss) earnings per share - Basic $ (0.07) $ 0.18 -------------------------------------------------------------------- -------------------------------------------------------------------- - Diluted $ (0.07) $ 0.17 -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Funds from operations $ 12,012 $ 23,251 -------------------------------------------------------------------- -------------------------------------------------------------------- Funds from operations per share - Basic $ 0.24 $ 0.47 -------------------------------------------------------------------- -------------------------------------------------------------------- - Diluted $ 0.24 $ 0.47 -------------------------------------------------------------------- -------------------------------------------------------------------- /T/ -30- FOR FURTHER INFORMATION PLEASE CONTACT: Boardwalk Equities Inc. Sam Kolias President and CEO (403) 531-9255 (403) 531-9565 (FAX) or Roberto Geremia Senior Vice-President, Finance and Chief Financial Officer (403) 531-9255 (403) 531-9565 (FAX) or Mike Hough Senior Vice President (403) 531-9255 (403) 531-9565 (FAX) or Paul Moon Director of Corporate Communications (403) 531-9255 (403) 531-9565 (FAX) World Wide Web: http://www.bwalk.com
