Boardwalk Real Estate Investment Trust · TSX:BEI.UN
Boardwalk Real Estate Investment Trust — Investor Presentation (December 2022)
54 slides from Boardwalk Real Estate Investment Trust's investor presentation, December 2022
Slide 1: December 2022 Investor Presentation
December 2022 Investor Presentation
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures This presentation contains forward-looking statements and information contained herein include, but are not limited to, those related to liquidity in the for owners and managers of investment real estate. REALPAC has adopted non- (collectively, "forward
Slide 3: Table of Contents
Table of Contents Corporate Profile 4 Delivering Strong Performance 6 Exceptional Value: Private and Public Market Pricing 13 Well Positioned for Organic Growth 23 Strong Housing Fundamentals 30 Accretive Capital Recycling 40 Solid Financial Foundation 49 ESG Update 52 3
Slide 4: Corporate Profile
Corporate Profile Boardwalk REIT is a growth-oriented Canadian multi-family real estate owner and operator with a customer and community focus 33,722 5 Provinces $7.0 Billion $274.3M 95% 26% of mortgages are CMHC Total Suites Assets across Canada Total Assets(1) 2021 Net Operating Income combined in
Slide 5: Creating Value for Stakeholders: Strategic Pillars
Creating Value for Stakeholders • Strategic Pillars People, Places, and Performance Boardwalk provides inclusive communities to work and live through its strategy of operational excellence, innovation, and opportunistic growth focused capital allocation, to create leading earnings performance result
Slide 6: Delivering Strong Performance
Delivering Strong Performance Strong Sequential Revenue Growth in Q3 with Improvement in Core Markets 6
Slide 7: Performance Review: GAAP and non-GAAP measures
Performance Review GAAP and non-GAAP measures (1) This is a non-GAAP financial measure. (2) Please refer to the section titled “Non-GAAP measures” in this presentation for more information. (3) Excludes adjustments related to IFRS 16. 7
Slide 8: Delivering Growth & Stakeholder Value: Strong FFO per Unit Growth
Delivering Growth & Stakeholder Value Strong FFO per Unit Growth 7.6% Annual Annual $2.74 $2.57 $0.85 $0.79 Q2: 0.68 Q2: 0.71 Q1: 0.56 Q1: 0.62 Q1: 0.65 Q3-2021 Q3-2022 8
Slide 9: Q3 2022 Operating Results: Sequential Quarterly Revenue Growth
Q3 2022 Operating Results Sequential Quarterly Revenue Growth Stabilized Revenue Q3 2022 vs Q2 Q2 2022 vs Q1 Q1 2022 vs Q4 Q4 2021 vs Q3 Growth # of Suites 2022 2022 2021 2021 Edmonton 12,882 2.6% 2.5% -1.1% -0.5% Calgary 5,879 3.2% 2.6% 0.6% 0.2% Red Deer 939 3.2% 1.7% 1.1% -0.5% Grande Prairie 645
Slide 10: Q3 2022 Operating Results: Same-property NOI Performance
Q3 2022 Operating Results Same-property NOI Performance % Rental % Total Rental % Net Operating • Same-property revenue growth in Q3 of 4.9% Operating expenses of 4.3% primarily a result of an Sep. 30 2022 - 3 M # of Suites Revenue Growth Expenses Growth Income Growth % of NOI Edmonton 12,882 3.5% 8
Slide 11: Rent Change on New & Renewal Leases
Rent Change on New & Renewal Leases Positive new & renewal leasing spreads Strong growth in renewal and new lease spreads in Alberta Strong overall leasing spreads entering the winter months Renewals represent 60-70% of monthly lease activity. All values are same-property as reported. 11
Slide 12: 2022 Guidance Update
2022 Guidance Update 2021 Actual (in $ thousands except Per Description 2022 Updated Guidance 2022 Previous Guidance Unit) Stabilized Property NOI Growth 3% - 5% 2% - 5% 0.1% Profit N/A N/A $446,267 FFO (1)(2)(3) N/A N/A $150,207 AFFO (1)(2)(3) N/A N/A $117,920 FFO Per Unit (2) $3.08 - $3.15 $3.00 -
Slide 13: Boardwalk REIT: Exceptional Value
Boardwalk REIT: Exceptional Value Significant Difference Between Private and Public Market Pricing 13
Slide 14: Exceptional Value: Recent transactions compare favourably to NAV
Exceptional Value Recent transactions compare favourably to current NAV estimate in Boardwalk markets Boardwalk’s current trading price represents exceptional value when compared to recent market transactions in its core markets. Current Trading Q3 NAV per Price Unit(1) Unit Price $40 $50 $60 $71.09
Slide 15: Edmonton Private Market Transactions
Edmonton Private Market Transactions Boardwalk’s Value Strongly Supported by Recent and Nearby Transactions Boardwalk Recent Transaction Nearby Boardwalk properties compare favorably to the recent Westpark Ridge transaction. 15
Slide 16: Edmonton Private Market Transactions
Edmonton Private Market Transactions Boardwalk’s Value Strongly Supported by Recent and Nearby Transactions Boardwalk IFRS Fair Value of individual assets comparable to recent and nearby transactions. Claremont Recent Transaction Court is similar in unit mix to Habitat Village & Marlborough Manor. T
Slide 17: Edmonton Private Market Transactions
Edmonton Private Market Transactions Boardwalk’s Value Strongly Supported by Recent and Nearby Transactions Well-maintained Boardwalk assets have appropriate IFRS Fair Values given age difference. CX has mostly 1-bedroom units while Boardwalk assets have a mix of studios, 1- bedroom, and 2-bedroom u
Slide 18: Edmonton Private Market Transactions
Edmonton Private Market Transactions Boardwalk’s Value Strongly Supported by Recent and Nearby Transactions Boardwalk Recent Transaction Well-maintained Boardwalk concrete assets have appropriate IFRS Fair Values given age difference. Christopher Arms contains a larger split of 1-bedroom suites. 18
Slide 19: Edmonton Private Market Transactions
Edmonton Private Market Transactions Boardwalk’s Value Strongly Supported by Recent and Nearby Transactions Boardwalk Recent Transaction 19
Slide 20: Calgary Private Market Transaction
Calgary Private Market Transaction Boardwalk’s Value Strongly Supported by Recent and Nearby Transactions(1) Boardwalk Q1: 0.56 Q1: 0.62 Q1: 0.65 Recent Transaction Auburn Landing has larger suites on average and includes lake access in market rents. (1) The Level acquisition is valued as a Level 2
Slide 21: Exceptional Value – Implied Cap Rate on Trailing NOI
Exceptional Value – Implied Cap Rate on Trailing NOI Lower transaction Cap Rates provide an organic opportunity for NAV growth $50 trading price equates to a 5.2% Cap Rate on trailing NOI. Implied capitalization rates are calculated using BEI.UN trailing 12M investment property NOI of $284.5 million
Slide 22: P / FFO Multiple 2022 F: Combination of Value and Growth
Combination of Value and Growth Publicly Traded Canadian Multi-Family REITs Relative Valuation(1) 30.0x 25.0x IIP P / FFO Multiple 2022 F 20.0x CAR MI BEI KMP 15.0x 10.0x 5.0x 0.0x -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 2017 to 2022 F FFO / Unit CAGR Source: FactSet (1) C
Slide 23: Well Positioned for Organic Growth
Well Positioned for Organic Growth Affordable and Non-Price Controlled Portfolio Positioned for Significant and Sustainable Growth 23
Slide 24: Positioned in Strong Rental Markets
Positioned in Strong Rental Markets Large Presence In Affordable and Non-Price Controlled Markets Mark-to-Market(1) Opportunity in Boardwalk Markets (1)(2) British Columbia Saskatchewan (3) 0.3% of portfolio Alberta 10.4% of portfolio Quebec per suite per suite per suite per suite per suite 62.5% of
Slide 25: Key Operational Metrics
Key Operational Metrics Optimization of Occupancy, Rent & Incentives Leads to Revenue Gains Actual Occupancy Incentives $11,000 $172 Thousands 98.1% $10,500 $165 97.2% $10,000 $158 96.1% 96.4% 95.9% $9,500 $150 95.5% $9,000 $141 $8,500 $8,000 $7,500 $7,000 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022 Q3
Slide 26: Occupancy Trend
Occupancy Trend Maintaining Occupancy as a Component of Revenue Optimization Rentals, Move-Outs & Occupancy 1,400 100.0% 1,200 98.0% 1,000 96.0% 800 94.0% 600 92.0% 400 90.0% 200 0 88.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2021 2022 Occupancy trend
Slide 27: Room for Sustainable Revenue Growth: Rents Indexed to Inflation
Room for Sustainable Revenue Growth Boardwalk Rents Indexed to Inflation CPI and Occupied Rent (Indexed, Q1 2014 = 100) 125 120 115 110 105 100 95 90 Occupied Rent Alberta Occupied Rent Portfolio 85 CPI Canada CPI Alberta 80 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3
Slide 28: CMHC & Boardwalk's Markets: Occupancy & Average Rents Lead
CMHC & Boardwalk’s Markets Boardwalk Occupancy & Average Rents Lead the Market Occupancy (1)(2) Suite Mix and Occupied Rent by Brand(3)(4) 49% 99.11% 98.85% 98.72% 98.50% 98.10% 98.00% 97.50% Living 97.21% 97.00% 96.91% 95.97% 95.74% 95.20% $1,153 94.90% 94.60% 94.00% 93.82% 92.90% 92.70% 88.78% 87.
Slide 29: Leveraging Technology for Further Operating Cost Reductions
Leveraging Technology for Further Operating Cost Reductions Future Initiatives to Improve Operating Margins Enhanced Resident Telus Internet SaskTel Internet Virtual Smart Homes Member Portal And TV Showings Investment (RETV) Enhanced resident In partnership with Boardwalk exclusive Offers increased
Slide 30: Strong Housing Fundamentals
Strong Housing Fundamentals Leading Macroeconomic Indicators are Favorable in Boardwalk’s Core Markets 30
Slide 31: Positive Outlook on Value and Multi-Family Fundamentals
Positive Outlook on Value and Multi-Family Fundamentals Strong Rental Demand Compelling Value Record Canadian immigration targets and growing international student Below Intrinsic Significant gap between current unit Immigration cohort will drive increased demand for Value price and Net Asset Value
Slide 32: Expanding Labour Market and Strong Fundamentals in Alberta
Expanding Labour Market and Strong Fundamentals in Alberta Alberta Calgary and Edmonton Alberta Sectors with High Job Vacancies (Q2 2022) Alberta Job Vacancies 17,755 13,775 12,185 11,425 115,540 108,715 102,365 103,130 106,215 104,725 89,655 93,585 7,415 6,070 84,475 5,965 Accommodation Constructio
Slide 33: Increasing Affordability Relative to Home Ownership
Increasing Affordability Relative to Home Ownership Higher Interest Rates Improve Affordability of Rental Monthly Mortgage Cost Less Boardwalk Same Property Occupied Rents(1)(2) 2,500 2,000 1,500 1,000 500 - 1/1/2012 4/1/2012 7/1/2012 1/1/2013 4/1/2013 7/1/2013 1/1/2014 4/1/2014 7/1/2014 1/1/2015 4/
Slide 34: Employment by Province
Employment by Province Recovering employment in Boardwalk’s core markets Source: Statistics Canada. In persons (thousands). 34
Slide 35: Population Growth
Population Growth • Alberta Leads the Country in Population Growth Rates Source: Statistics Canada 35
Slide 36: Net Migration
Net Migration Q2 2022 had the strongest net migration on record Alberta 30,000 27,500 25,000 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 - (2,500) (5,000) (7,500) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2016 2016 2016 2017 2017 2017 2017 201
Slide 37: Balanced Supply
Balanced Supply • High Affordability & Limited Supply Relative to Population Growth Alberta & Saskatchewan markets are positioned with consistent population growth compared to housing supply currently under construction. Additional upside with increased Government permanent resident targets. Sources
Slide 38: Room for Sustainable & Continuous Rent Growth
Room for Sustainable & Continuous Rent Growth Rent Growth Runway (1, 2, 3) $2,400 $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 2021 2022 2023 2024 2025 2026 Affordable Market Rent (30% of Income) Illustrative Rent Growth 95% LTV -- Monthly Mortgage Payment (Edmonton) 80% LTV -- Monthly Mortgage
Slide 39: In the Right Place, at the Right Time
In the Right Place, at the Right Time • Demand for affordability coupled with limited supply drives growth conditions in Boardwalk’s core markets Demand Supply ✓ Consistent population ✓ Forecasted housing growth in all of absorption to outpace Boardwalk’s markets construction in prairies ✓ Return of
Slide 40: Accretive Capital Recycling
Accretive Capital Recycling Pairing Organic Growth with Investment in Asset Improvements, Acquisitions, and Developments 40
Slide 41: Management's Current View on Sources and Uses of Capital
Management’s Current View on Sources and Uses of Capital The matrices below show Management’s current view on Boardwalk’s capital sources and uses. 41
Slide 42: Normal Course Issuer Bid
Normal Course Issuer Bid • Investing in Boardwalk’s own high-quality portfolio of assets Trust Units Weighted Repurchased & Average Period Cancelled Price Invested Capital 2021 438,400 $54.85 $24.0 million Q1 2022 137,500 $55.25 $7.6 million Q2 2022 240,000 $47.02 $11.3 million Q3 2022 62,500 $44.63
Slide 43: 2022 Acquisitions
2022 Acquisitions Creating value with disciplined & strategic acquisitions Acquired in Q1 of 2022, Peak Estates in Canmore, Alberta and Ardglen Place in Brampton, Ontario provide immediately accretive and growing cash Peak Estates Ardglen Place The Level flows as well as strategic benefits to Boardw
Slide 44: Railroad Tower 1 - Delivered on time and on budget
45 Railroad Tower 1 - Delivered on time and on budget • 176 units in Tower 1 received occupancy permit and first move-ins in October • Lease-up is strong and ahead of projection • Delivery of the 189 units in Tower 2 is expected Q4 2023 44
Slide 45: Development Pipeline
Development Pipeline Steady progress on value-creating development pipeline Under Construction Under Construction Future Developments – Timing TBD Project 45 Railroad Aspire The Marin Island Highway Location Brampton, Ontario View Royal, British Columbia Esquimalt, British Columbia View Royal, Briti
Slide 46: Recycling Capital
Recycling Capital Accessing equity capital derived from non-core asset dispositions Property Boardwalk Arms A & B Oak Tower Reid Park Estates Land Sandalwood Square 9550 & 9604 – 129B Ave., 11635 102 Ave. NW, 121 Clancy Drive, Saskatoon, Address Address 60 Bristol Rd. E, Mississauga, ON Edmonton, AB
Slide 47: Recycling Cash Flow Toward Repositioning & Value-Added Improvements
Recycling Cash Flow Toward Repositioning & Value-Added Improvements Value-add capital investments into our existing assets continue to generate positive yields. Renovation look-back analysis done over the 12 months following the renovation’s completion. Lakeview Apartments (Renovated in 2021) # Suit
Slide 48: Recycling Cash Flow Toward Repositioning & Value-Add Capital Improvements
Recycling Cash Flow Toward Repositioning & Value-Add Capital(1) Improvements Renovations Driving Market Share & Revenue Growth ▪ Rebranding driven by market demand ▪ Provide exceptional value at each price point ▪ Strategic capital improvement to drive market share ▪ Cost effective value-add amenity
Slide 49: Solid Financial Foundation
Solid Financial Foundation Strong Balance Sheet for Growth Opportunities 49
Slide 50: Balance Sheet Summary
Balance Sheet Summary Strong liquidity position & interest coverage Financial Highlights as at September 30, 2022 Annual Funds from Operation per Unit(3) and Liquidity (in thousands) Distribution per Unit Cash and cash equivalents $21,527 $2.94 Total available liquidity(1) $228,834 $2.74 $2.57 $2.21
Slide 51: Mortgage Summary
Mortgage Summary Laddered Maturity Profile Reducing Impact of Current Rate Environment (1) 95% of Boardwalk’s mortgages are CMHC insured, providing access to lower-cost financing and the reduction of renewal risk (1) As of September 30, 2022. 51
Slide 52: Environmental, Social, and Governance
Environmental, Social, and Governance Continuous Improvement in Boardwalk’s ESG Initiatives Benefiting all Stakeholders 52
Slide 53: Making an Impact: ESG Initiatives and Updates
Making an Impact ESG Initiatives and Updates Boardwalk REIT’s Third Annual ESG Released March 2022 Board Games 2021 2022 Score of 70 Boardwalk’s safety, Expansion of Score of 88, Top 5 in Real while also earning a inclusivity, diversity, and Boardwalk’s Chairman’s Estate and in the top GRESB Public
Slide 54: Contact Information
Contact Information Boardwalk REIT Third Quarter Results Sam Kolias Lisa Smandych Chief Executive Officer Chief Financial Officer Presentation Link www.bwalk.com /investors James Ha Eric Bowers Samantha Kolias- For Further Information President Vice President, Finance & Gunn Investor Relations Trust
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