Boardwalk REIT Announces 2011 First Quarter Financial Results

Boardwalk Real Estate Investment Trust (Boardwalk) announced solid first quarter results for the first three months of 2011. Funds from Operations (FFO) for the quarter totaled $28.1 Million, or $0.54 per unit, a decrease of approximately 3.5% and 1.8%, respectively, over the same quarter last year. The Trust confirms the Monthly Per Unit Distribution for May, June, and July of 2011 of $0.15 per Trust Unit.  FFO is a widely accepted supplemental measure of the performance of a Canadian Real Estate entity; however, it is not a measure defined by International Financial Reporting Standards (IFRS).  The reconciliation of FFO and other financial performance measures can be found in the Management's Discussion and Analysis (MD&A) for the first quarter ended March 31, 2011, under the section titled, "Performance Measures".

The first quarter of 2011 marks the first period that the Trust is reporting its financial results under IFRS.  Although there are many similarities with Canadian GAAP, there are also a variety of differences which are referred to in the International Financial Reporting Standards section of the Trust's MD&A. Note 3 of the Trust's Financial Statements provide a comprehensive assessment of these changes to the Trust's Financial Reporting.

The decrease in reported FFO can be attributed to higher operating expenses and loss of FFO from the sale of properties in 2010, which was moderated by lower financing costs and by the effectiveness of the Trust's Unit Buyback program when viewed on a per unit basis.


In the first quarter of 2011, overall occupancy for Boardwalk's portfolio was 96.9%, equal to the occupancy level for the same period last year but slightly down from the previous quarter.  Average market rents have increased to $1,022, an increase of 3.4% from $988 reported in March of 2010.  Boardwalk's rental strategy of continuous active management of three key variables: occupancy levels, market rents, and suite-specific incentives, has allowed the Trust to report an increase in both average and occupied rents versus the last quarter and the same period a year ago. Although the Trust has benefitted from strong occupancy levels through the winter season, the market remains competitive.  The Trust continues to believe that significant organic growth can be achieved with Boardwalk's rental strategy of continuous monitoring and adjusting of market rents based on demand as well as seasonal factors.

Consistent with historic trends, Calgary and Edmonton both saw decreases in occupancy for the first quarter of 2011; however, this was somewhat offset by higher occupied rents in both cities, as the Trust continues to maximize revenue through our rental strategy.  Conversely, occupancy in the Trust's Ontario markets have increased year over year for the first quarter of 2011, as the Trust continued to focus on occupancy in Ontario's recovering economy. In Saskatchewan, occupancy increased in Regina and remained flat in Saskatoon as demand continues to be healthy.  Occupancy in our Quebec market increased year-over-year with strong gains in Net Operating Income as a result of higher revenue.

With many of our competitors still experiencing low occupancy levels, it remains a challenge to realize traction in this continued competitive environment, but we will continue to monitor occupancy and adjust market rents accordingly, as well as apply suite-specific incentives as needed to maximize revenue.

On a sequential basis, stabilized revenues for the first three months of 2011 decreased 0.1% when compared to the previous quarter, mainly the result of decreased occupancy offset by increased occupied rental levels.   The increased occupied rental amounts are a positive sign that the use of selective rental incentives are beginning to decline.  This combined with continued strong occupancy levels is encouraging as the Trust moves forward into the Spring and Summer months which are the strongest rental months for the REIT.

Economic Market Fundamentals From Across Canada:


In the West, economic fundamentals remain solid. British Columbia, Alberta and Saskatchewan saw positive wage growth for February, year-over-year, and it is expected that economic and employment growth will continue through 2011. In Alberta, the unemployment rate decreased in March to 5.7% from 7.5% in the prior year.  Alberta and Saskatchewan continue to lead in employment growth driven by strong demand in the resource sectors.  Although the reported figures for net migration in both Alberta and Saskatchewan have tempered in March, CMHC estimates that net migration for both provinces in 2011 to be strong, as an improving job market will attract both interprovincial and international migrants. The Alberta Government reported record land sales in 2010; and for the first three months of 2011, Alberta Oil Well Spuds were up 13% over the same period last year.  Net migration was down in March of 2011 in British Columbia, however, CMHC forecasts that the strong jobmarket as shown in the 3.9% wage growth for the 12 month period ended February 2011, will fuel net migration in 2011.  Saskatchewan continues to enjoy Canada's lowest unemployment rate at 5.2% in March 2011.  CMHC continues to estimate that Saskatchewan will see record levels of net migration in 2011 and into 2012.


Economic fundamentals in Ontario are expected to improve as the Manufacturing and Automotive Industries advance.  Ontario reported a significant decrease to its unemployment rate in March 2011 to 8.1% from 8.8% in the previous year.  Ontario's Auto Industry continues to support approximately 400,000 direct and indirect jobs, and continues to play a sizable portion of the Ontario economy.   CMHC reports that the Ontario population will benefit from stronger international immigration and fewer migritory outflows to Western Canada.  Quebec also saw a slight year-over-year decrease in unemployment in March 2011 at 7.7%.  Wage growth was strong at 4.4% as many part time roles migrated into full time positions.

Unit Buyback

With its significant liquidity position, the Trust continues to look for opportunities to deploy a portion of surplus funds. The Trust continues to view the purchase of its Trust Units on the public market as a good investment; however, it believes that a balanced approach is necessary with respect to its buyback strategy compared to other options for deploying surplus cash.  In the first quarter of 2011, the Trust purchased and cancelled 160,900 Trust Units, representing a total purchase cost of approximately $6.7 million, or an average of $41.89 per Trust Unit. Cumulatively, since August 17, 2007, the Trust purchased and canceled 4,542,747 Trust Units, representing a total purchase cost of $170.5 million, or an average cost of $37.53 per Trust Unit. The Trust continues to review all available options that management believes will provide the greatest return to our Unitholders.

In August 2010, Boardwalk successfully renewed its Normal Course Issuer Bid, which allows Boardwalk to purchase up to 3,918,288 Trust Units, representing 10% of its public float of Trust Units, through the facilities of the Toronto Stock Exchange. The Bid commenced on August 24, 2010, and will terminate on August 23, 2011, or such earlier time as the Bid is complete.

As at March 31, 2011, Boardwalk REIT had 47,744,599 issued and outstanding Trust Units, plus 4,475,000 Class "B" Units of Boardwalk REIT Limited Partnership exchangeable for Trust Units on a one-for-one basis at the option of the holder. Accordingly, if all of the LP B Units were exchanged for REIT Units, the total issued and outstanding REIT Units would be 52,219,599.

Liquidity and Continued Financial Strength

The Trust maintained its solid financial position through the first quarter of 2011 and remains prepared for any opportunities that may arise.  Boardwalk REIT's total principal mortgage and debt outstanding was $2.35 billion as of March 31, 2011, as compared to $2.32 billion as of March 31, 2010.  As of March 31, 2011, the Trust's total debt had an average term to maturity of approximately 3 years with a weighted average interest rate of 4.25% and the debt-to-total enterprise value ratio was 51.9%.

Outlook and 2011 Financial Guidance

With improving economic fundamentals across the country, and the signals of improving rental conditions in Alberta, our largest market, we are optimistic that employment growth combined with positive migration will translate into higher demand for rental units.  Positive indicators such as oil drilling activity in Alberta and Saskatchewan, as well as strong international migration into Ontario and Quebec have us prepared for the spring and summer seasons ahead.  We will continue to monitor the demand for rentals on a daily basis, and adjust market rents and incentives accordingly to maximize our revenue.  CMHC Insured Mortgage rates remain at reasonably low levels and continue to present an opportunity for the Trust to renew our debt at lower than maturing rates.

Despite these positive indicators, the market remains volatile and clarity on whether or not these leading indicators translate into measureable rental demand can not be determined at this time.

Additional Information

A more detailed analysis is included in the Management's Discussion and Analysis and Consolidated Financial Statements, which have been filed on SEDAR and can be viewed at or on the Trust's website:

Additionally, more detail on our operations can be found in our conference call pressentation and other supplemental materials, which are posted on our website:

on May 12, 2011