Q2 2019 Investor Presentation
Forward Looking Statements and Non-GAAP Measures Forward Looking Statements This conference call presentation contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this conference call presentation, and other statements concerning Boardwalk’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward- looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcome s or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. All forward -looking statements in this conference call presentation are qualified by these cautionary statements. Certain material factors, estimates or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in these statements and actual results could differ materially from such conclusions, forecasts or projections. Additional information on the material risks that could cause our actual results to differ materially from the conclusions, forecast or projections in these statements and the material factors, estimates or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information can be found in our annual information form and annual report that are available on our website and at www.sedar.com. Except as required by applicable law, Boardwalk undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Non-GAAP Measures Boardwalk’s condensed consolidated interim financial statements are prepared in accordance with International Financial Repor tin g Standards (“IFRS”) and with the recommendations of REALpac, Canada’s senior national industry association for owners and managers of investment real estate. The Trust uses cer tain financial measures to assess performance, which are not generally accepted accounting principles (“GAAP”) under IFRS. The following measures, Net Operating Income (“NOI”), Funds From Operations (“FFO”), Adjusted Funds From Operations (“AFFO”), Ad justed Cash Flow From Operations (“ACFO”), Operating Margins, Stabilized Revenue Growth, Stabilized Operating Expense Growth and Stabilized NOI Growth, as well as other measures discussed in this presentation, do not have a standardized definition prescribed by IFRS and are, therefore unlikely to be comparable to similar measures provided by other reporting issuers. Non-GAAP measures should not be considered an alternative to profit(loss), cash flow from operations, or comparable metrics determined in accordance with IFRS as indicators of the Trust’s performance, profitability, cash flow and liquidity. For a full definition of these measures, please refer to the “N on- GAAP Financial Measures” in Boardwalk’s Management’s Discussion and Analysis for the three months and six months ended June 30, 2019. 2
Corporate Profile Boardwalk REIT is a Canadian multi-family residential real estate owner and operator, currently with over 33,000 units in four provinces 2019 1996 – 2004 Future Current unit price of 2004 Significant portfolio $44.00. Development & REIT Conversion growth driven by 10.7% Annualized growth focused in Unit price of $15.95 recycling capital Total Return since high growth markets REIT Conversion TSX: BEI.UN $5.4 $5.6 $5.8 $5.5 $5.6 $5.7 $5.9 $6.0 Suites Shares Outstanding 50.8 million Asset Value ($B) $4.7 $4.0 $4.2 IFRS Fair Value $6.0 billion Total Debt $2.7 billion Net Debt % of FV 48% 19,480 22,441 24,821 25,889 29,326 31,239 32,159 33,298 34,207 36,487 36,785 36,419 35,277 35,277 35,277 35,386 34,626 32,947 33,773 33,187 33,417 33,417 2,338 8,787 Annual Distribution $1.00 per trust unit 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 3
Boardwalk Strategy Building the Best Culture and Brand Organic Expansion & Brand Growth Diversification High-Grading Solid Financial Foundation = Unitholder Value Entryway at Park Place; Edmonton, AB 4
Capital Allocation Framework – Growing Free Cash Flow Net Operating Income Maximum Re- Maintenance investment / Debt Service Administration Capital Minimum Distributions Free Cash Flow Unit Buyback Return Capital to Value Added Acquisitions & 4.5% - 4.7% Yield Debt Paydown Unitholders – Capital Development (AFFO Yield 2.5 – 3% Yield Elevated 8%+ Yield 4% – 5% Yield Guidance Range at Distributions $44) Maximize Short & Long-Term Total Funds from Operations & Increase Asset Value 5
Boardwalk REIT – Delivering Growth & Offering Exceptional Value Exceptional Value Delivering Growth Significant FFO Per Unit Growth Current IFRS NAV of discount to NAV $63.30 / trust and comparable 2019 (6M) 2019 (3M) transactions unit 13.3% 14.8% > $200,000 Per Door Valuations Total Revenue Growth Average $181,000 2018 Calgary and 2019 (3M & 6M) Edmonton IFRS NAV $152,000 Transactions 4.6% $150,000 BEI Trading Value @ $44/Trust Unit BEI Sale of Non-Core Asset in Saskatoon 6
Alberta Highlights – Rental Growth & Economic Improvement Net migration of >40K CMHC Forecast High housing Jun-18 to Jun-19 in 2018 Vacancy Rates to affordability Alberta continue to decline in Employment up and standard 2019 and 2020 1.3% of living Labour Market Growth of 19.2K jobs from Jul-18 to Jul-19 CMHC Average Weekly Forecasting Earnings in Alberta continued rental Continued remain highest in rate growth into diversification of Canada Alberta Real GDP 2019 and 2020 industry with growth of 2.1% growth in non- in 2018 resource sectors 7
Q2 Financial Highlights - Delivering Another Solid Quarter 6M FFO & AFFO per Unit 3M FFO & AFFO per Unit 6M Jun-18 6M Jun-19 3M Jun-18 3M Jun-19 14.8% 13.3% 16.3% 17.6% $0.68 $1.24 $0.60 $0.57 $1.08 $0.49 $1.00 $0.85 FFO AFFO FFO AFFO Same Property Portfolio Performance 6M Jun-19 3M Jun-19 2.1% 1.9% 5.2% 5.0% 3.8% 3.7% Revenue Expense NOI Revenue Expense NOI Same Property figures exclude un-stabilized properties, sold assets, adjust for lease payments relating to IFRS 16 and is apples to apples for the Trust’s new Asset Management Model 8
Rent Trends on Renewals & New Rentals Continued positive traction on lease renewals and new leases, inline with seasonal expectations. Continuing to target 4-8% adjustments. Includes large number of Quebec lease renewals that traditionally occur in July 9
Sequential Revenue Growth Stabilized Revenue Q2 2019 vs Q1 Q1 2019 vs Q4 Q4 2018 vs Q3 Q3 2018 vs Q2 Growth # of Units 2019 2018 2018 2018 Revenue is increasing; Edmonton 12,906 1.8% 0.2% 1.1% 0.2% through a focus on: Calgary 5,657 1.4% 2.2% 0.7% 1.4% - Reducing vacancy loss Red Deer 939 2.2% 5.5% 2.8% 0.5% - Incentive reductions - Increasing market rents Grande Prairie 645 2.3% 2.2% 3.5% 3.7% Fort McMurray 352 0.7% -0.7% -2.0% -3.4% Quebec 6,000 0.2% 1.2% 1.4% 0.5% Saskatchewan 3,823 0.9% 0.1% 0.8% -1.4% Ontario 2,585 1.9% 1.2% 1.1% 0.4% 32,907 1.3% 1.0% 1.1% 0.3% 10
Occupancy, Rents, Incentives & Vacancy Loss Maintaining • High • Occupied rents Occupancy continue to rise • Overall strategy • Incentives per is to manage unit continue to revenue, which decrease and has consistently the cumulative and sustainably impact on total increased incentives is trending down All values exclude sold properties; same store 11
Brand Diversification Brand Diversification • Increases and improves product and service offerings to grow organically • Focuses our investments on properties with maximum return – Asset Management strategy • Retains resident base by providing appropriate housing needs to a wide demographic Boardwalk’s suite renovation and rebranding program focuses on select projects - repositioning them to a significantly higher level of quality with the new Boardwalk Lifestyle brand Upgrades include: • Modernization of lobbies, hallways and common areas • Enhancements to existing amenities • Complete suite renovations to new specifications The suite renovation program will: • Enhance product quality • Increase revenues • Reduce incentives and vacancy loss • High grade Boardwalk’s portfolio 12
Brand Diversification – Suite & Common Area Comparisons 13
Value Add Renovation Program – Living – Whitehall Square, Edmonton Whitehall Square – Living Scope • Lobbies • Main floor hallways • Fitness facility • Leasing office / experience • centre Total Cost: $215,000 • Rental Increase: $20 per suite • Yield: 38.5% • Before: Left Photos After: Right Photos 14
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