Boardwalk REIT’s Earnings Call Highlights Strong Growth Amid Challenges

Boardwalk Real Estate Investment Trust (($TSE:BEI.UN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Boardwalk Real Estate Investment Trust’s recent earnings call painted a picture of robust financial health, marked by increased rental revenue and high occupancy rates. Despite some challenges like increased vacancy loss and negative leasing spreads in Calgary, the overall sentiment was positive, reflecting the company’s strong financial position and strategic initiatives.

Increase in Rental Revenue and NOI

Boardwalk reported a notable increase in same-property rental revenue, which rose by 7.5%, and a 10.3% increase in same-property net operating income (NOI) compared to the same quarter last year. This growth underscores the company’s ability to enhance its financial performance through effective property management and rental strategies.

High Occupancy Rates

The trust maintained a strong portfolio occupancy rate of 98%, driven by high demand for affordable rental housing. This high occupancy rate highlights the attractiveness of Boardwalk’s properties and its ability to meet market demand effectively.

Strategic Capital Allocation

Boardwalk has strategically invested approximately $352,000 into value-add projects and executed successful acquisitions and dispositions totaling $210 million in real estate transactions. These strategic moves are aimed at enhancing the company’s portfolio and driving future growth.

Increased Distribution

The company confirmed the next three regular monthly distributions, equating to $1.62 per trust unit on an annualized basis, representing a 12.5% increase from the prior year. This increase in distribution reflects Boardwalk’s commitment to delivering value to its investors.

Strong Financial Position

Boardwalk maintains a robust financial position with approximately $27 million in cash and an undrawn $246 million operating line. This financial flexibility allows the company to navigate market challenges and pursue growth opportunities.

Increased Vacancy Loss

Despite reducing incentives, Boardwalk experienced an increase in vacancy loss, which impacted its financial performance. This challenge highlights the competitive nature of the rental market and the need for strategic adjustments.

Negative Leasing Spreads in Calgary

In Calgary, new lease spreads were slightly negative as the company prioritized maintaining high occupancy in competitive, higher-priced markets. This strategic decision reflects Boardwalk’s focus on long-term stability over short-term gains.

Challenges with New Supply

The company faces increased competition and vacancy, particularly for higher-priced products, due to new supply entering select markets. This challenge underscores the importance of strategic positioning and market adaptation.

Forward-Looking Guidance

Boardwalk’s forward-looking guidance remains optimistic, with expectations of continued strong financial performance. The company revised its 2025 guidance, forecasting same-property NOI growth between 5.5% and 8.5%, and FFO per unit between $4.35 and $4.60. With a strong balance sheet and $273 million in liquidity, Boardwalk is well-positioned to capitalize on market opportunities despite the challenges posed by new supply.

In conclusion, Boardwalk Real Estate Investment Trust’s earnings call highlighted a strong financial performance and strategic initiatives that position the company well for future growth. While challenges such as increased vacancy loss and competitive markets remain, the overall sentiment remains positive, reflecting confidence in the company’s ability to navigate these hurdles and continue delivering value to its stakeholders.