Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boardwalk Real Estate Investment Trust (BOWFF, Financial) reported an 8.2% increase in same-property rental revenue and an 11% increase in same-property net operating income for Q4 2024 compared to the same period last year.
- The company achieved a high occupancy rate of 98%, indicating strong demand for its affordable rental housing offerings.
- Boardwalk's financial performance was bolstered by a 12.5% increase in same-property funds from operations per unit, showcasing effective cash flow management.
- The trust's strategic investments in community upgrades and value-add projects have enhanced its leasing performance and value proposition.
- Boardwalk announced a 12.5% increase in its monthly distribution, reflecting confidence in its financial stability and growth prospects.
Negative Points
- Vacancy loss increased due to higher competition and new supply entering select markets, impacting revenue growth.
- Total rental expenses rose by 3.6% in Q4 2024, driven by higher operating expenses, utilities, and property taxes.
- Leasing spreads on new and renewed leases decreased, reflecting a more balanced supply and demand environment.
- The trust's administration costs increased by $0.7 million year-over-year due to inflationary wage adjustments and higher software costs.
- Boardwalk faces challenges in acquisition opportunities due to its current stock trading price, limiting its ability to capitalize on potential market opportunities.
Q & A Highlights
Q: On the leasing side for Alberta, is the dip in new leasing spreads to 1.3% a temporary phenomenon? What is your view on new lease spreads throughout 2025?
A: James Ha, President: Our approach this winter was to maintain high occupancy, so we took a conservative approach to market rents. We are well-positioned for the busier spring rental season with over 98% occupancy. We anticipate adjusting market rents upwards and reducing discounts, which should increase new lease spreads. Our renewal spreads remain strong, which is crucial as they represent about 75% of our lease velocity.
Q: Regarding the SPNOI guidance of 4% to 8% growth, is this more back-end loaded? What are the embedded growth assumptions for revenue and OpEx?
A: James Ha, President: Our revenue guidance is about 4.5% to 6.5% on a same-property basis. Gregg Tinling, CFO: For expenses, we expect a 3% to 6% increase in total rental expenses compared to 2024. The team is focused on managing controllable costs.
Q: The CapEx budget for 2025 seems up by roughly 10% over the 2024 actual level. Is this due to value-add initiatives or other factors?
A: James Ha, President: The budget increase is primarily due to inflationary adjustments and some carryforward projects from 2024. It reflects our ongoing value-add initiatives and building improvements.
Q: Do you plan to continue trimming non-core assets, and what acquisition opportunities are you seeing?
A: Samantha Kolias-Gunn, SVP Corporate Development: We are targeting $100 million to $200 million in dispositions for 2025. Samantha Adams, SVP Investments: We remain opportunistic with acquisitions, but current stock trading levels make it challenging. We will act if the right opportunity arises.
Q: How do you see market rents evolving as you enter the spring leasing season?
A: James Ha, President: We plan to adjust market rents upwards as we enter spring. Our communities are mostly full, and we continue to see strong demand for affordable housing. Our average rents remain competitive, especially in Edmonton, which supports our positive outlook.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
