Q1 2025 Boardwalk REIT Earnings Call
Speaker Change: Good afternoon ladies and gentlemen and welcome to the Boardwalk real estate investment trust first quarter 2025 earnings call At this time all lines are in listen only mode
Speaker Change: Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on May 7, 2025.
Eric Bowers: I would now like to turn a conference over to Eric Bowers. Please go ahead.
Speaker Change: Thank you Andrew and welcome to the Boardwalk REIT 2025 First Quarter Results Conference Call.
Speaker Change: With me here today are Sam Coleus, Chief Executive Officer, James Ha, President Greg Tinling, Chief Financial Officer, Samantha Coleus Gunn, Senior VP of Corporate Development and Governance, and Samantha Adams, Senior VP of Investments.
Speaker Change: We would like to begin this call by acknowledging on behalf of Boardwalk the treaties and traditional territories across our operations and express gratitude and respect for the land we are gathered on today and we now know as Canada.
Speaker Change: We respect Indigenous peoples and communities as the original stewards of this land. We come with respect for this land that we are on today for all the people who have and continue to reside here and the rich diversity of First Nation, Inuit and Métis peoples.
Speaker Change: Before we get to our results, please note that this call is being broadly distributed by way of webcast.
Speaker Change: If you have not already done so, please visit bwalk.com slash investors, where you will find a link to today's presentation, as well as PDF files of the Trust Financial Statements MDNA and Annual Report.
Speaker Change: Starting on slide two, we would like to remind our listeners that certain statements in this call and presentation may be considered for looking statements.
Speaker Change: Although the expectations that fourth and such statements are based on reasonable assumptions, Boardwalk's future operation and its actual performance may defer materially from those in any forward-looking statements.
Speaker Change: Additional information that could cause actual results to defer materially from these statements are detailed in Boardwalks publicly filed documents.
Speaker Change: I would like to now turn the call over to Sam Coleus. Thank you, Eric, and starting on Slide 4. A portable multi-family communities have always been an essential product and service. A key word in community is unity, as reflected in our new diagram.
Speaker Change: The most important word in multi-family communities is family. The most important part of our whole.
Speaker Change: is our family. Our family is where our heart is. Our heart is where love always lives. Our true North.
Speaker Change: At the center of our being is redefining BFF, our Boardwalk Family Forever. Welcome everyone to our Boardwalk Family Forever and to our Q1 2025 results.
Speaker Change: Next slide, our culture from our humble beginnings over 40 years ago, our resident members remain at the top of our organization.
Speaker Change: Our leaders put our team first and our team puts our resident members first. Guided by the Golden Rule, we have a peak performing customer service culture that creates exceptional results as we can see on our next slide 6.
are continued impressive performance.
Speaker Change: with GAP and non-GAAP measures , increasing from the same quarter last year, same property rental revenue increased 7.5% and same property net operating income increased 10.3%.
Speaker Change: Our operating margin increased by 160 basis points as well as our same property funds from operations per unit by 11.1%. I would like to now pass it over to Samantha Coleus-Gum. Thank you so much, Pam.
Samantha Coleus-Gunn: We are extremely grateful for our team's exceptional performance and continued commitment to our purpose, bringing our resident members home to love always. Continuing on to slide seven.
Our operational stability and the resilience of affordable housing.
Rental Market Fundamentals in our core markets are balanced.
Samantha Coleus-Gunn: Our occupancy, retention, and demand for affordable rental housing remains high.
Samantha Coleus-Gunn: Average asking rents in Canada remain much higher than Boardwalks occupied average rents. As a result of our self-regulation, we continue to provide Canadians with exceptional value.
Samantha Coleus-Gunn: Our economy continues to diversify, provide job opportunities, host world-class educational programs that attract skilled talent, offer an exceptional quality of life and affordability.
Samantha Coleus-Gunn: A most recent article released by Better Dwelling highlights Alberta as the only province to substantially attract young workers. Hage 25-45 D demographic critical to driving economic growth and long-term prosperity.
Samantha Coleus-Gunn: A striking result of our provincial governments targeted how Burda is calling campaign.
and the enduring Alberta Advantage.
Samantha Coleus-Gunn: Alberta continues to be a strong example of how lower taxes is a proven, best practice public policy that increases growth and prosperity for all. We continue to be in the right place at the right time.
Samantha Coleus-Gunn: Please refer to our appendix for more data on the persistent Alberta advantage.
Samantha Coleus-Gunn: For rentals.ca data, our average occupied rent of $1,538 for two bedroom apartment are attractive, especially relative to the Canadian average of $2,222.
Samantha Coleus-Gunn: A fortability continues to be in demand, has evidenced by our strong portfolio occupancy of 98% and is a leading factor in interprovincial migration.
Samantha Coleus-Gunn: The fiscal strength of our Alberta and Saskatchewan jurisdictions will continue to attract employers, allow for innovation and increase our productivity, contributing to a more stable economic environment.
Samantha Coleus-Gunn: Our self-regulation has a well-positioned and competitive market as we continue to strategically moderate our rental rates within a resident-friendly renewal rate band, resulting in greater stability in occupancy and reputation.
Samantha Coleus-Gunn: Cared with our strong financial foundation, minimum distribution policy, revolting in maximum reinvestment, and free cash flow.
Samantha Coleus-Gunn: Strategic repositioning on paralleled customer service and strong family values we remain in a position to deliver stable performance.
Samantha Coleus-Gunn: This is what sets us apart, bringing you home to where love always lives.
Samantha Coleus-Gunn: Boardwalk strives to be the first choice in multi-family apartment communities to work, invest, and call home with our Boardwalk family forever.
Samantha Coleus-Gunn: Slide 8 illustrates our amazing value representing exceptional quality had an affordable price. Boardwalk has made significant investments in its communities to improve value proposition and leasing performance.
Speaker Change: Past investments in upgraded fitness facilities, amenity rooms, and outdoor spaces provide high-quality communities in the affordable housing market segment. We'd like to now pass the call on to Greg Tinling, who will provide us with an overview of our quarter results, strong balance sheet, fair value, and ease.
[inaudible]
Thank you, Samantha.
Speaker Change: Slide 9 shows our key operational metrics. Occupancy continues to remain high, along with increasing occupied rent.
Speaker Change: Although vacancy loss increased, the trust was able to reduce incentives that helped contribute to the higher revenues reported for Q1 2025 compared to the same period a year ago.
Speaker Change: This is a reflection of our key strategic decisions made to maximize free cash flow and diversify our product offering, yielding significant financial performance.
Speaker Change: Flight 10 shows leasing spreads on new and renewed leases within our self-regulated resident friendly centric model keeping retention and referrals high in our turnover and expenses low.
Speaker Change: Year over year, leasing spreads on new and renewed leases have decreased, reflecting a return to a more balanced supply and demand picture, with new supply entering select markets within the portfolio that resulted in increased competition and vacancy, particularly for product at the higher price point.
Speaker Change: Our renewal spreads were 5.3% in April 2025 for Alberta. New lease spreads in Calgary are slightly negative as we prioritize occupancy in the more competitive higher price markets within the city.
Speaker Change: Edmonton continues to see positive new lease spreads as our portfolio of high quality affordable housing continues to see high demand. Overall, our blended Alberta spreads in the month of April were 2.9% and on a portfolio basis 3.3%.
Speaker Change: Continue to prioritize maintaining occupancy and maximizing retention. This will continue to provide resident friendly affordable housing options in our core markets while lowering our costs and steadying operational results. We will win win for all our stakeholders.
Speaker Change: Slide 11 shows sequential quarterly rental revenue growth, including 1.1% growth in Q1 2025 compared to Q4 2024.
Speaker Change: The change over each quarter is a reflection of Boardwalk strategy, striving toward balancing the optimum level of market rents, rental incentives and occupancy rates in order to achieve its NOI optimization strategy.
Speaker Change: Moving to slide 12 for Q-1 2025, same property net operating income increased by 10.3% compared to Q-1 2024 with revenue growth of 7.5%.
Speaker Change: Alberta, the trust-largest region, saw a revenue growth of 7.9% in Q1 2025 as compared to Q1 2024.
Speaker Change: Total rental expenses increased 3% for Q1 2025 compared to the same period in the prior year. Primarily attributable to higher utilities due to increased consumption, particularly in Quebec.
Speaker Change: Overall, operating expenses and property taxes were relatively comparable to the same period in the prior year. The team remains committed to ensuring focus and discipline when managing controllable operating expenses.
Speaker Change: On slide 13, administration costs decreased $0.3 million as compared to Q4 2024. Due to a smaller profit share and bonus accrual, partially offset by inflationary wage adjustments at the onset of the calendar year.
Speaker Change: Third unit-based compensation decreased $1 million compared to Q4 2024 due mainly to an $850,000 one-time true-up adjustment in the prior quarter to recognize unvested deferred units that would automatically vest if the participants who are eligible were to depart from Boardwalk due to
Speaker Change: Flight 14 illustrates Boardwalk's mortgage maturity schedule. Our mortgages are well staggered with approximately 96% of our mortgage balance carrying NHA insurance through the Canada Mortgage and Housing Corporation.
Speaker Change: This insurance remains in effect for the full amortization of the mortgage.
Speaker Change: In addition to carrying the government of Canada's backing, provides access to financing at rates lower than conventional mortgages with a current estimated 5-year and 10-year or CMHC rate of 3.50% and 4.05% respectively.
Speaker Change: Though current interest rates are above the trust maturing rates, the trust maturity curve remains staggered, reducing the amount, the renewal amount in any particular year. Lastly, the trust has an interest coverage of 3.0 in the current quarter.
Speaker Change: Slide 15 summarizes our 2025 Mortgage Program. To date, we have renewed or forward-locked $148.3 million at an average rate of 3.80% and an average term of 4 years.
Speaker Change: Current underwriting criteria in our most recent submissions to CMHC and our Lenders has remained in line with our historically conservative estimates.
Speaker Change: The trust is well positioned and approximately $27 million in cash as well as an undrawn $246 million operating line. This approximate $273 million in liquidity provides the trust with a flexible financial position.
Speaker Change: Slide 16 illustrates the trust's estimated fair value of its investment properties, excluding adjustments for IFRS 16, which totaled $8.4 billion as at March 31st, 2024, compared to $8.2 billion that December 31st, 2024.
Speaker Change: The increase in overall fair value is the result of increases from rental rate growth as well as the acquisition of elbow 5-8 in Calgary, Alberta, while being slightly offset by an upward adjustment for vacancy assumptions in Calgary to reflect a more balanced market.
Speaker Change: Current estimated fair value of approximately $241,000 per apartment door remains below replacement cost.
Speaker Change: In consultation with our external appraisers, the capitalization rates or cap rates used in determining Q-1 2025 fair value were unchanged from Q-4-2024.
Speaker Change: As it does every quarter the trust will continue to review completed asset sales transactions and market reports to determine if adjustments to cap rates are necessary.
Speaker Change: Most recent published cap-rate reports suggest that the cap-rates being utilized by the trust for calculating fair value are within their estimated ranges.
Slide 17 highlights our ESG initiatives.
Speaker Change: Using a disciplined capital allocation approach we are focused on reducing emissions through reduced utilities consumption and therefore reducing utilities costs, while always promoting social and governance initiatives.
Speaker Change: As part of our 2024 Annual Reporting, the Trust will be publishing its ESG report in May 2025, which will be available on our website.
Speaker Change: I would like to now turn the call over to Samantha Adams to highlight our capital allocation and discuss our development pipeline.
Samantha Adams: Thank you, Greg. We started 2025 where we left off in 2024, building on our approved and accretive capital deployment initiatives and focusing on our successful repositioning and value-ed strategy, acquisitions and disposition, as well as our NCIDs.
now.
Samantha Adams: In Q1, we invested approximately $352,000 into our value-add projects to upgrade our communities.
Samantha Adams: Slide 18, illustrate the investment of our free cash flow into repositioning the capital improvements, including suite optimization.
Samantha Adams: We are currently under construction on 16 spaces and assessing the feasibility of converting 37 additional spaces into rental streets.
Samantha Adams: By the end of 2025, we anticipate that we will have renovated 73% of the common areas in our portfolio as well.
Samantha Adams: Each project we undertake is evaluated individually and we target at least an 8% return on cost providing an accretive return on our capital.
Samantha Adams: During the quarter, Boardwalk completed or announced $210 million of real estate transactions as illustrator on slide 19.
Samantha Adams: Within these transactions we acquired 336 units representing an average year of construction of 2024 at an average stabilized cap rate of 5.5%.
Samantha Adams: In March, we successfully completed the forward sale of LB-5-8, our brand new six-story 255-sweet community in Calgary.
Samantha Adams: We also finalize the terms to acquire the remaining 50% interest in our joint venture community, Brio, which is very well located in the University District of Calgary.
Samantha Adams: Boardwalked together with our joint venture partner, built this 162 suite apartment community, and it was delivered in the spring of 2020.
Samantha Adams: The acquisition of the remaining 50% allows us to enhance our operating efficiencies and is expected to close in August of 2025.
Samantha Adams: As discussed on our previous call, in January we announced the successful sale of 3 non-core assets in Edmonton with an average vintage of 1992 for a total sale price of just under $80 million.
Samantha Adams: This price represents $205,000 per door and a cap rate of 4.8%.
Samantha Adams: The portion of the net proceeds from the sale was used to support the NCIB to strategically benefit from the disconnect that existed between our unit price and the value of our portfolio that we always illustrate on flight 20.
Samantha Adams: Through the end of the quarter, Boardwalk has invested $30 million in unit buybacks at an average price of $63.16.
Samantha Adams: This represents a cap rate of over 6%, which exceeded other opportunities that were available during that time.
Samantha Adams: Slide 21 provides an update on our selective development pipeline which has been designed to support the trust's long-term growth strategy to improve the quality and variety of our product offering over time.
Samantha Adams: We anticipate the inspire will be welcoming our first resident members in building one around July 1st and occupancy for the balance of the buildings is expected to be in September of this year.
Samantha Adams: As a reminder, the aspires located adjacent to our existing Aurora community, which will allow for greater operational efficiencies once completed.
Samantha Adams: Although the Marin site building permit has been submitted and our concept development from our diloup is underway, we are positing these developments in the short term as we wait for greater cost certainty and improved overall market conditions for development.
Samantha Adams: We have completed the rezoning for Island Highway and we are evaluating our next steps including listing the project for sale.
Speaker Change: I would now like to turn the call over to Jane Todd to discuss our track record of creating value and our updated 2025 guidance. Thank you Samantha and thank you to our entire Boardwalk team for your service and commitment to our resident members, which continues to deliver consistent and strong performance that our team is sharing today.
Speaker Change: Slide 22, updates our 2025 outlook as we build off our base of exceptional affordability, product quality, and self-moderated rental rates.
Speaker Change: Each of these are key inputs into the strength of our platform and ability to compete and outperform in a more balanced housing market.
Speaker Change: We continue to see that the demand for affordable housing remains resilient and our outlook for the year remains positive.
Speaker Change: For 2025, our team's ability to maintain high occupancy and strong blended leasing spreads are allowing us to increase the bottom end of our expectations.
Speaker Change: While the recently announced reduction of the Consumer Carbon Tax beginning in April is anticipated to decrease our utility cost and increase our cash flow for investment in future energy savings initiatives.
Speaker Change: Our revised, same property, NOI growth outlook is now forecasted to be between 5.5 and 8.5 percent. And our FFO per unit is anticipated to be between $4.35 and $4.60.
Speaker Change: This guidance is forward-looking in nature and reflects the most recent announcements to reduce carbon taxes to make housing more affordable.
Speaker Change: We look forward to regularly updating and refining our outlook in the quarters to come.
Speaker Change: On slide 23, we have confirmed the payment dates of our next three regular monthly distributions equating to $1.62 per trust unit on an annualized basis and represents a 12.5% increase from our distribution a year ago.
Speaker Change: Since 2021, our distribution has increased at a compounded annual growth rate of over 12% while still retaining an industry high proportion of our cash flow to reinvest and compound growth.
Speaker Change: Our formula and operating model has extended our FFO per unit track record and now positions Boardwalk in 2025 to more than double our FFO per unit in just eight years.
Speaker Change: On flight 24, this growth, along with our approach to maximum cash flow retention, has improved our leverage metrics to provide boardwalk with one of the strongest and most flexible balance sheets.
Speaker Change: Our discipline and Solid Financial Foundation provides us with flexibility to take advantage of opportunities that may arise.
Samantha Coleus-Gunn: As Samantha shared, one of the biggest opportunities we are currently seeing is in our own platform.
Samantha Coleus-Gunn: which on slides 25 and 26 shows the exceptional value that our trust units represent.
Samantha Coleus-Gunn: Our current trading price equates to well under 200,000 per apartment tour and over a 6% cap rate on a forward basis.
Samantha Coleus-Gunn: Both metrics are exceptional when considering our product quality, locations, spread to financing costs, and cash flow growth as shared in our outlook.
Samantha Coleus-Gunn: Recent private market transactions continue to be supportive of our estimated net asset value of $240,000 per door or $96 per trust unit.
Samantha Coleus-Gunn: The team continues to be active in the private market in sourcing non-core asset sales that our team can recycle toward a creative opportunities, including potential buyback or unique acquisition opportunities.
Samantha Coleus-Gunn: In closing, we would like to thank again our resident members, our team, our partners, and all our stakeholders for trusting Boardwalk to provide the best quality homes and communities and are looking forward to continuing our track record of growth.
Speaker Change: We would now be happy to take questions from the line.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and after session.
Speaker Change: Should you have a question, please press the star followed by the number one on your touch
Speaker Change: You will hear prompt that your hat has been raised.
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Speaker Change: If you are using a speaker phone, please lift the headset before pressing any keys.
One moment please, for your first question.
Your first question is from Fred Blando from Green Street. Please go ahead.
Thank you and good morning.
In terms of job growth in Alberta, maybe a question for James or Sam, just in terms of job growth in Alberta.
Speaker Change: Are you starting to see some cracks coming, for example, from the Audium Gas Sector and I guess my question is do you see risk that inter-proventual immigration could be negatively impacted sometimes this year?
Eric Bowers: Hi, Fred. It's Eric. I think great question. Thank you first and foremost.
Eric Bowers: Specifically on the oil and gas jobs, I think one one thing that is very different today is compared to sort of if you go back to the peak of the last cycle. Is our oil producers from a balance sheet perspective have really improved their dead levels.
Eric Bowers: That position puts them in a much better position as compared to what we've seen in past cycles.
Eric Bowers: in terms of the need to potentially downsize which is what we would have saw last time. It's very different today. I think in addition to that we've also seen
Eric Bowers: A diversification throughout many, many industries. I think it's Samantha commented in her opening remarks as well. Our government has done a great job in diversifying the economy by attracting new job growth in areas like healthcare, clean tech.
We're housing in other industries as well.
Eric Bowers: and I think to your question as well on the oil and gas side they have the other thing that will help mitigate some of that concern I think is the low Canadian dollar at the moment.
Eric Bowers: I'll just add Fred and James here to Eric's comments. There's the slide 32 in our appendix.
Eric Bowers: That really shows that change that's occurred in Alberta diversification. That's occurred. We can see on flight 32 in the appendix while in gas, the oil and gas industry in the percentage of total employment in our province.
Eric Bowers: has declined since 2012 despite our population growth growing significantly here in Alberta over that same time period
Eric Bowers: So does that mean that you still feel relatively positive in terms of inter-proventual immigration at least this year?
Eric Bowers: Yeah, Fred affordability remains some of the best in the country right here in Alberta. You know, our average rents in Edmonton of sub-$1,500.
Eric Bowers: you know with the portability to find as rent relative to income you can't find that in any other major city in Canada and that's a big reason why we continue to see positive migration. In addition to the low taxes job vacancies that exist.
Eric Bowers: All the reasons that Alberta has won in immigration standpoint over the last few years continue to exist today. And, you know, in fact, we saw that in our most recent population stats that came out just about a month ago where Alberta led population growth not only on a relative basis.
Eric Bowers: On an absolute basis, we saw Alberta have the best population growth in the country.
Speaker Change: Okay, now that's right. And quickly just my last question. How do you feel in terms of new supply in the Coagurian and Minton for the rest of the year? How bad is it? And what do you see supply heading during the rest of the year?
Speaker Change: Hi Fred, it's Eric again so certainly we've seen higher deliveries over the last couple years particularly in Calgary however as James just commented on.
Speaker Change: No we're in the country at the moment. Do we have as high demand as we have in Alberta right now? So we we do need that supply to to meet that demand.
Speaker Change: What we have a shortage of in particular is affordable high quality housing.
Speaker Change: And good news for us is that that is what we have and we've also taken that self-moderation approach.
along the way so while we do see
Speaker Change: You know elevated supply levels in particular in Calgary we think the approach that we've taken
Speaker Change: within our model will continue to be viewed very favorably and you can see that as well in our ability to maintain our higher occupancy levels given the amount we've re-invested in our portfolio over the last number of years.
Mm-hmm.
Okay, thank you. That's great. That's it for me.
Thanks, Fred.
Thank you.
Your next question is from Jonathan Keltzer from TD Cowan. Please go ahead.
Bye.
Speaker Change: Thanks, just sort of continuing on on Calgary with a negative new leasing spread and I can get that you guys are doing that to to maintain occupancy but
Speaker Change: At what point do you think you find the balance in terms of where you're where you're getting new leasing versus where market trends are?
Speaker Change: Donna, then we're at SAM, seeing indicators right now and just reviewed the Daily Dashboard before this call, and we have several of our communities with zero availability.
Speaker Change: And so our occupancies are really high right now and it's only the seventh of the month.
Now we've got lots of rentals
Speaker Change: and applications and we're well on target to get close to zero availability in Calgary so those are very positive we asked our operations leader yesterday how things are going and
Very, very little pocket deals.
Speaker Change: are being offered or even advertised. And so the indicators are positive and continue to show demand for affordability, good value, large apartment units, and also in migration interpreventually and even still international.
and so all of those are positive for
Speaker Change: More stable market and calorie. We do want to emphasize though we have enough.
more expensive higher-end rentals in Calgary and really across Canada.
Speaker Change: We've done a great job on providing additional supply with our CMAC financing and our policy makers and so overall we're seeing across Canada a more balanced market.
Speaker Change: Okay, that's helpful. And then just switching gears and you guys bought out or are about to buy out the Rio cans interested in Rio. Was there any thought to to listing that property for sale by the partnership?
Speaker Change: Oh hey, it's Samantha Adam speaking. We did contemplate that, but to be honest, we believe so strongly in Brio. It's in a fantastic area, really close University of Calgary, and so I would suggest we contemplated that for about, you know, the equivalent of five seconds. We're big believers in that aspect.
Speaker Change: It's a great opportunity for us now, too, from an operational perspective to enhance our efficiencies on site, so we're really excited.
Speaker Change: Okay, could we, if you're looking at, and I think you sort of hinted at looking at unique acquisitions, I think was the term that was used, would that sort of fall into that category and if you, you guys were to be on the acquisition side going forward to balance the year we look like assets similar to that?
Speaker Change: Well, this is a unique opportunity for us for sure because it's essentially an off-market deal and a property that we know and understand.
Speaker Change: So, Rio for us was a great opportunity. We continue to be really active right now actually on other opportunities. We're being very, very selective.
Speaker Change: When you say, like, Brio, do you mean more sort of new or nearly new type product or? Yeah, newer vintage type product.
Jonathan and Sam, the one...
Speaker Change: Part about the university area also has the largest regional hospital foothills, the new cancer research, a billion dollar investment, or more with employment.
Speaker Change: Our health care continues to be a big employer and a growing employer.
Speaker Change: not to mention the research element that goes with our health care and our sole provider which provides excellent research opportunities and data for research. And so that hub...
Over the last 40 years has rarely seen cyclicality.
Speaker Change: and that's why we love Brio and that Northwest Hub and location in particular. Another big amenity is a grocery store just
Speaker Change: within hundreds of feet away and our residents love the proximity of a grocery store and that's always been a very positive amenity that's very hard to replace as well.
And so that that's why we we love Brio the design
Are the large unit sizes?
Very difficult to replace.
Speaker Change: Over the last 40 years we haven't been able to buy something like this and so building it was the only way
Speaker Change: to own and provide a high quality product and service like this in that area.
OK, that's helpful. I'll turn it back. Thanks.
Thank you, John.
Your next question is from Mike Marquidis from BMO. Please go ahead.
Thanks.
Speaker Change: Just a quick question on questions. The first one being
Speaker Change: Thanks for the guidance, of course. I'm just curious to be give us some sense of how you expect your sequential revenue to project through the remainder of this year.
Speaker Change: I guess you're 1-1 Q1 so how should we be thinking about the trajectory Q2 through Q4 in your bags?
Eric Bowers: Thank you. Hi, Mike. It's Eric and then Q2. You're likely on a sequential basis. I think to see a little bit of a lower number sequentially. And that's mainly a virtue of just your new leasing spreads that we're seeing at the moment. If you move to.
Eric Bowers: Q3 I think both from a volume perspective but also because we have a good chunk of arched back leases.
Eric Bowers: Coming up at that time, I think you will see that essentially re-accelerate in Q3 from the Q2 number. So it's going to be a little bit.
Eric Bowers: down and up throughout the year but generally speaking that's what we're expecting.
Speaker Change: Okay, and I guess in Q2, you're capturing lower spreads, but you should have higher occupancy sounds like right on an average basis, could you start in January 3rd, love?
Speaker Change: Mike, it's James. We are absolutely striving for that higher occupancy. Yes, that is critical to our revenue management strategy.
Speaker Change: Okay, thanks. Simple one here. I can probably back into it, but let's go on right now. For you, can you provide the cap rate?
Or save me from doing the math.
Speaker Change: From our perspective, it's sort of a mid-to-high workout.
to high force. Okay, great. And then
Speaker Change: Samantha, while I got you, he gave some updates on development, sounds like Martaloop and
Speaker Change: I'm going to get a mixed up marim on pause right now and the cost of certain news that just related to tariffs.
Speaker Change: Correct. We just I think we're not unique in that. We're just waiting to see. We need greater cost in a certain day of the stage. So we just we felt the most prudent.
Speaker Change: Use of our capital is just a pause in the short term while we sort of wait and see what the cost looks like in the short term.
Okay, and then I think I think you all averson tonight.
Speaker Change: Yeah, of course, and then I think you mentioned in the short term just a month, certainty with respect to the fundamentals was that more specific to the Victorian market itself or
Speaker Change: No, just it all relates to the cost uncertainty and timelines now associated with developments. We are the Marta Loop.
Speaker Change: Land is here in Calgary in a fantastic location and the Marin and Esquimalt, one for those who don't know, is sort of a suburb of Victoria. It's also in an excellent location. So we are big believers in the location. It really has to do now with timing and cause uncertainties with development.
Speaker Change: Okay, and I'm last one I just I think for me just you picked up you said you were going to sell the third site as well.
We're looking at that, yep, yep.
Okay, so that's it for me. Thanks.
What?
Your next question is from Brad Sturgis from Raymond James. Please go ahead.
Brad Sturgis: There. Just to, you know, kind of put all the commentary together on leasing it. Sounds like you're getting a little bit more confident about your ability to push asking rent similar to what you get the commentary would have been last quarter or just.
Brad Sturgis: It's kind of common on what you're thinking about maybe being a little bit more opportunistic on pushing rents.
Speaker Change: Braddett Sam, our occupancy, really strong high occupancy is one factor. Our renewal rates.
Speaker Change: We're now targeting 80% or over, and retention is super strong and high, and that's actually creating a scarcity and lower turnover and fewer apartments to rent every month.
Much lower than they were last year.
Speaker Change: So a lot of positive indicators that we're very pleased with.
Speaker Change: and we're starting off the month with a lot of rentals too.
So that gives us...
Speaker Change: Great confidence that we're on the right trajectory and path and we continue to see a balance and a strong demand for affordability and our product.
Speaker Change: and the result of all the reinvestment that we've made that are competitors.
Speaker Change: for some of our competitors that haven't made as much of an investment in communities as we have. And so we're seeing a market share increase as well. A lot of our residents that have rented with us.
moved away from our competitors and now that we have
A little availability are really happy.
to rent with us and come back home with us.
Interest rates are rising.
Speaker Change: and renewal interest rates are rising, so many of our residents that moved to buy a home with higher interest rates are moving back home with us.
Speaker Change: And so there's a lot of positive factors that we're seeing that continue and an amazing team. First and foremost, our team has to get all the credit on our team's big shoulders.
Speaker Change: Quick response time, super service, just an amazing attitude and service for our residents are
Speaker Change: The Net Promoter Scores are Associate Net Promoter Scores. Happy Associates make happy residents and great results in KPIs. I've gone on enough.
I appreciate the the color there and the
Speaker Change: The response is I guess what I have you say I'm like how are you thinking about you know the election results Liberal minority government does that change much in terms of policy and and how do you think that could sort of impact the apartment sector in the housing market over the next couple years
Speaker Change: So we're seeing a shift of public policy to less taxes. We...
Speaker Change: Are are are a big fan and a big example of our premier Smith who
Speaker Change: who won on less taxes and reduce taxes and our economy is a good case example of when we reduce taxes. It's great for economic growth.
Speaker Change: and so reducing our carbon taxes is a really positive step forward to reducing taxes.
Speaker Change: And some of the policy that's tested and proven is reducing more taxes for housing, which is very positive. The minority...
Uh...
Speaker Change: Government that we have right now, the big opportunity we have is for our biggest most popular parties that being the liberal and the United Conservatives to come together and to put policy forward that 80% of us
Speaker Change: We the people Canadians support and back and so never has there been such a great opportunity for two of the most popular parties with public policies that are very similar now and pro economic growth.
Speaker Change: So we think it's a good thing. We think the election and our Prime Minister did a great job the other day didn't get into any any situations that other international leaders.
Speaker Change: I got into not to mention any names, but we're very pleased also with our Prime Minister vacuum in supporting the bi-election in Alberta for our former conservative leader as well.
Speaker Change: So far so good, we're very impressed with what's happening and as well as the support and the knowledge for Eastern Canadian population and provinces to become energy independent. We need to build...
Energy Core Doors
Speaker Change: to make all of Canada energy independent and isn't the United States the best case example what happens to
Speaker Change: I economy when a country becomes energy independent no coincidence America's economy has grown ever since America became energy independent and so what a huge opportunity for us Canadians
Speaker Change: and we can use all our 300 billion trees as a carbon offset to continue to do our green part as well.
Speaker Change: I echo those comments. Turn it back. I appreciate it. Appreciate it.
Thank you, Brad.
Speaker Change: Your next question is from Kyle Stanley from Desjardins, please go ahead.
Thanks. Morning, everyone.
Speaker Change: You know, the solid growth in Edmonton appears to be continuing as peer results here, but you know, if we do look at the rentals.ca data, the growth does look like it's slowing a little bit. So I just love your thoughts on.
Speaker Change: Maybe the outlook in Edmonton obviously is your largest market and how you know maybe boardwalk has been able to help perform what we're seeing in the broader market as pretty stats.
Hey Kyle, it's James.
Speaker Change: You know, as we've talked about throughout we are seeing more balanced rental market conditions pretty well across the country with a delivery of new new supply, you know, an eminent in our average rents of our $1,500 and we continue to see positive new and renewally soon spreads.
Affordability here remains some of the best in the country.
Speaker Change: We will highlight that the strong results this quarter really through more balanced housing conditions is just another great example to Sam's earlier point.
Speaker Change: about our team's ability to compete and perform through all market conditions and so with our average rent and investments that we've made in Edmonton Kyle we still stick to that call that we think Edmonton is going to be one of the best rental markets in Canada for 2025.
Speaker Change: Okay, thank you for that. Maybe just sticking on the supply in Calgary. It's been talked about a lot, but I'm just curious. Guys, we sit here today. Where's the gap between your rent and the new supply that's been delivered? And maybe how has that changed in the last...
Speaker Change: you know months or quarters as a result of maybe you know developers discounting rents you know what what's been what's been going on kind of behind the scenes there.
Speaker Change: A lot of the new supply that's coming online generally is going to be priced anywhere from 2300 to
Speaker Change: $3,000 a month. Our average rents are about $1900 in Calgary. To Sam's earlier point, we have several communities in Calgary that has zero availability.
Speaker Change: are more affordable product continues to be in very high demand and we, in fact, see positive leasing spreads out of those communities where we are seeing some competition is in that upper end where
Speaker Change: residents do have more choice. Residents are price sensitive and our team is competing to retain and attract new residents, which are teams doing a fantastic job with our continued high occupancy.
Thank you.
Speaker Change: Okay, thank you. Just the last one. Obviously, I think you've proven the merits of the strategic lease moderation strategy. As we sit here today, you know, what is your outlook for the
Speaker Change: You know, the upside that's still left as a result of that strategy as we move through the year.
Speaker Change: You know, we're going to continue to stay moderated for our residents and we're going to be extremely flexible with...
Speaker Change: Each and every single one of our residents, they think our high retention rates, some of the highest that we've seen ever before.
Speaker Change: are proof of that where our value offering is better than anybody else in the market are
Speaker Change: Price point is right, our affordability is there, the service that we offer is there, the quality of our communities is there.
Speaker Change: And that's a function of all the investment that we've done over the past several years and our teams commitment to high product quality and service. And so I think going forward we're going to continue to capture similar games, especially on retention and renewals as we are.
Speaker Change: And on a new pricing front, we're going to continue to maintain that high occupancy and so far as you've seen over the last couple of months we've been able to do that with just very small price discounts.
So far.
OK, thanks for that. I will turn it back.
Thank you, Gal.
Speaker Change: Your next question is from Jimmy Shan, from RBC Capital Markets. Please go ahead.
Jimmy Shan: Thanks. So just on the operating expense, you know, it barely moved on a year-over-year basis. And I'm wondering if you could talk generally about where you're finding the savings and what is the sustainability of the savings going forward.
Jimmy Shan: Hi Jimmy, it's Greg. Yeah, the operating expense, the expenses that you pointed were relatively flat. I mean, that was a combination like higher wages and salaries, building repairs and maintenance were higher as well as our advertising. That was largely offset by our lower bad debts and insurance.
We did see wages and salaries increase.
Jimmy Shan: But, I mean, as far as the savings that's contributing to that, it's the bad death. Our collection efforts have been stellar. The team is doing a great job. The insurance premium, as you know, when we renewed at July 1st last year, we were able to get quite a significant reduction in our renewal. So those have been the main factors.
Speaker Change: To that pace of growth, if we were to extrapolate for the balance of the year, would that be reasonable?
Speaker Change: I mean for the remainder of the year like our guidance like when it comes to operating expenses specific we're looking around a half percent to about 3 percent higher than last year.
Okay.
Okay.
Bye-bye.
Speaker Change: And then in relation to your Edmonton comment, can you remind me or maybe how would you describe the supplied picture in Edmonton relative to Calgary?
Speaker Change: Yeah, so I say Jimmy there again. I would say Edmonton, you know, certainly we're seeing, I guess, I
Speaker Change: A higher amount under construction than we have by historical standards but certainly the same comment told us true from earlier on the demand side.
Speaker Change: I would say slightly different markets so if you look at purpose-built rental supply and add in secondary condos supply
Speaker Change: in the Edmonton market, it's significantly lower than we see in Calgary. So I would use the word it's a little bit steadier in Edmonton than we've seen in Calgary over the last from a supply perspective.
over the last couple of years.
Speaker Change: One thing I would add as well to our overall supply outlook is we have been in our conversations with various counter parties.
Speaker Change: hearing that CMHC has been tightening up on their underwriting criteria for new supply specifically.
Speaker Change: So from a forward outlook basis, I think it's going to be potentially more challenging for certain developers to achieve the same leverage levels that they would have been able to a year or two ago.
Speaker Change: Jimi, it's James Otis to reiterate that the gap in our average rents in Edmonton and the economic rents for new development in Edmonton.
Speaker Change: are remain quite wide but yet that product quality because of the investment that we've made back into our assets has never been tighter.
Speaker Change: So that provides us with a great opportunity in Edmonton B on that base of $1,500 to continue to see all of it in strom.
Okay.
Speaker Change: And I don't know if this is a relevant comparison, but if I look at the right differential between Edmonton Marker and Ed.
as you stated and the Calgary market rent.
That is, I think it's about $350 per month.
Speaker Change: and I could be wrong here, but that seems to be wider than it's historically been. Again, I don't know if that's a relevant comparison though. I wondered is that with that, is that thinking to you in terms of that differential being wider than normal?
That yeah, I mean...
Speaker Change: Yeah, and that's a function of, you know, the additional supply that's been added to Calgary over the last few years. Keep in mind Calgary also has one of the smallest bases of rental universe in the country. And so when we are adding supply on a relative basis that's going to weight that average more and more towards that upper end.
Speaker Change: You know, having that price gap or that affordability gap between Edmonton and Calgary provides great opportunity for, you know, as Sam always says, the way to solve affordability is to have everybody move Edmonton.
Bye.
Okay, thank you.
Thank you, Jamie.
Speaker Change: There are no further questions at this time. I will turn the callvert to 10 in class for closing remarks.
Sam Clias: Thank you Andrew, as always if there are any other further questions or comments please do not hesitate to contact us.
Sam Clias: We've gratitude, we'd like to thank our extraordinary team, oil residents, CMACC, our lenders, and of course our unit holders from far and wide and local.
Sam Clias: It really is all about RPFM, our Boardwalk family forever, whose huge shoulders we stand and as leaders we continue to do everything we can to support continue growth and extraordinary.
Sam Clias: We really can't thank our extraordinary team and great leaders enough. We're pleased with our improving results on a foundation of exceptional values service and experience we continue to provide our resident members, our investors and all our stakeholders.
Sam Clias: We conclude, home is where our heart is, our heart is where our family is, and our family is where love always lives. Our occupied rent average $1,538. Our love always priceless.
Sam Clias: Welcome home to Love Always. Our future is Boardwalk Family Forever. What can be more important when choosing where to call home? God bless us and now more than ever grant us all peace.
[inaudible]
Ladies and gentlemen, this concludes your conference call for today.
Sam Clias: We thank you for participating and ask that you please disconnect your lines.