BOARDWALK REAL ESTATE INVESTMENT TR (TSX:BEI) reported first-quarter financial results on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://app.webinar.net/oNbLVRQzWME
Summary
BOARDWALK REAL ESTATE INVESTMENT TR reported an increase in same property rental revenue by 2.8% and net operating income by 6.8% year-over-year, with an operating margin increase of 230 basis points to 65.8%.
The company continues to focus on providing affordable housing and has invested over $1 billion since 2017 in rebranding and repositioning efforts to enhance product quality.
The company announced a revision in its 2026 guidance due to anticipated property tax increases, projecting same property NOI growth between 1-3.5% and FFO per unit between $4.60 and $4.80.
Despite increased competition in higher-end rental markets, the company maintains a high occupancy rate of 97.1% and has reduced leasing incentives to sustain rental revenue.
The company has been active in asset sales, deploying $102 million under its NCIB program and plans further investment to capitalize on its undervalued portfolio.
Management highlighted strong performance in Alberta and Saskatchewan regions, with plans to continue its strategic repositioning and capital allocation initiatives.
Full Transcript
OPERATOR
Eric Bowers (VP, Finance and Investor Relations)
Sam Colias (Chief Executive Officer)
Samantha Colias Gunn
Greg Tinling (Chief Financial Officer)
Samantha Adams (Senior VP of Investments)
James Ha (President)
OPERATOR
Brad Sturges (Equity Analyst)
Hey there. Good morning. I guess on the guidance revision, it sounds like it was predominantly on the property tax side. Would there be much of a change on the same store revenue growth assumptions?
Greg Tinling (Chief Financial Officer)
Hi, Brad, it’s Greg. On the revenue side, we’re projecting the range of 1.5% to about 2.5%. And that would be with Q1 being at the lower end of the range there.
Brad Sturges (Equity Analyst)
Okay. And with the leasing spreads, you know, the comment about staying positive through the spring and summer, I guess how would we think about that from a new leasing spread perspective? You’ve seen, I guess, a recovery on some of those spreads, but they’re still negative. So do you see that staying in negative territory or could we get back to more, call it flat or positive at some point later in the year?
James Ha (President)
Brad Sturges (Equity Analyst)
And compared to last year, how does the demand picture look this year? Is it similar to what you would have saw last year or would there be much of a variation?
James Ha (President)
Yeah, similar in terms of traffic. Again, have to give our team a ton of credit on the retention front and our strategy and approach through the winter months where again, we really prioritized occupancy, prioritized that retention, which put us into this position where we can be a little more aggressive with our rentals through the spring summer leasing season.
Brad Sturges (Equity Analyst)
Perfect. I’ll turn it back. Thank you.
Greg Tinling (Chief Financial Officer)
Thanks, Brad.
OPERATOR
Thank you. And your next question comes from Jonathan Kelcher from TD Cowan. Please go ahead,
Jonathan Kelcher (Analyst)
Jonathan. Sorry about that. Just sticking with the spring leasing. How is it shaping up versus your expectations.
Greg Tinling (Chief Financial Officer)
Jonathan Kelcher (Analyst)
And what about by market? Are there any markets that are particularly stronger or softer?
James Ha (President)
Jonathan Kelcher (Analyst)
Okay, that is helpful. And then just on the property tax, that starts to hit you guys in Q3, correct?
Greg Tinling (Chief Financial Officer)
That’s right. That’ll be a second half event. And so we expect our property tax number in the second quarter to be very similar to what we had in the first quarter. And then come the second half, that’s where we will see property tax increase. So the full extent of that 8 to 9% year over year property tax increase will be entirely in the second half of 2026.
Jonathan Kelcher (Analyst)
Okay. So should be decent Q2, same property NOI and then 4 quarters of more challenging. Correct?
Greg Tinling (Chief Financial Officer)
Jonathan Kelcher (Analyst)
Okay, that’s helpful, thanks. Turn it back.
OPERATOR
Thank you. And your next question comes from Theron from ATB Cormar Capital Markets. Please go ahead.
Theron
Thank you operator. Good afternoon guys. Just probably looking at operating expenses, obviously it’s been a key driver of your growth so far in terms of reduction on these expenses. But looking ahead, especially in the second half, how do you see operating like utilities and other costs kind of drop up versus property taxes.
Greg Tinling (Chief Financial Officer)
Theron
Thanks Greg. I’ll turn back.
OPERATOR
Thank you. Your next question comes from Mario Sarek from Scotiabank. Please go ahead.
Mario Sarek (Analyst)
Hi, good morning. Just wanted to come back to the same store revenue discussion. It looks like based on what Greg highlighted, The expectations for 26 are down about 125 basis points relative to the Q4 call. Is that primarily on expected blended lease spreads coming down a little bit relative to the 3 to 4% year to come up before? Or is some of it also related to perhaps occupancy being a bit lower than we expected?
James Ha (President)
Mario Sarek (Analyst)
Got it. Okay. And then just in terms of like, your incentives remain very low. They’re actually down year over year. Is the expectation for the breadth of the incentive offering to really just reside within new construction or are you having to start increase incentives on renewals in older products in any of the markets?
James Ha (President)
Mario Sarek (Analyst)
Got it. Okay. My last question just pertaining to the Alberta immigration referendum slated for October, are you getting a sense that that’s having any impact whatsoever in terms of migration into the province at this stage? And how do you see that playing out over time?
James Ha (President)
Mario Sarek (Analyst)
Okay, thanks, James. Thanks, Mario.
OPERATOR
Thank you. And your next question comes from Jimmy Shan from RBC Capital Markets. Please go ahead.
Jimmy Shan (Analyst)
Yeah, thanks. So first on the guidance, are you assuming the $200 million unit buyback?
James Ha (President)
Yes. That is included in our guidance here. Yes. That we will deploy the additional roughly 100 million this year.
Jimmy Shan (Analyst)
Okay. And then maybe just a big picture question. Oil prices are elevated still and a lot of discussions on more energy investments, pipeline data center, et cetera. So the Alberta macro picture looks good, at least from my perspective. Do you expect to feel the impact of these sort of macro factors on rental demand in the near term? How do we think about that?
Sam Colias (Chief Executive Officer)
Jimmy Shan (Analyst)
Right. But do you feel like that’s probably a few years away though, before we see that translate into your business?
Sam Colias (Chief Executive Officer)
Jimmy Shan (Analyst)
Okay. All right. Okay, thanks. That’s up for me.
Sam Colias (Chief Executive Officer)
Thank you, Jim.
OPERATOR
Thank you. And your next question comes from Matt Cornick from National Bank Financial. Please go ahead.
Matt Cornick (Analyst)
Hey guys, just a quick modeling one to start off in terms of Aspire, can you give us a sense to the number of units that are still unleased and kind of the cadence of those units being leased over this year?
James Ha (President)
Matt Cornick (Analyst)
Okay, that makes sense. And then just from a capital allocation standpoint, you’re a little bit more active on the disposition front than I think we expected. But seems like the best use of, to Jimmy’s point, the best use of that capital is buying Boardwalk’s existing portfolio at a 6, 3 cap rate. But what are you seeing outside of Boardwalk’s portfolio in terms of acquisition opportunities as well?
Samantha Adams (Senior VP of Investments)
Matt Cornick (Analyst)
That makes sense. And then just lastly on the property tax side, I know this isn’t the US where you have these huge swings in terms of getting reimbursements, but what has been your past kind of track record in terms of engaging with the city and reducing the burden?
James Ha (President)
Hey, Matt, it’s James. Historically pretty good. You know, we’re all about, we’re happy to pay our fair share, but at the end of the day we’re just, we’re working with our municipalities in terms of making sure that our Assessments are representative on an equity basis. So on a comparable basis, stay tuned, we’ll let everybody know. But we are active in those assessment appeals as we speak in both Alberta and Saskatchewan.
Matt Cornick (Analyst)
Okay, no, perfect. Appreciate the color.
OPERATOR
Thank you. And your last question comes from Kyle Stanley from Desjardins. Please go ahead.
Kyle Stanley (Analyst)
Thanks. Afternoon everyone. Just on the new supply side of things, as you speak with developers in Calgary and Edmonton, how are they thinking about the current supply demand environment today? And is there a view that the level of competition maybe doesn’t require more supply? Just trying to think about how we look at the, I guess the supply picture over the next 12.
James Ha (President)
Kyle Stanley (Analyst)
Okay, that tracks well.
Sam Colias (Chief Executive Officer)
Kyle Stanley (Analyst)
Sam Colias (Chief Executive Officer)
Okay, thanks for that. That’s it for me. I’ll turn it back.
Kyle Stanley (Analyst)
Thank you, Kyle.
OPERATOR
Thank you. And no more further questions at this time. I will turn it back to over to Mr. Sam Coleas for closing remarks.
Sam Colias (Chief Executive Officer)