TSX SYMBOL: BEI.UN August 13, 2004
Boardwalk REIT Announces Record Financial Results
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Calgary, Alberta – August 13, 2004 Boardwalk Real Estate Investment Trust (“BEI.UN” – TSX)
CALGARY, Aug. 13 /PRNewswire-FirstCall/ - ("BEI.UN" - TSX) - Boardwalk Real Estate Investment Trust ("Boardwalk REIT" or the "Trust") today announced its financial results for the three month and six month periods ending June 30, 2004. These results reflect the activities of Boardwalk Equities Inc. ("BEI") and Boardwalk REIT for the period January 1, 2004 to June 30, 2004. The financial results have been reported as a "Continuity of Interest" with specific financial results for the predecessor corporation of Boardwalk REIT, BEI, and the newly established Trust detailed in the notes to the financial statements which are included later in this press release. For the three-month period ended June 30, 2004, the Trust reported Funds from operations ("FFO") from continuing operations of $20.8 million and FFO per unit of $0.39 on a diluted basis, compared to FFO of $17.1 million and FFO per unit of $0.34 for the same period last year. Distributable income ("DI") was $21.7 million and DI per unit was $0.41 on a diluted basis, compared to DI of $18.3 million and DI per unit of $0.36 for the same period last year. FFO from continuing operations and DI are both key performance measurements for real estate investment trusts and companies.
Funds from operations ("FFO") is a generally accepted measure of operating performance of real estate investment trusts and companies, however is a non-GAAP measurement. The Trust calculates FFO by taking Net earnings after discontinued operations and adding non-cash items including Future income taxes and Amortization. The determination of this amount may differ from that of other real estate investment trusts and companies. Distributable income("DI") is calculated based on the definition as set out in the Trust's declaration of trust and is computed by taking FFO and adding back any historical deferred financing charges as well as adjusting for any discounts or premiums relating to the required mark to market debt amortization charged subsequent to the conversion date of May 3, 2004.
Highlights for the three month period ended June 30, 2004 include:
- Rental revenues of $70.0 million, an increase of 4.9% compared to
$66.7 million for the three-month period ended June 30, 2003.
- Net operating income of $46.9 million, a 6.3% increase from
$44.1 million in the same period last year.
- FFO from continuing operations, which excludes gains on property
dispositions, of $20.8 million, an increase of 21.6% compared to
$17.1 million for the three-month period ended June 30, 2003.
- FFO from continuing operations per unit of $0.39 on a diluted basis,
an increase of 14.7% compared to $0.34 for the three-month period
ended June 30, 2003.
- DI from continued operations was $0.41 per unit, an increase of 13.9%
compared to $0.36 for the three months ended June 30, 2003.
- Net income of $3.0 million, a 15.4% increase compared to $2.6 million
in the same period last year. EPS of $0.06 compared to $0.05 in the
first quarter of last year.
Highlights for the six month period ended June 30, 2004 include:
- Rental revenues of $139.9 million, an increase of 5.7% compared to
$132.4 million for the six-month period ended June 30, 2003.
- Net operating income of $90.2 million, a 6.4% increase from
$84.8 million in the same period last year.
- FFO from continuing operations, which excludes gains on property
dispositions, of $37.3 million, an increase of 17.3% compared to
$31.8 million for the six-month period ended June 30, 2003.
- FFO from continuing operations per unit of $0.71 on a diluted basis,
an increase of 12.7% compared to $0.63 for the six-month period ended
June 30, 2003.
- DI from continued operations was $0.74 per unit, an increase of 12.1%
compared to $0.66 for the six months ended June 30, 2003.
- Net income of $1.8 million, a 56.1% decrease compared to $4.1 million
in the same period last year. EPS of $0.03 compared to $0.08 in the
first six months of last year.
Sam Kolias, Boardwalk REIT's President and Chief Executive Officer, said, "The Trust's portfolio continued to deliver solid operating results, notwithstanding the ongoing strength and level of activity in housing markets across the country. This performance was driven in large part by our continued focus on operations and our successful entry into Quebec. Overall, there was an increase of about 1.5% in customer turnovers in the second quarter. This may have been triggered with interest rates rising, pushing some fence sitting home buyers into a home ownership position before interest rates rise to levels which they cannot afford. Demand continues to be strong. The Edmonton market in particular is flattening and we are providing rental incentives. Revenues in Edmonton are expected to be less in the third and fourth quarters of this year compared to the record third and fourth quarters of last year. It is important to keep things in perspective as Edmonton has delivered near double-digit top line revenue growth in the past several years and continues to be a very good market for us. The most encouraging note is that our total portfolio wide rentals for the month of July 2004 were the highest ever recorded resulting in a net absorption of 400 rental units for the month. Edmonton was a significant contributor to our record month. Our Edmonton rents continue to represent exceptional housing value at approximately $761 for an average 2 bedroom occupied unit type. Our Edmonton team set a new record too for new rentals during the month of July, breaking the old one by over 10%. August is already looking like another great month. Traditionally, July and August are our strongest rental months. We continue to use the higher seasonal demand during this time frame to increase our occupancy and revenues going into the third and fourth quarters."
Operational Highlights
The average vacancy rate across Boardwalk REIT's portfolio for the period ended June 30, 2004 was 5.67%, compared to 4.32% for BEI in the first quarter of 2004 and up from 4.99% for BEI in the second quarter of last year.
The average monthly rent realized in the first six months of 2004 was $739 per unit, up $12, or 1.7%, from $727 per unit for the six-month period ended June 30, 2003. Management estimates that market rents for its properties at the end of June 2004 averaged $790 per unit per month which compares to an average in-place monthly rent per occupied unit of $778 for the six-month period ended June 30, 2004. This translates into an estimated "loss-to-lease" of approximately $5.0 million, or $0.09 per trust unit, maintaining existing occupancy rate levels.
Same-Property Results
The "same-property" results for Boardwalk REIT's stabilized properties (defined as properties owned for a period of over 24 months) for the three- month period ended June 30, 2004 showed rental growth of 0.9%, a decrease in operating expenses of 6.3% and an increase in NOI of 4.6% compared to the same period last year. The "same-property" results for the six-month period ended June 30, 2004 showed rental growth of 1.5%, a decrease in operating expenses of 3.6% and an increase in NOI of 4.4% compared to the same period last year.
Included in these reported amounts are utility rebates received from the Provincial Government of Alberta. These rebates are part of a current government program that is scheduled to continue until March of 2006. A total of 28,875 units, representing approximately 91% of Boardwalk REIT's total portfolio, were classified as stabilized as at June 30, 2004.
Same-Property Results - Stabilized Portfolio
Three Months Ended June 30, 2004 vs. Three Months Ended June 30, 2003
-------------------------------------------------------------------------
Rental Other Total
Revenues Utilities Expenses Expenses NOI % of NOI
-------------------------------------------------------------------------
Calgary -0.2% 3.5% -18.3% -10.6% 4.0% 20%
Edmonton -0.2% 8.5% -13.0% -4.9% 1.9% 36%
Other Alberta -0.2% -27.2% -15.7% -20.8% 11.5% 6%
Saskatchewan 1.1% 8.1% -2.1% 0.7% 1.3% 12%
Ontario 2.4% -9.5% -4.5% -6.3% 9.4% 12%
Montreal 4.2% 27.2% -21.2% -5.7% 9.0% 14%
-------------------------------------------------------------------------
Total 0.9% 3.9% -11.8% -6.3% 4.6% 100%
-------------------------------------------------------------------------
-----------------------------------------------------------
-------------------------------------------------------------------------
Same-Property Results - Stabilized Portfolio
Six Months Ended June 30, 2004 vs. Six Months Ended June 30, 2003
-------------------------------------------------------------------------
Rental Other Total
Revenues Utilities Expenses Expenses NOI % of NOI
-------------------------------------------------------------------------
Calgary -0.1% 3.9% -9.0% -4.2% 1.5% 20%
Edmonton 0.2% 4.7% -14.4% -6.6% 3.8% 37%
Other Alberta 4.3% -1.1% 23.6% 14.3% -0.8% 5%
Saskatchewan 1.6% 17.0% -4.6% 2.2% 1.2% 12%
Ontario 3.7% -12.5% -2.7% -6.5% 13.8% 12%
Montreal 4.3% 7.3% -11.0% -4.5% 8.3% 14%
-------------------------------------------------------------------------
Total 1.5% 2.7% -7.5% -3.6% 4.4% 100%
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Acquisition Activity
In the three month period ended June 30, 2004, Boardwalk REIT purchased an additional 354 units adding to its Quebec and Ontario portfolio. A total of 323 of these units are located in the Quebec market place, with the remaining 31 units located in Windsor, Ontario.
- Domaine du Rocher -- Quebec City (Levis), QC -- a 64 unit apartment
complex consisting of 12 buildings ranging from 2 to 3 storeys in
height. The property was purchased at an acquisition price of
$3.5 million using cash on hand, which equates to approximately
$54,700 per unit and approximately $51.3 per rentable square foot.
The transaction had a going in cap rate of 7.65% and closed on
May 13, 2004.
- Forest Glade Townhomes -- Windsor, ON -- a 2 storey townhouse complex
consisting of 31 units, each with 3 bedrooms. The townhouses were
purchased for $2.5 million, which equates to approximately
$80,600 per unit and approximately $64.5 per rentable square foot.
The purchase, which closed on May 17, 2004, was funded by a
combination of cash on hand and the assumption of a $1.99 million
first mortgage with a fixed interest rate of 5.5% due on
February 2008. The going in cap rate on the acquisition was
approximately 9.53%.
- Residence le Quatre Cent -- Montreal (Laval), QC -- a 16 storey
concrete high-rise building with a total of 259 units in this well
kept and strategically located property. The property was acquired
for $17.3 million, which equates to approximately $66,800 per unit
and approximately $112.6 per rentable square foot. The transaction
closed on May 26, 2004 and had a going in cap rate of 8.01%. The
acquisition was funded by a combination of cash on hand and the
assumption of a $8.6 million first mortgage with a fixed interest
rate of 6.53% due in February 2011.
Further information on these properties can be found in the Supplemental Information Package located on Boardwalk REIT's website (www.boardwalkREIT.com).
Continued Financial Strength
Boardwalk REIT maintained its solid financial position in the quarter. Boardwalk REIT's mortgage debt totalled $1.41 billion as at June 30, 2004, up from $1.39 billion for BEI at December 31, 2003. The increase is largely attributable to the additional debt related to property acquisitions that Boardwalk REIT completed during the first half of the year. As of June 30, 2004, Boardwalk REIT's debt had an average maturity of 4.0 years with a weighted average interest rate of 5.54%. Boardwalk REIT's debt-to-total- market-capitalization ratio was 62.6% as at June 30, 2004, which compares to 63.5% for BEI at the same time last year.
Boardwalk REIT's interest coverage ratio, excluding gains, for the three- month period ended June 30, 2004 was 2.2 times compared to 2.0 times in the same period last year.
2004 Earnings Guidance
Commenting on the Trust's outlook, Rob Geremia, Senior Vice President, Finance and CFO, said "We are maintaining our previously disclosed forecasts for FFO and recurring distributable income of between $1.37 to $1.44 and $1.43 to $1.49, respectively. The forecast assumptions for 2004 remain the same and are based on new acquisitions of between 1,000 to 2,000 units and stabilized NOI growth of between 1% and 2%. Our previously announced annualized distribution of $1.24 per REIT unit is based on an 85% payout ratio."
Supplementary Information
Boardwalk REIT produces quarterly supplemental information that provides detailed information regarding it's activities during the quarter. The second quarter supplemental information is available on our website (www.boardwalkreit.com).
Financial Results Teleconference
We invite you to participate in the teleconference that will be held to discuss Boardwalk REIT's financial results this morning at 11:00am EST. Senior management will speak to the financial results and provide a corporate update. Presentation materials will be made available on our website (www.boardwalkreit.com) prior to the call.
Participation & Registration: Please RSVP to Investor Relations at 403-531-9255 or by email to investor@bwalk.com.
Teleconference: The telephone numbers for the conference are: 416-913-8746 (within Toronto) or toll-free 1-800-814-4853 (outside Toronto).
Webcast: Investors will be able to listen to the call and view our slide presentation over the Internet by visiting http://www.boardwalkreit.com/ 15 min. prior to the start of the call. An information page will be provided for any software needed and system requirements. The live audiocast will also be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)867680.
Replay: An audio recording of the teleconference will be available from 1:00pm EST on August 13, 2004 until 11:59pm EST on August 20th, 2004. You can access it by dialing 416-640-1917 and using the passcode 21080407 followed the pound sign. An audio archive will also be available on our website (http://www.boardwalkreit.com/) approximately two hours after the conference call.
Corporate Profile
Boardwalk REIT is an open-ended real estate investment trust formed to acquire all of the assets and undertakings of Boardwalk Equities Inc. Boardwalk REIT's principal objectives are to provide its unitholders with monthly cash distributions, partially on a Canadian income tax-deferred basis, and to increase the value of its trust units through the effective management of its residential multi-family revenue producing properties and the acquisition of additional properties. Boardwalk REIT currently owns and operates in excess of 250 properties with over 31,700 units totalling approximately 27 million net rentable square feet, and is Canada's largest owner/operator of multi-family rental communities. Boardwalk REIT's portfolio is concentrated in the provinces of Alberta, Saskatchewan, Ontario and Quebec.
CONSOLIDATED BALANCE SHEETS
(CDN$ THOUSANDS)
(Unaudited)
AS AT June 30, December 31,
2004 2003
-------------------------
Assets
Revenue producing properties $ 1,731,322 $ 1,713,171
Properties held for resale 7,695 7,493
Deferred financing costs 39,135 38,044
Other assets 16,070 14,652
Future income taxes (NOTE 9) 224 -
Mortgages and accounts receivable 13,321 13,126
Segregated tenants' security deposits 6,680 6,771
Cash and cash equivalents 23,393 10,123
-------------------------------------------------------------------------
$ 1,837,840 $ 1,803,380
-------------------------
-------------------------
Liabilities
Mortgages payable $ 1,409,330 $ 1,387,067
Accounts payable and accrued liabilities 28,452 19,801
Refundable tenants' security deposits and other 9,687 9,730
Capital lease obligations 2,931 3,515
Future income taxes (NOTE 9) - 74,765
-------------------------------------------------------------------------
$ 1,450,400 $ 1,494,878
-------------------------
Unitholders' Equity
Unitholders' capital (NOTE 7) 295,041 275,509
Accumulated earnings 92,399 32,993
-------------------------------------------------------------------------
$ 387,440 $ 308,502
-------------------------------------------------------------------------
$ 1,837,840 $ 1,803,380
-------------------------
-------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
INFORMATION FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 COMBINES
INFORMATION FROM BOARDWALK REAL ESTATE INVESTMENT TRUST AND ITS
PREDECESSOR (NOTES 2 AND 4)
(CDN$ THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(Unaudited)
3 months 3 months 6 months 6 months
ended ended ended ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
---------------------------------------------------
NOTES 2 and 4
Revenue
Rental income $ 70,040 $ 66,675 $ 139,865 $ 132,382
---------------------------------------------------
Expenses
Revenue producing
properties:
Operating expenses 7,908 8,141 16,302 16,379
Utilities 8,438 8,061 20,687 18,294
Utility rebate
(NOTE 10) - - (812) -
Property taxes 6,784 6,376 13,529 12,889
Administration 6,040 5,826 11,963 11,678
Financing costs 18,810 19,002 38,155 37,975
Deferred financing
costs amortization 824 1,169 1,525 1,833
Amortization (NOTE 3) 19,565 12,442 36,938 24,617
-------------------------------------------------------------------------
68,369 61,017 138,287 123,665
---------------------------------------------------
Earnings from
continuing
operations before
income taxes 1,671 5,658 1,578 8,717
Large corporations
taxes 408 1,018 1,200 1,840
Future income taxes
(recovery) (NOTE 9) (1,718) 2,085 (1,376) 3,555
-------------------------------------------------------------------------
Earnings from
continuing operations 2,981 2,555 1,754 3,322
Earnings from
discontinued
operations, net of tax - - - 751
-------------------------------------------------------------------------
Net earnings for the
period $ 2,981 $ 2,555 $ 1,754 $ 4,073
---------------------------------------------------
---------------------------------------------------
Basic earnings per
unit (NOTE 8)
- from continuing
operations $ 0.06 $ 0.05 $ 0.03 $ 0.07
- from discontinued
operations - - - 0.01
-------------------------------------------------------------------------
Basic earnings per
unit $ 0.06 $ 0.05 $ 0.03 $ 0.08
---------------------------------------------------
---------------------------------------------------
Diluted earnings per
unit (NOTE 8)
- from continuing
operations $ 0.06 $ 0.05 $ 0.03 $ 0.07
- from discontinued
operations - - - 0.01
-------------------------------------------------------------------------
Diluted earnings per
unit $ 0.06 $ 0.05 $ 0.03 $ 0.08
---------------------------------------------------
---------------------------------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF ACCUMULATED EARNINGS
(CDN$ THOUSANDS)
(Unaudited)
6 months 6 months
ended ended
June 30, June 30,
2004 2003
-------------------------
Accumulated earnings, beginning of period $ 32,993 $ 35,229
Net earnings for the period 1,754 4,073
Distribution on units (14,878) (2,010)
Premium on unit repurchases (1,023) (392)
Elimination of future income taxes on
conversion to trust (NOTE 2) 73,553 -
-------------------------------------------------------------------------
Accumulated earnings, end of period $ 92,399 $ 36,900
-------------------------
-------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
INFORMATION FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 COMBINES
INFORMATION FROM BOARDWALK REAL ESTATE INVESTMENT TRUST AND ITS
PREDECESSOR (NOTES 2 AND 4)
(CDN$ THOUSANDS)
(Unaudited)
3 months 3 months 6 months 6 months
ended ended ended ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
---------------------------------------------------
NOTES 2 and 4
Operating activities
Net earnings for
the period $ 2,981 $ 2,555 $ 1,754 $ 4,073
Earnings from
discontinued
operations, net
of tax - - - (751)
Future income
taxes (recovery) (1,718) 2,085 (1,376) 3,555
Amortization 19,565 12,442 36,938 24,617
-------------------------------------------------------------------------
Funds from
continuing
operations 20,828 17,082 37,316 31,494
Funds from
discontinued
operations - - - 33
Net change in
operating working
capital 155 2,828 (2,259) 324
Net change in
properties held
for resale (94) 1,783 (202) 1,672
-------------------------------------------------------------------------
Total operating
cash flows 20,889 21,693 34,855 33,523
---------------------------------------------------
Financing activities
Issue of trust
units (net of issue
costs) (NOTE 7) 6,165 1,310 28,642 4,013
Unit repurchase
program (610) - (610) (628)
Distributions paid (10,940) (1,008) (14,878) (2,010)
Financing of revenue
producing properties 34,656 46,061 69,855 88,864
Repayment of debt on
revenue producing
properties (29,978) (51,982) (66,473) (75,888)
Deferred financing
costs incurred (net
of amortization) (1,504) (664) (2,967) (937)
-------------------------------------------------------------------------
(2,211) (6,283) 13,569 13,414
---------------------------------------------------
Investing activities
Purchases of revenue
producing properties
(NOTE 5) (13,089) (3,915) (22,263) (46,433)
Project improvements
to revenue
producing properties (5,938) (11,812) (12,025) (23,299)
Net cash proceeds
from sale of
properties - - - 1,223
Technology for real
estate operations (109) (648) (866) (938)
-------------------------------------------------------------------------
(19,136) (16,375) (35,154) (69,447)
---------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents balance
during period (458) (965) 13,270 (22,510)
Cash and cash
equivalents,
beginning of period 23,851 2,086 10,123 23,631
-------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $ 23,393 $ 1,121 $ 23,393 $ 1,121
---------------------------------------------------
---------------------------------------------------
Supplementary cash
flow information:
Taxes paid $ 336 $ 918 $ 1,242 $ 1,734
Interest paid $ 18,901 $ 19,235 $ 38,291 $ 38,088
---------------------------------------------------
---------------------------------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 2004
(TABULAR AMOUNTS IN CDN$ THOUSANDS, EXCEPT NUMBER OF UNITS AND PER UNIT
AMOUNTS UNLESS OTHERWISE STATED)
(Unaudited)
1. ORGANIZATION OF TRUST
Boardwalk Real Estate Investment Trust ("Boardwalk REIT") is an
unincorporated, open-ended real estate investment trust created
pursuant to the Declaration of Trust, dated January 9, 2004 and as
amended and restated on May 3, 2004, under the laws of the Province
of Alberta. Boardwalk REIT was created to invest in revenue producing
multi-family residential properties or interests within Canada,
initially through the acquisition of operations of Boardwalk Equities
Inc. (the "Corporation"), which was acquired on May 3, 2004.
2. BASIS OF PRESENTATION
These unaudited interim consolidated financial statements have been
prepared in accordance with the recommendations of the handbook of
the Canadian Institute of Chartered Accountants ("CICA Handbook"),
and are consistent with those used in the audited consolidated
financial statements of Boardwalk Equities Inc. as at and for the
year ended December 31, 2003, except as described in Note 3 below.
These interim financial statements do not include all of the
disclosures required by Canadian generally accepted accounting
principles ("Canadian GAAP") applicable to annual financial
statements and, therefore, should be read in conjunction with the
Corporation's audited consolidated financial statements.
Boardwalk REIT is considered to be a continuation of Boardwalk
Equities Inc. following the continuity of interest method of
accounting. Under the continuity of interest method of accounting,
Boardwalk REIT's acquisition of the operations of Boardwalk Equities
Inc. is recorded at the net book value of the Corporation's assets
and liabilities on May 3, 2004 and the unitholders' capital to
Boardwalk REIT represents the shareholders' equity of the Corporation
at that date. Future income tax liabilities in the amount of
$73.6 million were eliminated, except the portion related to tax and
accounting base differences in corporate subsidiaries of Boardwalk
REIT.
The statements of earnings and cash flows for the three months
ended June 30, 2004 reflect the activities of Boardwalk Equities Inc.
for the period from April 1, 2004 to May 2, 2004 combined with the
activities of Boardwalk REIT for the period from May 3, 2004 to
June 30, 2004. The statements of earnings and cash flows for the six
months ended June 30, 2004 reflect the activities of Boardwalk
Equities Inc. for the period from January 1, 2004 to May 2, 2004
combined with the activities of Boardwalk REIT for the period from
May 3, 2004 to June 30, 2004 (see Note 4). The comparative figures
represent the activities of Boardwalk Equities Inc.
The preparation of financial statements in accordance with Canadian
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and to make
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from
those estimates.
Due to seasonality, the operating results for the three and six
months ended June 30, 2004 are not necessarily indicative of the
results that may be expected for the full fiscal year.
3. ACCOUNTING POLICY CHANGES
Amortization of revenue producing buildings
Effective January 1, 2004, the straight-line method was adopted to
compute amortization of its revenue producing buildings. The adoption
of the straight-line method from the sinking-fund method has been
applied prospectively in accordance with the transitional provision
of CICA Handbook Section 1100. Had the change not been made, the
effect on the financial statements would have been a decrease to
amortization of $9.8 million and an increase to net earnings of
approximately $7.6 million for the period ended June 30, 2004.
Accounting for operating leases
In accordance with EIC-140, Accounting for Operating Leases Acquired
in Either an Asset Acquisition or a Business Combination, an
enterprise that acquires real estate, such as an office building,
retail centre, or apartment complex in either an asset acquisition or
business combination, should allocate a portion of the purchase price
to in-place operating leases that the enterprise acquires in
connection with the real estate property. Application of EIC-140 has
been applied prospectively as of January 1, 2004 to real estate
acquisitions initiated subsequent to the date of issue of EIC-140.
Impairment of long-lived assets
Effective January 1, 2003, the provisions of CICA Handbook Section
3063, Impairment of Long-lived Assets, was adopted. With the adoption
of this section, an impairment loss will be recognized in the period
when the carrying amount of the revenue producing properties exceeds
the net recoverable amount represented by the undiscounted estimated
future cash flows expected to be received from the ongoing use of the
properties plus their residual value. If it is determined that an
impairment exists, the carrying value of the revenue producing
properties will be reduced to their estimated fair value. The
adoption of this section has had no impact on the financial
statements of the current and prior periods.
Comparative figures
Certain comparative figures have been reclassified to conform with
the presentation of the current period, or as a result of accounting
changes.
4. RESULTS OF BOARDWALK REIT AND ITS PREDECESSOR
The following statements of earnings and cash flows reflect the
activities of Boardwalk REIT for the six-month period ended June 30,
2004, separated to show the results of Boardwalk Equities Inc. prior
to May 3, 2004 and the results of Boardwalk REIT subsequent to May 2,
2004.
STATEMENT OF EARNINGS January 1, May 3, 6 months
2004 to 2004 to ended
May 2, June 30, June 30,
2004 2004 2004
--------------------------------------
Revenue
Rental income $ 93,108 $ 46,757 $ 139,865
--------------------------------------
Expenses
Revenue producing
properties:
Operating expenses 11,429 4,873 16,302
Utilities 15,965 4,722 20,687
Utility rebate (812) - (812)
Property taxes 9,000 4,529 13,529
Administration 7,720 4,243 11,963
Financing costs 24,856 13,299 38,155
Deferred financing costs
amortization 1,051 474 1,525
Amortization 23,273 13,665 36,938
-------------------------------------------------------------------
92,482 45,805 138,287
--------------------------------------
Earnings from continuing
operations before income
taxes 626 952 1,578
Large corporations taxes 1,032 168 1,200
Future income tax recovery (1,291) (85) (1,376)
-------------------------------------------------------------------
Earnings from continuing
operations 885 869 1,754
Earnings from discontinued
operations, net of tax - - -
-------------------------------------------------------------------
Net earnings for the period $ 885 $ 869 $ 1,754
--------------------------------------
--------------------------------------
Basic earnings per unit
- from continuing
operations $ 0.02 $ 0.02 $ 0.03
- from discontinued
operations - - -
-------------------------------------------------------------------
Basic earnings per unit $ 0.02 $ 0.02 $ 0.03
--------------------------------------
--------------------------------------
Diluted earnings per unit
- from continuing
operations $ 0.02 $ 0.02 $ 0.03
- from discontinued
operations - - -
-------------------------------------------------------------------
Diluted earnings per unit $ 0.02 $ 0.02 $ 0.03
--------------------------------------
--------------------------------------
STATEMENT OF CASH FLOWS January 1, May 3, 6 months
2004 to 2004 to ended
May 2, June 30, June 30,
2004 2004 2004
--------------------------------------
Operating activities
Net earnings for the period $ 885 $ 869 $ 1,754
Future income tax recovery (1,291) (85) (1,376)
Amortization 23,273 13,665 36,938
---------------------------------------------------------------------
Funds from continuing
operations 22,867 14,449 37,316
Net change in operating
working capital (4,425) 2,166 (2,259)
Net change in properties
held for resale (141) (61) (202)
---------------------------------------------------------------------
Total operating cash flows 18,301 16,554 34,855
--------------------------------------
Financing activities
Issue of trust units
(net of issue costs) 28,372 270 28,642
Unit repurchase program - (610) (610)
Distributions paid (3,938) (10,940) (14,878)
Financing of revenue
producing properties 47,718 22,137 69,855
Repayment of debt on revenue
producing properties (47,414) (19,059) (66,473)
Deferred financing costs
incurred (net of amortization) (1,969) (998) (2,967)
---------------------------------------------------------------------
22,769 (9,200) 13,569
--------------------------------------
Investing activities
Purchases of revenue
producing properties (9,174) (13,089) (22,263)
Project improvements to
revenue producing properties (7,303) (4,722) (12,025)
Technology for real estate
operations (868) 2 (866)
---------------------------------------------------------------------
(17,345) (17,809) (35,154)
--------------------------------------
Net increase (decrease) in
cash and cash equivalents $ 23,725 $ (10,455) $ 13,270
--------------------------------------
--------------------------------------
The following statements of earnings and cash flows reflect the
activities of Boardwalk REIT for the three-month period ended
June 30, 2004, separated to show the results of Boardwalk Equities
Inc. prior to May 3, 2004 and the results of Boardwalk REIT
subsequent to May 2, 2004.
STATEMENT OF EARNINGS April 1, May 3, 3 months
2004 to 2004 to ended
May 2, June 30, June 30,
2004 2004 2004
--------------------------------------
Revenue
Rental income $ 23,283 $ 46,757 $ 70,040
Expenses
Revenue producing properties:
Operating expenses 3,035 4,873 7,908
Utilities 3,716 4,722 8,438
Utility rebate - - -
Property taxes 2,255 4,529 6,784
Administration 1,797 4,243 6,040
Financing costs 5,511 13,299 18,810
Deferred financing costs
amortization 350 474 824
Amortization 5,900 13,665 19,565
---------------------------------------------------------------------
22,564 45,805 68,369
--------------------------------------
Earnings from continuing
operations before income
taxes 719 952 1,671
Large corporations taxes 240 168 408
Future income tax recovery (1,633) (85) (1,718)
---------------------------------------------------------------------
Earnings from continuing
operations 2,112 869 2,981
Earnings from discontinued
operations, net of tax - - -
---------------------------------------------------------------------
Net earnings for the period $ 2,112 $ 869 $ 2,981
--------------------------------------
--------------------------------------
Basic earnings per unit
- from continuing
operations $ 0.04 $ 0.02 $ 0.06
- from discontinued
operations - - -
---------------------------------------------------------------------
Basic earnings per unit $ 0.04 $ 0.02 $ 0.06
--------------------------------------
--------------------------------------
Diluted earnings per unit
- from continuing
operations $ 0.04 $ 0.02 $ 0.06
- from discontinued
operations - - -
---------------------------------------------------------------------
Diluted earnings per unit $ 0.04 $ 0.02 $ 0.06
--------------------------------------
--------------------------------------
STATEMENT OF CASH FLOWS April 1, May 3, 3 months
2004 to 2004 to ended
May 2, June 30, June 30,
2004 2004 2004
--------------------------------------
Operating activities
Net earnings for the period $ 2,112 $ 869 $ 2,981
Future income tax recovery (1,633) (85) (1,718)
Amortization 5,900 13,665 19,565
---------------------------------------------------------------------
Funds from continuing
operations 6,379 14,449 20,828
Net change in operating
working capital (2,011) 2,166 155
Net change in properties
held for resale (33) (61) (94)
---------------------------------------------------------------------
Total operating cash flows 4,335 16,554 20,889
--------------------------------------
Financing activities
Issue of trust units
(net of issue costs) 5,895 270 6,165
Unit repurchase program - (610) (610)
Distributions paid - (10,940) (10,940)
Financing of revenue
producing properties 12,519 22,137 34,656
Repayment of debt on revenue
producing properties (10,919) (19,059) (29,978)
Deferred financing costs
incurred (net of
amortization) (506) (998) (1,504)
---------------------------------------------------------------------
6,989 (9,200) (2,211)
--------------------------------------
Investing activities
Purchases of revenue
producing properties - (13,089) (13,089)
Project improvements to
revenue producing properties (1,216) (4,722) (5,938)
Technology for real estate
operations (111) 2 (109)
---------------------------------------------------------------------
(1,327) (17,809) (19,136)
--------------------------------------
Net increase (decrease) in
cash and cash equivalents $ 9,997 $ (10,455) $ (458)
--------------------------------------
--------------------------------------
5. REVENUE PRODUCING PROPERTIES
Acquisitions
January 1, May 3, 6 months 6 months
2004 2004 ended ended
to May 2, to June 30, June 30, June 30,
2004 2004 2004 2003
---------------------------------------------------
Cash paid $ 9,174 $ 13,089 $ 22,263 $ 46,433
Debt assumed 7,912 10,409 18,321 15,468
---------------------------------------------------------------------
Total purchase
price 17,086 23,498 40,584 61,901
Fair value
adjustments
to debt 560 774 1,334 869
Book value $ 17,646 $ 24,272 $ 41,918 $ 62,770
---------------------------------------------------
---------------------------------------------------
Allocation of
book value to
revenue producing
properties $ 16,910 $ 23,235 $ 40,145 $ 62,770
---------------------------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Allocation of
book value to
other assets
(NOTE 2 -
Accounting for
Operating Leases) 736 1,037 1,773 -
---------------------------------------------------------------------
$ 17,646 $ 24,272 $ 41,918 $ 62,770
---------------------------------------------------
---------------------------------------------------
Units acquired 183 354 537 1,307
---------------------------------------------------
---------------------------------------------------
Dispositions
January 1, May 3, 6 months 6 months
2004 2004 ended ended
to May 2, to June 30, June 30, June 30,
2004 2004 2004 2003
---------------------------------------------------
Cash received $ - $ - $ - $ 1,385
Debt assumed - - - 1,655
---------------------------------------------------------------------
Total proceeds - - - 3,040
Net book value - - - 1,993
---------------------------------------------------------------------
Gain on sales $ - $ - $ - $ 1,047
---------------------------------------------------
---------------------------------------------------
Units sold - - - 40
---------------------------------------------------
---------------------------------------------------
6. DISPOSAL OF LONG-LIVED ASSETS AND DISCONTINUED OPERATIONS
During the first quarter of 2003, a $3.0 million unsolicited offer
was received to purchase a 40-unit property located in Edmonton,
Alberta. The sale was completed by the end of the first quarter of
2003. There were no dispositions in the first six months of 2004.
Note 5 discloses the carrying amounts of the major assets and
liabilities included in the disposition. The following table sets
forth the results of operations associated with the long-lived asset,
separately reported as discontinued operations.
January 1, May 3, 6 months 6 months
2004 2004 ended ended
to May 2, to June 30, June 30, June 30,
2004 2004 2004 2003
---------------------------------------------------
Revenue
Rental income $ - $ - $ - $ 86
---------------------------------------------------
Expenses
Revenue producing
properties:
Operating expenses - - - 4
Utilities - - - 17
Property taxes - - - 6
Administration - - - 2
Financing costs - - - 24
---------------------------------------------------------------------
- - - 53
---------------------------------------------------
Operating earnings
from discontinued
operations before
income taxes - - - 33
Future income taxes - - - 12
Operating earnings
from discontinued
operations - - - 21
Gain on disposition - - - 1,047
Future income taxes - - - (317)
Earnings from
discontinued
operations $ - $ - $ - $ 751
---------------------------------------------------
---------------------------------------------------
7. UNITHOLDERS' CAPITAL
The Plan of Arrangement (the "Arrangement") to convert Boardwalk
Equities Inc. from a share corporation to a real estate investment
trust was completed on May 3, 2004. On conversion of Boardwalk
Equities Inc. to a trust, Boardwalk Equities Inc. incurred
$8.5 million in restructuring costs. Under the Arrangement, the
former shareholders of Boardwalk Equities Inc. received Boardwalk
REIT units or Class B Limited Partnership ("LP Class B") units of a
controlled limited partnership of Boardwalk REIT, Boardwalk REIT
Limited Partnership.
The LP Class B units are exchangeable, on a one-for-one basis, into
Boardwalk REIT units at any time at the option of the holder. Prior
to such exchange, distributions will be made on the exchangeable
units in an amount equivalent to the distributions which would have
been made had the units of Boardwalk REIT been issued. Each LP Class
B unit was accompanied by a Special Voting unit, which will entitle
the holder to receive notice of, attend and vote at all meetings of
unitholders. There is no value assigned to the Special Voting units.
The LP Class B units issued are included in the unitholders' capital
contributions on the balance sheet. The change in unitholders'
capital contribution for 2004 are as follows:
Shares Amount
Share capital of Boardwalk Equities Inc.
at December 31, 2003 50,868,119 $ 275,509
Options exercised 2,345,155 28,372
-------------------------
Share capital of Boardwalk Equities Inc.
at May 2, 2004 exchanged for trust units 53,213,274 $ 303,881
-------------------------
-------------------------
Summary of Unitholders'
Capital Contributions Units Amount
Units issued in exchange for
Boardwalk Equities Inc. shares 53,213,274 $ 303,881
Issuance of 15,000 units for cash at
$18.00 per unit on May 3, 2004 15,000 270
Unit repurchases, recorded at
book value of units (104,700) (610)
Restructuring cost - (8,500)
-------------------------
Total unitholders' capital contribution 53,123,574 $ 295,041
-------------------------
-------------------------
The Declaration of Trust authorizes Boardwalk REIT to issue an
unlimited number of units for the consideration and on terms and
conditions established by the Trustees without the approval of any
unitholders. The interests in Boardwalk REIT are represented by two
classes of units: a class described and designated as "REIT Units"
and a class described and designated as "Special Voting Units". The
beneficial interest of the two classes of units is as follows:
(a) REIT Units
REIT Units represents an undivided beneficial interest in Boardwalk
REIT and in distributions made by Boardwalk REIT. The REIT Units are
freely transferable, subject to applicable securities regulatory
requirements. Each REIT Unit entitles the holder to one vote at all
meetings of unitholders. Except as set out under the redemption
rights below, the REIT Units have no conversion, retraction,
redemption or pre-emptive rights.
REIT Units are redeemable at any time, in whole or in part, on demand
by the holders. Upon receipt by Boardwalk REIT of a written
redemption notice and other documents that may be required, all
rights to and under the REIT Units tendered for redemption shall be
surrendered and the holder shall be entitled to receive a price per
REIT Unit equal to the lesser of:
i) 90% of the "market price" of the REIT Units on the principal
market on which the REIT Units are quoted for trading during
the twenty- day period ending on the trading day prior to the
day on which the REIT Units were surrendered to Boardwalk REIT
for redemption; and
ii) 100% of the "closing market price" of the REIT Units on the
principal market on which the REIT Units are quoted for trading
on the redemption date.
(b) Special Voting Units
The Declaration of Trust provides for the issuance of an unlimited
number of Special Voting Units that will be used to provide voting
rights to holders of LP Class B units or other securities that are,
directly or indirectly, exchangeable for REIT Units.
Each Special Voting Unit entitles the holder to the number of votes
at any meeting of unitholders, which is equal to the number of REIT
Units which may be obtained upon surrender of the LP Class B unit to
which the Special Voting Unit relates. The Special Voting Units do
not entitle or give any rights to the holders to receive
distributions or any amount upon liquidation, dissolution or
winding-up of Boardwalk REIT.
The breakdown of trust units of Boardwalk REIT by class is as
follows:
Units Amount
Boardwalk REIT Units 48,648,574
Special Voting Units issued to holders
of LP Class B units 4,475,000
-------------------------
Total trust units 53,123,574 $ 295,041
-------------------------
-------------------------
Stock Options
The following table illustrates the impact on net earnings and
earnings per unit if compensation expense had been recorded in the
current and prior periods based on the fair value of all options
granted on or after January 1, 2002:
6 months 6 months
ended ended
June 30, June 30,
2004 2003
-------------------------
Compensation costs $ (2,278) $ (1,046)
Net earnings
As reported $ 1,754 $ 4,073
Pro forma $ (524) $ 3,027
Net earnings per unit
Basic
As reported $ 0.04 $ 0.08
Pro forma $ (0.01) $ 0.06
Diluted
As reported $ 0.04 $ 0.08
Pro forma $ (0.01) $ 0.06
As a result Boardwalk REIT's conversion, all previously granted stock
options vested prior to May 3, 2004. Consequently, net earnings and
earnings per unit shown above for the current period reflect all
remaining compensation costs not previously recognized in prior
periods.
The fair value of each option granted in 2002 was estimated to be
$6.74 on the date of grant using the Black-Scholes option-pricing
model with weighted average assumptions for grants as follows:
Risk free interest rate 5.33%
Expected lives (years) 7 - 10 years
Expected volatility 42.56%
Dividend per unit $0.05
No stock options were granted subsequent to December 31, 2002.
8. DISTRIBUTABLE INCOME AND PER UNIT INFORMATION
Distributable cash per unit
Boardwalk REIT makes distributions to unitholders on a monthly basis
on or about the 15th day of the following month, except December. On
December 31, Boardwalk REIT makes a distribution for the month of
December.
Net earnings, subsequent to Boardwalk REIT conversion $ 869
Add:
Amortization 13,665
Amortization of deferred financing costs incurred
prior to May 3, 2004 459
Deduct:
Future income tax recovery (85)
Amortization of net premium on long-term debt
assumed after May 2, 2004 (17)
---------------------------------------------------------------------
Distributable income $ 14,891
Distribution paid to unitholders $ 10,940
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average units outstanding
- basic and diluted 53,159,181
Distributable income earned per unit $ 0.280
Actual distributions declared per unit $ 0.206
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per unit
6 months 6 months
ended ended
June 30, June 30,
2004 2003
-------------------------
Numerator
Earnings from continuing operations $ 1,754 $ 3,322
Earnings from discontinued operations - $ 751
---------------------------------------------------------------------
Denominator
Denominator for basic earnings per unit
- weighted average units (THOUSANDS) 52,395 50,225
---------------------------------------------------------------------
Effect of dilutive units
Units issued in respect of long-term
incentive plan (THOUSANDS) - 521
Denominator for diluted earnings per unit
adjusted for weighted average shares and
assumed conversion (THOUSANDS) 52,395 50,746
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per unit from
continuing operations
Basic $ 0.03 $ 0.07
Diluted $ 0.03 $ 0.07
---------------------------------------------------------------------
Earnings per unit from
discontinued operations
Basic $ 0.00 $ 0.01
Diluted $ 0.00 $ 0.01
---------------------------------------------------------------------
---------------------------------------------------------------------
9. INCOME TAXES
Boardwalk REIT is a "mutual fund trust" as defined under the Income
Tax Act (Canada) and accordingly is not taxable on its income to the
extent that its income is distributed to its unitholders. This
exemption does not extend to the corporate subsidiaries of Boardwalk
REIT that are subject to income tax. Total future income tax recovery
for the six-month ended June 30, 2004 combines the results of
Boardwalk Equities Inc. prior to May 3, 2004 with the results of
Boardwalk REIT subsequent to May 2, 2004. The adjustment for change
in effective tax rate reflects the reduction of the current combined
federal and provincial substantially enacted rate in the province of
Alberta.
January 1, May 3, 6 months 6 months
2004 2004 ended ended
to May 2, to June 30, June 30, June 30,
2004 2004 2004 2003
---------------------------------------------------
Continuing
operations $ (1,291) $ (85) $ (1,376) $ 3,555
Discontinued
operations - - - 329
---------------------------------------------------------------------
Total future
income taxes
(recovery) $ (1,291) $ (85) $ (1,376) $ 3,884
---------------------------------------------------
---------------------------------------------------
Future income taxes (recovery) consist of the following:
6 months 6 months
ended ended
June 30, June 30,
2004 2003
-------------------------
Tax expense based on expected rate $ 201 $ 3,785
Non-taxable portion of capital gains - (223)
Adjustment to future income tax liabilities (26) 916
Adjustment for change in effective tax rate (1,551) (594)
---------------------------------------------------------------------
Future income taxes (recovery) $ (1,376) $ 3,884
-------------------------
-------------------------
The future income tax asset (liability) is calculated as follows:
AS AT June 30, December 31,
2004 2003
-------------------------
Tax assets related to operating losses $ 675 $ 77,354
Tax liabilities related to differences
in tax and book basis (451) (152,119)
---------------------------------------------------------------------
Future income tax asset (liability) $ 224 $ (74,765)
-------------------------
-------------------------
10. COMMITMENTS AND CONTINGENCIES
At June 30, 2004, Boardwalk REIT has long-term physical supply
arrangements with two electrical utility companies to supply it with
its electrical power needs for Alberta for the next sixteen to thirty
months at a blended rate of approximately $0.066/kwh. These
agreements provide that Boardwalk REIT purchase its power for all
Alberta properties under contract for the upcoming months.
Boardwalk REIT also has two physical settlement fixed-price supply
contracts for Alberta natural gas requirements. These contracts fix
the price of natural gas for 75% of its requirements in Alberta. The
two contracts are for physical settlement, and each represents
approximately 37.5% of Boardwalk REIT's Alberta requirements. The
first of these contracts runs from January 1, 2003 to September 30,
2004 and provides the commodity at a price of $5.44/GJ. The second
contract runs from October 1, 2003 to September 30, 2005 and provides
the commodity at a price of $6.16/GJ.
In Saskatchewan, Boardwalk REIT has a physical supply agreement to
supply 100% of its natural gas requirements for that province. The
agreement extends until October 31, 2005 at a fixed price of
$5.20/GJ.
In Eastern Canada, Boardwalk REIT has procured approximately 75% of
its gas usage requirements under two physical fixed-price supply
contracts until the fall, priced near $6.00/GJ.
Beginning in November 2003, the Alberta government implemented a
natural gas rebate program covering the winter usage months of
November thru March. This program will be in effect for a remaining
thirty-three month term ending March 31, 2006. The rebate program
becomes active when the natural gas consumer price exceeds $5.50/GJ
for any individual winter usage month. There was no rebate for
November and December 2003. For January to March 2004, Boardwalk
REIT's predecessor was eligible for an estimated rebate of $812,000.
11. GUARANTEES
In the normal course of business, various agreements may be entered
that may contain features that meet the AcG-14 definition of a
guarantee. AcG-14 defines a guarantee to be a contract (including an
indemnity) that contingently requires an entity to make payments to
the guaranteed party based on (i) changes in an underlying interest
rate, foreign exchange rate, equity or commodity instrument, index or
other variable, that is related to an asset, a liability or an equity
security of the counterparty, (ii) failure of another party to
perform under an obligating agreement or (iii) failure of a third
party to pay its indebtedness when due.
In connection with the sales of properties, a mortgage assumed by the
purchaser will have an indirect guarantee provided to the lender
until the mortgage is refinanced by the purchaser. In the event of
default by the purchaser, the seller would be liable for the
outstanding mortgage balance. Boardwalk REIT's maximum exposure at
June 30, 2004 is approximately $6.1 million. In the event of default,
Boardwalk REIT's recourse for recovery includes the sale of the
respective building asset. Boardwalk REIT expects that the proceeds
from the sale of the building asset will cover, and in most
likelihood exceed, the maximum potential liability associated with
the amount being guaranteed. Therefore, at June 30, 2004, no amounts
have been recorded in the consolidated financial statements with
respect to the above noted indirect guarantees.
12. SEGMENTED INFORMATION
Boardwalk REIT specializes in multi-family residential housing and
operates primarily within one business segment in four provinces
located in Canada. The following summary presents segmented financial
information for Boardwalk REIT's business by geographic location, and
reflects the activities of Boardwalk Equities Inc. for the period
from January 1, 2004 to May 2, 2004 or from April 1, 2004 to May 2,
2004 combined with the activities of Boardwalk REIT for the period
from May 3, 2004 to June 30, 2004. The comparative figures represent
the activities of Boardwalk Equities Inc.
3 months 3 months 6 months 6 months
ended ended ended ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
---------------------------------------------------
Alberta
Revenue $ 37,792 $ 37,885 $ 75,876 $ 75,528
---------------------------------------------------
Expenses
Operating 3,552 4,652 8,197 9,368
Utilities 4,634 4,510 10,217 9,826
Property taxes 2,741 2,738 5,435 5,643
---------------------------------------------------------------------
10,927 11,900 23,849 24,837
---------------------------------------------------
Net operating
income $ 26,865 $ 25,985 $ 52,027 $ 50,691
---------------------------------------------------
Saskatchewan
Revenue $ 8,482 $ 8,389 $ 17,110 $ 16,843
---------------------------------------------------
Expenses
Operating 1,040 1,004 2,116 2,161
Utilities 909 841 2,425 2,073
Property taxes 1,118 1,200 2,235 2,399
---------------------------------------------------------------------
3,067 3,045 6,776 6,633
---------------------------------------------------
Net operating
income $ 5,415 $ 5,344 $ 10,334 $ 10,210
---------------------------------------------------
Ontario
Revenue $ 8,891 $ 8,683 $ 17,865 $ 17,220
---------------------------------------------------
Expenses
Operating 964 1,170 2,065 2,446
Utilities 1,237 1,367 2,926 3,344
Property taxes 1,445 1,353 2,947 2,704
---------------------------------------------------------------------
3,646 3,890 7,938 8,494
---------------------------------------------------
Net operating
income $ 5,245 $ 4,793 $ 9,927 $ 8,726
---------------------------------------------------
Quebec
Revenue $ 14,620 $ 11,454 $ 28,459 $ 22,004
---------------------------------------------------
Expenses
Operating 1,504 1,203 3,024 2,324
Utilities 1,580 1,340 4,211 2,959
Property taxes 1,474 1,095 2,893 2,130
---------------------------------------------------------------------
4,558 3,638 10,128 7,413
---------------------------------------------------
Net operating
income $ 10,062 $ 7,816 $ 18,331 $ 14,591
---------------------------------------------------
Total
Net operating
income $ 47,587 $ 43,938 $ 90,619 $ 84,218
Unallocated
revenue(x) 255 348 555 3,912
Unallocated
expenses(xx) (44,861) (41,731) (89,420) (84,057)
---------------------------------------------------------------------
Net earnings for
the period $ 2,981 $ 2,555 $ 1,754 $ 4,073
---------------------------------------------------
---------------------------------------------------
AS AT
June 30, December 31,
2004 2003
-------------------------
Alberta
Identifiable assets
Revenue producing properties $ 951,688 $ 969,196
Mortgages and accounts receivable 6,167 8,338
Deferred financing costs 24,729 26,621
Tenants' security deposit 5,519 5,674
-------------------------
$ 988,103 $ 1,009,829
-------------------------
Saskatchewan
Identifiable assets
Revenue producing properties $ 176,397 $ 178,867
Mortgages and accounts receivable 77 11
Deferred financing costs 4,440 4,585
Tenants' security deposits 1,161 1,097
-------------------------
$ 182,075 $ 184,560
-------------------------
Ontario
Identifiable assets
Revenue producing properties $ 214,703 $ 215,428
Mortgages and accounts receivable 253 250
Deferred financing costs 2,671 2,709
-------------------------
$ 217,627 $ 218,387
-------------------------
Quebec
Identifiable assets
Revenue producing properties $ 378,899 $ 342,364
Mortgages and accounts receivable 4,691 4,425
Deferred financing costs 5,727 4,102
-------------------------
$ 389,317 $ 350,891
-------------------------
Total assets
Identifiable assets $ 1,777,122 $ 1,763,667
Unallocated assets(xxx) 60,718 39,713
-------------------------
$ 1,837,840 $ 1,803,380
-------------------------
-------------------------
(x) Unallocated revenue includes property sales, interest income,
revenue from discontinued operations and other non-rental
income.
(xx) Unallocated expenses include cost of property sales, operating
expenses from discontinued operations, non-rental operating
expenses, administration, financing costs, amortization, income
taxes and other provisions.
(xxx) Unallocated assets include properties held for development,
cash, short-term investments and other assets.
For further information please contact:
Boardwalk REIT
Sam Kolias,
President and CEO,
(403) 531-9255;
Roberto Geremia,
Senior Vice President, Finance
and Chief Financial Officer,
(403) 531-9255;
Paul Moon,
Director of Corporate Communications,
(403) 531-9255.
