TSX SYMBOL: BEI.UN November 15, 2004
Boardwalk REIT Announces Record Third Quarter Results
13% Increase In FFO From Continuing Operations In Third Quarter
Announces Increase In November 2004 Monthly Distribution
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SUPPLEMENTAL NOTES - Q3-2004 (Printer Friendly PDF File - 954 Kb)
Calgary, Alberta – November 15, 2004 Boardwalk Real Estate Investment Trust (“BEI.UN” – TSX)Boardwalk Real Estate Investment Trust ("Boardwalk REIT" or the "Trust") today announced its financial results for the three and nine-month periods ending September 30, 2004. These results reflect the activities of Boardwalk Equities Inc. ("BEI") and Boardwalk REIT for the period January 1, 2004 to September 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 third quarter ended September 30, 2004, the Trust reported funds from operations ("FFO") from continuing operations of $22.2 million and FFO per unit of $0.42 on a diluted basis, compared to FFO of $19.7 million and FFO per unit of $0.39 for the same period last year. Distributable income ("DI") was $22.9 million and DI per unit was $0.43 on a diluted basis, compared to DI of $20.5 million and DI per unit of $0.40 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 from continuing operations and adding back amortization on any deferred financing charges incurred prior to May 3, 2004 as well as adjusting for any discounts or premiums relating to the amortization of mark-to-market debt adjustment incurred subsequent to the conversion date of May 3, 2004. Highlights for the three-month period ended September 30, 2004 include: - Rental revenues of $70.4 million, an increase of 2.5% compared to $68.7 million for the three-month period ended September 30, 2003. - Net operating income of $48.0 million, a 3.2% increase from $46.5 million in the same period last year. - FFO from continuing operations, which excludes gains on property dispositions, of $22.2 million, an increase of 12.7% compared to $19.7 million for the three-month period ended September 30, 2003. - FFO from continuing operations per unit of $0.42 on a diluted basis, an increase of 7.7% compared to $0.39 for the three-month period ended September 30, 2003. - DI from continued operations was $0.43 per unit, an increase of 7.5% compared to $0.40 for the three months ended September 30, 2003. - Net income of $3.2 million, a 37.3% decrease compared to $5.1 million in the same period last year. Earnings per unit from continuing operations of $0.06 compared to $0.10 in the third quarter of last year. The decrease is the result of a prospective application of a change in accounting policy with respect to the depreciation of our building assets. Highlights for the nine-month period ended September 30, 2004 include: - Rental revenues of $210.2 million, an increase of 4.5% compared to $201.1 million for the nine-month period ended September 30, 2003. - Net operating income of $138.1 million, a 5.1% increase from $131.4 million in the same period last year. - FFO from continuing operations, which excludes gains on property dispositions, of $59.6 million, an increase of 16.4% compared to $51.2 million for the nine-month period ended September 30, 2003. - FFO from continuing operations per unit of $1.13 on a diluted basis, an increase of 11.9% compared to $1.01 for the nine-month period ended September 30, 2003. - DI from continued operations was $1.17 per unit, an increase of 10.4% compared to $1.06 for the nine months ended September 30, 2003. - Net income of $5.0 million, a 45.7% decrease compared to $9.2 million in the same period last year. Earnings per unit from continuing operations of $0.09 compared to $0.17 in the first nine months of last year. The decrease is the result of a prospective application of a change in accounting policy with respect to the depreciation of our building assets.
Sam Kolias, Boardwalk REIT's President and Chief Executive Officer, stated, "We are pleased to deliver another record quarter despite challenging yet recovering multi-family market fundamentals. With interest rates still low and the new supply of homes and condominiums still high, we believe it is a reflection of our team's continued high performance. Recent reports from CMHC and other financial agencies indicate that the housing market will continue to move towards a balanced state into 2005 and beyond. Historically high new housing starts and resale activity will moderate in the coming quarters as increasing construction, mortgage and carrying costs will further erode affordability for home-buying consumers. On the demand side, further job creation and in-migration for Alberta, our largest market, will continue its positive trend as the province leads the country in economic growth into 2005.
"As shown in our latest results, we have made substantial gains on our month-to-month portfolio occupancy levels. October 2004 occupancy was recorded at 96.1% compared to 94.2% in August 2004, an increase of 190 bps. Overall average monthly turnover is decreasing. This decrease in turnover can be seen in Calgary and in our smaller Alberta markets such as Fort McMurray and Grande Prairie, and reflects the ongoing positive economic growth in the province. Our record quarter includes a significant increase in property taxes in Edmonton, approximately $1.1M or $0.02 per unit, as was anticipated and discussed in prior conference calls. Our Edmonton portfolio continues to face competition from a heavy supply of new condominiums and homes. Revenue in Edmonton was down approximately 2.2% for the quarter and down 0.3% for the nine-month period. Saskatchewan markets continue to be stable with Saskatoon showing some signs of weakness from the oversupply of condos and Regina remaining firm. In Ontario, rental revenues from our London properties continue to improve while Windsor is down slightly as a result of the oversupply of new condominiums and homes. Our Quebec markets are continuing to show strength, albeit at a slower pace due to new competition from new condominiums and homes.
"Overall, our diversity continues to deliver firm revenues from our entire portfolio. We remain committed to delivering sustainable long-term value for our unitholders now and into the New Year."
Operational Highlights
The average vacancy rate across Boardwalk REIT's portfolio for the period ended September 30, 2004 was 5.48%, down from 5.67% in the second quarter of 2004 and up from 3.66% in the third quarter of last year. The average monthly rent realized in the first nine months of 2004 was $737 per unit, up $8, or 1.1%, from $729 per unit for the nine-month period ended September 30, 2003. Management estimates that market rents for its properties at the end of September 2004 averaged $801 per unit per month which compares to an average in-place monthly rent per occupied unit of $779 for the nine-month period ended September 30, 2004. This translates into an estimated "loss-to-lease" of approximately $8.1 million, or $0.15 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 September 30, 2004 showed flat rental growth, a decrease in operating expenses of 2.0% and an increase in NOI of 1.0% compared to the same period last year. The "same-property" results for the nine-month period ended September 30, 2004 showed rental growth of 1.0%, a decrease in operating expenses of 3.5% and an increase in NOI of 3.4% 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 28,927 units, representing approximately 91% of Boardwalk REIT's total portfolio, were classified as stabilized as at September 30, 2004.
Same-Property Results - Stabilized Portfolio Three Months Ended September 30, 2004 vs. Three Months Ended September 30, 2003 ------------------------------------------------------------------------- Rental Total Revenues Expenses NOI % of NOI ------------------------------------------------------------------------- Calgary -1.2% -7.8% 1.3% 20% Edmonton -2.3% 2.4% -4.3% 35% Other Alberta 5.5% -21.5% 18.5% 6% Saskatchewan 0.5% -11.8% 7.3% 13% Ontario 3.0% 1.7% 3.9% 12% Quebec 2.5% 8.4% 0.0% 14% ------------------------------------------------------------------------- Total 0.0% -2.0% 1.0% 100% ------------------------------------------------------------------------- ------------------------------------------------ ------------------------------------------------------------------------- Same-Property Results - Stabilized Portfolio Nine Months Ended September 30, 2004 vs. Nine Months Ended September 30, 2003 ------------------------------------------------------------------------- Rental Total Revenues Expenses NOI % of NOI ------------------------------------------------------------------------- Calgary -0.5% -4.7% 1.2% 20% Edmonton -0.6% -1.8% -0.1% 36% Other Alberta 4.7% -12.7% 13.4% 6% Saskatchewan 1.2% -2.2% 3.3% 12% Ontario 3.5% -4.1% 10.2% 12% Quebec 3.7% -3.3% 7.1% 14% ------------------------------------------------------------------------- Total 1.0% -3.5% 3.4% 100% ------------------------------------------------------------------------- ------------------------------------------------ ------------------------------------------------------------------------- Acquisition ActivitySubsequent to September 30, 2004, Boardwalk REIT added to its Quebec and Ontario portfolio by purchasing an additional 266 units. A total of 168 of these units are located in the Montreal market place, with 98 units located in Windsor, Ontario.
- Le Bienville - Montreal (Longueuil), QC - a 168 unit apartment property consisting of two walk-up style wood-frame buildings with brick exterior. The property was purchased at an acquisition price of $7.1 million using cash on hand. The purchase price equates to approximately $42,300 per unit and approximately $61.4 per rentable square foot. The transaction had a going-in cap rate of 8.31% and closed on October 14, 2004.
- Tecumseh Eastview Apartments - Windsor (Tecumseh), ON - a 7-storey concrete high-rise property consisting of 26 one-bedrooms and 72 two- bedrooms for a total of 98 apartment units. The property was purchased for $6.6 million, which equates to approximately $67,300 per unit and approximately $92.1 per rentable square foot. The purchase was funded by a combination of cash on hand and the assumption of an existing mortgage of $2.0 million with a fixed interest rate of 6.28% due in December 2005. The going-in cap rate on the acquisition was approximately 8.08%, and the transaction closed on October 29, 2004.
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 totaled $1.41 billion as at September 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 nine months of the year. As of September 30, 2004, Boardwalk REIT's debt had an average maturity of 3.8 years with a weighted average interest rate of 5.49%. Boardwalk REIT's debt-to-total-market-capitalization ratio was 60.9% as at September 30, 2004, which compares to 64.1% for BEI at the same time last year.
Boardwalk REIT's interest coverage ratio, excluding gains, for the three- month period ended September 30, 2004 was 2.2 times compared to 2.1 times in the same period last year.
2004 Earnings Guidance
Commenting on the Trust's outlook, Rob Geremia, Senior Vice President, Finance and CFO, stated, "Although we have reported slightly better than expected operating results for the first nine months of 2004, we continue to be cautious for the remainder of the year. However, given the new results, we are narrowing our 2004 guidance for FFO and distributable income to $1.40 to $1.44 and $1.46 to $1.49 respectively, from the previous forecast of FFO and distributable income of $1.37 to $1.44 and $1.43 to 1.49, respectively. The forecast assumptions for 2004 are based on new acquisitions at slightly below the targeted range of between 1,000 to 2,000 units and stabilized NOI growth of between 1.0% and 2.0%."
2005 Earnings Guidance
"For 2005, we are introducing our guidance for FFO and distributable income of between $1.42 to $1.49 and $1.46 to $1.53, respectively. These forecasts are based on the assumptions of approximately 0.0% to 1.0% stabilized NOI growth and new acquisitions of between 1,000 to 2,000 new units for the year."
November 2004 Monthly Distribution
Boardwalk REIT announces that it has increased its monthly cash distributions by 1.6%, to $0.105 per trust unit, or $1.26 per trust unit per year (up from $1.24 per trust unit per year). The Trust has declared a cash distribution of $0.105 per trust unit for the month of November, 2004. The November distribution will be payable on December 15, 2004 to unitholders of record on November 30, 2004.
To encourage participation and reward unitholders, investors registered in the Distribution Reinvestment Plan ("DRIP") will continue to receive a "bonus" distribution of additional Trust Units representing 3% of the amount of their cash distributions reinvested pursuant to the Plan. A full copy of the DRIP can be found on Trust's website at www.boardwalkREIT.com.
Supplementary Information
Boardwalk REIT produces quarterly supplemental information that provides detailed information regarding its activities during the quarter. The third 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 ET. Senior management will speak to the financial results and provide an update. Presentation materials will be made available on our website (www.boardwalkreit.com) prior to the call.
Teleconference: The telephone numbers for the conference are: 416-640-4127 (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=927300.
Replay: An audio recording of the teleconference will be available from 1:00pm ET on November 15, 2004 until 11:59pm ET on November 22, 2004. You can access it by dialing 416-640-1917 and using the passcode 21097043 followed by 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 32,000 units totaling 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 September 30, December 31,
2004 2003
----------------------------
Assets
Revenue producing properties $1,721,196 $1,713,171
Properties held for resale 7,800 7,493
Deferred financing costs 38,779 38,044
Other assets 16,566 14,652
Future income taxes (NOTE 9) 461 -
Mortgages and accounts receivable 5,809 13,126
Segregated tenants' security deposits 6,709 6,771
Cash and cash equivalents 17,148 10,123
-------------------------------------------------------------------------
$1,814,468 $1,803,380
----------------------------
----------------------------
Liabilities
Mortgages payable $1,408,082 $1,387,067
Accounts payable and accrued liabilities 23,569 19,801
Refundable tenants' security deposits and
other 9,848 9,730
Capital lease obligations 145 3,515
Future income taxes (NOTE 9) - 74,765
-------------------------------------------------------------------------
$1,441,644 $1,494,878
----------------------------
Unitholders' Equity
Unitholders' capital (NOTE 7) 293,992 275,509
Accumulated earnings 78,832 32,993
-------------------------------------------------------------------------
$ 372,824 $ 308,502
-------------------------------------------------------------------------
$1,814,468 $1,803,380
----------------------------
----------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 COMBINES
INFORMATION FROM BOARDWALK REAL ESTATE INVESTMENT TRUST AND ITS
PREDECESSOR (NOTES 2 AND 4)
(CDN$ THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(Unaudited)
3 months 3 months 9 months 9 months
ended ended ended ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
----------------------------------------------------------
NOTES 2 and 4
Revenue
Rental income $ 70,369 $ 68,717 $ 210,234 $ 201,099
----------------------------------------------------------
Expenses
Revenue
producing
properties:
Operating
expenses 8,214 8,624 24,516 25,003
Utilities 6,025 6,851 26,712 25,145
Utility
rebate
(NOTE 10) - - (812) -
Property
taxes 8,170 6,702 21,699 19,591
Administration 5,715 5,857 17,678 17,535
Financing
costs 19,062 19,391 57,217 57,366
Deferred
financing
costs
amortization 683 732 2,208 2,565
Amortization
(NOTE 3) 19,256 12,973 56,194 37,590
-------------------------------------------------------------------------
67,125 61,130 205,412 184,795
----------------------------------------------------------
Earnings from
continuing
operations
before income
taxes 3,244 7,587 4,822 16,304
Large
corporations
taxes 255 828 1,455 2,668
Future income
taxes
(recovery)
(NOTE 9) (237) 1,614 (1,613) 5,169
-------------------------------------------------------------------------
Earnings from
continuing
operations 3,226 5,145 4,980 8,467
Earnings from
discontinued
operations,
net of tax - - - 751
-------------------------------------------------------------------------
Net earnings
for the period $ 3,226 $ 5,145 $ 4,980 $ 9,218
----------------------------------------------------------
----------------------------------------------------------
Basic earnings
per unit
(NOTE 8)
- from
continuing
operations $ 0.06 $ 0.10 $ 0.09 $ 0.17
- from
discontinued
operations - - - 0.01
-------------------------------------------------------------------------
Basic earnings
per unit $ 0.06 $ 0.10 $ 0.09 $ 0.18
----------------------------------------------------------
----------------------------------------------------------
Diluted
earnings per
unit (NOTE 8)
- from
continuing
operations $ 0.06 $ 0.10 $ 0.09 $ 0.17
- from
discontinued
operations - - - 0.01
-------------------------------------------------------------------------
Diluted
earnings
per unit $ 0.06 $ 0.10 $ 0.09 $ 0.18
----------------------------------------------------------
----------------------------------------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF ACCUMULATED EARNINGS
(CDN$ THOUSANDS)
(Unaudited)
9 months 9 months
ended ended
September 30, September 30,
2004 2003
----------------------------
Accumulated earnings, beginning of period $ 32,993 $ 35,229
Net earnings for the period 4,980 9,218
Distributions on units (31,297) (5,795)
Premium on unit repurchases (stock
repurchases pre May 3, 2004) (1,397) (392)
Elimination of future income taxes on
conversion to trust (NOTE 2) 73,553 -
-------------------------------------------------------------------------
Accumulated earnings, end of period $ 78,832 $ 38,260
----------------------------
----------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 COMBINES
INFORMATION FROM BOARDWALK REAL ESTATE INVESTMENT TRUST AND ITS
PREDECESSOR (NOTES 2 AND 4)
(CDN$ THOUSANDS)
(Unaudited)
3 months 3 months 9 months 9 months
ended ended ended ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
----------------------------------------------------------
NOTES 2 and 4
Operating
activities
Net earnings
for the
period $ 3,226 $ 5,145 $ 4,980 $ 9,218
Earnings from
discontinued
operations,
net of tax - - - (751)
Future income
taxes
(recovery) (237) 1,614 (1,613) 5,169
Amortization 19,256 12,973 56,194 37,590
-------------------------------------------------------------------------
Funds from
continuing
operations 22,245 19,732 59,561 51,226
Funds from
discontinued
operations - - - 33
Net change in
operating
working
capital 1,089 592 7,330 916
Net change in
properties
held for
resale (105) (123) (307) 1,549
-------------------------------------------------------------------------
Total
operating
cash flows 23,229 20,201 66,584 53,724
----------------------------------------------------------
Financing
activities
Issue of
trust units
(net of
issue costs)
(NOTE 7) 127 601 28,769 4,614
Restructuring
costs (1,020) - (9,520) -
Unit
repurchase
program
(stock
repurchase
program pre
May 3, 2004) (156) - (766) (628)
Distributions
paid (16,419) (3,785) (31,297) (5,795)
Financing of
revenue
producing
properties 25,485 60,954 95,340 149,818
Repayment of
debt on
revenue
producing
properties (26,173) (39,578) (92,646) (115,364)
Capital lease
obligations (2,786) (274) (3,370) (803)
Deferred
financing
costs incurred
(net of
amortization) 1,827 (1,808) (1,140) (2,745)
-------------------------------------------------------------------------
(19,115) 16,110 (14,630) 29,097
----------------------------------------------------------
Investing
activities
Purchases of
revenue
producing
properties
(NOTE 5) - (22,296) (22,263) (68,831)
Project
improvements
to revenue
producing
properties (10,101) (15,427) (22,126) (38,726)
Net cash
proceeds from
sale of
properties - - - 1,223
Technology for
real estate
operations (258) 323 (540) (86)
-------------------------------------------------------------------------
(10,359) (37,400) (44,929) (106,420)
----------------------------------------------------------
Net increase
(decrease) in
cash and cash
equivalents
balance during
period (6,245) (1,089) 7,025 (23,599)
Cash and cash
equivalents,
beginning of
period 23,393 1,121 10,123 23,631
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 17,148 $ 32 $ 17,148 $ 32
----------------------------------------------------------
----------------------------------------------------------
Supplementary
cash flow
information:
Taxes paid $ 425 $ 832 $ 1,667 $ 2,566
Interest paid $ 18,934 $ 18,928 $ 57,225 $ 57,016
----------------------------------------------------------
----------------------------------------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 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
September 30, 2004 reflect the activities of Boardwalk REIT. The
statements of earnings and cash flows for the nine months ended
September 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
September 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 nine
months ended September 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 $14.8 million and an increase to net
earnings of approximately $9.8 million for the nine-month period
ended September 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 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 nine-month period ended
September 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, 9 months
2004 to 2004 to ended
May 2, September 30, September 30,
2004 2004 2004
-----------------------------------------
Revenue
Rental income $ 93,108 $ 117,126 $ 210,234
-----------------------------------------
Expenses
Revenue producing
properties:
Operating expenses 11,429 13,087 24,516
Utilities 15,965 10,747 26,712
Utility rebate (812) - (812)
Property taxes 9,000 12,699 21,699
Administration 7,720 9,958 17,678
Financing costs 24,856 32,361 57,217
Deferred financing costs
amortization 1,051 1,157 2,208
Amortization 23,273 32,921 56,194
---------------------------------------------------------------------
92,482 112,930 205,412
-----------------------------------------
Earnings from continuing
operations before income
taxes 626 4,196 4,822
Large corporations taxes 1,032 423 1,455
Future income tax recovery (1,291) (322) (1,613)
---------------------------------------------------------------------
Earnings from continuing
operations 885 4,095 4,980
Earnings from discontinued
operations, net of tax - - -
---------------------------------------------------------------------
Net earnings for the period $ 885 $ 4,095 $ 4,980
-----------------------------------------
-----------------------------------------
Basic earnings per unit
- from continuing
operations $ 0.02 $ 0.07 $ 0.09
- from discontinued
operations - - -
---------------------------------------------------------------------
Basic earnings per unit $ 0.02 $ 0.07 $ 0.09
-----------------------------------------
-----------------------------------------
Diluted earnings per unit
- from continuing
operations $ 0.02 $ 0.07 $ 0.09
- from discontinued
operations - - -
---------------------------------------------------------------------
Diluted earnings per unit $ 0.02 $ 0.07 $ 0.09
-----------------------------------------
-----------------------------------------
STATEMENT OF CASH FLOWS January 1, May 3, 9 months
2004 to 2004 to ended
May 2, September 30, September 30,
2004 2004 2004
-----------------------------------------
Operating activities
Net earnings for the
period $ 885 $ 4,095 $ 4,980
Future income tax
recovery (1,291) (322) (1,613)
Amortization 23,273 32,921 56,194
---------------------------------------------------------------------
Funds from continuing
operations 22,867 36,694 59,561
Net change in operating
working capital 4,075 3,255 7,330
Net change in properties
held for resale (141) (166) (307)
---------------------------------------------------------------------
Total operating cash flows 26,801 39,783 66,584
-----------------------------------------
Financing activities
Issue of trust units (net
of issue costs) 28,372 397 28,769
Restructuring costs (8,500) (1,020) (9,520)
Unit repurchase program
(stock repurchase program
pre May 3, 2004) - (766) (766)
Distributions paid (3,938) (27,359) (31,297)
Financing of revenue
producing properties 47,718 47,622 95,340
Repayment of debt on
revenue producing
properties (47,414) (45,232) (92,646)
Capital lease obligations (407) (2,963) (3,370)
Deferred financing costs
incurred (net of
amortization) (1,969) 829 (1,140)
---------------------------------------------------------------------
13,862 (28,492) (14,630)
-----------------------------------------
Investing activities
Purchases of revenue
producing properties (9,174) (13,089) (22,263)
Project improvements to
revenue producing
properties (7,303) (14,823) (22,126)
Technology for real estate
operations (461) (79) (540)
---------------------------------------------------------------------
(16,938) (27,991) (44,929)
-----------------------------------------
Net increase (decrease) in
cash and cash equivalents $ 23,725 $ (16,700) $ 7,025
-----------------------------------------
-----------------------------------------
5. REVENUE PRODUCING PROPERTIES
Acquisitions
January 1, May 3, 9 months 9 months
2004 to 2004 to ended ended
May 2, September 30, September 30, September 30,
2004 2004 2004 2004
--------------------------------------------------------
Cash paid $ 9,174 $ 13,089 $ 22,263 $ 68,831
Debt assumed 7,912 10,409 18,321 38,834
---------------------------------------------------------------------
Total
purchase
price 17,086 23,498 40,584 107,665
Fair value
adjustments
to debt 560 774 1,334 2,137
Book value $ 17,646 $ 24,272 $ 41,918 $ 109,802
--------------------------------------------------------
--------------------------------------------------------
Allocation
of book
value to
revenue
producing
properties $ 16,910 $ 23,235 $ 40,145 $ 109,802
Allocation
of book
value to
other assets
(NOTE 2 -
Accounting
for
Operating
Leases) 736 1,037 1,773 -
---------------------------------------------------------------------
$ 17,646 $ 24,272 $ 41,918 $ 109,802
--------------------------------------------------------
--------------------------------------------------------
Units
acquired 183 354 537 1,956
--------------------------------------------------------
--------------------------------------------------------
Dispositions
January 1, May 3, 9 months 9 months
2004 to 2004 to ended ended
May 2, September 30, September 30, September 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 nine 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, 9 months 9 months
2004 to 2004 to ended ended
May 2, September 30, September 30, September 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
$9.5 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 (138,400) (766)
Units issued under dividend reinvestment
plan 7,929 127
Restructuring cost - (9,520)
---------------------------
Total unitholders' capital contribution 53,097,803 $ 293,992
---------------------------
---------------------------
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 represent 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 48,622,803
Special Voting Units issued to holders
of LP Class B units 4,475,000
---------------------------
Total trust units 53,097,803 $ 293,992
---------------------------
---------------------------
Stock Options (Pre May 3, 2004)
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:
9 months 9 months
ended ended
September 30, September 30,
2004 2003
----------------------------
Compensation costs $ (2,278) $ (1,555)
Net earnings
As reported $ 4,980 $ 9,218
Pro forma $ 2,702 $ 7,663
Net earnings per unit
Basic
As reported $ 0.09 $ 0.18
Pro forma $ 0.05 $ 0.15
Diluted
As reported $ 0.09 $ 0.18
Pro forma $ 0.05 $ 0.15
As a result Boardwalk REIT's conversion, all previously granted
security options vested prior to May 3, 2004. Of the total of
2,398,828 security options outstanding at December 31, 2003, a total
of 2,345,155 security options were exercised and the balance of
53,673 security options were cancelled. 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 security 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. The reconciliation
of distributable income and per unit information begins with net
earnings calculated in accordance with Canadian generally accepted
accounting principles and as defined in the Declaration of Trust for
Boardwalk REIT. However, distributable income and the per unit
information are non-GAAP measures that do not have any standardized
meaning prescribed by GAAP and, therefore, unlikely to be comparable
to similar measures presented by other real estate companies and
trusts.
Net earnings, subsequent to Boardwalk REIT conversion $ 4,095
Add:
Amortization 32,921
Amortization of deferred financing costs incurred
prior to May 3, 2004 1,131
Deduct:
Future income tax recovery (322)
Amortization of net premium on long-term debt
assumed after May 2, 2004 (52)
---------------------------------------------------------------------
Distributable income $ 37,773
Distribution paid to unitholders $ 27,359
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average units outstanding - basic and diluted 53,122,763
Distributable income earned per unit $ 0.711
Actual distributions declared per unit $ 0.515
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per unit
9 months 9 months
ended ended
September 30, September 30,
2004 2003
----------------------------
Numerator
Earnings from continuing operations $ 4,980 $ 8,467
Earnings from discontinued operations - $ 751
---------------------------------------------------------------------
Denominator
Denominator for basic earnings per unit
- weighted average units (THOUSANDS) 52,632 50,304
---------------------------------------------------------------------
Effect of dilutive units
Units issued in respect of long-term
incentive plan (THOUSANDS) - 544
Denominator for diluted earnings per unit
adjusted for weighted average shares
and assumed conversion (THOUSANDS) 52,632 50,848
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per unit from
continuing operations
Basic $ 0.09 $ 0.17
Diluted $ 0.09 $ 0.17
---------------------------------------------------------------------
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 nine-month ended September 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, 9 months 9 months
2004 to 2004 to ended ended
May 2, September 30, September 30, September 30,
2004 2004 2004 2003
--------------------------------------------------------
Continuing
operations $ (1,291) $ (322) $ (1,613) $ 5,169
Discontinued
operations - - - 329
---------------------------------------------------------------------
Total future
income taxes
(recovery) $ (1,291) $ (322) $ (1,613) $ 5,498
--------------------------------------------------------
--------------------------------------------------------
Future income
taxes (recovery)
consists of
the following:
9 months 9 months
ended ended
September 30, September 30,
2004 2003
----------------------------
Tax (recovery) expense based
on expected rate $ (36) $ 6,451
Non-taxable portion of capital gains - (223)
Adjustment to future income tax liabilities (26) 772
Adjustment for change in effective tax rate (1,551) (1,502)
---------------------------------------------------------------------
Future income taxes (recovery) $ (1,613) $ 5,498
----------------------------
----------------------------
The future income tax asset (liability) is calculated as follows:
AS AT September 30, December 31,
2004 2003
----------------------------
Tax assets related to operating losses $ 1,143 $ 77,354
Tax liabilities related to differences
in tax and book basis (682) (152,119)
---------------------------------------------------------------------
Future income tax asset (liability) $ 461 $ (74,765)
----------------------------
----------------------------
10. COMMITMENTS AND CONTINGENCIES
At September 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 fifteen to
twenty-seven 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 a physical settlement fixed-price supply
contracts for Alberta natural gas requirements. This contract fixes
the price of natural gas for 37.5% of its requirements in Alberta.
The contract is for physical settlement, 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 37% of
its gas usage requirements under a physical fixed-price supply
contract until August 2005, 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 through March. This program will be in effect for a
remaining eighteen-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
September 30, 2004 is approximately $6.0 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 September 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 combined with the activities of
Boardwalk REIT for the period from May 3, 2004 to September 30, 2004.
The segmented financial information for the three-month period ended
September 30, 2004 reflects the activities of Boardwalk REIT. The
comparative figures represent the activities of Boardwalk Equities
Inc.
3 months 3 months 9 months 9 months
ended ended ended ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
----------------------------------------------------------
Alberta
Revenue $ 38,025 $ 38,505 $ 113,901 $ 114,033
----------------------------------------------------------
Expenses
Operating 4,084 4,783 12,281 14,151
Utilities 3,092 3,924 14,121 13,750
Utility
rebates - (812) -
Property
taxes 3,860 2,658 9,295 8,301
---------------------------------------------------------------------
11,036 11,365 34,885 36,202
----------------------------------------------------------
Net
operating
income $ 26,989 $ 27,140 $ 79,016 $ 77,831
----------------------------------------------------------
Saskatchewan
Revenue $ 8,553 $ 8,510 $ 25,663 $ 25,353
----------------------------------------------------------
Expenses
Operating 998 1,165 3,114 3,327
Utilities 568 643 2,993 2,716
Property
taxes 1,103 1,217 3,338 3,616
---------------------------------------------------------------------
2,669 3,025 9,445 9,659
----------------------------------------------------------
Net
operating
income $ 5,884 $ 5,485 $ 16,218 $ 15,694
----------------------------------------------------------
Ontario
Revenue $ 8,959 $ 8,699 $ 26,824 $ 25,919
----------------------------------------------------------
Expenses
Operating 985 1,136 3,050 3,582
Utilities 1,242 1,077 4,168 4,421
Property
taxes 1,518 1,470 4,465 4,174
---------------------------------------------------------------------
3,745 3,683 11,683 12,177
----------------------------------------------------------
Net
operating
income $ 5,214 $ 5,016 $ 15,141 $ 13,742
----------------------------------------------------------
Quebec
Revenue $ 14,634 $ 12,767 $ 43,093 $ 34,771
----------------------------------------------------------
Expenses
Operating 1,638 1,488 4,662 3,812
Utilities 865 1,177 5,076 4,136
Property
taxes 1,668 1,295 4,561 3,425
---------------------------------------------------------------------
4,171 3,960 14,299 11,373
----------------------------------------------------------
Net
operating
income $ 10,463 $ 8,807 $ 28,794 $ 23,398
----------------------------------------------------------
Total
Net
operating
income $ 48,550 $ 46,448 $ 139,169 $ 130,665
Unallocated
revenue(x) 198 236 753 4,149
Unallocated
expenses(xx) (45,522) (41,539) (134,942) (125,596)
---------------------------------------------------------------------
Net earnings
for the
period $ 3,226 $ 5,145 $ 4,980 $ 9,218
----------------------------------------------------------
----------------------------------------------------------
AS AT September 30, December 31,
2004 2003
----------------------------
Alberta
Identifiable assets
Revenue producing properties $ 944,735 $ 969,196
Mortgages and accounts receivable - 8,338
Deferred financing costs 24,526 26,621
Tenants' security deposit 5,468 5,674
----------------------------
$ 974,729 $1,009,829
----------------------------
Saskatchewan
Identifiable assets
Revenue producing properties $ 174,794 $ 178,867
Mortgages and accounts receivable - 11
Deferred financing costs 4,534 4,585
Tenants' security deposits 1,241 1,097
----------------------------
$ 180,569 $ 184,560
----------------------------
Ontario
Identifiable assets
Revenue producing properties $ 212,938 $ 215,428
Mortgages and accounts receivable 132 250
----------------------------
Deferred financing costs 2,960 2,709
----------------------------
$ 216,030 $ 218,387
----------------------------
Quebec
Identifiable assets
Revenue producing properties $ 377,873 $ 342,364
Mortgages and accounts receivable 4,661 4,425
Deferred financing costs 5,256 4,102
----------------------------
$ 387,790 $ 350,891
----------------------------
Total assets
Identifiable assets $1,759,118 $1,763,667
Unallocated assets(xxx) 55,350 39,713
----------------------------
$1,814,468 $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.
13. SUBSEQUENT EVENTS
Subsequent to September 30, 2004, Boardwalk REIT contracted to
acquire 266 residential units from unrelated third parties for an
aggregate purchase price of $13.7 million. The acquisitions will be
financed through the assumption of existing mortgages and cash.
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 32,000 units totaling 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.
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.
