TSX SYMBOL: BEI.UN November 13, 2006
Boardwalk REIT Announces Solid Third Quarter 2006 Financial Results; FFO Per Unit Up 17.1%
Over Same Period Last Year; Further Upward Revision in Guidance; and Increase in Annual
Distributions by 17.5% to $1.48 Per Year.
DOWNLOAD Q3-2006 November 13, 2006 PRESS RELEASE (Printer Friendly PDF File - 85 Kb)
SUPPLEMENTAL NOTES - Q3-2006 (Printer Friendly PDF File - 187 Kb)
Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX)
CALGARY, Nov. 13 /CNW/ - Boardwalk Real Estate Investment Trust
("Boardwalk REIT" or the "Trust") today announced solid financial results for
the third quarter of 2006, FFO per unit up 17.1% over same period last year;
further upward revision in guidance; and an increase in annual distributions
by 17.5% to $1.48 per year.
For the third quarter ended September 30, 2006, the Trust reported Funds
From Operations ("FFO") of $26.9 million and FFO per unit of $0.48 on a
diluted basis, compared to FFO of $21.8 million and FFO per unit of $0.41 for
the same period last year. Distributable income ("DI") for the quarter was
$27.3 million and DI per unit was $0.49 on a diluted basis, compared to
$22.3 million and $0.42 per unit for the same period last year.
Funds From Operations ("FFO") is a generally accepted measure of
operating performance of real estate investment trusts and companies; however,
it is a non-GAAP measure. The Trust calculates FFO by taking net earnings
after discontinued operations, adjusting for gains or losses on disposal of
discontinued operation assets and extraordinary items, and adding non-cash
expenses 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 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
real estate investment trust conversion date of May 3, 2004.
Highlights of the Trust's third quarter 2006 financial results include:
<<
- Rental revenues of $81.1 million, an increase of 8.9%, compared to
$74.5 million for the three-month period ended September 30, 2005.
- Net operating income of $51.6 million, representing a 10.3% increase,
from $46.8 million in the same period last year.
- FFO of $26.9 million, an increase of 23.4%, compared to $21.8 million
for the three-month period ended September 30, 2005.
- FFO per unit was $0.48 on a diluted basis, up 17.1%, compared to
$0.41 for the three-month period ended September 30, 2005.
- DI was $0.49 per unit, up 16.7%, from $0.42 for the three months
ended September 30, 2005.
>>
Commenting on the Trust's Q3 2006 results, Sam Kolias, President and
C.E.O., said
"We are pleased to report a strong third quarter for our Trust. Excellent
market fundamentals aligned to produce positive effects on the Alberta rental
market. After the strong summer we just enjoyed, our Trust is positioned to
end 2006 on a high note. We anticipate a solid winter and remain confident in
meeting or exceeding the majority of objectives detailed in our 2005 Annual
Report.
"The rental market remains robust in Alberta, as substantial net
provincial in-migration, high home prices, exceptional industry growth and
record low unemployment combine to generate solid demand. Our Alberta market,
which makes up in excess of 50% of our total portfolio, saw its already low
vacancy decrease still further through the third quarter."
"Current average monthly market rents in Alberta increased by
approximately $328 in the first nine months of 2006, from $817 as at
December 31, 2005, to $1,145 at September 30, 2006. Even as rents increase,
however, the gap between home and condominium ownership costs versus the cost
of renting continues to widen still further, pricing many would-be homeowners
out of the market. Given the 45% gains in house purchase prices seen across
Alberta in the past year, rental rate increases prove to be substantially more
affordable than home purchase. In fact, increasing home purchase prices make
renting the best value in accommodation available in Alberta today. These
market fundamentals continue to bode well for Boardwalk's future."
"At all times, we remember that our customers are the cornerstone of our
business. We are committed to pursuing a balance between profitability and
customer relationship. Developing long-term, positive associations with our
customers ensures corporate sustainability into the future. While we are
certainly pleased to benefit from the Alberta market's increased rental rate
capacity, we stand by our internal, customer-focused rental rate policies.
However, given that approximately 50% of our suites turn over each year and
new leases are signed at market rents, revenues are on a solid foundation for
continued growth."
"This quarter's positive results can be attributed to our superior
operating platform; our on-going focus on developing a sustainable portfolio;
and the continued strength and improvement in many of our major rental markets
across the country. Our diversification into 18 markets across five provinces
strengthens our long-term viability and market resiliency. Currently, our
Alberta markets are receiving the bulk of stakeholder interest due to their
exceptionally positive financial and operating results. However, the remaining
49% of our units, which continue to perform as per expectations, are equally
important as they provide necessary diversification and strength to greatly
enhance the Trust's viability over the long-term."
<<
Operational Highlights
The average vacancy rate across the Trust's portfolio for the third
quarter of 2006 was 3.73%, down from 3.87% in the second quarter of 2006, and
down from 4.57% compared to the same period last year.
The average monthly rent on our entire portfolio realized in the third
quarter of 2006 was $797 per rental unit, up $46 from $751 per rental unit for
the same period last year.
The average market rent for the Trust's properties at the end of September
2006 was an estimated $985 per rental unit per month, which compares to an
average in-place monthly rent per occupied unit of $832 for the quarter ended
September 30, 2006.
At the end of September 2006, the potential between occupied rents and
market rents (mark-to-market) totaled $57 million, or $1.01 per unit, up from
$43 million or $.79 at the end of June 2006.
More detail on our operations will be found in our conference call
presentation to be posted on our web site today at
www.boardwalkreit.com/FinancialReports/r2006/. The conference call audio for
this presentation can also be found on our web site at
www.boardwalkreit.com/FinancialReports/r2006/ following the call.
Same-Property Results
Boardwalk continued to show solid performance in its stabilized properties
(defined as properties owned for over 24 months). The "same-property" results
for the Trust's stabilized portfolio for the three-month period ended
September 30, 2006 showed rental revenue growth of 6.1% on a year over year
basis. Operating expenses increased 5.2%, resulting in an increase in NOI of
6.6% compared to the same period last year. The "same-property" results for
the nine-month period ended September 30, 2006 showed rental revenue growth of
4.2%, and an increase in total operating expenses of 2.5%, resulting in an
increase in NOI of 5.3% compared to the same period last year. A total of
31,401 units, representing approximately 93% of Boardwalk's total portfolio,
were classified as stabilized as at September 30, 2006.
Same-Property Results - Stabilized Portfolio
-------------------------------------------------------------------------
Operating
3 Months Revenue Expenses NOI % of NOI
-------------------------------------------------------------------------
Calgary 14.3% 2.6% 19.0% 20%
-------------------------------------------------------------------------
Edmonton 7.4% -0.6% 11.4% 34%
-------------------------------------------------------------------------
Other Alberta 14.3% -0.1% 21.1% 6%
-------------------------------------------------------------------------
Saskatchewan 3.0% 9.8% -1.0% 11%
-------------------------------------------------------------------------
Ontario 1.7% 10.4% -6.1% 9%
-------------------------------------------------------------------------
Quebec 0.2% 9.4% -4.5% 20%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
6.1% 5.2% 6.6% 100%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating
9 Months Revenue Expenses NOI % of NOI
-------------------------------------------------------------------------
Calgary 9.0% -3.3% 15.2% 19%
-------------------------------------------------------------------------
Edmonton 5.2% -1.5% 9.2% 34%
-------------------------------------------------------------------------
Other Alberta 10.7% -4.6% 19.3% 6%
-------------------------------------------------------------------------
Saskatchewan 2.3% 4.6% 0.5% 11%
-------------------------------------------------------------------------
Ontario 1.6% 3.2% -0.2% 10%
-------------------------------------------------------------------------
Quebec 0.1% 11.7% -7.6% 20%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4.2% 2.5% 5.3% 100%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
Commenting on Boardwalk's same-property results, President and CEO, Sam
Kolias, said,
"In the third quarter, we were pleased to see revenue growth accelerating
more quickly than expense increases on a same store basis for the fourth
straight quarter. Across our portfolio, expenses continued to rise. However,
increasing expenses were somewhat tempered by savings in natural gas
expenditures, and property taxes were flat after the massive increases of the
past couple years."
Acquisition/Disposition Activity
There were no acquisition or disposition activities in the third quarter
of 2006 for Boardwalk. At the end of the third quarter of 2006, one property,
consisting of 90 units located in Calgary, Alberta, was reclassified as
properties held for redevelopment as a result of Boardwalk's plan to convert
these suites to condominium units for sale.
Subsequent to September 30, 2006, Boardwalk REIT contracted to acquire
96 residential units located in Victoria, British Columbia from unrelated
third parties for an aggregate purchase price of $9.4 million. The acquisition
was funded from cash on hand. The project, built in 1976, consists of one
bachelor, 62 one-bedroom, 29 two-bedroom and four three-bedroom units. The
acquisition has a going-in cap rate of 5.83% and closed on November 9, 2006.
Previously announced acquisitions in 2006 consisted of 840 rental units
in the provinces of Quebec, Alberta and British Columbia. The acquisitions had
a total combined purchase price of $60.05 million and had, in aggregate, a
going-in cap rate of 6.86%. The acquisition of 560 of the announced units was
completed in the first quarter of the year, while the purchase of the
remaining 280 units closed midway through the second quarter.
Previously announced disposition activities in 2006 occurred in the first
quarter of the year. The sale involved two multi-family residential properties
consisting of 196 units sold for $20.7 million in total. Further details on
the Trust's acquisition and disposition activities can be found in the
supplemental information package available on Boardwalk REIT's website,
located at www.boardwalkreit.com.
Commenting on the Trust's property acquisitions and dispositions, Bill
Chidley, Senior Vice President, Corporate Development, said: "The acquisitions
completed to date in 2006 add quality assets in traditionally strong rental
markets to our overall portfolio. We remain on track with our guidance of
acquiring approximately 1,000 new units during 2006."
"The acquisition market for multi-family rentals in Canada continues to
be a highly competitive 'seller's market'. We are in discussion on a number of
possible acquisitions; however, we cannot be certain of closing on any of
these transactions. While market forces are making acquisitions more
difficult, Cap Rate compression continues to positively impact our portfolio's
overall value. This compression is expected to continue, further increasing
our portfolio's value as we look forward. Our key growth over the short term
will be based on internal growth, enhanced through external acquisition."
Continued Financial Strength
The Trust built upon its solid financial position in the third quarter of
2006. Boardwalk's total mortgage and long-term debt was $1.53 billion as at
September 30, 2006, down from $1.55 billion at September 30, 2005. As at
September 30, 2006, the Trust's total debt had an average maturity of
3.3 years with a weighted average interest rate of 5.35%. The Trust's
debt-to-total-market-capitalization ratio was 45.7%. The Trust's interest
coverage ratio of adjusted EBITDA (i.e. earnings before interest, taxes,
depreciation and amortization) to interest expense, after excluding gains, was
2.36 times for the three months ended September 30, 2006, compared to 2.10
times for the same period last year. During the third quarter of 2006,
Boardwalk successfully completed approximately $7.3 million in mortgage
refinancings and renewals. Of note in 2006, the Trust sold a total of 2.9
million trust units into the public market on a bought deal basis through a
group of underwriters led by National Bank Financial. This transaction was
completed in March of 2006, with an issue price of $22.80 per unit.
Outlook and 2006 Earnings Guidance
Commenting on the outlook for the Trust, Rob Geremia, Senior Vice
President, Finance and CFO, said, "Given the continued improvement in our
Alberta Portfolio, we again feel it reasonable to increase guidance from the
amounts originally estimated. Our fiscal 2006 guidance for FFO on a per unit
basis has been revised from the initial guidance of $1.37 - $1.46, to $1.55 -
$1.62. Our fiscal 2006 guidance for Distributable Income on a per unit basis
has been similarly increased from the initial guidance of $1.41 - $1.51, to
$1.57 to $1.64. We have increased our estimated stabilized NOI growth to 5.0%,
up from the previously forecasted expectation of 0.0% as at December 31, 2005.
In revising these estimates, we have taken into account the March 2006
issuance of 2.9 million trust units. These forecasts are further based on the
expectation of new property acquisitions of approximately 1,000 new
residential units for the year."
Increasing Distributions
Boardwalk's Trustees have approved an increase in the Trust's
Distributions to $1.48 on an annualized basis, an increase of 17.5% from the
$1.26 currently distributed. On a monthly basis, the Trust will distribute
$.123 per outstanding trust unit as compared to the current monthly
distribution of $.105. The monthly distribution change will be effective to
Unitholders of record on November 30, 2006 and payable on December 15, 2006.
2007 Guidance
Boardwalk traditionally provides the next fiscal year financial
performance objectives during the third quarter. Based on our internal review,
we are introducing fiscal 2007 guidance for FFO and DI on a per Trust unit
basis of between $1.85 to $2.00 and $1.87 to $2.02, respectively. These
forecasts are based on the assumptions of an 8.0% increase in stabilized NOI
growth, and new property acquisitions of between 1,000 to 2,000 residential
units for the year. Commenting on the Trust's 2007 guidance, Rob Geremia said,
"Given Alberta's strong rental market fundamentals, we expect strong internal
rental revenue growth through 2007. This growth will be tempered slightly by
increasing turn-over and operating expenses, particularly due to inflationary
pressures on wage and supply costs in our Alberta markets. The 2007 guidance
assumes that the existing Alberta Natural Gas Rebate program will be extended,
in its current form. It is management's intention to update the market on a
quarterly basis regarding our guidance estimates."
Supplementary Information
Boardwalk produces Quarterly Supplemental Information that provides
detailed information regarding the Trust's activities during the quarter. The
Third Quarter 2006 Supplemental Information is available on our investor
website at www.boardwalkreit.com.
Teleconference on Third Quarter Financial Results
We invite you to participate in the teleconference that will be held to
discuss these results this same morning at 11:00 am EST. Senior management
will speak to the third quarter financial results and provide a corporate
update. Presentation materials will be made available on our investor website
at 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:
416-644-3416 (within Toronto) or toll-free 1-800-814-4890 (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=1626680
Replay: An audio recording of the teleconference will be available from
1:00 pm ET on Monday, November 13, 2006 until 11:59 pm ET on Monday, November
20, 2006. You can access it by dialing 416-640-1917 and using the passcode
21205778 followed by the pound (No.) 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 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
260 properties with over 34,000 units totalling approximately 28 million net
rentable square feet, and is Canada's largest owner/operator of multifamily
rental communities. Boardwalk REIT's portfolio is concentrated in the
provinces of Alberta, British Columbia, Saskatchewan, Ontario and Quebec.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements relating to our
operations and the environment in which we operate, which are based on our
expectations, estimates, forecast and projections, which we believe are
reasonable as of the current date . These statements are not guarantees of
future performance and involve risks and uncertainties that are difficult to
control or predict. For more exhaustive information on these risks and
uncertainties you should refer to our most recently filed annual information
form which is available at www.sedar.com. Actual outcomes and results may
differ materially from those expressed in these forward-looking statements.
Readers, therefore, should not place undue reliance on any such
forward-looking statements. Further, a forward-looking statement speaks only
as of the date on which such statement is made and should not be relied upon
as of any other date. While we may elect to, we undertake no obligation to
publicly update any such statement to reflect new information or the
occurrence of future events or circumstances at any particular time.
<<
CONSOLIDATED BALANCE SHEETS
(CDN$ THOUSANDS)
As at September 30, December 31,
2006 2005
(Unaudited) (Audited)
---------------------------
Assets
Revenue producing properties (NOTE 4) $ 1,818,876 $ 1,782,648
Deferred financing costs 43,237 42,853
Other assets (NOTE 5) 13,951 11,328
Future income taxes (NOTE 11) 708 929
Mortgages and accounts receivable 6,193 9,039
Segregated tenants' security deposits 9,586 7,280
Cash and cash equivalents 2,018 11,145
Discontinued operations (NOTE 6) 5,280 18,164
-------------------------------------------------------------------------
$ 1,899,849 $ 1,883,386
---------------------------
---------------------------
Liabilities
Mortgages payable $ 1,404,556 $ 1,409,375
Debentures (NOTE 7) 120,000 120,000
Accounts payable and accrued liabilities 32,322 32,196
Refundable tenants' security deposits and other 12,856 10,486
Discontinued operations (NOTE 6) - 15,587
-------------------------------------------------------------------------
$ 1,569,734 $ 1,587,644
---------------------------
Unitholders' Equity
Unitholders' equity $ 330,115 $ 295,742
-------------------------------------------------------------------------
$ 1,899,849 $ 1,883,386
---------------------------
---------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
(CDN$ THOUSANDS, EXCEPT PER UNIT AMOUNTS)
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue
Rental income $81,083 $74,490 $235,805 $220,968
---------------------------------------------------
Expenses
Revenue producing
properties:
Operating expenses 14,003 12,514 42,107 38,632
Utilities 7,464 6,958 29,346 27,935
Utility rebate
(NOTE 12) (39) (7) (1,427) (618)
Property taxes 8,041 8,219 24,201 24,105
Administration 3,867 3,752 12,712 10,779
Financing costs 20,209 20,546 60,691 61,323
Deferred financing
costs amortization 767 854 2,233 2,698
Amortization of
capital assets 18,887 18,662 54,620 55,673
-------------------------------------------------------------------------
73,199 71,498 224,483 220,527
---------------------------------------------------
7,884 2,992 11,322 441
Recovery of write-
down on technology
business unit - - - (739)
-------------------------------------------------------------------------
Earnings from
continuing operations
before income taxes 7,884 2,992 11,322 1,180
Large corporations
taxes - 251 8 370
Future income taxes
(recovery) (NOTE 11) 446 28 222 (804)
Earnings from
continuing operations 7,438 2,713 11,092 1,614
Earnings from
discontinued
operations,
net of tax (NOTE 6) 64 216 7,768 2,213
-------------------------------------------------------------------------
Net earnings $7,502 $2,929 $18,860 $3,827
---------------------------------------------------
---------------------------------------------------
Basic earnings per
unit (NOTE 10)
- from continuing
operations $0.13 $0.06 $0.20 $0.03
- from discontinued
operations - - 0.14 0.04
-------------------------------------------------------------------------
Basic earnings per
unit $0.13 $0.06 $0.34 $0.07
---------------------------------------------------
---------------------------------------------------
Diluted earnings per
unit (NOTE 10)
- from continuing
operations $0.13 $0.06 $0.20 $0.03
- from discontinued
operations - - 0.14 0.04
-------------------------------------------------------------------------
Diluted earnings per
unit $0.13 $0.06 $0.34 $0.07
---------------------------------------------------
---------------------------------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
(CDN$ THOUSANDS, EXCEPT NUMBER OF UNITS)
9 months 9 months
ended ended
September September
30, 2006 30, 2005
-------------------------
(Unaudited) (Unaudited)
Trust units (NOTE 9)
Balance, beginning of period $295,696 $293,503
Unit issue proceeds under equity financing, net 63,594 -
Unit issue proceeds under distribution
reinvestment plan 4,008 1,765
Restructuring costs (165) 32
Deferred unit plan (NOTE 8) 597 -
-------------------------------------------------------------------------
Balance, end of period $363,730 $295,300
-------------------------
Cumulative earnings
Balance, beginning of period $129,530 $124,498
Net earnings 18,860 3,827
-------------------------------------------------------------------------
Balance, end of period $148,390 $128,325
-------------------------
Cumulative distributions to unitholders
Balance, beginning of period $(129,483) $(62,485)
Distributions declared to unitholders (NOTE 10) (52,522) (50,234)
-------------------------------------------------------------------------
Balance, end of period $(182,005) $(112,719)
-------------------------
Total unitholders' equity $330,115 $310,906
-------------------------
-------------------------
Units issued and outstanding (NOTE 9) 56,303,731 53,201,879
-------------------------
-------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CDN$ THOUSANDS)
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating activities
Net earnings $7,502 $2,929 $18,860 $3,827
Earnings from
discontinued
operations, net
of tax (64) (216) (7,768) (2,213)
Future income taxes
(recovery) 446 28 222 (804)
Amortization of
capital assets 18,887 18,662 54,620 55,673
Recovery of write-down
on technology
business unit - - - (739)
-------------------------------------------------------------------------
Funds from continuing
operations 26,771 21,403 65,934 55,744
Funds from
discontinued
operations 111 380 383 1,210
Net change in
operating working
capital 2,316 (3,037) 612 28
-------------------------------------------------------------------------
Total operating
cash flows 29,198 18,746 66,929 56,982
---------------------------------------------------
Financing activities
Issue of trust units
(net of issue costs)
(NOTE 9) 1,523 565 67,602 1,797
Restructuring costs (24) - (165) -
Distributions paid (17,725) (16,749) (52,199) (50,230)
Issuance of
debentures (NOTE 7) - - - 120,000
Financing of revenue
producing properties 7,293 14,627 20,039 127,589
Repayment of debt on
revenue producing
properties (14,177) (17,634) (39,803) (123,878)
Deferred financing
costs incurred
(net of amortization) (180) (211) (379) (4,772)
-------------------------------------------------------------------------
(23,290) (19,402) (4,905) 70,506
---------------------------------------------------
Investing activities
Purchases of revenue
producing properties
(NOTE 4) - - (60,795) (103,289)
Improvements to
revenue producing
properties (11,051) (6,187) (29,623) (18,500)
Net cash proceeds
from sale of
properties - - 20,274 9,405
Additions to
corporate
technology
assets (379) (592) (1,007) (1,524)
-------------------------------------------------------------------------
(11,430) (6,779) (71,151) (113,908)
---------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents balance (5,522) (7,435) (9,127) 13,580
Cash and cash
equivalents (bank
indebtedness),
beginning of period 7,540 18,292 11,145 (2,723)
-------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $2,018 $10,857 $2,018 $10,857
---------------------------------------------------
---------------------------------------------------
Supplementary cash
flow information:
Capital taxes paid
(received) $(676) $242 $(326) $900
Interest paid $21,876 $19,188 $62,534 $57,531
---------------------------------------------------
---------------------------------------------------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2006
(TABULAR AMOUNTS IN CDN$ THOUSANDS, EXCEPT NUMBER OF UNITS AND PER UNIT
AMOUNTS UNLESS OTHERWISE STATED)
(UNAUDITED)
1. ORGANIZATION OF TRUST
Boardwalk Real Estate Investment Trust ("Boardwalk REIT" or the
"Trust") is an unincorporated, open-ended real estate investment
trust created pursuant to the Declaration of Trust, dated January 9,
2004, as amended and restated on May 3, 2004 and May 10, 2006, 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 the
operations of Boardwalk Equities Inc. (the "Corporation"), which were
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 as at and for the year ended December 31, 2005. 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, they should be read in conjunction with the audited
consolidated financial statements.
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, 2006 are not necessarily indicative
of the results that may be expected for the full year ending
December 31, 2006 due to seasonal variations in utility costs and
other factors. Historically, Boardwalk REIT has experienced higher
utility expenses in the first quarter as a result of the winter
months, which create variations in the quarterly results.
Certain comparative figures have been reclassified to conform to the
presentation of the current period, or as a result of accounting
changes.
3. ACCOUNTING CHANGES
DEFERRED UNIT PLAN
The deferred unit plan is described in NOTE 8. Deferred units granted
to trustees and executives in respect of their trustee fees and
executive bonuses are considered to be in respect of past services
and are recognized in compensation expense upon grant. Deferred units
granted relating to amounts matched by the Trust are considered to be
in respect of future services and are recognized in compensation
expense on a straight-line basis over the vesting period.
Compensation cost is measured based on the ten (10) day weighted
average market price of the Trust's units on the date of grant of the
deferred units. The deferred units earn additional deferred units for
the distributions that would otherwise have been paid on the deferred
units had they instead been issued as Trust Units on the date of
grant. No additional compensation cost is recorded for additional
deferred units issued. Deferred units that have vested, but for which
the corresponding Trust Units have not been issued and where the
ultimate issuance of such Trust Units is simply a matter of the
passage of time, are considered to be outstanding units from the date
of vesting for basic income per unit calculations.
4. REVENUE PRODUCING PROPERTIES
Acquisitions
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Cash paid $- $- $60,795 $103,289
Debt assumed - - - 13,144
---------------------------------------------------------------------
Total purchase
price - - 60,795 116,433
Fair value
adjustments to
debt - - - (207)
---------------------------------------------------------------------
Book value $- $- $60,795 $116,226
---------------------------------------------------
---------------------------------------------------
Allocation of book
value to revenue
producing
properties $- $- $58,562 $112,569
Allocation of book
value to other
assets - - 2,233 3,657
---------------------------------------------------------------------
$- $- $60,795 $116,226
Multi-family units
acquired - - 840 1,325
---------------------------------------------------
---------------------------------------------------
Dispositions
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Cash received $- $- $20,274 $9,405
Cost of dispositions - - 426 127
---------------------------------------------------------------------
Total proceeds - - 20,700 9,532
Net book value - - 13,173 8,025
---------------------------------------------------------------------
Gain on dispositions $- $- $7,527 $1,507
---------------------------------------------------
---------------------------------------------------
Multi-family units
sold - - 196 186
---------------------------------------------------
---------------------------------------------------
5. OTHER ASSETS
As at September 30, December 31,
2006 2005
---------------------------
Corporate technology assets
(net of amortization) $3,456 $3,502
Head office building (net of
amortization) 2,281 2,350
Deposits on potential property
acquisitions 115 200
Prepaid parts and supplies 1,950 2,037
Lease goodwill and customer relationship
intangibles, net of accumulated
amortization 1,158 125
Prepaid property taxes 2,967 1,151
Prepaid and other 2,024 1,963
---------------------------------------------------------------------
$13,951 $11,328
---------------------------
---------------------------
Accumulated amortization for corporate technology assets and head
office building at September 30, 2006 were $11.8 million and
$0.9 million, respectively (December 31, 2005 - $10.8 million and
$0.8 million, respectively).
6. DISCONTINUED OPERATIONS
During the first quarter of 2006, the Trust completed the sale of a
156-unit and a 40-unit rental property, both located in Calgary,
Alberta. During the third quarter of 2006, a revenue producing
property in Calgary was classified as discontinued operations as a
result of the Trust initiating an active program to dispose of this
property. This property is being developed into condominium units for
sale at a price that is reasonable in relation to its current fair
value. These three properties formed part of our Alberta segment in
our segmented information disclosure. The following tables set forth
the results of operations as well as the assets and liabilities
associated with the discontinued operations.
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Revenue
Rental income $273 $906 $1,011 $3,348
---------------------------------------------------------------------
Expenses
Revenue producing
properties:
Operating expenses 30 79 168 378
Utilities 25 78 130 410
Utility rebate - - (12) (18)
Property taxes 19 79 82 250
Administration 6 23 28 94
Financing costs 81 256 228 992
Deferred financing
cost amortization 1 11 4 32
Amortization of
capital assets 47 164 142 492
---------------------------------------------------------------------
209 690 770 2,630
---------------------------------------------------
64 216 241 718
Gain on dispositions
(NOTE 4) - - 7,527 1,507
---------------------------------------------------
Operating earnings
from discontinued
operations before
income taxes 64 216 7,768 2,225
Future income taxes - - - 12
---------------------------------------------------------------------
Earnings from
discontinued
operations $64 $216 $7,768 $2,213
---------------------------------------------------
---------------------------------------------------
September 30, December 31,
2006 2005
---------------------------
Discontinued Assets
Revenue producing properties held for sale $- $12,490
Properties held for redevelopment 5,109 5,230
Other assets on properties held for sale - 268
Other assets on properties held for
redevelopment 171 176
---------------------------------------------------------------------
Total $5,280 $18,164
---------------------------
---------------------------
Discontinued Liabilities
Mortgages payable on properties held for
sale $- $9,562
Mortgages payable on properties held for
redevelopment - 6,025
---------------------------------------------------------------------
Total $- $15,587
---------------------------
---------------------------
7. DEBENTURES
On January 21, 2005, Boardwalk REIT completed a public offering of
unsecured debentures in the aggregate amount of $120 million. The
debentures are rated "BBB" with a stable trend by Dominion Bond
Rating Services, carry a coupon rate of 5.31% and will mature on
January 23, 2012. Net proceeds of approximately $119 million were
used to fund acquisitions, repay operating lines of credit and for
general trust purposes. In conjunction with the debenture issue, the
Trust also entered into a bond forward contract to hedge the risk of
interest rate fluctuations prior to the final pricing of the
debenture. The bond forward contract was settled when the debentures
were issued for the settlement amount of $0.7 million. The settlement
amount will be amortized over the term of the unsecured debentures.
8. DEFERRED UNIT PLAN
During 2006, the Trust implemented a deferred unit plan. The plan
entitles trustees and officers, at the participant's option, to
receive deferred units in consideration for trustee fees or executive
bonuses with the Trust matching the number of units received. The
deferred units vest 50% on the third anniversary and 25% on each of
the fourth and fifth anniversaries, subject to provisions for earlier
vesting in certain events. The deferred units earn additional
deferred units for the distributions that would otherwise have been
paid on the deferred units (i.e., had they instead been issued as
Trust Units on the date of grant). Once vested, participants are
entitled, on filing of a notice of redemption with the trust, to
receive an equivalent number of Trust Units. The deferred unit plan
was approved by unitholders on May 10, 2006. At the end of
September 30, 2006, total compensation costs of $0.6 million were
recognized in income related to employee awards under the deferred
unit plan.
The status of the outstanding deferred units is as follows:
Outstanding Vested
Deferred units granted 59,790 -
Additional deferred units earned on unvested
units 231 -
---------------------------
September 30, 2006 60,021 -
---------------------------
---------------------------
9. UNITHOLDERS' CAPITAL
The Plan of Arrangement (the "Arrangement") to convert the assets of
Boardwalk Equities Inc. to a real estate investment trust was
completed on May 3, 2004. On conversion of the assets of Boardwalk
Equities Inc. to a trust, $10.3 million was incurred for
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 the Trust, Boardwalk REIT Limited Partnership.
The LP Class B units may only be transferred subject to applicable
securities laws, regulations and orders, and subject to the terms and
conditions of the limited partnership agreement creating Boardwalk
REIT Limited Partnership, dated January 1, 2003, as amended and
restated on May 3, 2004. 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 entitles the holder to receive notice of, attend
and vote at all meetings of Boardwalk REIT unitholders. There is no
value assigned to the Special Voting units. The LP Class B units
issued are included in the Boardwalk REIT unitholders' capital
contributions on the balance sheet. The changes in unitholders'
capital contribution are as follows:
Summary of Unitholders' Capital
Contributions Units Amount
December 31, 2004 53,107,567 $293,503
Units issued under distribution reinvestment
plan 116,627 2,202
Restructuring costs - (9)
---------------------------
December 31, 2005 53,224,194 $295,696
Units issued under equity financing 2,915,000 63,594
Units issued under distribution reinvestment
plan 164,537 4,008
Restructuring costs - (165)
Deferred unit plan (NOTE 8) - 597
---------------------------
September 30, 2006 56,303,731 $363,730
---------------------------
---------------------------
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 that 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 51,828,731
Special Voting Units issued to holders of
LP Class B units 4,475,000
---------------------------
Total trust units 56,303,731 $363,730
---------------------------
---------------------------
10. DISTRIBUTABLE INCOME AND PER UNIT INFORMATION
Distributable income per unit
Boardwalk REIT makes distributions to unitholders on a monthly basis
on or about the 15th day of the following month. The reported
distributable income is defined under the Trust's Declaration of
Trust ("DOT"). Under this current DOT, the Trust is required to
distribute, at a minimum, its reported taxable income. The
reconciliation of distributable income and per unit information
begins with total operating cash flows 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 Canadian GAAP and,
therefore, are unlikely to be comparable to similar measures
presented by other real estate companies and trusts.
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Total operating cash
flows $29,198 $18,746 $66,929 $56,982
Net change in
operating working
capital (2,316) 3,037 (612) (28)
Add:
Deferred financing
costs
amortization 768 865 2,237 2,730
Amortization of
net discount on
long-term debt
assumed after
May 2, 2004 - 4 - 5
Deduct:
Deferred financing
costs
amortization post
May 2, 2004 (317) (332) (824) (648)
Amortization of
net premium on
long-term debt
assumed after
May 2, 2004 (11) - (34) -
---------------------------------------------------------------------
Distributable income $27,322 $22,320 $67,696 $59,041
Distribution
declared to
unitholders $17,730 $16,757 $52,522 $50,234
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average
units outstanding
- basic and
diluted 56,277,684 53,189,860 55,279,021 53,152,242
Distributable
income earned per
unit $0.485 $0.420 $1.225 $1.111
Actual distributions
declared per unit $0.315 $0.315 $0.950 $0.945
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per unit
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Numerator
Earnings from
continuing
operations $7,438 $2,713 $11,092 $1,614
Earnings from
discontinued
operations $64 $216 $7,768 $2,213
---------------------------------------------------------------------
Denominator
Denominator for
basic earnings
per unit -
weighted
average units
(THOUSANDS) 56,278 53,190 55,279 53,152
---------------------------------------------------------------------
Denominator for
diluted earnings
per unit
adjusted for
weighted average
units and
assumed
conversion
(THOUSANDS) 56,278 53,190 55,279 53,152
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per unit
from continuing
operations
Basic $0.13 $0.06 $0.20 $0.03
Diluted $0.13 $0.06 $0.20 $0.03
---------------------------------------------------------------------
Earnings per unit
from discontinued
operations
Basic $0.00 $0.00 $0.14 $0.04
Diluted $0.00 $0.00 $0.14 $0.04
---------------------------------------------------------------------
---------------------------------------------------------------------
11. 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.
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Continuing
operations $446 $28 $222 $(804)
Discontinued
operations - - - 12
---------------------------------------------------------------------
Total future
income taxes
(recovery) $446 $28 $222 $(792)
---------------------------------------------------------------------
---------------------------------------------------------------------
Future income taxes (recovery) consist of the following:
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Tax (recovery)
expense
based on
expected rate $462 $(25) $141 $(164)
Adjustment to
future income
tax
liabilities 166 53 172 (548)
Adjustment for
change in
effective tax
rate (182) - (91) (80)
---------------------------------------------------------------------
Future income
taxes (recovery) $446 $28 $222 $(792)
---------------------------------------------------------------------
---------------------------------------------------------------------
The future income tax asset is calculated as follows:
As at September 30, December 31,
2006 2005
---------------------------
Tax asset related to operating losses $689 $403
Tax asset related to differences in tax
and book basis 19 526
---------------------------------------------------------------------
Future income tax asset $708 $929
---------------------------
---------------------------
12. COMMITMENTS AND CONTINGENCIES
At September 30, 2006, the Trust had long-term supply arrangements
with two electrical utility companies to supply the Trust with its
electrical power needs for Alberta for the next three to twenty-seven
months at a blended rate of approximately $0.0561/kwh. These
agreements provide that the Trust purchase its power for all Alberta
properties under contract for the upcoming months.
While the above utility contracts for electrical power reduce the
risk of exposure to adverse changes in commodity prices, they also
reduce the potential benefits of favourable changes in commodity
prices. For accounting purposes, all settlements are recorded as
utility expense in the period the settlement occurs.
Beginning in November 2003, the Alberta government implemented a
natural gas rebate program covering the winter usage months of
November through March. In October 2005, the natural gas rebate
program was extended to cover the month of October. In January of
2006, the Alberta government announced a three-year extension to the
program covering the winter months of October through March. The
extension of the natural gas rebate program will end March 31, 2009.
The rebate program becomes active when the natural gas consumer price
charged by two of the three major gas companies in Alberta exceeds
$5.50/GJ for any individual winter usage month. For January through
March 2006, Boardwalk REIT was eligible for estimated rebates
totalling $1.4 million. For January to March 2005, Boardwalk REIT was
eligible for rebates totalling approximately $0.6 million.
The Trust has also entered into three natural gas supply contracts,
which provide a degree of price certainty for natural gas usage in
the provinces of Saskatchewan, Ontario and Quebec. The contracts
cover between 75 - 100% of the Trust's natural gas requirements for
each of the provinces. The physical supply agreement for Saskatchewan
runs from November 1, 2006 to October 31, 2007 and provides the
commodity at a price of $8.48/GJ. The physical supply agreements for
Ontario and Quebec run from June 1, 2006 to June 1, 2007 and provide
the commodity near $8.00/GJ.
Boardwalk REIT, in the normal course of operations, will become
subject to a variety of legal and other claims against the Trust.
Management and the Trust's legal counsel evaluate all claims on their
apparent merits, and accrue management's best estimate of the
estimated costs to satisfy such claims. Management believes that the
outcome of current or pending legal and other claims filed against
the Trust or its predecessor will not be material to Boardwalk REIT.
13. 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, 2006 is approximately $5.5 million (September 30, 2005
- $5.7 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, 2006, no amounts have been recorded in
the consolidated financial statements with respect to the above noted
indirect guarantees.
14. SEGMENTED INFORMATION
Boardwalk REIT specializes in multi-family residential housing and
operates primarily within one business segment in five Canadian
provinces. The following summary presents segmented financial
information for Boardwalk REIT's business by geographic location.
3 months 3 months 9 months 9 months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------
Alberta
Revenue $43,600 $38,809 $124,712 $115,209
---------------------------------------------------
Expenses
Operating 6,823 5,975 19,904 19,241
Utilities 3,498 3,643 14,224 14,045
Utility rebates - (2) (1,384) (623)
Property taxes 2,967 3,383 9,399 9,832
-------------------------------------------------------------------------
13,288 12,999 42,143 42,495
---------------------------------------------------
Net operating income $30,312 $25,810 $82,569 $72,714
---------------------------------------------------
Saskatchewan
Revenue $8,933 $8,674 $26,347 $25,756
---------------------------------------------------
Expenses
Operating 1,579 1,454 4,758 4,718
Utilities 886 670 3,646 3,101
Property taxes 1,187 1,210 3,625 3,712
-------------------------------------------------------------------------
3,652 3,334 12,029 11,531
---------------------------------------------------
Net operating income $5,281 $5,340 $14,318 $14,225
---------------------------------------------------
Ontario
Revenue $9,363 $9,198 $28,130 $27,653
---------------------------------------------------
Expenses
Operating 1,540 1,453 4,657 4,696
Utilities 1,460 1,264 4,739 4,721
Property taxes 1,846 1,685 5,373 5,011
-------------------------------------------------------------------------
4,846 4,402 14,769 14,428
---------------------------------------------------
Net operating income $4,517 $4,796 $13,361 $13,225
---------------------------------------------------
British Columbia
Revenue $2,151 $1,514 $5,939 $3,929
---------------------------------------------------
Expenses
Operating 429 226 1,178 726
Utilities 235 152 684 365
Property taxes 120 163 342 251
-------------------------------------------------------------------------
784 541 2,204 1,342
---------------------------------------------------
Net operating income $1,367 $973 $3,735 $2,587
---------------------------------------------------
Quebec
Revenue $16,927 $16,159 $50,225 $47,890
---------------------------------------------------
Expenses
Operating 3,196 2,803 10,116 8,119
Utilities 1,345 1,185 5,944 5,464
Property taxes 1,906 1,756 5,397 5,253
-------------------------------------------------------------------------
6,447 5,744 21,457 18,836
---------------------------------------------------
Net operating income $10,480 $10,415 $28,768 $29,054
---------------------------------------------------
Total
Net operating income $51,957 $47,334 $142,751 $131,805
Unallocated revenue(*) 382 1,042 22,163 13,411
Unallocated
expenses(xx) (44,837) (45,447) (146,054) (141,389)
-------------------------------------------------------------------------
Net earnings for
the period $7,502 $2,929 $18,860 $3,827
---------------------------------------------------
---------------------------------------------------
As at September 30, December 31,
2006 2005
------------------------------
Alberta
Identifiable assets
Revenue producing properties $931,602 $929,273
Mortgages and accounts receivable 759 5,277
Deferred financing costs 26,845 25,908
Tenants' security deposit 7,738 5,688
------------------------------
$966,944 $966,146
------------------------------
Saskatchewan
Identifiable assets
Revenue producing properties $173,432 $176,116
Mortgages and accounts receivable 159 185
Deferred financing costs 4,294 4,320
Tenants' security deposits 1,506 1,341
------------------------------
$179,391 $181,962
------------------------------
Ontario
Identifiable assets
Revenue producing properties $210,195 $213,490
Mortgages and accounts receivable 245 236
Deferred financing costs 3,490 3,508
------------------------------
$213,930 $217,234
------------------------------
British Columbia
Identifiable assets
Revenue producing properties $79,278 $62,014
Mortgages and accounts receivable 50 285
Deferred financing costs 21 -
Tenants' security deposits 343 250
------------------------------
$79,692 $62,549
------------------------------
Quebec
Identifiable assets
Revenue producing properties $420,645 $398,109
Mortgages and accounts receivable 1,376 5,032
Deferred financing costs 5,648 5,927
------------------------------
$427,669 $409,068
------------------------------
Total assets
Identifiable assets $1,867,626 $1,836,959
Unallocated assets(xxx) 32,223 46,427
------------------------------
$1,899,849 $1,883,386
------------------------------
------------------------------
(*) 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, corporate administration, financing costs, amortization,
income taxes and other provisions.
(xxx) Unallocated assets include discontinued assets, cash, short-term
investments and other assets.
15. SUBSEQUENT EVENTS
Subsequent to September 30, 2006, Boardwalk REIT contracted to acquire 96
residential units located in Victoria, British Columbia from unrelated third
parties for an aggregate purchase price of $9.4 million. The acquisition will
be funded from cash on hand and Boardwalk REIT's credit facility.
>>
%SEDAR: 00020684E
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;
