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- Mar 11, 2008
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Boardwalk REIT`s Revenue FLAT, Occupancy UPCALGARY - Boardwalk Real Estate Investment Trust is reporting higher occupancy at its more than 35,000 rental units across the country, but flat revenue, as the Calgary-based company commented on third quarter results.Canada`s largest landlord said it hopes to cut the incentives offered to tenants in Calgary by half - the city is home to 15 per cent of its apartments but 30 per cent of total incentives - but while those costs are being burned off, rents are likely to stay the same.
"Looking at the housing number, condominiums, there`s still over supply in the market, so it will take awhile," CEO Sam Kolias told analysts Thursday. "Absorption numbers suggest 12 months until the excess supply gets mopped up."
He added that overall higher occupancy rates - sitting at 97 per cent during the July to September period, up slightly from the year before - allowed them to increase market rates on a selective basis, while the cost of incentives also increased by $200,000 to $2.5 million in an attempt to continue attracting renters.President Rob Geremia said easing away from incentives, which can include lower rents, happen through individual negotiations.
Average monthly rents of $977 were up $1 over the same period last year.
Boardwalk`s funds from operations - a key performance measure for real estate companies - dropped 3.9 per cent to $33.5 million between July and September compared to a year ago. At 64 cents a unit, that was below analysts expectations of 69 cents a unit, according to Thomson Reuters, and Boardwalk`s shares closed down on the TSX at $42.10 Thursday.
The company narrowed the range of its expected funds from operations for the year, dropping the high end five cents to $2.50 per trust unit.
Asked by analysts whether they were being conservative in their estimates, Kolias pointed out winter is their slow season, but that they revisit projections every quarter.
"Right at this moment we`re seeing flat revenue," he said. "Until we see rents actually moving up and incentives burning away we`re not going to change our guidance right now."
It was estimated it would take at least two quarters for the market to reach equilibrium.
Third quarter revenue was $104.7 million.
Boardwalk said it is still keeping an eye on possible acquisitions - it sold 88 units in Quebec over the quarter - but given the market has no plans to buy over the next year.
Source: http://tinyurl.com/2fdrlyu
"Looking at the housing number, condominiums, there`s still over supply in the market, so it will take awhile," CEO Sam Kolias told analysts Thursday. "Absorption numbers suggest 12 months until the excess supply gets mopped up."
He added that overall higher occupancy rates - sitting at 97 per cent during the July to September period, up slightly from the year before - allowed them to increase market rates on a selective basis, while the cost of incentives also increased by $200,000 to $2.5 million in an attempt to continue attracting renters.President Rob Geremia said easing away from incentives, which can include lower rents, happen through individual negotiations.
Average monthly rents of $977 were up $1 over the same period last year.
Boardwalk`s funds from operations - a key performance measure for real estate companies - dropped 3.9 per cent to $33.5 million between July and September compared to a year ago. At 64 cents a unit, that was below analysts expectations of 69 cents a unit, according to Thomson Reuters, and Boardwalk`s shares closed down on the TSX at $42.10 Thursday.
The company narrowed the range of its expected funds from operations for the year, dropping the high end five cents to $2.50 per trust unit.
Asked by analysts whether they were being conservative in their estimates, Kolias pointed out winter is their slow season, but that they revisit projections every quarter.
"Right at this moment we`re seeing flat revenue," he said. "Until we see rents actually moving up and incentives burning away we`re not going to change our guidance right now."
It was estimated it would take at least two quarters for the market to reach equilibrium.
Third quarter revenue was $104.7 million.
Boardwalk said it is still keeping an eye on possible acquisitions - it sold 88 units in Quebec over the quarter - but given the market has no plans to buy over the next year.
Source: http://tinyurl.com/2fdrlyu