BOARDWALK REIT INCREASES FINANCIAL GUIDANCE FOR 2023 AND REPORTS STRONG RESULTS FOR Q2 2023 WITH CONTINUED OPERATING MARGIN IMPROVEMENT

CALGARY, AB, Aug. 10, 2023 /PRNewswire/ - Boardwalk Real Estate Investment Trust (TSX: BEI.UN)

SUMMARY HIGHLIGHTS FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2023

• STRONG FINANCIAL PERFORMANCE

FOR THE 3 MONTH PERIOD ENDED JUNE 30, 2023

• • Profit of $232.2 million
  • Funds From Operations ("FFO") of $0.89 per Unit⁽¹⁾⁽²⁾; an increase of 11.3% from Q2 2022
  • Net Operating Income ("NOI") of $82.6 million; an increase of 13.8% from Q2 2022
  • Same Property⁽³⁾ Net Operating Income ("Same Property NOI") of $81.7 million; an increase of 12.5% from Q2 2022
  • Operating margin of 61.6%; 220 basis point ("bps") improvement from Q2 2022

FOR THE 6 MONTH PERIOD ENDED JUNE 30, 2023

• • Profit of $453.6 million
  • FFO per Unit⁽¹⁾⁽²⁾ of $1.68; an increase of 13.5% from the same period a year ago
  • NOI of $158.4 million; an increase of 15.2% from the same period a year ago
  • Operating margin of 59.8%; 260 bps improvement from the same period a year ago
  • Same Property NOI of $157.2 million; an increase of 13.0% from the same period a year ago
• SOLID OPERATIONAL PERFORMANCE DRIVEN BY STRONG SAME PROPERTY RENTAL REVENUE GROWTH IN Q2 2023
  • Q2 2023 same property sequential quarterly rental revenue growth of 2.3% from the prior quarter
  • Occupied rent increased to $1,326 in June of 2023, a $34 improvement from March 2023
  • Q2 2023 same property rental revenue growth of 8.6% from a year ago
  • Occupancy of 98.3% in Q2 2023; an increase of 188 basis points from Q2 2022
• CONTINUED LEASING STRENGTH
  • August 2023 preliminary occupancy of 98.5%, an increase of 140 basis points from August 2022
  • New leasing spreads of 12.8% in Alberta in July 2023
  • Renewal leasing spreads of 8.4% in Alberta in July 2023
  • Despite strong leasing spreads, rents in Alberta relative to income levels remain some of the most affordable in Canada and remain well-below inflation adjusted levels since 2014
• STRONG AND FLEXIBLE FINANCIAL POSITION
  • Approximately $238.7 million of total available liquidity at the end of the quarter
  • 96% of Boardwalk's mortgages carry CMHC-insurance
  • Unitholders' Equity of $3.9 billion
  • Fair value capitalization rate of 4.90%
  • The Trust's current fair value capitalization rate remains at a positive spread to interest rates
  • Net Asset Value increase, primarily a result of higher market rental rates, to $80.98 per Unit⁽¹⁾⁽²⁾
    
    
• ACCRETIVE AND STRATEGIC CAPITAL ALLOCATION
  • Completed acquisition of previously announced accretive acquisition of the The Vue, a newly constructed 124-suite apartment community in Langford, British Columbia
• UPDATE TO 2023 FINANCIAL GUIDANCE
  • Tightened and increased FFO per Unit⁽¹⁾⁽²⁾ estimate to revised range of $3.42 to $3.54
  • Tightened and increased Same Property NOI growth range to +11.5% to +14.0%
• DISTRIBUTION OF $1.17 PER TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF SEPTEMBER, OCTOBER, AND NOVEMBER

Boardwalk Real Estate Investment Trust ("Boardwalk", the "REIT" or the "Trust") today announced its financial results for the second quarter of 2023.

Sam Kolias; Chairman and Chief Executive Officer of Boardwalk REIT commented:

"We are pleased to report on another strong quarter with continued growth in Net Operating Income, Profit and Funds from Operations per unit. We continue to make positive strides on our improving Operating Margin, as our team takes a responsible approach within a robust leasing environment, while finding innovative ways to develop incremental cost containment initiatives. As individuals search for economic opportunities, an attractive lifestyle and affordable places to call home, our largest markets of Edmonton and Calgary continue to see large net inflows from international and interprovincial migration.

As of the beginning of August, same property portfolio occupancy has reached 98.5%. Demand fundamentals remain strong across all of the Trust's markets. Positive market rent adjustments are being implemented in many of our communities. Boardwalk remains committed to ensuring long-term sustainability for all stakeholders. Our strategic moderation of leasing spreads on both new leases and lease renewals supports Resident Member satisfaction and preserves affordability within our communities while providing a steady, less volatile, long-term revenue growth profile for unitholders.

Higher interest rates continue to provide a challenge for community providers so far in 2023. However, demand for affordable housing remains strong across the country and we are confident that our team's Resident friendly approach, commitment to innovation and peak performance culture will continue to deliver strong organic growth."

SECOND QUARTER FINANCIAL HIGHLIGHTS

In Q2 2023, same property operating margin increased compared to the same period in the prior year, as the Trust's same property rental revenue growth remained strong and the Trust's disciplined approach to cost improvement initiatives resulted in operating expense growth significantly below inflation. The Trust anticipates that as same property rental revenue remains strong throughout 2023 and the Trust continues to optimize its operating platform, operating margins will continue to improve as compared to the same period in 2022.

The Trust's fair value of its investment properties as at June 30, 2023 increased from the previous quarter and year end primarily, as a result of increased market rents in many of its markets reflecting improving rental fundamentals. The Trust's stabilized capitalization rate ("cap rate") was 4.90% for Q2 2023 compared to 4.92% for the prior quarter, and the cap rate ranges utilized continue to be in-line with recently published third party quarterly cap rate reports. The Trust's current fair value cap rate remains at a positive spread to interest rates.

SOLID OPERATIONAL RESULTS

The Trust improved occupancy compared to the same period a year ago by focusing on gaining market share and retention. Market rents were adjusted in many communities where rental market fundamentals continue to improve. Turnover rates continued to decline as compared to the previous year across the Trust's portfolio. Average occupied rent increased sequentially, and when compared to the same period a year ago, as the Trust focuses on reducing or eliminating incentives on lease renewals, leasing at market rents for new leases and adjusting market rents where fundamentals are strong.

For the second quarter of 2023, a same property rental revenue increase of 8.6% combined with same property total rental expense increase of 2.7%, resulted in same property NOI growth of 12.5%. Same property rental expenses increased for most regions due to the current economic environment leading to higher wages and salaries from inflation, higher insurance premiums, higher utilities from increased rates, and higher property taxes.

During the quarter, lower vacancy loss and incentives, along with positive market rent adjustments supported Boardwalk's Calgary portfolio increase in same property NOI of 13.5%. The positive revenue growth was partially offset by increases in utilities and wages on a year-over-year basis. Calgary's increased utilities' costs were mainly attributable to increased prices for electricity as a result of a fixed price contract which expired in 2022 and was renewed at a higher rate.

In Edmonton, lower vacancy loss and incentives were coupled with lower operating expenses, as a result of lower repairs and maintenance costs, advertising, and bad debts as a result of the higher occupancy realized, resulting in positive NOI growth of 18.1% for the second quarter of 2023 compared to the second quarter of 2022. The Trust is well positioned in our Edmonton market with occupancy above 98.0% heading into the end of the summer season.

Saskatchewan's market remains strong with the Trust's portfolio realizing 7.5% same property NOI growth in the second quarter of 2023 versus the same period last year, as a result of strong same property revenue growth, partially offset by higher repair and maintenance costs, inflationary pressures on wages and salaries and increased prices for most utilities in the second quarter.

In Ontario, the mark-to-market opportunity on turnover contributed to same property NOI growth of 4.7%, in the second quarter of 2023 compared to the second quarter of 2022. Same property rental revenue growth of 5.2% was partially offset by increases in wages and salaries, insurance and advertising in the second quarter of 2023.

In Quebec, increasing revenues along with the lease-up of its L'Astre community which was transitioned from a seniors' community, resulted in same property NOI increasing by 6.5% in the second quarter of 2023 compared to the second quarter of 2022.

In British Columbia, a same property rental revenue increase of 4.8% was partially offset by total rental expense growth of 8.4%, due mainly to inflationary pressure on wages and salaries and repairs and maintenance, resulting in same property NOI growth of 4.0% in the second quarter of 2023 compared to the second quarter of 2022.

As we look forward to the second half of 2023, and as shown in our updated guidance further in this release, Boardwalk is well positioned for both continued revenue growth and expense management to deliver strong NOI growth throughout the remainder of the year.