Boardwalk Real Estate Investment Trust Q2 Earnings Call Highlights

Key Points

• Q2 operating performance was stable: Same-property rental revenue and NOI both increased 1.7% year over year, occupancy reached 97%, and FFO per unit rose 2.6% despite lower total FFO following asset sales.
• Capital recycling remained a priority: Boardwalk completed or announced C$492 million of asset sales in the first half of 2026 and used most proceeds for C$204 million of unit buybacks, which management viewed as more accretive than property acquisitions at current valuations.
• Management maintained its outlook: Boardwalk reiterated 2026 guidance for same-property NOI growth of 1% to 3.5% and FFO per unit of C$4.60 to C$4.80, while targeting occupancy of 97.5% to 98% and confirming monthly distributions of C$0.15 per unit.

Boardwalk Real Estate Investment Trust TSE: BEI.UN reported second-quarter operating results that reflected stable demand for affordable rental housing, with same-property rental revenue and net operating income each rising 1.7% from a year earlier.

Chief Executive Officer Sam Kolias said the trust maintained a 67.6% operating margin during the quarter. Funds from operations declined slightly following recent asset sales, but FFO per unit increased 2.6%, which management attributed in part to the use of sale proceeds for unit repurchases under its normal course issuer bid program. Profit declined because of a non-cash reduction in IFRS net asset value, he said.

Occupancy Remains High in More Competitive Rental Markets

Boardwalk reported occupancy of 97% and average occupied rent of C$1,612 for a two-bedroom apartment, compared with a Canadian average of C$2,159 cited from Rentals.ca data. Samantha Kolias-Gunn, senior vice president of corporate development and governance, said the company’s affordability position and more than C$1 billion of rebranding and repositioning investments since 2017 have supported resident retention and property competitiveness.

Management said rental markets in its core regions have become more balanced as new housing supply has been delivered, particularly in higher-end product categories. Boardwalk said it has responded by adjusting rents and incentives by community while prioritizing occupancy, retention and net operating income.

Chief Financial Officer Gregg Tinling said average occupied rent increased both sequentially and year over year. While vacancy loss rose, the trust reduced incentives, helping to support higher rental revenue versus the second quarter of 2025.

Leasing spreads moderated year over year amid the more balanced supply-demand environment. Boardwalk raised market rents in communities with stronger fundamentals, while reducing rents in certain areas with higher new-supply deliveries or higher price points. Tinling said the blended leasing spread remained positive.

Same-property NOI in Alberta, Boardwalk’s largest region, rose 1% on revenue growth of 1.1%. Total rental expenses increased 1.9% from a year earlier, driven primarily by repairs and maintenance, bad debt expense and property taxes. Lower insurance premiums and utility expenses partly offset those increases.

During the question-and-answer session, President James Ha said July leasing activity was strong by volume and that August is typically a strong leasing month. The trust is seeking to raise occupancy toward a range of 97.5% to 98%, he said. Ha also said July new and renewal leasing spreads were generally consistent with trends seen in May and June.

Asset Sales, Buybacks and Desjardins Co-Ownership

Boardwalk completed or announced C$492 million of asset sales during the first half of 2026. Management said those transactions are expected to generate about C$272 million in net proceeds once closed and reduce near-term capital spending by approximately C$26 million.

The trust recently announced the sale of a two-property London, Ontario, portfolio for C$40 million, representing a 4.5% exit capitalization rate based on trailing 12-month NOI. Samantha Adams, senior vice president of investments, said the transaction was completed at a slight premium to IFRS value.

Management said most disposition proceeds have been directed toward unit repurchases. Boardwalk invested C$204 million year to date under its NCIB at a weighted average price of C$65.51 per unit. Adams said private-market transactions in Boardwalk’s core markets have occurred at capitalization rates of roughly 4.75% to 5.25%, while the trust’s units implied a cap rate above 6%, making repurchases its most accretive capital deployment option at present.

The trust also formed a co-ownership arrangement with Desjardins Global Asset Management and its Canadian private real estate fund. Desjardins will acquire a 50% interest in a seed portfolio at an implied value of C$292 million, or about C$446,000 per suite, which management said is in line with Boardwalk’s IFRS values.

Boardwalk will retain a 50% stake, continue day-to-day operations and receive a 4.25% property management and administrative fee on effective gross revenues. Adams said the fee is expected to improve the yield on Boardwalk’s proportionate share by about 25 basis points.

Adams said the partnership has no fixed capital-deployment target or defined term. While there may be additional existing Boardwalk properties that fit the partnership’s criteria, the intended long-term growth strategy is through third-party acquisitions. Management described the target assets as newer, well-amenitized properties with larger suites in markets including Edmonton, Calgary and Victoria.

Balance Sheet and Outlook

Boardwalk’s fair value of investment properties, excluding IFRS 16 adjustments, totaled C$8.4 billion as of June 30, down from C$8.6 billion at the end of 2025. Tinling said the decline reflected completed asset sales and a fair-value loss adjustment. Estimated property value was approximately C$243,000 per apartment door, which management said remained below replacement cost.

About 99% of the trust’s mortgage balance carries CMHC National Housing Act insurance. Of C$815 million of mortgages maturing in 2026, Boardwalk had renewed or forward-locked C$457 million at an average rate of 3.78% and an average term of about six years. The trust reported interest coverage of 2.97 times, liquidity of just under C$375 million, debt to EBITDA of 9.3 times and debt to assets of about 43%.

Boardwalk reiterated its 2026 guidance for same-property NOI growth of 1% to 3.5% and FFO per unit of C$4.60 to C$4.80. Ha said same-property revenue was tracking toward the lower end of the company’s original growth range, while its expense-growth outlook improved despite expected property-tax increases in the second half.

The trust also confirmed monthly distributions of C$0.15 per unit, or C$1.80 annually, for September, October and November 2026.

About Boardwalk Real Estate Investment Trust (TSE:BEI.UN)

Boardwalk Real Estate Investment Trust, or Boardwalk REIT, is a real estate investment trust engaged in the acquisition, development, and management of residential multifamily communities throughout Canada. Although the company's cumulative residential property portfolio includes holdings in the provinces of Alberta, Saskatchewan, Ontario, and Quebec, the majority of its total units are located in Alberta. The submarkets around the cities of Calgary and Edmonton, specifically, account for the majority of Boardwalk REIT's total residential suites.

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