Boardwalk Real Estate Investment Trust

Good afternoon, ladies and gentlemen, and welcome to the Boardwalk Real Estate Investment Trust fourth quarter 2022 earnings conference call. At this time, all participant lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded on Friday, February 24, 2023. And now we'd like to turn the conference over to Eric Bowers. Please go ahead, sir.

Thank you, Sylvie, and welcome to the BoardWalk REIT 2022 Fourth Quarter Results Conference Call. With me here today are Sam Collius, Chief Executive Officer, James Ha, President, and Lisa Svandich, Chief Financial Officer. Please note that this call is being broadly disseminated by way of webcast. If you have not already done so, please visit bwalk.com slash investors, where you will find a link to today's presentation as well as PDF files of the trust's financial statements, MD&A, and supplemental information package. Starting on slide two, we would like to remind our listeners that certain statements in this call and presentation may be considered forward-looking statements. Although the expectations set forth in such statements are based on reasonable assumptions, BoardWalk's future operation and its actual performance may differ materially from those in any forward-looking statements. Additional information that could cause actual results to differ materially from these statements are detailed in BoardWalk's publicly filed documents. I would like to now turn the call over to Sam Kolbius.

Thank you, Eric, and welcome everyone to our Q4 2022 conference call. Starting on slide four, our performance with our GAAP and non-GAAP measures of FFO per unit, net asset value, and unit holder equity and fair value of investment properties all seeing an increase from the prior year with the exception of profit as a result of non-cash accounting adjustments for fair value relative to the prior year. Slide five, our 2022 FFO per unit growth is at 6.5% from the prior year, reflecting stronger apartment rental fundamentals in our core markets. Slide six, our strategy to create value for our stakeholders begins with our people. We are so grateful for our extraordinary team who continues to innovate and deliver our places, homes for our resident members. In turn, this leads to leading earnings performance, which we believe will continue to result in strong total returns for all our stakeholders. Our strategic focuses are significant organic growth from utilizing our proven platform that focuses on operational excellence to optimize NOI growth. When we pair this with the current improvement in apartment rental market fundamentals on a solid foundation of some of the most affordable rents in Canada, we are well positioned to continue to accelerate on our organic growth trend. A creative capital recycling focuses on opportunistic investment into acquisitions, development, and investment into our own high-quality existing portfolio with a tactical unit buyback when appropriate. These opportunistic investments, combined with our operational optimization, have positioned Boardwalk for increasing asset values within Boardwalk's diversified and high-quality multifamily portfolio. Our solid financial foundation provides flexibility on our balance sheet with our growing free cash flow and with CMHC insurance on 96% of our financings, which provides access to low-cost mortgage capital with reduced renewal risk. Slide 7, we are delivering solid growth. Boardwalk's existing exposure to strong rental demand, non-price-controlled markets with record immigration, significant organic growth as Alberta and Saskatchewan have some of the most affordable rental rates in the country with limited new supply versus demand from both international and interprovincial migration. Rising interest rates, making home ownership more expensive, and rising construction costs are all widening the gap between our replacement cost of our assets and our current evaluation. Construction levels in our core markets remain low relative to anticipated household formation. Our largest market, Edmonton, is now over 98% occupancy, contributing to our solid performance. Apartment rental fundamentals continue to improve with higher revenues as a result of inflationary adjustments coupled with essentially no new incentives on new and renewal leases. All our markets now have high occupancy and strong apartment rental fundamentals. Slide 8 shows an all-time record high in migration into our largest region, Alberta, from both interprovincial and international migrants calling Alberta home. This migration reflects the affordability that Alberta provides relative to other provinces, coupled with higher job vacancies. Slide 9 shows record total employed in Alberta, along with how diversified new jobs are helping with the diversification of the Alberta economy. Slide 10 shows some headlines that reflect the diversifying economy for Alberta. Some economists predict Alberta will avoid recession. In addition, there are many major projects under development in the province of Alberta which will further promote more job opportunities in the future. Slide 11 shows our large presence in affordable and non-price-controlled markets, with Alberta and Saskatchewan representing 62.4% and 10.4% of our portfolio, respectfully. Boardwalk's current mark-to-market, which includes the reduction of incentives, averages $138 per suite and equates to approximately $54 million in revenue opportunity. Slide 12. shows occupied rents in Alberta are at a similar level in Q3 2015. There remains a significant gap between occupied rents and the change over consumer price index over the last eight years. Slide 13 shows our high affordability in our core Edmonton and Calgary markets. with rents well below 30% of medium rental household income. This slide also shows how high demand is with elevated migration in our core markets versus low relative new supply. Slide 14 shows high occupancy as a result of strong apartment rental fundamentals in all our key markets. Move outs versus last year are also dropping as our retention increases. Slide 15 shows our key operational metrics with high occupancy, lower incentives, higher occupied rents, resulting in an acceleration of revenues for the quarter and year. Slide 16 shows steady net new and renewal rental rates. Year over year, we have seen a significant improvement. New lease spreads are strategically moderated to keep providing resident-friendly affordable housing options in our core markets while steadying operational results, a win-win for all our stakeholders. Slide 17 shows a 2.2% sequential quarterly revenue gain consistent with the 2.3% and 2.2% from the last two quarters. reflecting strong apartment rental fundamentals through our winter season for all our markets we would like to now pass the call on to lisa smandage who will provide us with an overview of our portfolio performance balance sheet and repositioning results lisa thank you sam moving to slide 18 for q4 2022 same property net operating income increased by 5.9 percent