A DISCIPLINED APPROACH
B O A R D W A L K R E A L E S T A T E I N V E S T M E N T T R U S T
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2014 A N N U A L R E P O R T | w w w. B o a r d w a l k R E I T. c o m | T S X : B E I . U N
A DISCIPLINED APPROACH
C O N T E N T S
1 Highlights
5 Letter to Unitholders
10
Table of Qualitative and Quantitative Goals and
Targets
18 Resident Members
20 Unitholders
22 Associates
25 Health and Safety
26 Community
28 Environment and Sustainability
30 Portfolio Summary
34
Good Corporate Governance
35 Financial Review
36 Management’s Discussion and Analysis
90 Management’s Report
91
Independent Auditors’ Report
92 Financial Statements
96 Notes to Financial Statements
140 Five Year Summary
142 Quarterly Results
144
Market and Unitholder Information
145 Corporate Information
B O A R D W A L K R E I T
2014 HIGHLIGHTS
OPERATING RESULTS
▲
Rental revenues increased by 4.3% to $473.2 million.
▲
Net Operating Income (“NOI”) increased by 2.9% to $292.4 million.
▲
Funds From Operations (“FFO”) excluding gains and losses from dispositions increased by 4.5% to
$175.8 million.
PERFORMANCE
▲
The Trust distributed $2.04 per Trust Unit of regular distributions on an annualized basis in 2014.
▲ A special distribution of $1.40 per Trust Unit was paid to Unitholders of record on December 31, 2014.
▲
The Trust demonstrated one of the lowest regular distribution payout ratios among Canadian REITs
during fiscal 2014 at approximately 61% of FFO.
FINANCIAL POSITION
▲
The Trust renewed $427.3 million in fiscal 2104 and reduced its average interest rate on these
mortgages from 3.42% to 2.67%.
▲
The Portfolio Weighted Average interest rate has been reduced to 3.34%.
▲
99% of the Trust’s mortgages are NHA-Insured.
▲
At December 31, 2014, the Trust had $140 million in cash on its balance sheet in addition to a $196
million undrawn credit facility.
Funds From Operations
Per Unit (Cdn$)
2.39
2.07
2.51
2.47
2.52
1.41
1.64
3.21
3.37
2.87
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
1
Grand Prairie
645 units
1.9% of portfolio
Fort McMurray
352 units
1.0% of portfolio
St. Albert
280 units
0.8% of portfolio
Spruce Grove
160 units
0.5% of portfolio
Edmonton
11,956 units
34.5% of portfolio
Red Deer
939 units
2.7% of portfolio
Banff
76 units
0.2% of portfolio
Saskatoon
1,988 units
5.7% of portfolio
Airdrie
163 units
0.5% of portfolio
O U R M I S S I O N :
“ TO SERVE AND PROVIDE OUR
RESIDENTS WITH QUALITY
RENTAL COMMUNITIES.”
Calgary
5,180 units
15.0% of portfolio
Regina
2,622 units
7.6% of portfolio
Corporate Profile
Boardwalk REIT strives to be Canada’s friendliest landlord and currently owns and operates more than 220 communities
with over 34,000 residential units totaling approximately 29 million net rentable square feet. Boardwalk’s principal
objectives are to provide its Residents with the best quality communities and superior customer service, while providing
Unitholders with sustainable monthly cash distributions, and increase the value of its trust units through selective
acquisitions, dispositions, development, and effective management of its residential multi-family communities.
Boardwalk REIT is vertically integrated and is Canada’s leading owner/operator of multi-family communities with over
1,500 Associates bringing Residents home to properties located in Alberta, Saskatchewan, Ontario, and Quebec.
2
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
34,626
Total Units
Quebec City
1,319 units
3.8% of portfolio
London
2,256 units
6.5% of portfolio
Windsor
1,680 units
4.9% of portfolio
Kitchener
329 units
1.0% of portfolio
Montreal
4,681 units
13.5% of portfolio
Boardwalk REIT – Total Number of Units
31,239 32,159 33,298 34,207
36,487 36,785 36,419
35,277 35,277
35,277
35,386 34,626
29,326
24,821 25,889
22,441
19,480
8,787
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
3
L E T T E R T O U N I T H O L D E R S
A DISCIPLINED APPROACH
We are pleased to report on a positive year for Boardwalk REIT (“Boardwalk” or the
“Trust”). In 2014, we continued to provide the best value in housing by focusing
on providing our Resident Members with superior customer service and the best
quality communities, while also providing our Unitholders with sustainable monthly
distributions coupled with long-term organic growth. The commitment and dedication
of our Associates continues to drive our success and has allowed the Trust to report
Funds from Operations (“FFO”) performance of $3.37 per Trust Unit on a diluted basis
for 2014, a growth of approximately 5% compared to 2013.
Our disciplined approach begins with our commitment to
multi-family asset transactions showed that Capitalization Rates
provide the best quality and service. We continue to provide
remained low, which in turn, when coupled with increasing mar-
Resident friendly programs, including our internal subsidy pro-
ket rents in most markets, kept prices high for investment grade
gram, which provides rental increase forgiveness to Resident
apartments. Debt financing continued to be readily available for
Members who can prove financial hardship as a result of a rental
CMHC-insured financing for Multi-Family Real Estate, which con-
increase, and our self-imposed rent protection program, which
tinued to drive demand. The Trust was able to capitalize further
limits the amount of a rent increase to a sustainable level for any
on the low interest rate environment by renewing its maturing
given year for existing Residents. These programs, along with
mortgages at interest rates well below the maturing rates.
our Community initiatives, help to further provide a Community
where we believe our Residents are proud to call home. Our
approach in providing our Residents with the best value in
housing has set us apart and, to date, our Resident Members
have rewarded us with their loyalty through lower turnover and
higher occupancy as we continue to build long-term relation-
ships with them.
2014 ECONOMIC ENVIRONMENT
Demand for rental housing remained strong in 2014 in most of
the Trust’s markets. Throughout the year, vacancy rates remained
low in most of the Trust’s core markets. Lower vacancy levels
allow the Trust to continue its Rental Strategy of maintaining
high occupancy through the continuous monitoring of occu-
pancy levels, adjusting market rents and offering suite specific
incentives to optimize revenue.
Despite early market expectations of higher interest rates in
Despite decreasing oil prices in December of 2014, the Prairie
Provinces led economic growth for the majority of 2014. As a
result, continued strong rental fundamentals remained for the
Trust, which were driven by positive employment prospects in
Alberta. Migration into the province remained elevated in 2014
as interprovincial and international migration were sources of
new residents into Alberta. Alberta and Saskatchewan contin-
ued its trend of carrying the lowest unemployment rates in the
Country, and continued to earn the highest wages in Canada,
a positive leading indicator for housing. In Alberta, the home
ownership and resale market appeared to be in balance, despite
the tightening of mortgage criteria in the previous year. In
Saskatchewan, the higher level of wages resulted in an increase
of single-family and condominium home ownership, which
tempered the Trust’s occupancy levels in the last quarter of 2014.
Many of the Residents who leave a Boardwalk community do so
to purchase a home. However, despite increasing market rents,
rental continues to remain the most affordable form of housing
2014, the Canadian Real Estate market continued to be strong as
in Canada.
4
L E T T E R T O U N I T H O L D E R S
B O A R D W A L K R E I T / A R 2 0 1 4
(From left to right): William Wong, Chief Financial
Officer; Van Kolias, Senior Vice President, Quality
Control; Sam Kolias, Chief Executive Officer and
Chairman of the Board; William Chidley, Senior
Vice President, Corporate Development; Roberto
Geremia, President; and Dean Burns, General
Counsel and Secretary.
BALANCED AND SUSTAINABLE GROWTH
The Trust did not acquire any Apartment Units in 2014, with the exception of one (1)
unit acquired in Edmonton, Alberta in the property known as ‘Morningside Estates’ for
a purchase price of $175 thousand. The Trust currently owns 222 of the 224 units in the
property. However, Boardwalk delivered solid organic growth this year. With approxi-
mately 70% of its over 34,000 apartment units in Alberta and Saskatchewan, the Trust
believes it is well-positioned in historically higher-growth markets, while remaining
diversified with properties in Ontario and Quebec. In 2014, the Trust continued to pro-
vide sustainable monthly cash distributions while also decreasing the Trust’s FFO payout
ratio. As of the February 2015, regular monthly distributions have increased 13.3% since
the beginning of 2012 to $2.04 per Trust Unit on an annualized basis. The Trust’s FFO
payout ratio has decreased simultaneously to a conservative 61% of 2014 FFO. The Trust
continues to be in a solid position.
In 2014, the Trust completed the disposition of its British Columbia portfolio, as well as a
non-core asset in Edmonton. The total sale price for these assets was $153.5 million, with
net proceeds of approximately $90 million. The Trust is continuing the process of review-
ing the potential sale of select non-core properties with the intent of high-grading its
portfolio by re-deploying the equity from these assets towards value enhancing trans-
actions, including development, capital improvements, return of equity to Unitholders,
and the repurchase and cancellation of Trust Units under the Trust’s Normal Course
Issuer Bid.
B O A R D W A L K R E I T / A R 2 0 1 4
L E T T E R T O U N I T H O L D E R S
5
The majority of the proceeds from the Trust’s dispositions in 2014 were returned to
Unitholders through a Special Distribution of $1.40 per Trust Unit for Unitholders of
PORTFOLIO HIGHLIGHTS
▲
Occupancy for the year
ended 2014 was 97.8%.
▲
Average Market Rent for
the end of 2014 was $1,202
per unit per month, up from
$1,157 in 2013.
▲
Average Occupied Rent for
the end of 2014 was $1,170
per unit per month, up from
$1,122 in the same period
last year.
▲
Interest coverage ratio for
fiscal 2014 was 3.37 times
compared to 3.15 for the
same period last year.
record as at December 31, 2014. In 2014, the Trust also deployed $31.6 million towards
the purchase and cancellation of 472,100 Trust Units at an average purchase cost of
$67.01 per Trust Unit. Between mid-2007 and the beginning of 2012, the Trust exercised
a similar strategy of high-grading its portfolio through the sale of 1,578 Apartment
Units, comprised of non-core assets, for total gross proceeds of $171.9 million. The Trust
re-deployed this equity into the purchase and cancellation of Trust Units under similar
Normal Course Issuer Bids, and, re-purchased and cancelled 4,542,747 Trust Units, repre-
senting a total investment of $170.5 million, or an average cost of $37.53 per Trust Unit.
We continue to benefit from high occupancy as a result of the Trust’s Rental Strategy
of monitoring vacancy, adjusting market rents, and offering suite specific incentives to
optimize revenue. The Trust reported occupancy levels at the end of 2014 of 97.8%, a
slight decrease from the prior year of 98.2%, and continued to be successful in increasing
occupied rents throughout the year in a progressive fashion. Market rents throughout
the year have also increased and continue to have a favourable mark-to-market oppor-
tunity as we enter 2015.
The Trust’s average market rent at the end of 2014 was $1,202 versus the average occu-
pied rent of $1,170. The narrowing of this loss to lease gap continues to be a key revenue
growth opportunity for the Trust, however, we believe the best method of closing this
loss to lease opportunity is through the Trust’s Rental Strategy of maintaining occu-
pancy, adjusting rent, and offering suite specific incentives to optimize revenue.
Boardwalk completed construction of its first development project on excess land the
Trust owned. The 109-unit, wood-frame building in Calgary, Alberta, named Spruce
Ridge Gardens, was completed on time and on budget of approximately $19 million.
Boardwalk received an Occupancy Permit from The City of Calgary in December of 2013
and has been fully leased with an estimated capitalization rate of 6.9% including the
surfacing of $4.25 million of land value.
$1,250
$1,200
$1,150
$1,100
$1,050
$1,000
$1,173
$1,183
$1,190
$1,153
$1,160
$1,202
$1,170
$1,157
$1,138
$1,122
December
2013
March
2014
June
2014
September
2014
December
2014
Occupied Rent
Market Rent
Mark to Market per Unit per Month
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$–
6
L E T T E R T O U N I T H O L D E R S
B O A R D W A L K R E I T / A R 2 0 1 4
FINANCIAL AND
OPERATING HIGHLIGHTS
▲
Rental revenues of $473.2
million, an increase of 4.3%
compared to $453.6 million
for the twelve-month period
ended December 31, 2014.
▲
Net Operating Income of
$292.4 million, representing
a 2.9% increase from $284.2
million in the same period
last year.
▲
FFO of $175.8 million, an
increase of 4.5% compared
to $168.2 million year-over-
year.
▲
FFO per unit of $3.37 on
a diluted basis, up 5.0%
compared to $3.21 for the
twelve-month period ended
December 31, 2014.
▲
AFFO was $159.3 million, an
increase of 5.2% compared
to $151.4 million year-over-
year.
▲
AFFO per unit was $3.05
on a diluted basis, up 5.5%
compared to $2.89 for the
twelve-month period ended
December 31, 2014.
In October of 2014, the Trust executed a fixed price construction contract, and com-
menced construction of the first phase of its Pines of Normanview Development on
excess land the Trust owns in Regina, Saskatchewan. The first phase consists of a four
storey, 79 unit, wood frame, elevatored building with underground parking. The Trust
estimates the project will be completed in Q1 2016, with a total cost of approximately
$14.1 million, or $178,000 per door, resulting in an estimated capitalization rate of 6.0%
to 6.5%, excluding land value.
The Trust is continuing to explore the viability of other potential developments on excess
land the Trust currently owns. The combination of low capitalization rates, low interest
rates, and relatively low construction costs provides an opportunity to enhance value to
our Unitholders by increasing the quality of the Trust’s portfolio from the development
of new multi-family assets.
Financial Strength and Flexibility
At the end of 2014, the Trust had approximately $336 million in available liquidity (com-
prised of $140 million in cash and access to an undrawn $196 million credit facility). It
should be noted that approximately $73 million of the cash at the end of 2014 funded
the special distribution for Unitholders of record on December 31, 2014, which was
paid on January 15, 2015. This distribution is related to the Trust’s return of equity to
Unitholders from the sale of its British Columbia assets. Ample liquidity and balance
sheet strength is an important element in the execution of the Trust’s overall strategy as
it provides maximum flexibility should a potential opportunity arise.
As interest rates continued to remain low throughout 2014, the Trust was able to
renew approximately $427 million in mortgage maturities, as well as obtain $10 million
of additional mortgage funds with an average term of 6 years at a weighted average
interest rate of 2.67%, a decrease from the 3.42% maturing rate on these mortgages,
and a significant decrease in the Trust’s interest expense. As of February 2015, estimated
CMHC-insured 5 and 10 year mortgage rates continued to decrease and were estimated
to be 1.50% and 2.30% respectively. The Trust was able to execute forward locking of
interest rates on select mortgages to crystalize interest savings on a portion of the Trust’s
maturities in 2015. The Trust’s mortgage program in a low interest environment has a
bias towards longer mortgage terms to lock in low interest rates for a longer term.
Boardwalk’s Debt (net of cash) to Fair Value at the end of 2014 was a conservative 38%.
The Trust’s Fair Value excluding sold properties as of December 31, 2014 was $5.8 bil-
lion, an increase from $5.6 billion a year ago, as a result of increasing market rents and
overall growth in the Trust’s Net Operating Income, where capitalization rates remained
relatively unchanged. Our interest coverage ratio, measured as Earnings before Interest,
Taxes, Depreciation, and Amortization (“EBITDA”) to interest expense (excluding gains)
for the current year increased to 3.37 times versus 3.15 times for the same period last year.
The Trust achieved an increase of 2.5% in Stabilized Building Net Operating Income in
2014, which was within our original and revised guidance range. The Trust’s rental strat-
egy of maintaining high occupancy coupled with the increase in occupied and market
rents, along with decreasing turnover costs, provided positive organic revenue growth
in 2014. These gains were tempered, however, by an increase in operating expenses
B O A R D W A L K R E I T / A R 2 0 1 4
L E T T E R T O U N I T H O L D E R S
7
mainly attributable to higher wages and salaries and utilities as well as inflationary pres-
sures of other expense items throughout the year, including property taxes.
Unit Breakdown by Province
As at Dec 31, 2014
NOI Breakdown by Province
As at Dec 31, 2014
AB 65.0%
SK 14.1%
ON 7.3%
QC 13.6%
AB 57.0%
SK 13.3%
ON 12.4%
QC 17.3%
AB 65.0%
SK 14.1%
ON 7.3%
QC 13.6%
Boardwalk Stabilized NOI Growth for 2014
Original Guidance
Revised Guidance
Actual Results, 2014
1% – 4%
2% – 4%
2.5%
For fiscal 2014, our reported FFO per unit increased by approximately 5.0% versus the
same period last year at $3.37, and finished within our original and quarterly revised
guidance range. The positive FFO growth was attributed to the positive NOI growth
the Trust achieved through its NOI Optimization strategy combined with a continued
reduction in interest expense.
Funds from Operation – 2014
Original Guidance
Revised Guidance
Actual Results, 2014
2015 Outlook
Unit Breakdown by Province
As at Dec 31, 2014
$3.25 to $3.45
$3.32 to $3.41
$3.37
NOI Breakdown by Province
As at Dec 31, 2014
AB 57.0%
The volatility of crude prices in 2015 has resulted in pressure on the Alberta and
SK 13.3%
Saskatchewan economies with the potential to impact each province’s near term
ON 12.4%
growth. In the past, our disciplined approach has well-positioned us to weather volatile
economies. We continue to exercise discipline and build long term relationships with
QC 17.3%
our Residents while further enhancing our product and service. Renting continues to be
a great option when looking at consumer housing options with today’s economic uncer-
tainty. This organic growth opportunity combined with management of inflationary
expenses will continue to help us deliver another year of solid financial results in 2015.
A continued low interest rate environment will further enhance FFO growth as approx-
imately $427 million of mortgages will mature in 2015 with an average interest rate of
3.66%, representing an interest savings opportunity with current (as of February, 2015)
5 and 10 year CMHC insured financing rates of 1.50% and 2.30% respectively. The Trust
is constantly monitoring the credit market and, if warranted, may commit to further
forward interest rate locks in order to crystallize interest expense savings. However, the
Trust is committed to maintaining a balanced approach to its mortgage program.
With this in mind, we remain cautiously optimistic for 2015. As is customary, at the end
of the third quarter of 2014, the Trust provided a financial outlook for the upcoming year
to enhance transparency in our financial reporting by sharing our own perspectives on
the Trust’s current position and objectives. This guidance is updated on a quarterly basis
and is reported during our quarterly conference calls and press releases.
Description
Investment Properties
Stabilized Building NOI Growth
FFO Per Trust Unit
AFFO per Trust Unit – based on $500/yr/apt
2015 Financial Guidance
No new apartment acquisitions,
dispositions or developments
1% to 4%
$3.40 to $3.60
$3.07 to $3.27
8
L E T T E R T O U N I T H O L D E R S
B O A R D W A L K R E I T / A R 2 0 1 4
In 2015, we expect to remain well-capitalized, and foresee a positive year with FFO in
the range of $3.40 to $3.60 and Stabilized Building NOI growth of 1% to 4%. At this
time, we are not anticipating any new apartment acquisitions in 2015, as we continue
Rental Revenue Cycle
Move-outs > Move-ins
to believe our largest opportunity remains organic growth, investment in our existing
Rents Increase
Vacancy Rises
communities, and investment in the Trust’s Unit Buyback program.
In Summary
Our disciplined approach can be found in all aspects of the Trust.
Incentives
Decrease
Incentives
Increase
We continue to provide our Resident Members with the best value in housing with our
customer friendly approach that includes superior customer service, resident support
Move-ins > Move-outs
Vacancy Drops
Rents Decrease
programs and the best quality communities.
Balanced and sustainable growth through financial strength and flexibility combined
with our customer friendly approach has positioned the Trust to continue to provide its
Unitholders with sustainable monthly cash distributions and capital appreciation. The
Trust will continue to maintain a flexible financial position to allow it to efficiently pursue
any future potential opportunities which may arise.
We would like to take this opportunity to thank our 1,500 associates across Canada for
their discipline and commitment to our vision and values in providing our Residents
with the best quality communities.
Thank you to our stakeholders as well as financial and operating partners for their con-
tinued support. We would especially like to thank CMHC, our largest financial partner,
as they continue to provide mortgage insurance products which maintain low interest
rates and mitigates renewal risks, all of which allows Boardwalk to provide the best value
in rental housing for Canadians.
We would also like to thank our Board of Trustees for their discipline, guidance and con-
tinued focus on governance.
As always, thank you to our Residents for their continued loyalty and engagement in our
Boardwalk Community. Thank you for calling Boardwalk your home.
Respectfully,
Sam Kolias
Chairman and CEO
B O A R D W A L K R E I T / A R 2 0 1 4
L E T T E R T O U N I T H O L D E R S
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T A B L E O F Q U A L I T A T I V E A N D Q U A N T I T A T I V E
GOALS AND TARGETS
Boardwalk strives to meet and exceed its goals and targets by adhering to its Golden Foundation:
GOLDEN RULE:
T R E AT O T H E R S A S YO U WA N T T O B E T R E AT E D
GOLDEN GOAL:
B E G O O D
GOLDEN VISION:
L O V E C O M M U N I T Y
GOLDEN MISSION:
H AV E F U N
Boardwalk’s guiding mission is, “To serve and provide our Resident Members with
quality rental communities.” We take a disciplined approach to this mission and
continue to create and implement strategies that help us accomplish this. The
result of these strategies can be felt by our Resident Members, our Associates, our
Organization, our Communities, and our Unitholders.
The benefits of this include:
▲
Property values that continue to appreciate, along with the ability to obtain cash flow that is sustainable and long-term, creating
and enhancing value for our Unitholders;
▲
The ability to continue to build a work environment for our valued Associates that is rewarding, safe, healthy, and happy, as well
as consistent across Canada;
▲
The opportunity to be a positive influence and affect change throughout our local and global communities; and,
▲
To strive towards being Canada’s friendliest and leading residential landlord through strategic acquisitions, dispositions, and
development, as well as through the implementation of creative and innovative strategies.
Our strategies can be measured and assessed based on the goals and targets that Boardwalk sets annually. These goals and targets
are outlined in the following table. Boardwalk aims to exceed these goals and targets; however, we recognize that outside market
influences and forces can affect our expenses and ultimately, our returns. As a result, we realize that exceeding these targets is not
always possible in each area. With this said, Boardwalk strives to overcome and mitigate these obstacles and improve where, and
when, we can.
10
G O A L S A N D T A R G E T S
B O A R D W A L K R E I T / A R 2 0 1 4
The goals and targets outlined below are intricately intertwined, each continually affecting
the others. While one stakeholder may place importance on one, others may place priority on
another. Boardwalk firmly believes in continuing to hold ourselves accountable to these goals
and targets, and we hope our performance will encourage discussion between all of our stake-
holders. Boardwalk believes taking a disciplined approach to these goals and targets, provides
positive benefits for all of our stakeholders, in addition to creating, building, and enhancing
strong and lasting communities for our Resident Members, Associates and Stakeholders alike.
Key:
✓
✓
✓
✓
✗
Achieved, and aim to
improve still further
Achieved
Partly achieved
Did not achieve
RESIDENT MEMBERS: To work proactively to ensure Boardwalk remains Canada’s multi-family residential landlord of choice.
2014 Targets
2014 Results
Continually improve the
Customer Service we
provide.
✓
✓
Respond to the
changing priorities of
our Resident Members.
✓
✓
In order to provide Resident Members with the best service possible, the
Boardwalk Call Centre is open 24 hours a day, 7 days a week and 365 days a
year. Residents can contact Customer Service by telephone, email or live chat.
In 2014, the Boardwalk Call Centre received 143,993 phone calls, 21,885 live
chats, and 123,008 emails.
In addition to the Boardwalk Call Centre, Resident Members are provided
with 24-hour on-call maintenance. This includes our 72-hour maintenance
guarantee that states all standard maintenance request will be completed
within three days.
In 2014, Boardwalk continued to track the reasons Residents move out.
Boardwalk saw a slight decrease in the number of move outs in 2014 at 12,182,
as compared to 12,222 in 2013. By monitoring this, Boardwalk is able to identify
areas of improvement with regards to the service we are providing our
Residents.
Throughout 2014, Boardwalk continued to administer an automated telephone
survey to track the satisfaction of Residents who have just moved in, or have
recently had maintenance work completed. In 2014 85% of Residents were
satisfied with their maintenance work and over 90% were satisfied with their
move-in.
In 2014, Boardwalk launched a brand new secure Resident Website. This
new website has features such as: a newsfeed, the ability to view their lease
and account balance, receive electronic communication from Boardwalk,
and a Community Corner that allows Residents to communicate directly
with Boardwalk, and with each other. As of December 1, 2014, the number of
Residents registered on the site had increased by 45% since its launch.
Boardwalk launched a redesign of the external facing website, www.bwalk.
com. 2014 saw continued success with this website, as well as the addition
of new features in an effort to continue to provide current and potential
Residents with easy access to the information they need. These new features
include: a mobile optimized menu bar, map view project search, and a newly
designed Investor Website.
In addition, Boardwalk continues to see success with its secure Resident
Website. A redesigned version was launched in 2014 and as a result,
Registration on the site increased by 45%. We continue to look for new
features and additions to this site to serve the demand for online options for
our Residents.
2015 Targets
Continually improve the
Customer Service we
provide.
Respond to the
changing priorities of
our Resident Members.
B O A R D W A L K R E I T / A R 2 0 1 4
G O A L S A N D T A R G E T S
11
RESIDENT MEMBERS (continued)
2014 Targets
2014 Results
2015 Targets
✓
✓
Develop innovative ways
to further improve our
long term relationships
with our Resident
Members.
Throughout 2014, Boardwalk continued to offer its Internal Subsidy Program to
help Residents in financial need. In addition, Boardwalk also continued to offer
Residents internal rent control, which limits the amount Boardwalk will raise
rents in any given year. These programs continue to create long and lasting
relationships with our Residents.
Develop innovative ways
to further improve our
long term relationships
with our Resident
Members.
In 2014, Boardwalk sponsored over 70 events across Canada. These events
encouraged our Residents to get involved in their communities by getting to
know their neighbours, or volunteering. Boardwalk is planning to continue
these initiatives in 2015 in an effort to continue to build strong and lasting
communities.
Boardwalk hosted its third annual Monopoly Tournament in 2014. This year the
competition was held in Regina, SK. Following the same format as previous years,
after four rounds of competition, three finalists competed against a Boardwalk
representative. The first place winner received six months of free rent, second
place received one month of free rent, and third place received an iPad.
In 2014, Boardwalk continued to invite Residents and Associates to partner
with Youth With a Mission (YWAM) to build homes for those in need in Tijuana,
Mexico. Over the course of 2014, Boardwalk hosted three trips to Tijuana,
which saw 105 Associates and five Residents build seven homes.
In 2014, Boardwalk continued to distribute the Resident Magazine, ‘Across the
Board.’ The magazine has three issues per year and features a growing number
of articles contributed by Resident Members. The magazine offers Residents
a way to feel connected with the Boardwalk community across Canada. The
magazine has seen great success in 2014, and Boardwalk plans to continue
distributing this magazine in 2015.
Boardwalk continues to believe that part of creating long lasting relationships
with our Residents is building communities in which they are proud to live. As
a result, our continued volunteer efforts in Boardwalk communities, not only
better the communities in which we operate, but also give our Residents the
opportunity to join us in our goal of building better communities.
ASSOCIATES: Invest in our people to provide them with supportive, engaging, long-term employment.
2014 Targets
2014 Results
2015 Targets
Strive to cultivate a
corporate culture of
on-going, open, two-
way dialogue between
all levels of staff.
Continue to implement
our new internal
communications
strategic plan.
✓
✓
Boardwalk continued to operate its intranet for Associates in 2014. The
intranet provides Associates with online access to important information and
documents, as well as the ability to view updates and photos from Boardwalk
events around Canada. In 2015, we will be evaluating this website and are
investigating the opportunity to redesign the website to further enhance its use.
Strive to cultivate a
corporate culture of
on-going, open, two-
way dialogue between
all levels of staff.
Continue to implement
our strategic internal
communications plan.
In 2014, Boardwalk continued to distribute its quarterly internal magazine
to Associates. This magazine continued to be successful with Associates in
2014 with increased contributions from Associates. The magazine provides
Associates with quarterly financial information, as well as important Health
and Safety, and Human Resources information. It also provides Associates with
stories and photos from around Canada. Boardwalk continues to look for new
and innovative additions to the magazine.
Throughout 2014, Boardwalk continued to host annual luncheons for
Associates with the Executive Team. These events continue to provide a
medium for Executives to communicate directly with Associates across
Canada, and communicate Boardwalk’s strategic initiatives with them directly.
Associates continue to provide positive feedback with regards to these events
and in 2015 Boardwalk will be hosting them once again. We continue to look
for ways to improve Associate engagement.
12
G O A L S A N D T A R G E T S
B O A R D W A L K R E I T / A R 2 0 1 4
ASSOCIATES (continued)
2014 Targets
2014 Results
Encourage a positive
workplace that
effectively engages
Associates.
Encourage work-life
balance.
Constantly adjust
internal policy and
focuses to the changing
priorities of our
Associates, innovatively
maintaining a balance
between our Associates,
Resident Members,
Unitholders and
Communities.
Foster safe and
respectful work practices
and environments, and
further develop the
training, orientation and
support offered to new
Associates.
✓
✓
Boardwalk continues to ensure that they are providing competitive salaries
and benefits to valued Associates. To ensure this, Boardwalk conducts market
research to ensure that salaries and benefits align with its competitors.
Additionally, Boardwalk provides Associates with a Profit Share Program, and a
High Potential Program that recognizes outstanding Associates.
Boardwalk has a long-standing internal committee that is dedicated to raising
funds to provide assistance to Associates who may be in need. Each Region
Boardwalk operates in has a committee, and Boardwalk matches 100% of the
fundraising efforts for these committees.
✓
✓
Boardwalk continued to invest in Associate training and development with
$107,000 invested in 2014. The funds are used by Associates to cover items such
as books, tuition and membership fees to help in their continued education
and development.
Boardwalk conducts orientation for all new Associates. This provides new
Associates with the opportunity to speak directly to Human Resources
personnel, learn about Boardwalk’s Health and Safety policy, and receive
important information about internal processes and protocol. Orientation also
offers Boardwalk the opportunity to begin to immerse new Associates in the
Boardwalk culture.
2015 Targets
Encourage a positive
workplace that
effectively engages
Associates.
Encourage work-life
balance.
Constantly adjust
internal policy and
focuses to the changing
priorities of our
Associates, innovatively
maintaining a balance
between our Associates,
Resident Members,
Unitholders and
Communities.
Foster safe and
respectful work practices
and environments, and
further develop the
training, orientation and
support offered to new
Associates.
Educate and enforce
our Health and Safety
Procedures to all
Associates
✓
✓
Boardwalk continued the Zero Injury Campaign in 2014 in an effort to ensure
that we continue to provide a safe work environment for Associates. In
2014, 183 sites remained injury free. Injury free sites are recognized through
Boardwalk’s intranet, internal magazine, and the annual luncheons with
Executives. Additionally, all Boardwalk Associates continue to have a Health
and Safety objective included in their performance review.
Continue to create a safe
work environment by
educating our Associates
and enforcing our Health
and Safety Procedures.
Boardwalk conducted an external Health and Safety audit in 2014. The
results of which was an overall score of 97%. The finished report outlined
key strengths Boardwalk has in regards to Health and Safety, as well as
suggestions for improvement. Through 2015, Boardwalk will be working
towards developing the areas outlined for improvement, as well as continuing
to grow in our Health and Safety strengths.
Boardwalk continues to monitor and review the Health and Safety Program in
place to ensure it is in compliance with the most recent legislation, as well as
to ensure we continue to offer Associates a safe and healthy place to work. In
2014, Boardwalk added a workplace violence risk assessment to the Health and
Safety Program.
B O A R D W A L K R E I T / A R 2 0 1 4
G O A L S A N D T A R G E T S
13
2015 Targets
Strive to constantly
enhance our ability
to attract, support,
encourage and
recognize high-
performing and
innovative team
members.
ASSOCIATES (continued)
2014 Targets
2014 Results
Strive to constantly
enhance our ability
to attract, support,
encourage and
recognize high-
performing and
innovative team
members.
✓
✓
In 2014, Boardwalk was pleased to present 11 Associates with Foundation of
Excellence Awards, and one Associate with a Leader of Excellence Award.
These awards are peer nominated and given to Associates who continue to
portray Boardwalk’s Mission, Vision, and Values each day.
In 2014, Boardwalk continued the Chairman’s Scholarship. This provides the
children of Boardwalk Associates with the opportunity to obtain scholarships
for post-secondary education. In 2014, Boardwalk awarded scholarships to 24
individuals, the first installment of these scholarships totalling over $92,000.
Boardwalk also provided the second installment to 11 recipients of 2013
Chairman’s Scholarship, which totaled an additional $50,000.
Boardwalk continued the internal Bravo Program in 2014. This program
gives Boardwalk the opportunity to recognized Associates who go above
and beyond and have received compliments from our Residents. In 2014,
Boardwalk was pleased to award over 340 Bravos to Associates and sites.
In 2014, Boardwalk continued to offer the Associate Referral Bonus. This
provides Associates with a bonus when they refer friends or family to work at
Boardwalk.
Boardwalk continues to ensure that Associates are receiving compensation
that is in line with competitors and market averages. As a result, we continually
conduct market research to ensure that Associate salaries and benefits are
competitive.
Boardwalk also offers Associates a comprehensive benefits package. In 2014
Boardwalk amended the benefits package to include a Mission Sponsorship,
encouraging Associates to take extended time to conduct a mission to
enhance local or global communities. During such a Mission, Boardwalk
provides Associates with financial help to conduct the mission. Additionally,
Boardwalk offers Associates an RRSP Match Program. In 2014, Boardwalk
dedicated over $2 million to this program. Over the course of 2014, Boardwalk
invested over $2 million in comprehensive group benefits.
Decrease turnover to
10-20% retain long term
Associates, and further
develop succession
planning policy and
procedures
✓
✓
Boardwalk continues to offer its Mentorship Program for Associates. The goal
of this program is to ensure all Associates feel comfortable in their positions.
Each Boardwalk Site Associate is provided with a mentor who helps them
with their training, learn their new job, and better understand the Boardwalk
culture. Boardwalk continues to evaluate and update this program, and in
2014, Power Tool training was introduced.
Retain long term
Associates, and further
develop succession
planning policy and
procedures
To ensure Boardwalk’s continued success as well as to prepare for the future
and offer Associates a chance to excel, Boardwalk continues to implement
its Succession Planning Program. This program requires that each Leader
to identify a successor for their role, as well as to set a time frame in which
this individual would be ready to take on the role. This program promotes a
continued investment in our Associates training and development.
Boardwalk has over 1,500 Associates across Canada. We are pleased to know
that of these Associates, 25% of them have been with Boardwalk for between
five to ten years, and 22% of them have been with Boardwalk between ten to
25 years. In 2014 Associates turnover was 16.62%, a decrease from 2013.
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G O A L S A N D T A R G E T S
B O A R D W A L K R E I T / A R 2 0 1 4
COMMUNITY: To positively impact the communities in which we operate and the larger global community.
2014 Targets
2014 Results
✓
✓
Through partnerships with various organizations across Canada, Boardwalk
provides over 1,000 units of affordable housing to individuals in need. This also
represents an in-kind donation of over $1 million. Organizations Boardwalk
partners with include: Calgary Housing Company, Housing First, Accessible
Housing, Red Deer Housing, London Housing Company, and many more.
Expand and continue to
focus on our Community
Development
Department in order
to further foster
collaboration with
Government and Social
Services.
2015 Targets
Expand and continue to
focus on our Community
Development
Department in order
to further foster
collaboration with
Government and Social
Services.
Continue to assist our
Resident Members who
are in financial need.
✓
✓
Boardwalk continued its Internal Subsidy Program in 2014, providing
assistance to Residents in financial need. In 2014, Boardwalk had approximately
30 suites on internal subsidy; however, this number fluctuates throughout the
year.
Continue to provide
assistance to our
Resident Members who
are in financial need.
✓
✓
Focus on encouraging
corporate and individual
contribution and
involvement in our
communities.
Focus on encouraging
corporate and individual
contribution and
involvement in our
communities.
Boardwalk continues to implement its internal rent control policy. This policy
limits the amount that Boardwalk can, or will, increase rents in any given
month. Boardwalk began this program in 1999 it is evaluated on an ongoing
basis to ensure it continues to improve and is sustainable for our Residents.
In 2014, Boardwalk once again hosted the annual National Week of Caring. This
is held in December every year, and provides Associates with the opportunity
to volunteer in their communities for up to four hours of paid work time. To
facilitate this, and encourage Associates to give back, Boardwalk organizes
multiple different volunteer efforts over the week to make it easier for
Associates to give back. In 2014, Boardwalk saw over 425 Associates participate
in the Week of Caring, for a total over 1,460 hours.
In addition, Boardwalk sponsored various events in 2014 including: We Day
Alberta, the Boardwalk Walk for Wellspring, The Coldest Night of the Year, and
among others, Hockey Helps the Homeless.
In 2014, Boardwalk continued to offer a Company Matched Payroll Charitable
Deduction Program to all Associates. This program gives Associates the
opportunity to donate to specific charities, and to have that donation
matched by Boardwalk. Boardwalk will match these contributions up to $1,000
per Associate, per year. In 2014, Boardwalk matched over $29,700.
The Boardwalk Angels Program continued in 2014. The Boardwalk Angels
Program continues to recognize Associates and Resident Members who
give back to their communities and who participate in charitable events that
support local and global communities. This program has only been in place
for three years at Boardwalk, and we are pleased that in 2014 we continued
to recognize over 100 buildings which participated in multiple community
engagements. This program will continue into 2015.
To expand our
boundaries by taking an
active role in our global
community.
✓
✓
In 2014, Boardwalk continued to invite Residents to join Associates and travel
to Tijuana, Mexico to build homes for families in need. Over the course of 2014,
Boardwalk conducted three trips to Tijuana and built seven homes.
Again, in 2014, Boardwalk continued to encourage Associates and Resident
Members to participate in Operation Christmas Child. Samaritan’s Purse sends
shoeboxes of gifts to children in need around the world. In 2014, Boardwalk
had Associates volunteer at the Samaritan’s Purse warehouse to prepare these
shoeboxes for travel. In addition, Boardwalk Associates and Resident Members
packed 2,668 shoe boxes, and increase in number from 2013.
To expand our
boundaries by taking an
active role in our global
community.
B O A R D W A L K R E I T / A R 2 0 1 4
G O A L S A N D T A R G E T S
15
THE ENVIRONMENT: To positively impact the environment through sustainable practices.
2014 Targets
2014 Results
2015 Targets
Increase corporate
sustainability by creating
opportunities for positive
environmental change.
✓
✓
In 2014, Boardwalk increased the use of LED lighting and installed
variable frequency drivers in all our large motors, both of which have
allowed us to reduce our energy consumption. Additionally, Boardwalk
has been installing high efficiency boilers, where applicable.
Increase corporate
sustainability by creating
opportunities for positive
environmental change.
Boardwalk has electrically metered over 5,500 suites across its portfolio
in Canada in an effort to continue to make our Residents aware of their
impact on the environment. Additionally, we have installed low-flow
shower heads and toilets, and continue to use paint that is low in VOC.
We also continue to purchase energy star appliances.
To continue to reduce our energy consumption, Boardwalk uses timers
and photocells in outdoor lighting at sites, as well as LED lights in
emergency fixtures.
In an effort to reduce paper usage, Boardwalk continues to ensure that
all Investor materials are available online at www.BoardwalkREIT.com. In
2014, Boardwalk launched a redesign of this site to encourage increased
online usage in the hopes Investors would opt for online versions of
materials, rather than printed versions. Additionally, Boardwalk continues
to use FSC-certified mixed sources paper for our annual reports. Further
to this, Boardwalk continues to offer online options for Residents
and Associates to further reduce the amount of paper the company
consumes.
In addition to our newly redesigned Investor Website, Boardwalk
continues to encourage Investors to register online to receive our Annual
Report and other Investor materials.
CORPORATE GOVERNANCE: To provide fully transparent, on-going corporate information to all stakeholders, meeting or exceeding
the guidelines set out by the TSX regarding effective corporate governance.
2014 Targets
2014 Results
Maintain independence of
the Board.
Strive to continually
improve transparency and
open, honest dialogue with
all Unitholders.
Further enhance
procedures and systems
for the consistent, timely
dissemination of corporate
and industry information.
✓
✓
✓
✓
✓
✓
Currently the Trust has 7 Trustees, 5 of whom are independent.
We provide the public with the opportunity to call in and listen to all
our quarterly conference calls. There is also an audio recording of our
webcasts made available following the teleconference.
Our senior management as well as our dedicated Investor Relations team
are committed to making ourselves available to answer and address
specific Unitholder questions.
In 2014, we continued to see success and improvement with our quarterly
reporting format. With feedback from Stakeholders and the Investment
Community, Boardwalk strives to provide transparent and useful
financial documents.
We provide webcasts of all of our quarterly conference calls to the
public. We also strive to make all of our documents and webcasts easily
accessible. There are links to all of our current and past documents
containing our corporate information on our investor website.
2015 Targets
Maintain independence of
the Board.
Strive to continually
improve transparency and
open, honest dialogue with
all Unitholders.
Further enhance
procedures and systems
for the consistent, timely
dissemination of corporate
and industry information.
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G O A L S A N D T A R G E T S
B O A R D W A L K R E I T / A R 2 0 1 4
UNITHOLDERS: To provide a consistent, sustainable and attractive investment option focused on providing stable monthly cash flow
and increasing overall returns for Unitholders.
2014 Targets
2014 Results
Realize FFO target of $3.25
to $3.45 per Trust Unit.
✓
✓
Boardwalk met its FFO target in 2014, and exceeded the mid-point of its
original FFO expectation for the year, achieving FFO of $3.37 per Trust
Unit for 2014. The Trust continues to update its financial guidance each
quarter, and has provided its 2015 financial guidance
2015 Targets
Realize FFO target of $3.40
to $3.60.
Stabilized Buildings NOI
growth of 1% to 4%.
✓
✓
Stabilized Buildings NOI increased 2.5%, and was within our original
target. The Trust also revises its NOI target each quarter, and has
provided its 2015 NOI guidance.
Stabilized Buildings NOI
growth of -1% to 4%.
Realize a total return on the
REIT units that outperforms
the S&P / TSX Composite
and the S&P / TSX Capped
REIT Indices.
✗ In 2014, Boardwalk Unitholders realized a total return of 9.1% on their REIT
units, compared to the posted return of 10.4% for the S&P / TSX Capped
REIT Indices. The return for Boardwalk and other publicly traded entities
for 2014 were moderated by a decline in REIT Unit Prices in December, a
result of declining Crude Oil Prices.
Realize a total return on the
REIT units that outperforms
the S&P / TSX Composite
and the S&P / TSX Capped
REIT Indices.
Complete performance
enhancing transactions to
maximize Unitholder value.
✓
✓
The S&P TSX Composite index returned a gain of 10.6% and also
outperformed Boardwalk Units in 2014.
In 2014, the Trust increased its FFO/Unit by 5.0% to $3.37/Trust unit by
focusing on organic revenue growth while managing controllable
expenses. The Trust feels this organic growth focus continues to be the
largest opportunity for sustainable growth. The Trust also continued to
renew its maturing mortgages at accretive interest rates given the low
interest rate environment. In addition, the Trust completed a disposition
of its BC Assets and one property located in Edmonton for a total price of
approximately $154 million. A portion of the proceeds were returned to
Unitholders in the form of a Special Distribution of $1.40 per Trust Unit for
Unitholders of Record on December 31, 2014.
Complete performance
enhancing transactions to
maximize Unitholder value.
B O A R D W A L K R E I T / A R 2 0 1 4
G O A L S A N D T A R G E T S
17
A D I S C I P L I N E D A P P R O A C H F O R O U R
UNITHOLDERS
Boardwalk continues to cultivate a diverse portfolio of assets that span across four provinces and consist
of over 220 properties. This continued diversity allows Boardwalk to navigate and adapt to the changing
market conditions that are seen across different regions, as well as to mitigate risks in individual markets.
While Boardwalk is not immune to global market instability, the Trust continues to maintain a strong
financial position with ample liquidity which allows Boardwalk to pursue opportunities as they arise.
The Trust continues to take a disciplined approach with regards to acquisitions, disposi-
tions and development. When considering an acquisition, Boardwalk’s analysis ensures
that any potential acquisitions are accretive under the appropriate conditions. In
recent years, Boardwalk has not seen substantial portfolio growth through acquisitions
because the risk adjusted cost was not in the best interest of the Trust. In 2014, the Trust
completed a disposition of its British Columbia Portfolio and one asset in Edmonton
totalling 735 units for a total price of $153.5 million. Some of the proceeds were used
in recycling capital within the Trust’s organic growth strategy; however a large portion
of the proceeds were returned to Unitholders through a special distribution made to
Unitholders of record on December 31, 2014. Boardwalk successfully completed its first
development project, Spruce Ridge Gardens, and began leasing in December of 2013.
The project was completed on time, and under budget. Boardwalk has embarked on
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O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
its second development project, Pines Edge Estates, located on existing land the Trust
owns in Regina, SK. The project’s completion is targeted for the first quarter of 2016. The
Trust continues to evaluate the viability of other development projects in regions where
Boardwalk currently operates.
13.3%
The Trust was able to sustainably
increase distributions since the
beginning of 2012 by 13.3%.
Organic growth within the Trust’s portfolio remains the largest opportunity for the Trust
to enhance value to Unitholders. The closing of the Trust’s loss-to-lease (the difference
between market rents and the actual rent received) on rents grew to $32 per unit per
month at the end of 2014, and represents nearly $13 million in annualized revenue. As
the Trust continues to maintain high occupancy with rent adjustments and suite specific
incentives as part of its revenue optimization strategy, the closing of this loss-to-lease
represents a significant opportunity for the Trust.
2014 FFO per unit was positive at $3.37 per Trust Unit, a 5.0% increase over the previous
year. The Trust was able to sustainably increase distributions since the beginning of 2012
by 13.3% to provide our Unitholders with $2.04 per Unit on an annualized basis of reg-
ular cash distribution as of December 31, 2014, which represents approximately 61% of
FFO in 2014, and remains one of the most conservative payout ratios among our peers.
In 2014, the Trust approved a special distribution of $1.40 per unit to return capital to
Unitholders. In total, the Trust distributed $106 million in regular distributions and $73
million in special distributions totalling $179 million in 2014.
As interest rates remained low for much of 2014, Boardwalk is pleased to have renewed
approximately $427 million of maturing CMHC mortgage principal. The weighted aver-
age new interest rate on these funds was 2.67% versus the maturing rate of 3.42%, a
significant decrease to Boardwalk’s interest expense. The average term of these renew-
als was over 6 years.
Moving into 2015, interest rates are expected to remain at historically low levels and
present an opportunity for the Trust to continue to reduce the maturing interest rates
on 2015 mortgages. The Trust will continue to proactively monitor interest rate markets,
and has prepared optional forward interest rate fix contracts on a significant number of
mortgage maturities in 2015, should the market change.
Through a disciplined approach, and at the guidance and leadership of the Trust’s sea-
soned management team, Boardwalk continues to be an industry leader with regards to
transparency and financial disclosure. Boardwalk encourages all of our stakeholders to
review our quarterly financial reports as they are an excellent source of information. All
of the Trust’s financial reports can be found on Boardwalk’s recently redesigned website:
www.BoardwalkREIT.com. As seen in these reports, Boardwalk continues to be one of
the few REITs who provide stakeholders with financial guidance on a quarterly basis.
Full transparency allows prospective and current Unitholders the opportunity to fully
evaluate the Trust’s long-term value proposition including, but not limited to, the Trust’s
stable cash distributions, healthy balance sheet, and conservative fiscal management.
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
19
M E E T I N G T H E N E E D S O F B O A R D W A L K ’ S
RESIDENT MEMBERS
Boardwalk continues to take a disciplined approach to meet
Resident Members’ needs and enhance the communities in which
they live. This focus has resulted in increased retention of Resident
Members as we continue to build long lasting relationships.
Boardwalk strives to provide exceptional Customer Service to
their maintenance work, and over 90% were satisfied with their
Resident Members across Canada. To accomplish this, Boardwalk
move in. In addition, Boardwalk continues to monitor the reasons
provides Residents with a Customer Call Centre that is available
why Residents leave their Boardwalk communities. In 2014, turn-
24 hours a day, 7 days a week, and 365 days a year. Residents can
over was down to 12,182, a slight decrease from 12,222 in 2013.
reach the Customer Call Centre by email, telephone, or live chat.
In 2014, the Call Centre received 143,993 phone calls, 21,885 live
chats, and 123,008 emails.
Throughout 2014, Boardwalk continued its Internal Subsidy
Program. This program helps Residents in financial need through
various methods of rent forgiveness, or by withholding a rental
Additionally, Boardwalk provides Residents with 24-hour on
increase. In 2014, Boardwalk had 30 suites in the Internal Subsidy
call maintenance. Boardwalk has also implemented a 72-hour
Program. However, this number fluctuates throughout the year,
Maintenance Guarantee for Residents, which promises all stan-
increasing as needed.
dard maintenance requests, will be completed within 72 hours.
To ensure Boardwalk Residents are consistently satisfied with
Boardwalk service, we conduct an automated telephone survey
for Residents who have just had a maintenance request com-
pleted, or recently moved into a Boardwalk Community. In 2014,
the survey results showed 85% of Residents were satisfied with
In an effort to continue to respond to the changing needs and
priorities of Residents, Boardwalk launched a new design for the
secure Resident website in 2014. The redesign of the website pro-
vides Residents with an easier to use layout, and a website that is
compatible across a variety of different devices. The redesign saw
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O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
the addition of new features for Residents including a newsfeed and an online forum
for Residents to communicate with one another, as well as Boardwalk. These new fea-
In 2014, Boardwalk continued to
tures are added to already existing features that include an online account balance, the
publish its Resident magazine,
ability to receive electronic communications from Boardwalk, and the ability to submit
“Across the Board.”
maintenance requests, to name a few. Since the launch of the redesign, the number of
Residents registered on the website has increased by 45%.
Boardwalk hosts numerous Resident appreciation events across Canada. These events
include barbeques, movie nights, zoo days, sport camps for children, pool parties, as
well as exclusive invites to events such as The Calgary Improv Festival in Calgary, AB,
and The Beatlemania concert in Verdun, QC. Boardwalk finds these appreciation events
create long lasting, positive relationships with our Resident Members, which directly
results in higher Resident retention, as well as creating a better community for Residents
to be a part of.
In 2014, Boardwalk continued to publish its Resident magazine, “Across the Board.” The
magazine is published three times a year, and features an increasing number of stories
contributed by Residents. The magazine is also made available online on the Resident
website, but an increasing amount of Residents are requesting paper copies to read.
While Boardwalk has spent a considerable amount of time and effort to create a sense
of community within each Boardwalk building, the Resident magazine allows us the
opportunity to extend that sense of community and unite Boardwalk Residents across
Canada.
To continue to strengthen our relationship with our Residents, Boardwalk invites
Resident Members to accompany Associates on trips to Tijuana, Mexico, with Youth with
a Mission (YWAM). In 2014, five residents were able to attend these trips, all expenses
paid, to work alongside Boardwalk Associates and build seven houses for families
in need in Tijuana, Mexico. Boardwalk continues to receive positive feedback from
Residents who have attended these trips, saying it allows them to see a different side of
the landlord/tenant relationship, and how much they enjoy getting to know some of the
hardworking Associates at Boardwalk.
Aligning with Boardwalk’s goal to build better communities, and its Golden Mission, to
Have Fun, Boardwalk hosted the third annual Monopoly Tournament for Residents in
Regina, SK. Once again, Residents from across the region competed against one another
for a chance to play against a Boardwalk representative in the final. The winner of the
tournament received six months of free rent, second place received one month of free
rent, and the Resident in third place received an iPad. This Tournament continues to be
the source of an abundance of positive feedback from Residents, as well as an opportu-
nity for Residents to connect and get to know one another.
Over the past years, Boardwalk has focused on creating new and innovative ways to
connect with our Residents and make them proud to call Boardwalk home. These efforts
have been tremendously successful in recent years as we continue to hear positive
comments from our Residents and see an increase in our Resident retention. Boardwalk
plans to continue these efforts in 2015.
Monopoly Tournament Winners
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
21
B O A R D W A L K ’ S T E A M O F D E D I C A T E D
ASSOCIATES
We believe our past, present and future success is, and will be, driven by our team
of 1,500 Associates. Boardwalk takes a disciplined approach towards Associate
recruitment, ensuring our Associates are dedicated to Boardwalk’s Community and
Customer Service culture. The result is a team committed to Boardwalk’s vision of
building better communities.
Operating in four provinces, Boardwalk provides every Associate timely access to neces-
sary information. To accomplish this, Boardwalk has implemented an internal commu-
nication strategy that aims to ensure its team remains informed about updated policies
and procedures through the use of multiple information vehicles. Firstly, the Boardwalk
“Bistro” intranet is a secure and frequently updated website. Associates are able to visit
the intranet from anywhere, at any time, and obtain updates on Boardwalk’s Health and
Safety Program, Human Resources information, and an update on Boardwalk current
events across Canada. Secondly, Boardwalk publishes the “Community Chest”, an inter-
nally distributed quarterly magazine. “Community Chest” features similar information
to the intranet, but also offers the opportunity for Associates to contribute their own
stories. The Community Chest also features spotlights on Associates while also provid-
ing d access to up-to-date Boardwalk financial information. Finally, Boardwalk continues
to host annual TEAM luncheons for our Associates. Boardwalk’s Executive team travels
to each city where Boardwalk operates and provides focused updates on Boardwalk’s
corporate strategy to our Associates.
22
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
Boardwalk works towards supporting Associates in various ways. In each Region
Boardwalk operates, there is an internal committee with the sole purpose of raising
funds to provide gifts of hope to Associates and their families during a time of need.
Boardwalk matches 100% of the funds raised for this program. Associates are eligible to
receive these gifts when they are nominated by one of their peers.
Boardwalk aims to provide Associates with a rewarding place to work, with a focus on
work-life balance and competitive compensation packages. Boardwalk conducts mar-
ket research to ensure that total compensation packages are in line with competitors.
Further, our Profit Share Program and a High Potential program reward Associates who
consistently perform above expectations. Boardwalk recognizes the continued impor-
tance of Associate development. To promote continued learning and growth, Boardwalk
invests in Associate training and development. In 2014, Boardwalk invested over
$100,000 towards tuition fees, books, and professional membership fees, for Associates.
Boardwalk continues to offer Associates a great benefits package. Benefits include an
RRSP Match Program, where Associates can opt to have a percentage of their salary go
directly into an RRSP. Boardwalk will match these contributions based on the length
of an Associate’s employment. In 2014, Boardwalk contributed over $2 million to the
RRSP Match program. Throughout 2014, Boardwalk extended its already comprehen-
sive Associates benefits package to include new items such as the Mission Sponsorship
which encourages Associates to do charitable work in local and global communities
for an extended period of time while receiving financial support for the mission from
Boardwalk. Additionally, Boardwalk’s group benefits plan eligibility requirements have
been changed from a waiting period of six months to three months =- a positive for our
newest team members. Over the course of 2014, Boardwalk invested over $2 million in
comprehensive group benefits.
Over the course of 2014, Boardwalk continued to offer the Chairman’s Scholarship to the
children of Boardwalk Associates. In 2014, 24 students were provided a combined total of
over $90,000 towards their post-secondary education. Additionally, Boardwalk provided
the second installment of the scholarship to 11 of the 2013 recipients, representing an
additional $50,000.
Chairman’s Scholarship Recipients
Student
Associate
City
Katelyn Battle
Wanda Battle
Edmonton
Kassandra Bautista
Abelardo Bautista
Edmonton
Boyd Belisle
Marcel Bella
Calgary
Red Deer
Pacita Caponpon
Calgary
Liam Belisle
Brendan Bella
Anita Linares
Martin Brisson
Brett Dietterle
Student
Brock Mix
Erin Reiman
Sarah Reiman
Nicole Smith
Sera Sajeev
Associate
Helen Mix
Dean Reiman
Dean Reiman
Maureen Smith
City
Airdrie
Calgary
Calgary
Regina
Sajeev Thomas
Edmonton
Kristine Dault
St-Jean-Sur-Richelieu
Eugini Tolentino
Filomeno Tolentino
Edmonton
Norman Dietterle
Calgary
Naomi Gallardo
Imelda Gallardo
Edmonton
Carissa Delorme
Sasha Guido
Alec Wu
Tracy Guo
Calgary
Calgary
Holly Zwicker
Olivier Cabana
Jordann Trudel
Jack Zwicker
Aylmer
Helene Thomas
Montreal
Daniel Trudel
Verdun
Jessika Denault
Donald Denault
St Constant
Ravindu Karunathilake
Jay Karunathilaka
Edmonton
Lisa Massa
Lorenzo Massa
Laval
Jhon Mapalo
Wilfredo Mapalo
Edmonton
Rodolfo Guevera Rojas
Rene Guevera
Red Deer
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
23
Boardwalk also encourages Associates to give back to their communities. The Company
Matched Charitable Deduction Program offers Associates the opportunity to dedicate
a certain portion of their salary to a specific charity. Boardwalk will then match these
donations, up to $1,000 per Associate, per year. In 2014, Boardwalk donated over
$29,700 to charities on behalf of Associates.
Boardwalk continues to search for ways to recognize outstanding Associates. In 2014,
Boardwalk continued to award Associates with Foundation of Excellence and Leader of
Excellence Awards. These awards are peer nominated, and given to Associates who con-
tinually go above and beyond. In 2014, Boardwalk was pleased to present 11 Associates
with Foundation of Excellence awards, and one Associate with a Leader of Excellence
award. Boardwalk also recognized 340 Associates with Bravos for receiving compliments
from Residents at the Customer Call Centre.
The results of Boardwalk’s continued effort to create a healthy, safe, and happy work
environment for Associates are evident in Associate retention. Of Boardwalk’s team of
over 1,500 Associates, 25% have been with Boardwalk between five and ten years, and
22% between ten to 25 years. In 2014, Boardwalk’s Associate turnover was 16.62%, a
slight decline from the previous year.
Boardwalk continues to focus on creating better communities, both where our Residents
live, and where our Associates work. In 2014, Boardwalk continued its focus on building
and sustaining a strong Boardwalk community for Associates to work in. Boardwalk’s
goal is to provide a place of employment Associates are proud and motivated to go to
each day. The efforts will carry through into 2015 as we as a team continue to grow and
support the Boardwalk family.
24
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
HEALTH A N D SAFETY
Boardwalk continues to ensure Associates have a healthy
and safe work environment. Boardwalk continued the Zero
Injury Campaign in 2014. The Campaign goal is to eliminate all
workplace injuries and illnesses, and in 2014, Boardwalk had
183 sites remain injury free for the entire year. These sites are
recognized for this accomplishment in the “Community Chest”,
the “Bistro”, and at the annual TEAM luncheons with the Executive
team. Further to this, Associates continue to have a Health
and Safety objective on their performance reviews in order to
reinforce the importance of workplace safety.
In 2014, Boardwalk conducted an external Health and Safety audit. This audit resulted
in a score of 97%. While Boardwalk was pleased to receive such a high score, we con-
tinue to look for ways to improve. The final report provided advice and suggestions for
further improvement that Boardwalk will work to implement in 2015. Further to this
audit, Boardwalk added a Workplace Violence Risk Assessment to the Health and Safety
Program in 2014, and continues to ensure the program is in compliance with the most
recent legislation.
One of the challenges our Health and Safety Program faces is Boardwalk has over
1,500 Associates who are located across Canada. To ensure Boardwalk’s Health and
Safety Program is successful, the Health and Safety Program is communicated to each
and every Associate. In an effort to accomplish this, Boardwalk had a dedicated page
to Health and Safety on the “Bistro”, with an abundance of information along with the
necessary forms for Associates to access at any time, from any place. Additionally, each
quarterly distribution of the “Community Chest” includes valuable Health and Safety
information, including updates to the program, including advice for creating a safer
work environment. Finally, Health and Safety is always included in the presentation at
the annual TEAM luncheons, where we continue to emphasize the importance of Health
and Safety to each of Boardwalk’s team members.
Boardwalk has the following programs in place to ensure our Associates receive the
appropriate training and education, allowing them to work in a safe manner.
Health and Safety Programs
Asbestos Management Plan
Associate Training
Bed Bugs
Bodily Fluids & Dead Animal Cleanup
Chainsaw Safety
Communication
Company Vehicle Safety
Confined Spaces
Electrical Safety
Emergency Response
Environmental Policy
Fall Protection
Firearms / Weapons Found on Site
First Aid
Forklift Safety
Hazard Detection Program
Hazardous Materials, Storage and Disposal
Housekeeping
Incident Reporting
Indoor Air Quality
Job Hazard Analysis
Joint Health & Safety Committee
Ladder Safety
Lockout and Tagging
Material Safety Data Sheets (MSDS)
Modified Duties
Monthly Site Safety Inspections
Mould Remediation
Needle / Syringe Safety
Noise Exposure & Hearing Conservation
Office Ergonomics
Pandemic Response
Personal Protective Equipment
Pesticides
Pool Safety
Power Tool Safety
Respirator Code of Practice
Right to Refuse Unsafe Work
Safety Infractions
Site Safety Meetings
Slip, Trip & Fall
Snow Shoveling
Sun & Heat Protection
Transportation of Dangerous Goods
Visitor Policy
Workplace Hazardous Materials
Information Systems (WHMIS)
Working Alone
Workplace Violence
Zero Injury Campaign
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
25
B U I L D I N G B E T T E R
COMMUNITY
Boardwalk continued its community focus in 2014. This focus includes a disciplined
approach to creating, and developing strong and sustainable Boardwalk communities.
Boardwalk continues to encourage Associates and Resident Members to get involved
in their local and global communities, working together to affect change. Boardwalk
believes the continued focus on building better communities has created positive results
for all Stakeholders, including, Resident Members, Associates, and Unitholders.
Boardwalk continues to create innovative ways to engage
Associates and Resident Members in community development.
In 2014, Boardwalk continued the Boardwalk Angels Program
which recognizes Resident Members who have participated in
charitable programs and initiatives. We are currently recognizing
over 100 sites for multiple engagements in the program.
Additionally, Boardwalk hosted the annual Week of Caring in
December of 2014. Over the course of this week, Boardwalk
provides Associates the opportunity to volunteer for up to four
paid work hours. In 2014, we had over 425 Associates volunteer
for over 1,460 hours. Boardwalk also encouraged both Resident
Members and Associates to participate in Operation Christmas
Feed the Hungry
Child through Samaritans Purse. Together, Boardwalk packed
over 2,600 shoeboxes of gifts for children in need around the
world.
Boardwalk remained involved with Homes of Hope in 2014, and
sponsored three trips to Tijuana, Mexico. Over the course of these
three trips, Boardwalk brought 105 Associates and 5 Resident
Members to Tijuana, Mexico, to build seven homes for families
in need. Boardwalk plans to continue these trips in 2015 as they
provide Boardwalk Associates across Canada the opportunity to
team build, as well as to build long term relationships with our
Resident Members. We find these trips are excellent team build-
ing activities and help us work towards building better global
communities.
Throughout 2014, Boardwalk sponsored numerous different
community initiatives. 2014 was the third consecutive year
Boardwalk sponsored We Day Alberta. We Day is an event
Walk for Wellspring
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O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
Homes of Hope, Tijuana, Mexico
Windsor Heart and Stroke Big Bike Ride
focused on empowering youth as the leaders of tomorrow. Through this sponsorship,
Boardwalk was able to bring Resident Members to the We Day Alberta event, along
with 12 students from a local school who would have otherwise been unable to attend.
Additionally, during We Day, Boardwalk hosted a Twitter contest that required partici-
pants in the audience of 20,000 students to tweet how they have done good this year.
The winner received $500 to the charity of her choice, which was, the Sheldon Kennedy
Child Advocacy Centre.
In 2014, Boardwalk launched a new sponsorship at the University of Alberta in Edmonton,
AB. The sponsorship was for the Community Service Learning Program. The sponsorship
created the Boardwalk Building Better Communities Change and Learning Grant for
$10,000. Students at the university were challenged to create community improvement
programs, of which, two were selected and funded. Two projects were selected: 1)
Summer camps for immigrant youths to adapt to Canada, and, 2) A published book of
senior stories to be used in plays by a senior acting troupe out of Edmonton.
Throughout 2014, Boardwalk also sponsored numerous youth programs, including a
YMCA Youth Leadership Program, Calgary Police Services Youthlink, Windsor Youth
Volunteer Program, and University of Alberta’s Sport Activity Camps for Youth, to name
a few. Additionally in 2014, Boardwalk began a sponsorship at the Calgary Women’s
Emergency Shelter to house a family for one month, as well as to rebuild the Shelter’s
security fence and garbage enclosure.
In an effort to create better communities, Boardwalk contributes units of affordable
housing to individuals in need. Across the entire Boardwalk portfolio, over 1,000 units
of affordable housing is provided in partnership with various organizations, including
Calgary Housing Company, Housing First, Accessible Housing, Red Deer Housing, and
London Housing Company. In addition to these units, through various partnerships,
Boardwalk also provides in-kind donations totaling over $1.1 million. To help the
Residents in financial need in Boardwalk communities, Boardwalk continued its Internal
Subsidy Program in 2014.
Finally, to continue to encourage our Associates to give back to communities, the
Charitable Match Program remained in place at Boardwalk in 2014. This program gives
Associates the opportunity to direct a portion of their salary to a specific charity. Of this
donation, Boardwalk will match up to $1,000 per Associate, per year. In 2014, Boardwalk
Samaritans Purse, Operation Christmas Child
Hockey Helps the Homeless
donated over $29,700 on behalf of Associates.
We Day Winner
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
27
ENVIRONMENT A N D SUSTAINABILITY
Boardwalk takes a disciplined approach with regards to creating
value for Unitholders, Associates, Resident Members, and
Communities and ensures this is accomplished in a way that is
both financially and environmentally sustainable.
Part of Boardwalk’s commitment to the environment is continuing to make Residents
aware of their individual impact. As a result, Boardwalk has over 5,500 units that are
Boardwalk continues to decrease
electrically sub-metered, all of which meet the Canada Measurement Certification
the impact we, as a company, have
Requirements. Further, through the implementation of the secure Resident website,
on the environment.
Boardwalk has been able to decrease the amount of paper materials distributed to
Residents, as they are opting to have Boardwalk correspondence delivered electronically.
In addition to making Residents aware of their impact on the environment, Boardwalk
continues to decrease the impact we, as a company, have on the environment. This
is accomplished by installing low flow shower heads and toilets, and energy efficient
fixtures, the purchase of energy star appliances, and use of low VOC paint. Boardwalk
also uses timers and photocells for outdoor lighting to ensure lights do not stay on
longer than necessary, and we are increasing the use of LED lighting as well as installing
variable frequency drives on all of our large motors. These efforts have had a positive
effect on reducing our energy consumption. Boardwalk is also installing high efficiency
boilers, where applicable. Boardwalk continues to participate in ongoing capital proj-
ects that benefit efficiency, which include attic insulation, ventilation upgrades, roof
28
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
replacements, building envelope upgrades, siding upgrades, and window replace-
ments, all of which are having a tremendous impact in lowering the amount of energy
The continued financial stability
of Boardwalk allows us to provide
value to our Unitholders, a
healthy work environment for
our Associates, a place to call
home for our Residents, and the
opportunity to build better local
and global communities.
Boardwalk consumes.
Throughout Boardwalk offices across Canada, Associates continue to be encouraged to
shut off their lights and computers at the end of each day, over weekends, and while on
vacation. Boardwalk also offers recycling programs at all offices for items such as card-
board, paper, plastic, and computer and printer parts. In addition, Boardwalk continues
to ensure that materials are available online for Residents, Associates, and Unitholders,
all in an effort to reduce the amount of paper printing we do.
In addition to monitoring its impact on the environment via day-to-day operations,
Boardwalk strives to be a sustainable company from a social and financial perspective.
Boardwalk continues to make efforts to be a positive force in communities and work
towards finding solutions for social issues. This includes initiatives such as offering
affordable housing and partnering with organizations across Canada to help end
homelessness. In 2014, Boardwalk sponsored, and became directly involved in, many
youth programs to help fight social issues early in an individual’s life. Of course, we also
continued our trips to Tijuana, Mexico, to help impact the global community. In 2015,
Boardwalk will continue to support social issues currently facing our communities, and
to positively affect the world around us. These efforts continue to be largely driven by
our Associates. Boardwalk provides our Associates with opportunities to create change
in local and global communities. We continue to be pleased and impressed by how our
Associates have embraced these opportunities, and as a company we are now extend-
ing this empowerment to our Residents as well.
Boardwalk’s continued financial sustainability is driven by the Trust’s Board of Directors,
Management Team, and our Stakeholders. With the valued input and guidance from
each of these groups, Boardwalk continues to maintain a strong balance sheet and
continues its conservative fiscal management. Boardwalk continues to take measures
to ensure the continued financial sustainability of the company for all Stakeholders
involved. The continued financial stability of Boardwalk allows us to provide value to our
Unitholders, a healthy work environment for our Associates, a place to call home for our
Residents, and the opportunity to build better local and global communities.
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
29
B O A R D W A L K R E I T
PORTFOLIO SUMMARY
30
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
Property Name
CALGARY, AB
Beltline Towers
Boardwalk Heights
Brentview Towers
Centre Pointe West
Chateau
Elbow Tower
Flintridge Place
Glamorgan Manor
Hillside Estates
Lakeside Estates
Lakeview
McKinnon Court
McKinnon Manor
Northwest Pointe
Oak Hill Estates
O’Neil Tower
Patrician Village
Pineridge
Prominence Place Apts.
Radisson Village I
Radisson Village II
Radisson Village III
Ridgeview Gardens
Royal Park Plaza
Russet Court
Sarcee Trail Place
Skygate Tower
Spruce Ridge Estates
Spruce Ridge Gardens
Travois
Varsity Place
Varsity Square
Vista Gardens
Westwinds Village
Willow Park Gardens
EDMONTON, AB
Alexander Plaza
Aspen Court
Boardwalk Arms A
Boardwalk Centre
Boardwalk Villages
Breton Manor
Briarwynd Court
Brookside Terrace
Cambrian Place
Building
Type
# Suites
Net
Rentable
Sq. Ft.
Average
Unit Size
Property Name
Building
Type
# Suites
Net
Rentable
Sq. Ft.
Average
Unit Size
EDMONTON, AB (continued)
Highrise
Highrise
Highrise
Midrise
Highrise
Highrise
Midrise
Walk-Up
Walk-Up
Walk-Up
Walkup
Walk-Up
Walk-Up
Walk-Up
Townhouse
Highrise
Walk-Up
Lowrise
Walk-Up
TH & WU
TH & WU
Townhouse
Townhouse
Highrise
Garden
HR & MR
Highrise
Walk-Up
Walk-Up
Walk-Up
Walk-up
MR & LR
Townhouse
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Highrise
Townhouse
Walk-Up
TH & WU
TH & WU
Walk-Up
115
202
239
123
145
158
68
86
76
89
120
48
60
150
240
187
392
76
75
124
124
118
160
86
206
376
142
284
109
89
70
297
100
180
66
5,180
252
80
78
597
255
66
172
131
105
80,424
160,894
151,440
110,611
110,545
108,280
55,023
63,510
58,900
77,732
107,680
36,540
43,740
102,750
236,040
131,281
295,600
52,275
55,920
108,269
108,015
124,379
151,080
66,137
213,264
301,720
113,350
196,464
86,351
61,350
47,090
241,128
121,040
137,815
44,563
4,161,200
203,740
68,680
64,340
471,871
258,150
57,760
144,896
196,779
105,008
699
797
634
899
762
685
809
738
775
873
897
761
729
685
984
702
754
688
746
873
871
1,054
944
769
1,035
802
798
692
792
689
673
812
1,210
766
675
803
808
859
825
790
1,012
875
842
1,502
1,000
Camelot
Capital View Tower
Carmen
Castle Court
Castleridge Estates
Cedarville
Christopher Arms
Corian
Deville
Ermineskin Place
Fairmont Village
Fontana Place
Fort Garry House
Galbraith House
Garden Oaks
Granville Square
Greentree Village
Habitat Village
Imperial Tower
Kew Place
Lansdowne Park
Leewood Village
Lord Byron Towers
Lord Byron Townhouses
Lorelei House
Maple Gardens
Marlborough Manor
Maureen Manor
Meadowside Estates
Meadowview Manor
Monterey Pointe
Morningside Estates
Northridge Estates
Oak Tower
Parkside Tower
Parkview Estates
Pembroke Estates
Pinetree Village
Point West Townhouses
Primrose Lane
Prominence Place
Redwood Court
Riverview Manor
Royal Heights
Sandstone Pointe
Sir William Place
Solano House
Southgate Tower
Walk-Up
Highrise
Walk-Up
Walk-Up
Townhouse
Walk-Up
Lowrise
Garden
Highrise
Highrise
Walk-Up
Lowrise
Highrise
Highrise
Garden
Townhouse
Walk-Up
Townhouse
Highrise
Walk-Up
Midrise
Walk-Up
Highrise
Townhouse
Walk-Up
Walk-Up
Walk-Up
Highrise
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Highrise
Highrise
Townhouse
Walk-Up
Walk-Up
Townhouse
Walk-Up
Highrise
Lowrise
Highrise
Highrise
Walk-Up
HR & WU
Highrise
Highrise
64
115
64
89
108
144
45
153
66
226
424
62
93
163
56
48
192
151
138
108
62
142
158
147
78
181
56
91
148
348
104
222
180
70
179
104
198
142
69
153
91
116
81
74
81
220
91
170
54,625
71,281
54,625
93,950
124,524
122,120
29,900
167,400
47,700
181,788
362,184
40,820
70,950
110,400
47,250
53,376
156,000
129,256
112,050
105,776
48,473
129,375
133,994
172,369
65,870
163,840
49,582
64,918
104,036
284,490
83,548
166,315
103,270
51,852
162,049
88,432
198,360
106,740
72,810
151,310
73,310
107,680
62,092
41,550
83,800
126,940
79,325
153,385
854
620
854
1,056
1,153
848
664
1,094
723
804
854
658
763
677
844
1,112
813
856
812
979
782
911
848
1,173
844
905
885
713
703
818
803
749
574
741
905
850
1,002
752
1,055
989
806
928
767
561
1,035
577
872
902
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
31
Property Name
Building
Type
# Suites
Net
Rentable
Sq. Ft.
Average
Unit Size
Property Name
Building
Type
# Suites
Net
Rentable
Sq. Ft.
Average
Unit Size
LONDON, ON
Abbey Estates
Castlegrove Estates
Forest City Estates
Heritage Square
Landmark Towers
Maple Ridge On The Parc
Meadowcrest
Noel Meadows
Ridgewood Estates
Sandford
The Bristol
Topping Lane Terrace
Villages of Hyde Park
Westmount Ridge
MONTREAL , QC
Domaine d’Iberville
Le Bienville
Les Jardins Viva
Nuns’ Island Portfolio
Complexe Deguire
Le Quatre Cent
QUEBEC CIT Y, QC
Complexe Laudance
Appartements Du Verdier
Les Jardins de Merici
Place Charlesbourg
Place du Parc
Place Samuel de Champlain
Place Chamonix
Townhouse
Lowrise
Highrise
MR & WU
Highrise
Highrise
Walk-Up
Walk-Up
Townhouse
Walk-Up
Highrise
Midrise
Townhouse
Midrise
Highrise
Walk-up
Walk-up
HR, WU & TH
Highrise
Highrise
Midrise
Walk-Up
Highrise
Midrise
Midrise
Highrise
Townhouse
53
144
272
359
213
257
162
105
29
96
138
189
60
179
2,256
720
168
112
3,100
322
259
4,681
183
195
346
108
111
130
246
1,319
59,794
126,420
221,000
270,828
173,400
247,166
110,835
72,600
31,020
77,594
109,059
177,880
57,850
131,700
1,867,146
560,880
115,600
91,000
3,075,140
276,324
153,500
4,272,444
134,480
152,645
300,000
82,624
81,746
104,153
236,630
1,092,278
1,128
878
813
754
814
962
684
691
1,070
808
790
941
964
736
828
779
688
813
992
858
593
913
735
783
867
765
736
801
962
828
EDMONTON, AB (continued)
Summerlea Place
Suncourt Place
Tamarack East & West
Terrace Garden Estates
Terrace Tower
The Palisades
The Westmount
Tower Hill
Tower On The Hill
Valley Ridge Tower
Victorian Arms
Viking Arms
Village Plaza
Warwick
West Edmonton Court
West Edmonton Village
Westborough Court
Westbrook Estates
Westmoreland
Westridge Estates B
Westridge Estates C
Westridge Manor
Westwinds of Summerlea
Whitehall Square
Wimbledon
Garden
Walk-Up
Garden
Walk-Up
Highrise
Highrise
Highrise
Highrise
Highrise
Highrise
Walk-Up
Highrise
Townhouse
Walk-Up
Walk-Up
HR, WU & TH
Walk-Up
Walk-Up
Lowrise
Lowrise
Lowrise
Garden
Garden
HR & WU
Highrise
FORT MCMURR AY, AB
Birchwood Manor
Chanteclair
Edelweiss Terrace
Heatherton
Hillside Manor
Mallard Arms
McMurray Manor
The Granada
The Valencia
RED DEER, AB
Canyon Pointe
Cloverhill Terrace
Inglewood Terrace
Parke Avenue Square
Riverbend Village
Saratoga Tower
Taylor Heights
Watson Tower
Westridge Estates
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Lowrise
Walk-Up
Walk-Up
Walk-Up
Midrise
Lowrise
Walk-up
Walk-Up
Midrise
Walk-Up
Midrise
Townhouse
39
62
132
114
84
94
133
82
100
49
96
240
68
60
82
1,176
60
172
56
91
90
64
48
598
165
11,956
43,297
55,144
212,486
101,980
66,000
77,200
124,825
46,360
85,008
30,546
91,524
257,410
65,280
49,092
73,209
1,138,368
50,250
148,616
45,865
56,950
56,950
69,038
53,872
545,934
117,216
10,499,334
24
79
32
23
30
36
44
44
40
352
163
120
68
88
150
48
140
50
112
939
18,120
68,138
27,226
16,750
21,248
30,497
30,350
35,775
33,850
281,954
114,039
102,225
42,407
87,268
114,750
53,762
103,512
43,988
113,664
775,615
1,110
889
1,610
895
786
821
939
565
850
623
953
1,073
960
818
893
968
838
864
819
626
633
1,079
1,122
913
710
878
755
863
851
728
708
847
690
813
846
801
700
852
624
992
765
1,120
739
880
1,015
826
32
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
Property Name
REGINA, SK
Ashok Portfolio
Boardwalk Estates
Boardwalk Manor
Centennial South
Centennial West
Eastside Estates
Evergreen Estates
Grace Manors
Greenbriar
Lockwood Arms
Pines of Normanview
Qu’appelle Village I & II
Qu’appelle Village III
Southpointe Plaza
The Meadows
Wascana Park Estates
SASK ATOON, SK
Carlton Tower
Chancellor Gate
Dorchester Tower
Heritage Townhomes
Lawson Village
Meadow Park Estates
Palace Gates
Penthouse
Regal Towers
Reid Park Estates
St. Charles Place
St. James Place
Stonebridge
Stonebridge Townhomes
Wildwood Ways B
Building
Type
# Suites
Net
Rentable
Sq. Ft.
Average
Unit Size
Walk-Up
Walk-Up
Walk-Up
Garden
Garden
Townhouse
Walk-Up
Townhouse
Walk-Up
Walk-Up
Garden
TH & WU
Walk-Up
Midrise
Townhouse
Townhouse
Highrise
Walk-Up
Highrise
Townhouse
Walk-Up
Townhouse
Walk-Up
Lowrise
Highrise
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Townhouse
Walk-Up
140
665
72
170
60
150
150
72
72
96
133
154
180
140
52
316
2,622
158
138
52
104
96
200
206
82
161
179
156
140
162
100
54
1,988
81,098
467,696
60,360
129,080
46,032
167,550
125,660
69,120
57,600
69,000
115,973
133,200
144,160
117,560
57,824
307,200
2,149,113
155,138
126,396
48,608
99,840
75,441
192,000
142,525
61,550
122,384
128,700
123,000
105,750
131,864
135,486
43,961
1,692,643
579
703
838
759
767
1,117
838
960
800
719
872
865
801
840
1,112
972
820
982
916
935
960
786
960
692
751
760
719
788
755
814
1,355
814
851
Property Name
WINDSOR, ON
Anchorage
Anchorage on the Park
Askin Tower
Buckingham Tower
Caron Tower
Empress Court
Frances Tower
Glenwood
Janisse Tower
Karita Tower
Lauzon Tower
Marine Court
Randal Court
Regency Colonade
Riverdale Manor
Rivershore Tower
Sandilands Tower
Sandwich Tower
Seaway Tower
Sun Crest Tower
Sun Ray Manor
Tecumseh Terrace
University Tower
Building
Type
# Suites
Net
Rentable
Sq. Ft.
Average
Unit Size
Highrise
Townhouse
Midrise
Midrise
Midrise
Walk-Up
Midrise
Midrise
Midrise
Midrise
Highrise
Midrise
Walk-Up
Highrise
Walk-up
Highrise
Midrise
Midrise
Highrise
Midrise
Midrise
Midrise
Midrise
135
31
60
34
47
40
53
33
75
41
178
68
47
133
97
96
47
66
152
58
41
98
50
1,680
110,245
38,750
39,675
30,805
36,947
28,250
43,906
25,619
45,000
28,950
137,784
49,206
38,775
113,205
77,850
63,300
38,775
40,650
112,037
43,100
29,950
71,606
36,100
1,280,485
817
1,250
661
906
786
706
828
776
600
706
774
724
825
851
803
659
825
616
737
743
730
731
722
762
OTHER
Boardwalk Park Estates I
Boardwalk Park Estates II
(Grande Prairie, AB)
Prairie Sunrise
(Grande Prairie, AB)
Elk Valley Estates (Banff, AB)
Tower Lane Terrace (Airdrie, AB)
Springwood Place
(Spruce Grove, AB)
Sturgeon Point Villas
(St. Albert, AB)
Kings Tower (Kitchener, ON)
Westheights Place
(Kitchener, ON)
TH & WU
369
306,850
832
Townhouse
32
30,210
944
HR & WU
Walk-Up
Walk-Up
244
76
163
201,992
53,340
130,920
828
702
803
Lowrise
160
122,640
767
Walk-up
Highrise
Midrise
280
226
284,953
171,100
103
1,653
91,920
1,393,925
1,018
757
892
843
Total – As at Dec 31, 2014
34,626
29,466,136
851
Total – As at Dec 31, 2013
35,386
30,022,352
848
B O A R D W A L K R E I T / A R 2 0 1 4
O P E R A T I O N S R E V I E W
33
G O O D C O R P O R A T E
GOVERNANCE
One of Boardwalk’s corporate values is integrity.
▲
Reviewing, discussing and approving the Trust’s strategic
Accordingly, we pride ourselves on striving to be
honest, accountable and transparent in all of our
plan, which takes into account, among other things, the
opportunities and risks of the business.
corporate reporting. As a result of our commitment to
integrity, good corporate governance has been the foundation of
▲
Identifying the principal risks of the Trust’s business, and
ensuring implementation of appropriate systems to man-
all of Boardwalk’s successes over the past 31 years. We were proud
age those risks. (Among other things, the Board reviews risk
to be recognized by The Journal of the Institute of Corporate
management policies and processes, including those con-
Directors for effective communication regarding our transition
cerning credit risk, market risk, liquidity risk and operational
to International Financial Reporting Standards (IFRS). We aim to
risk.)
provide our stakeholders with important information in a timely
manner, and encourage open and honest dialogue between,
and with, our stakeholders in an effort to ensure Boardwalk’s
continued success. Our Board of Trustees follows a mandate
described in their Statement of Corporate Governance Practices
that explicitly defines the expectations and limits of both the
▲
Reviewing the performance of the CEO and other senior
executives of the Trust.
▲
Creating and maintaining the communication policy of the
Trust, including
Board and management. This comprehensive statement of our
–
Approving the contents of major disclosure documents
governance principles gives authority and autonomy to the
of the Trust.
Board through the articulation of key issues, including: specific
functions of the Board, Board independence and integrity,
selection and composition of the Board, and Board committees.
As a publicly traded Trust listed on the Toronto Stock Exchange
(TSX), Boardwalk either meets or exceeds the guidelines set out by
the TSX and Canadian Securities Administrators regarding effec-
tive corporate governance. The governance of our Trust is based
on the mandate of our Board of Trustees, our Code of Business
Conduct, as well as the guiding Mission, Vision and Values that all
Associates and management are expected to uphold. These guid-
ing principles, derived from the Golden Rule of “treating others as
we would like to be treated,” provide a framework for our Trustees
and Associates as they deal with the often complex and sensitive
issues that arise over the normal course of our business.
As per the mandate, a majority of Trustees must be independent
of management and free from any business or other relationship
which could, or could reasonably be perceived to, materially
interfere with the Trustee’s ability to act with a view to the best
interests of the Trust and its Unitholders. Currently, five (5) of the
seven (7) Board members are independent. In addition to assum-
ing responsibility for the stewardship of the Trust, Boardwalk’s
Board is specifically charged with:
–
Reviewing policies and programs related to the image
of the Trust and ensuring appropriate processes are in
place for communicating with all stakeholders.
–
Reviewing how the Trust communicates and interacts
with analysts and the public to avoid selective disclosure.
▲
Managing the integrity of internal controls and manage-
ment information systems.
In addition to its other accountabilities, the Board is responsible
for two committees, the Compensation, Governance and
Nominations Committee, as well as the Audit and Risk
Management Committee, each of which is composed solely
of outside and
independent Trustees. The Compensation,
Governance and Nominations Committee
is charged with
the responsibilities of identifying and evaluating candidates
to fill Board vacancies, and assessing Board and committee
effectiveness. The Audit and Risk Management Committee assists
the Board in overseeing the integrity of the Board’s financial
statements, the performance of the Trust’s external auditors, the
adequacy and effectiveness of internal controls and compliance
with legal and regulatory matters.
34
O P E R A T I O N S R E V I E W
B O A R D W A L K R E I T / A R 2 0 1 4
Financial Review
ManageMent’s Discussion anD analysis
Financial stateMents
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
▲ Management’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
▲ Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
▲
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . 91
Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
MD&A Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
▲ Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
▲ Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 96
Values, Vision and Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
su ppleMental inForMation
▲ Five Year Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
▲ Quarterly Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
▲ Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
▲ Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Investment Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Hedging Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Performance Review Of 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
▲ Consolidated Operations and Earnings Review . . . . . . 48
Overall Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Segmented Operational Review . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Operational Sensitivities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Stabilized Property Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Financing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Other Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
▲ Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Review of Consolidated Statements of Cash Flows . . . . . . . . . . . 59
Review of Consolidated Statements of Financial Position . . . . .62
Capital Structure and Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
▲ Risks and Risk Management . . . . . . . . . . . . . . . . . . . . . . . . 68
General Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Specific Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Certain Tax Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Risks Associated with Disclosure Controls and Procedures
& Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . 75
▲ Accounting and Control Matters . . . . . . . . . . . . . . . . . . . . 75
Critical Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Application of New and Revised IFRSs and Future
Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
International Financial Reporting Standards (“IFRS”} . . . . . . . . . .87
▲ 2015 Financial Outlook and Market Guidance . . . . . . . 88
Selected Consolidated Financial Information . . . . . . . . . . . . . . . .89
B O A R Dw A L k R E I T / A R 2 0 1 4
F I N A N C I A l R E v I E w
35
ManageMent’s Discussion anD analysis
For the Year Ended December 31, 2014
ForwarD-looking stateMents
Caution regarding forward-looking statements:
The terms “Boardwalk”, “Boardwalk REIT”, the “Trust”, “we”, “us” and “our” in the following Management’s Discussion and Analysis (“MD&A”) refer to
Boardwalk Real Estate Investment Trust, its consolidated financial position, and results of operations for the years ended December 31, 2014 and 2013.
Financial data provided has been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board (“IASB”) and as required by all Publicly Accountable Enterprises to be adopted effective January 1, 2011. This MD&A is current
as of February 19, 2015 unless otherwise stated, and should be read in conjunction with Boardwalk’s audited annual consolidated financial statements
for the years ended December 31, 2014 and 2013, which have been prepared in accordance with IFRS, together with the MD&A related thereto, copies of
which have been filed electronically with securities regulators in Canada through the System for Electronic Document Analysis and Retrieval (“SEDAR”)
and may be accessed through the SEDAR web site at www.sedar.com. Historical results and percentage relationships contained in the annual consol-
idated financial statements and MD&A related thereto, including trends, which might appear, should not be taken as indicative of future operations.
Unless otherwise indicated, all amounts are expressed in Canadian dollars.
Forward-looking Statement Advisory:
Certain information included in this MD&A contains forward-looking statements within the meaning of applicable securities laws. These statements
include, but are not limited to, statements made concerning Boardwalk’s objectives, its strategies to achieve those objectives, as well as statements
with respect to management’s beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstanc-
es, performance, or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking
terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or
similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on
information currently available to management. All forward-looking statements in this MD&A are qualified by these cautionary statements.
These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on Boardwalk’s current estimates
and assumptions, which are subject to risks and uncertainties, including those described in Boardwalk REIT’s 2014 Annual Information Form (“AIF”)
under the heading “Challenges and Risks”, which could cause actual events or results to differ materially from the forward-looking statements con-
tained in this MD&A. Those risks and uncertainties include, but are not limited to, those related to liquidity in the global marketplace associated with
current economic conditions, tenant rental rate concessions, occupancy levels, access to debt and equity capital, changes to Canada Mortgage and
Housing Corporation riles regarding mortgage insurance, interest rates, joint ventures/partnerships, the relative illiquidity of real property, unexpected
costs or liabilities related to acquisitions, construction, environmental matters, uninsured perils, legal matters, reliance on key personnel, Unitholder lia-
bility, income taxes, and changes to income tax rules that impair the ability of Boardwalk to qualify for the REIT Exemption (as defined below). Material
factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but
are not limited to, the rental environment compared to several years ago, relatively stable interest costs, access to equity and debt capital markets to
fund (at acceptable costs), the future growth program to enable the Trust to refinance debts as they mature, the availability of purchase opportunities
for growth in Canada, and the impact of accounting principles adopted by the Trust effective January 1, 2011 under IFRS. Although the forward-looking
information contained in this MD&A is based upon what management believes are reasonable assumptions, there can be no assurance actual results
will be consistent with these forward-looking statements. Certain statements included in this MD&A may be considered “financial outlook” for purposes
of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this MD&A.
The Income Tax Act (Canada) (the “Act”) contains legislation affecting the tax treatment of publicly traded trusts (the “SIFT Legislation”). The SIFT
Legislation generally will not impose tax on a trust which qualifies under such legislation as a real estate investment trust (the “REIT Exemption”) provid-
ed all of the Trust’s taxable income each year is paid, or made payable to, its Unitholders. Boardwalk qualified for the REIT Exemption and will continue
to qualify for the REIT Exemption provided all of its taxable income continue to be distributed to its Unitholders. Further discussion of this is contained
in this MD&A.
Except as required by applicable law, Boardwalk undertakes no obligation to publicly update or revise any forward-looking statement, whether as a
result of new information, future events, or otherwise.
36
M A N A G E M E Nt ’ S D I S C u S S I O N A N D A N A l Y S I S
B O A R D w A L k R E I T / A R 2 0 1 4
executive suMMaRy
Business overview
Boardwalk Real Estate Investment Trust (“Boardwalk REIT”, “Boardwalk” or the “Trust”) is an unincorporated, open-ended real estate
investment trust created pursuant to a Declaration of Trust, dated January 9, 2004, and as amended and restated on various dates
between May 3, 2004 and May 14, 2014 (the “Declaration of Trust” or “DOT”), under the laws of the Province of Alberta . Boardwalk REIT
was created to invest in revenue producing multi-family residential properties, or interests, initially through the acquisition of assets
and operations of Boardwalk Equities Inc . (the “Corporation”) .
On May 3, 2004, the Corporation sold all of its assets and undertakings to Boardwalk REIT . Boardwalk REIT Units trade on the Toronto
Stock Exchange (“TSX”) under the trading symbol ‘BEI .UN’ . Boardwalk REIT’s principal objectives are to provide its Unitholders
(“Unitholders”) with stable and growing 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 investment properties and the acquisition of ad-
ditional, accretive properties . At the end of 2014, Boardwalk REIT owned and operated in excess of 220 properties, comprised of 34,626
residential units and totaling approximately 29 million net rentable square feet . As of December 31, 2014, Boardwalk REIT’s property
portfolio was concentrated in the provinces of Alberta, Saskatchewan, Ontario and Quebec . As a result of the disposition in Q2 2014
of all of the Trust’s real estate assets in British Columbia, earnings from these assets were reclassified as discontinued operations with
restatement of prior period comparative earnings .
At December 31, 2014 and 2013, the fair value of Boardwalk’s Investment Property assets was approximately $5 .8 billion and $5 .7
billion, respectively, which generated a profit of $154 .8 million and $151 .2 million for the years ended December 31, 2014 and 2013
(before fair value gains, income tax expense recovery and profit from discontinued operations) . During the years ended December 31,
2014 and 2013, the Trust earned $175 .8 million and $168 .2 million, respectively, of Funds From Operations (FFO), or $3 .37 and $3 .21
per Unit on a diluted basis . Adjusted Funds From Operations (“AFFO”) for the years ended December 31, 2014 and 2013 were $159 .3
million and $151 .4 million, respectively, or $3 .05 and $2 .89 per Unit on a diluted basis .
MD&a ov erview
This MD&A focuses on key areas from the audited consolidated financial statements and pertains to major known risks and uncer-
tainties relating to the real estate industry, in general, and the Trust’s business, in particular . This discussion should not be considered
all-inclusive as it excludes changes that may occur in general economic, political, and environmental conditions . Additionally, other
elements may or may not occur, which could affect the organization in the future . To ensure that the reader is obtaining the best
overall perspective, this discussion should be read in conjunction with material contained in other parts of Boardwalk REIT’s Annual
Report, the audited consolidated financial statements for the years ended December 31, 2014 and 2013 and the Annual Information
Form (“AIF”) dated February 19, 2015, along with all other publicly posted information on the Corporation and Boardwalk REIT . It is not
our intent to reproduce information that is located in these other reported documents, but rather to highlight some of the key points
and refer you to these documents for more detailed information .
outlook
The 2014 year proved to be a successful year for Boardwalk REIT and the multi-family real estate rental market in Canada . Throughout
the year, Boardwalk continued to see strong demand for rental apartments across its major markets, particularly in natural resource
intensive provinces, like Alberta and Saskatchewan . For most of the year, Alberta led the way in Canada in gross domestic product
(GDP) growth, sustained by the strength of its oil and gas sector, positive net provincial migration and positive job growth forecast .
Both Calgary and Edmonton’s apartment vacancy rates, at less than 2%, remained relatively stable for 2014 . The dramatic decline in
resource prices near the end of the year and the start of 2015, however, if sustained over the longer period may result in a significant
B O A R Dw A L k R E I T / A R 2 0 1 4
M A N A G E M E N t ’ S D I S C u S S I O N A N D A N A l Y S I S
37
slowing of Alberta’s and Saskatchewan’s economic growth, and have a longer-term impact on rental and vacancy rates . Recently, a
number of energy producers have reduced or scaled back 2015 capital spending plans, with some also reducing dividend payouts .
This potential slowing in western Canada’s economic growth rate, if sustained over a longer period, may filter through to weaker
employment prospects, a tempering of housing demands and a decline in net migration . In contrast, oil-consuming provinces, like
Ontario and Quebec, may see an increase to GDP growth forecasts as lower crude oil prices and a lower Canadian dollar may provide
a lift to manufacturing activity, in the midst of rising U .S . demand . while the apartment rental market still remains one of the most
affordable housing options in Canada, Boardwalk continues to monitor the volatility of resource prices to see if changes will be needed
to its rental revenue strategy, for example, by offering more incentives for a longer-term lease . Long-term Government of Canada
benchmark yields remain low and stable, and have continued to decline since March of 2014, despite previous forecasts that interest
rates were headed higher . However, uncertainty still remains regarding how interest rates will play out for the foreseeable future,
particularly with the recent cut in the Government of Canada Interest rates, which have resulted in base level Canadian Bonds posting
rates at historical lows and further emphasizing the downside risk to 2015 economic growth brought on by the recent sharp decline
in oil prices . Recent property transactions continue to demonstrate there is a demand to own apartment assets in major Canadian
markets, to the extent that Capitalization Rates remain low and selling prices remain high for properties in this asset class . The Trust is
continuously evaluating whether to sell non-core real estate assets and, during Q2 2014, sold one project in Edmonton, Alberta, and
all of its British Columbia assets .
Although Boardwalk did not acquire any new apartment buildings during 2013 or 2014, we remain active in the bidding process; how-
ever, Boardwalk has not been able to conclude that acquiring these assets at the offered selling prices would be in the best interest of
the Trust on a risk-adjusted basis . Boardwalk continues to maintain a healthy liquidity position, and allocated a portion of this to new
development opportunities and trust unit buybacks through its current Normal Course Issuer Bid . Boardwalk is still well positioned to
take advantage of future acquisitions or value-added opportunities, if and when they arise .
The Canadian multi-family real estate sector continues to have access to a very low cost of debt through the use of Government
of Canada-backed debt with the National Housing Act (“NHA”) program, which is administered by Canada Mortgage and Housing
Corporation (“CMHC”) . with the continued volatility and muted recovery in the world markets, Canada continues to be a country of
high regard and, as a result, is experiencing historical low interest rates in the bond markets . This has translated into historically low
interest rates for those who choose to use the NHA vehicle .
Boardwalk REIT believes the fundamentals of its asset class, and, in particular, its specific assets, generally remain strong . This strength
is mainly due to the affordability of renting versus the cost of owning a home . This fact has kept overall occupancy at reasonable levels
and, when combined with the non-exposure to any one or small group of Customers or Resident Members, has kept revenue stable
and risks low . In the debt capital market, the fact that over 99% of the Trust’s secured debt carries NHA insurance, the benefits of which
will be detailed later in this report, has significantly assisted in renewing and obtaining new financing on its assets at rates better than
the maturing interest rates . The Trust continues to be well positioned, with a regular distribution payout ratio of approximately 60 .5%
of FFO for the year ended December 31, 2014 . This is below the 61 .5% for the year ended December 31, 2013, an improvement that
can be attributed to stronger operating performance in 2014 as well the ability to refinance maturing mortgages at significantly lower
interest rates . The Trust continues to have access to low-rate Government of Canada-backed debt in the form of NHA insurance .
As the Trust moves forward, Boardwalk continues to look for ways to further enhance the returns provided to our stakeholders . The
Trust continues to focus inward on our operations, continuously looking for ways to reduce costs while simultaneously focusing on
our Resident Members . In addition, we continue to maintain a conservative balance sheet with a Debt-to-Enterprise Value at approx-
imately 40% .
At the start of 2015, Boardwalk continues to witness a stable demand for rentals in all rental markets in which it operates . However,
given the backdrop of lower oil prices, Boardwalk is continuing to monitor its rental activities and rental operating expenses closely to
see if changes are needed to its Net Operating Income (NOI) Optimization Strategy . The Trust continues to believe that a focus on its
NOI Optimization Strategy will lead to stable results for fiscal 2015 .
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Declaration oF trust
The investment guidelines and operating policies of the Trust are outlined in the Trust’s DOT, a copy of which is available on request to
all Unitholders . Further information of the DOT can also be located on page 40 of the AIF . Some of the main financial guidelines and
operating policies set out in the DOT are as follows:
Investment Guidelines
1 . Acquire, develop, and operate multi-family residential property In Canada; and,
2 .
No investment will be made that would disqualify Boardwalk REIT as a “mutual fund trust” or a “registered investment” as defined
in the Income Tax Act (Canada) .
Operating Policies
1 .
2 .
3 .
4 .
Interest Coverage Ratio of at least 1 .5 to 1;
No guaranteeing of third-party debt unless related to direct or indirect ownership or acquisition of real property, including po-
tential joint venture partner structures;
Third-party surveys of structural and environmental conditions are required prior to the acquisition of a multi-family asset; and,
Commitment to expending at least 8 .5% of its gross consolidated annual rental revenues generated from properties that have
been insured by CMHC on on-site maintenance compensation to Associates, repairs and maintenance, as well as capital upgrades .
Distribution Policy
Boardwalk REIT may distribute to holders of REIT Units on or about each Distribution Date(1), respectively, such percentage of Funds
From Operations for the calendar month then ended as the Trustees determine in their discretion . Distributions will not be less than
Boardwalk REIT’s taxable income, unless the Trustees, in their absolute discretion, determine another amount .
Compliance with DOt
At December 31, 2014, the Trust was in material compliance with all investment guidelines and operating policies as stipulated in the
DOT as amended . More details will be provided later in this document with respect to certain detailed calculations .
For the year ended December 31, 2014, Boardwalk REIT’s overall interest coverage ratio of adjusted EBITDA (i .e . Earnings Before Interest,
Taxes, Depreciation and Amortization) to interest expense, excluding distributions on LP B Units and fair value gains and losses, was
3 .37 (December 31, 2013 – 3 .15) .
values, vision anD oBjectives
Boardwalk REIT is a fully integrated, Customer-oriented, multi-family residential real estate owner and property management organi-
zation . The Trust was built by focusing on its values, vision and Golden Foundation .
A Commitment to value
Boardwalk REIT’s Vision and business strategy are targeted on effectively meeting the needs of our Customers, or Resident Members . It
is our belief that this focus will result in long-term value creation for all our stakeholders . Our key stakeholders include our Associates,
major financial and mortgage partners, including CMHC, strategic operational partners and Unitholders .
(1)
‘’Distribution Date’’ means with respect to a distribution by Boardwalk REIT, a business day determined by the Trustees for any calendar month to be on or about the
15th day of the following month .
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Our vision
Boardwalk REIT’s Vision is to be Canada’s leading provider of multi-family residential housing . Boardwalk believes it will be able to
accomplish this through the continued careful cultivation of internal growth, selective development on excess land density it owns
and a targeted and disciplined acquisition and disposition program .
Golden Foundation
Boardwalk REIT and its Associates operate under a ‘Golden Foundation’, which is built on the following objectives:
▲
The Golden Rule: “Treat others as you would like to be treated”
▲
The Golden Goal: “Be Good”
▲
The Golden Vision: “Love Community”
▲
The Golden Mission: “Have Fun”
Our Associates are expected to adhere to the following guiding principles:
we will:
▲
work together in a team environment of mutual respect, trust and honesty between all Associates and Resident Members;
▲
Serve our Resident Members’ need for an affordable, quality, well-kept home;
▲
Maintain building exteriors and landscaping, thereby increasing “curb appeal”, have well-kept common areas and ensure our
homes are clean and well maintained;
▲
Maintain a balance between the needs of our Resident Members, Associates, Unitholders, communities and families;
▲
Nurture and promote a learning environment where our Associates’ skills and capabilities grow with the needs of both the Trust
and our Resident Members, and accept that these needs will be consistently evolving and improving the definition of “Rental
Communities”; and
▲
Provide access to the latest tools and technology and utilize the latest tools and technology designed to increase the operating
efficiency of the Trust as a whole .
we value:
▲
Integrity
we will be honest, accountable, transparent, respectful, and trusting in our dealings with others, appreciating their views and
differences .
▲
Teamwork
we will effectively work as a team, appreciating and benefiting from each other’s unique talents and skills in an open environment
while recognizing that the team’s successes are our successes .
▲
Resident Member Service
we will promptly respond to Resident Member concerns and needs with thoughtfulness, compassion and innovation . we will
strive to develop proactive solutions through a support network and a positive service attitude .
▲
Social Responsibility
we will contribute to our communities and encourage our Associates to contribute in ways that reflect our Golden Rule of ‘treat-
ing others in a way we would wish to be treated’, balancing our needs with those of others, our Golden Goal is to ‘be good’, our
Golden Mission Is ‘have fun’, and our Golden Vision is to ‘love community’ .
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▲
Our Associates
we will provide a safe and respectful work environment that attracts, supports, develops, and recognizes high-performing and
innovative team members .
Boardwalk believes that by adhering to the above Vision and Values, and implementing strategies consistent with these principles,
Boardwalk REIT will produce higher sustainable operating cash flows and a continued appreciation of its property values . The result
will be enhanced value for all our stakeholders .
Achieving this goal requires the full integration of our core strategies of focused investing, superior property management and the
implementation and effective use of new technologies . Boardwalk REIT can best achieve this goal by strategically:
▲
Maximizing Resident Member satisfaction by providing an above-average level of service and accommodation;
▲
Acquiring selected multi-family residential properties;
▲
Selling properties (“Non-Core”) with lower future growth prospects or, on a limited basis, the conversion of properties into con-
dominium units for sale, and the reinvesting of these funds back into other accretive opportunities;
▲
Purchasing Trust Units on the open market;
▲
Enhancing property values, operating returns and cash flows through pro-active management, property stabilization and capital
improvements;
▲
Reviewing and considering the development of new selective multi-family projects if the economics support such projects;
▲
Managing capital prudently while maintaining a conservative financial structure;
▲
Pursuing opportunities to form selective partnership, joint ventures, or an exchange of assets; and
▲
Reinvesting the released equity from asset sales back into the Trust’s portfolio to create additional value-added opportunities .
To support our overall operating strategy, it is necessary to:
▲
Ensure ample capital is available at all times for acquisitions and value-added enhancements;
▲
Appropriately allocate available capital to existing project enhancement and on-going new acquisitions;
▲
Utilize appropriate levels of debt leverage;
▲
Determine and utilize sources with the lowest cost of capital;
▲
Actively manage our exposure to interest rate and debt renewal risk; and
▲
Optimize the use of NHA insurance, which is administered by CMHC, to access more cost-effective debt capital .
non-gaap Financial Measures
Boardwalk REIT assesses and measures operating results based on performance measures referred to as “Funds From Operations”
(FFO), and Adjusted Funds From Operations (AFFO) . FFO is a widely accepted supplemental measure of the performance of a Canadian
real estate entity; however, it is not a measure defined by IFRS . In recent periods, additional attention has been given to AFFO as a
supplemental measurement . FFO and AFFO do not have any standardized meaning prescribed by IFRS and, therefore, may not be
comparable to similar measures presented by other entities . The IFRS measurement most comparable to FFO and AFFO is Profit . we
define FFO, after the adoption of IFRS, as income before fair value adjustments, distributions on the LP B Units, gains or losses on the
sale of Investment Properties, depreciation, deferred income tax, and certain other non-cash adjustments, if any . The reconciliation
from Profit under IFRS to FFO can be found below, under the section titled “Performance Measures” . The reconciliation from FFO to
AFFO can be found in the section titled “Maintenance of Productive Capacity” . FFO and AFFO, however, should not be construed as an
alternative to profit determined in accordance with IFRS as indicators of Boardwalk REIT’s performance . In addition, Boardwalk REIT’s
calculation methodology for FFO and AFFO may differ from that of other real estate companies and trusts .
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A reconciliation of FFO to cash flow from operating activities as shown in the Trust’s Consolidated Statements of Cash Flows is also
provided below in the section titled, “Review of Consolidated Statements of Cash Flows”, along with added commentary on the sus-
tainability of Boardwalk REIT’s Trust Unit distributions .
investMent philosophy
Throughout Boardwalk REIT’s history, the Trust has constantly looked for opportunities to create value for the Trust Unitholders . This
is achieved by investing managerial resources and capital in activities that increase FFO per unit and AFFO per unit on a sustaining
basis and/or increase Net Asset Value (“NAV”) per unit . Prior to 2008, a large part of this opportunity was focused on investment
opportunities, both in capital improvements of our existing portfolio and in acquisition of additional properties . However, our invest-
ment strategy is not simply one by which we are constantly looking to expand our existing footprint, but rather one by which we are
constantly looking to create value . Starting in 2008, but more pronounced during 2009 and 2010, it was evident to us that the Trust’s
investment opportunities were not in the acquisition of additional apartment units, but rather in the sale of Non-Core properties and
the deployment of capital to acquire additional Boardwalk REIT Trust Units in the public markets through our published Normal Course
Issuer Bids (“NCIBs”), as the Trust can purchase our own well-maintained assets (i .e our Units) at less than what is available through
acquisitions .
Cumulatively, since 2007, Boardwalk REIT purchased and cancelled approximately 4 .9 million Trust Units for a total purchase price of
$195 .4 million, or an average cost of $40 .26 per Trust Unit .
The Trust has an on-going program of selling Non-Core properties in its portfolio and re-deploying the released capital to acquiring
or developing additional properties, potentially paying a special distribution to its Unitholders, reinvesting in its existing properties to
achieve superior returns, developing new multi-family properties and/or purchasing its Trust Units for cancellation . The Trust contin-
ues to review all available options that management believes will provide the greatest return to our Unitholders .
Cost of Capital
In understanding Boardwalk REIT’s investment strategy, it is also necessary to review its cost of capital . The Trust’s cost of capital is
generally defined as its weighted average cost of raising incremental capital and, thus, its hurdle rate for evaluating incremental invest-
ment opportunities . In other words, it can be thought of as the rate of return that the Trust would otherwise be able to earn given the
same level of risk . As with most real estate entities, the cost of capital is the combination of the cost of debt and the cost of equity . As
will be discussed in a later section, the Trust currently has access to a lower cost of debt through its access to the NHA insured market .
However, even this market has different levels of risk that are mainly priced through the term selected on the related mortgage . That
is, the longer the mortgage finance term, the longer the borrower is removing the interest rate risk from the investment . It is our view
that on those investments where you do not have the benefit of hindsight, for example with the actual purchase, ownership and
management of a particular building, there is an increased level of performance risk . To moderate this risk, it is necessary to hedge
the interest rate risk, by taking a longer-term mortgage to allow you time to better understand the performance risk of the specific
property investment . The other major component in the cost of capital relates to the cost of equity required for the investment . The
determination of this cost has a number of different models and definitions . However, for simplicity purposes, Boardwalk determines
its current cost of equity as the amount of AFFO reported compared to its current market capitalization . For 2014, the Trust reported
AFFO per Unit of $3 .05 on a fully diluted basis . when compared to the Trust Unit’s market price of $61 .54 as at December 31, 2014, this
equates to approximately 4 .96% as its cost of equity .
Once we have determined the cost of capital, management then analyzes and evaluates the opportunities available to the Trust
against a base case scenario . The base case will be determined on two distinct criteria:
(i) whether the investment is accretive to the Trust’s implied Capitalization Rate (“Cap Rate”) after adjusting for related risk, and
(ii)
given the existing leverage of the Trust, whether the investment is accretive on a FFO and AFFO basis given its existing port-
folio’s internal growth profile . The investment is also evaluated on a stabilized basis, that is, after considering the impact of
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funding deferred capital expenditures and leasing up the property . The base case of the Cap Rate test focuses on the implied
Cap Rate of the Trust’s existing property portfolio because the Trust best understands the operations and risk profile of its
own apartment units, and its ability to purchase its own real estate through the use of NCIBs . In general, for an investment
to be accretive, not only does it have to generate a return above this level, it must also be of equivalent (or better) quality
and location . The amount of expectation above this base rate is the anticipated risk premium adjustment . Each investment
is looked at in isolation and evaluated accordingly . It is necessary to understand that multi-family rental real estate has
historically been an investment based on leverage . As such, it is necessary for us to analyze the underlying ability to obtain
debt and the cost of that debt . Boardwalk currently does have access to NHA insurance from the Government of Canada,
the details of which are discussed later in this document . As with other debt in most instances, the longer the proposed
term maturity, the higher the price typically paid for this debt . This difference is the adjustment the market puts on the risk
that the interest rates will be higher during the term of the loan . Accordingly, the investment consideration for the Trust
also adjusts for this risk by building into its current cost of debt a balanced strategy of mortgage maturities, with upcoming
renewals and refinancings targeted for terms ranging from five to ten years .
heDg ing activities
There were no new hedging activities in the fiscal year ended December 31, 2014 .
In 2008, the Trust entered into forward hedging arrangements with respect to some of its mortgage interest obligations . The strategy
consisted of hedging, or locking in, the interest rates on the underlying bonds used to set mortgage interest rates while layering an
interest rate swap on top of this to reduce overall interest rates and variability in cash flows from fluctuating interest rates . The effect
on the current and prior year’s financial results is outlined below .
Bond Forward transaction
In 2008, the Trust entered into a bond forward transaction (the “Transaction”) with a major Canadian financial institution . In total, the
Transaction, which comprised of bond forward contracts on specific mortgages that matured and were renewed in 2008, was for a
total notional amount of $101 .6 million with a weighted average term and interest rate of 7 .2 years and 3 .63%, respectively . One of the
bond forward contracts in the Transaction, which was assessed to be an effective hedge, was settled for a loss of $284 thousand . This
bond forward contract continues to be assessed as “effective” under IFRS and this loss continues to be amortized over the term of the
new financing until the May 1, 2015 date of maturity . As at December 31, 2014, the unamortized amount of this effective hedge was
approximately $41 thousand .
Interest Rate Swap
In 2008, Boardwalk REIT entered into an interest rate swap agreement on the mortgages of specific properties within its portfolio in
an effort to hedge the variability in cash flows attributed to fluctuating interest rates . These interest rate swap agreements were desig-
nated as cash flow hedges on March 11, 2008 . The effective date of the hedges was May 1, 2008, and will continue to be designated as
such until the May 1, 2015 date of maturity . Hedge accounting has been applied to these agreements in accordance with International
Accounting Standard (“IAS”) – 39: Financial Instruments: Recognition and Measurement (“IAS 39”) .
The effectiveness of the hedging relationship is reviewed on a quarterly basis and measured at fair value . Any gains or losses, which
arise as a result of the “effectiveness” of the hedge, will be recognized in Other Comprehensive Income (“OCI”) . The ineffective portion
of the hedging gain or loss on the swap transaction will be recognized immediately in profit . On recognition of the financial liability
of the hedged item on the consolidated statement of financial position, the associated gains or losses that were recognized in OCI
would be reclassified into income in the same period, or periods, during which the interest payments of the hedged item affect profit .
However, if all, or a portion, of the loss recognized in OCI will not be recovered in one or more future periods, this amount will be
immediately reclassified into income .
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As at December 31, 2014, the interest rate swap agreement was assessed to be an effective hedge in accordance with IFRS and, any
gains or losses on the interest rate swap agreement were recognized in income in the periods during which the interest payments on
the hedged items were recognized . For the year ended December 31, 2014, a gain of $2 .4 million was recognized in OCI (December 31,
2013 – gain of $2 .1 million) .
perForMance review oF 2014
Boardwalk REIT generates revenues, cash flows, and earnings from two separate sources: rental operations and the sale of “Non-Core”
real estate properties .
Boardwalk REIT’s most consistent and largest source of income comes from its rental operations . Income from this source is derived
from leasing individual apartment units to Customers (who we refer to as “Resident Members”) who have varying lease terms ranging
from month-to-month to twelve-month leases .
In the past, Boardwalk REIT has generated additional income from the sale of selective non-core real estate properties . The sale of
these properties is part of Boardwalk REIT’s overall operating strategy whereby the equity generated through the sale is then utilized
by Boardwalk REIT for the acquisition and/or development of new rental properties, to assist in its property value enhancement pro-
gram, or for the acquisition of Boardwalk REIT’s Trust Units in the public market . The Trust, however, will only proceed with the sale of
Non-Core real estate properties if market conditions justify the dispositions and Boardwalk has an alternative use for the net proceeds
generated . During the second quarter of 2014, a property in Edmonton, Alberta, and all of Boardwalk’s British Columbia real estate
assets were sold, resulting in a total loss on asset sales of $4 .5 million . As Investment Properties are carried at fair value, a loss on sale
arises from the transaction costs .
Performance Measures
It continues to be the intention of the Trust to pay out, at a minimum, all taxable income to Unitholders in the form of monthly distri-
butions, unless the Board of Trustees, in its absolute discretion, determines a different amount . In 2014, the Trust distributed $2 .04 per
outstanding Trust and LP B Unit on an annualized basis (or $0 .17 per Trust and LP B Unit on a monthly basis) . The Trust also declared
a special distribution of $1 .40 per Unit to all Unitholders of record as at December 31, 2014 . This special distribution was in addition
to the regular normal distribution (described above) that the Trust declares and pays on a monthly basis . The total dollar amount of
this one-time special distribution was approximately $72 .8 million and was paid on January 15, 2015 in conjunction with the regular
monthly distribution to Unitholders of record as at December 31, 2014 . Additional information related to this special distribution is
discussed below .
For the year ended December 31, 2014, the Trust declared regular distributions of $106 .3 million (inclusive of distributions paid to
the LP Class B Unitholders), representing approximately 60 .5% of FFO . The reader should note the overall operating performance of
the first and fourth quarters tend to generate the highest payout ratio, mainly due to the high seasonality in operating expenses . In
particular, these quarters tend to be the highest demand periods for natural gas, a major operational cost for the Trust . The reader
should not simply annualize these quarterly reported results . On a quarterly basis, the Trust’s Board of Trustees reviews the current
level of distributions and determines if any adjustment to the distributed amount is warranted .
Although the Trust believes it is important to distribute a significant portion of its FFO, it also maintains it should withhold a portion of
the available cash flow to assist with the execution of its business strategy . On an overall basis, the Trust aims to maintain a conserva-
tive payout ratio and reviews this with its Board of Trustees on a quarterly basis .
Over the past few years, AFFO has begun to surface as an additional performance measurement . AFFO is determined by taking the
amounts reported as FFO and deducting what is commonly referred to as ‘Maintenance Capital Expenditures’ . Maintenance Capital
Expenditures are referred to as expenditures that, by standard accounting definitions, are accounted for as capital in that the expen-
diture itself has a useful life in excess of the current financial year and also adds or maintains the value of the related asset . A more
detailed discussion of this topic will be provided in the ‘Maintenance of Productive Capacity’ section later in this document .
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Special Distribution
As noted, during 2014, the Trust sold a selective number of non-core properties . The net proceeds of the sale of certain non-core
properties have partially assisted In the purchase of REIT Units for cancellation on the open market . Although the Trust continues to be
committed to this strategy, consistent with our balanced approach, the sale of these non-core assets resulted in a significant profit to
the Trust for the 2014 fiscal year . The size of this profit, when combined with the existing income generated from continued operations,
resulted in a significant increase in the Trust’s reported taxable income and, as a result, a “Special Distribution” in the amount of $1 .40
per outstanding Trust and LP Class B Unit for Unitholders of record as of December 31, 2014 was declared . The payable date on the
Special Distribution was January 15, 2015 to Unitholders of record as of December 31, 2014 . The capital required for this distribution
came directly from the net proceeds on the sale of non-core properties in 2014 .
Unlike many REIT’s and real estate companies, Boardwalk REIT does not include any gains reported on the sale of its properties in its
calculation of FFO . The Trust feels that such income is volatile and unpredictable, and would significantly dilute the relevance of FFO
as a measure of performance .
How Did we Do?
At the beginning of the 2014 fiscal year, certain selective performance targets were set out for fiscal 2014 . The assumptions used in
these performance targets were reviewed on a quarterly basis and the full-year guidance was adjusted if such assumptions changed .
The following table compares our forecasted performance to our actual results in fiscal 2014 .
FFO per Trust Unit
AFFO per Trust Unit
Investment Properties
2014 Actual
$3 .37
$3 .05
2014 Objectives
Revised in Q3 2014
2014 Objectives
Revised in Q2 2014
$3 .32 to $3 .41
$3 .00 to $3 .09
$3 .27 to $3 .43
$2 .95 to $3 .11
2014 Original
Objectives
$3 .25 to $3 .45
$2 .93 to $3 .13
Sold one project in
Edmonton, Alberta,
and all of its British
Columbia assets .
No new acquisitions or
developments .
No additional
apartment acquisitions,
dispositions or
developments
No additional
apartment acquisitions,
dispositions or
developments
No new apartment
acquisitions,
dispositions or
developments
Stabilized Building NOI Growth
2 .5%
2% to 4%
1% to 4%
1% to 4%
The reader is cautioned the financial objectives, when generated, were considered forward-looking information and that actual results
may vary materially from these objectives reported .
Both actual FFO and AFFO for fiscal 2014 were within the revised guidance reported as part of the Trust’s disclosure for the third
quarter of 2014 .
FFO Reconciliation from 2013 to 2014
The following table shows a reconciliation of changes in FFO from December 31, 2013 to December 31, 2014 . It should be noted that
FFO, as disclosed in the table below, reflects FFO derived from the Trust’s consolidated financial statements prepared in accordance
with IFRS . As previously noted, we define the calculation of FFO, under IFRS, as net income before fair value adjustments, distributions
on the LP Class B Units, gains (losses) on the sale of Investment Properties, depreciation, deferred income taxes, and certain other
non-cash items . A more detailed disclosure of the calculation of FFO will be provided later in this report .
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FFO Reconciliation
FFO Opening – Dec 31, 2013
NOI from Stabilized Properties
NOI from Non-Stabilized Properties
FFO Loss from Sold Properties
Financing Costs (1)
Administration and other
Unit Buyback
FFO Closing – Dec 31, 2014
12 Months
$ 3 .21
0 .14
0 .02
(0 .06)
0 .07
(0 .03)
0 .02
$ 3 .37
(1)
Financing costs above exclude the distribution payments for LP Class B Units which are classified as financial liabilities under IFRS . Further discussion
related to this can be found later in this report .
liquidity
The access to liquidity is an important element of the Trust as it allows the Trust to implement its overall strategy . The current low
interest rate environment has allowed Boardwalk to renew its existing maturing mortgages at more favourable interest rates than the
maturing interest rates . In addition, Boardwalk has been able to access additional capital from its properties through the continued
use of the current NHA insurance program, which is being offered at attractive rates . Further interest savings, however, will become
more limited when interest rates start to reverse their declining trends seen over the past several years .
The Trust’s cash position was $139 .6 million at December 31, 2014, compared to $131 .1 million reported on December 31, 2013 .
However, it should be noted that this cash position is before the previously noted Special Distribution declared to its Trust and LP
Class B Unitholders in the amount of $72 .8 million, or $1 .40 per outstanding unit, on record as at December 31, 2014 . This Special
Distribution was paid on January 15, 2015 .
FFO Reconciliations
In the following table, Boardwalk REIT provides a reconciliation of FFO (a non-IFRS measure) to profit for the period, its closely related
financial statement measurement for the years ended December 31, 2014 and December 31, 2013 . Adjustments are explained in the
notes below, as appropriate .
FFO Reconciliation
In $000’s, except per unit amounts
Profit for the period
Adjustments
Profit from discontinued operations, net of tax (1)
Loss on sale of assets
Fair value gains (2)
Add back distributions to LP Class B Units recorded as
financing charges (3)
Deferred income tax expense
Depreciation expense on PP&E
Funds from operations
Funds from operations – per unit
12 months
2014
12 months
2013
$ 235,610
$ 325,135
% Change
11,181
4,453
(95,443)
15,372
40
4,612
12,595
–
(183,118)
8,838
533
4,201
$ 175,825
$
3 .37
$ 168,184
$
3 .21
4 .5%
5 .0%
(1)
(2)
(3)
The Trust disposed of all its British Columbia real estate assets . As British Columbia represents an identifiable geographic segment under IFRS, this
disposition has been classified as a discontinued operation . The earnings from discontinued operations prior to its sale, but not the gain or loss on
disposition, are included in determining FFO .
Under IFRS, the Trust has a number of Statement of Financial Position items, which are measured using a fair value model with fluctuations related to
these fair value amounts from period to period flowing through the Statement of Comprehensive Income . These fair value adjustments are considered
“non-cash items” and are added back in the calculation of FFO .
Under IFRS, the LP Class B Units are considered financial instruments in accordance with IAS 32 – Financial Instruments: Presentation (“IAS 32”) . As a
result of this classification, their corresponding distribution amounts are considered “financing charges” under IFRS . The Trust believes these distribution
payments do not truly represent “financing charges”, as these amounts are only payable if the Trust declares distributions, and only for the amount of any
distributions declared, both of which are at the discretion of the Board of Trustees as outlined in the DOT . Therefore, these distributions are excluded from
the calculation of FFO, consistent with the treatment of distributions paid to all other Unitholders .
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Overall, Boardwalk REIT earned FFO of $175 .8 million for fiscal 2014 compared to $168 .2 million for the same period in 2013 . FFO on a
per unit fully diluted basis for the current year ended December 31, 2014, increased approximately 5 .0%, compared to the prior year,
from $3 .21 to $3 .37 . The increase was primarily driven by higher rental revenue while maintaining high occupancy levels and lower
financing costs .
New Property Acquisitions and Dispositions
For the 2013 and 2014 years, there were no new investment property acquisitions .
During the second quarter of 2014, Boardwalk sold a 102-unit project in Edmonton, Alberta, and all of its British Columbia real estate
assets consisting of 633 apartment units . The sale of the Edmonton project closed May 5, 2014, at a selling price of $13 .5 million before
selling costs . There was no secured mortgage encumbrance on the Edmonton property . The sale of the British Columbia real estate
assets closed May 29, 2014, at a selling price of $140 million before selling costs and a holdback of $1 .5 million to upgrade a fire hydrant
waterline as required by the fire department of the City of Victoria . The purchaser of the British Columbia real estate assets assumed
the secured mortgages on these assets, with the Trust remaining as guarantor on two of the three mortgages until term maturity, or
when these mortgages are refinanced, whichever occurs sooner .
The Trust also purchased one unit in Edmonton, Alberta, in the property known as ‘Morningside Estates’ for a purchase price of $175
thousand . The purchase closed May 15, 2014, after which, the Trust owned 222 of the 224 units in the property .
During the third quarter of 2014, a total of 26 apartments units were designated unavailable for rental, reducing the Trust’s total num-
ber of apartment units available from 34,652 to 34,626 . Four of the units were completely destroyed by fire and all four were located
in one building forming part of our wascana property . These units are covered under our existing insurance policy and the Trust is
expecting to be fully reimbursed for the restoration and any lost revenue as a result . The other 22 units are located in a stand-alone
building at the Trust’s Boardwalk Estates property in Regina, Saskatchewan . The entire project is comprised of 655 units spread across
49 separate buildings . The Trust noted during its regular preventative maintenance program that some structural work was needed on
this 22-unit building, where preliminary reports recommended certain procedures be completed to shore up the structure . The Trust
proceeded with these recommendations, but had subsequently found that the remediation was not sufficient . In October of 2014, an
additional external report was commissioned, which noted that the foundation continued to have movement and recommended that
the building be vacated until such time a solution was found . In the interest of the health and safety of our Resident Members, the
Trust agreed and further investigation determined that the nature of the problem related to the ground properties of the site . The Trust
has determined that the best solution will be to demolish this complex of 22 units and, subsequently, utilize the land as a green space
designed to enhance the surrounding area . Given this strategy, the Trust has adjusted its IFRS fair value on these noted properties to
account for the loss of units . Boardwalk is constantly monitoring the condition of our buildings and suites to ensure they remain safe
for our Resident Members .
Development
On November 7, 2013, Boardwalk received the Occupancy Permit from the City of Calgary for the 109-unit development (Spruce Ridge
Gardens) it started in July of 2012 . To date, Boardwalk has completed the lease up phase of this project . The Trust defines “Stabilized
Properties” as properties that have been owned by Boardwalk for a 24-month period or greater . As such, Spruce Ridge Gardens is not a
stabilized property, and any reference to stabilized properties or same store properties does not include Spruce Ridge Gardens .
In October 2014, the Trust commenced the first phase of construction for a 79-unit building on excess land on our property known
as Pines of Normanview in Regina, Saskatchewan . The Trust executed a fixed-price construction contract with an estimated cost to
complete of approximately $14 .4 million, or $178,000 per door . The four-story, wood frame building will consist of 13 one-bedroom
and 66 two-bedroom units . Stabilized capitalization rate is estimated to be between 6 .0% and 6 .5%, excluding any value attributable
to the land . The Trust internally estimated the value of the land to be approximately $1 .0 million, or $12,000 per door . The building is
estimated to be completed in Q1 2016 .
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we continue to explore other development opportunities in Regina, Calgary, and Edmonton . Each of these opportunities will be
evaluated separately to determine the viability of these projects .
Financial Performance Summary
At a Glance
In $000’s, except per unit amounts
Total Assets
Total Rental Revenue
Profit
Total Funds From Operations
Profit Per Unit
Funds From Operations Per Unit
2014
2013
% Change
$ 5,971,645
$ 5,925,683
$
$
$
473,245
246,791
175,825
$ 5 .17
$ 3 .37
$
$
$
453,584
337,730
168,184
$ 7 .05
$ 3 .21
0 .8%
4 .3%
(26 .9)%
4 .5%
(26 .7)%
5 .0%
Total Assets increased from the amounts reported in the prior year, mainly due to an increase in the reported amount for investment
properties, which are now carried at fair value . Total Rental Revenue increased by 4 .3%, the result of higher rental rates . Profit de-
creased by 26 .9% compared to the prior year, due primarily to a decrease in the fair value gain recognized on its investment properties
in 2014 compared to 2013 .
consoliDateD opeRations anD eaRnings Review
ov erall review
Consolidated Statements of Comprehensive Income
Rental Operations
Boardwalk REIT’s Net Operating Income Strategy includes a rental revenue strategy that focuses on enhancing overall rental revenues
through the balance between market rents, rental incentives, turnovers, and occupancy losses . The application of this rental revenue
strategy is ongoing, on a market-by-market analysis, again with the focus on obtaining the optimal balance of these variables given
existing market conditions .
In $000’s, except number of suites
Total rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margins
Number of suites at December 31
12 Months
2014
12 Months
2013
$ 473,245
$ 453,584
$
$
$
93,180
47,572
40,091
$ 180,843
$ 292,402
61 .8%
34,626
$
$
$
89,002
42,121
38,272
$ 169,395
$ 284,189
62 .7%
35,386
% Change
4 .3%
4 .7%
12 .9%
4 .8%
6 .8%
2 .9%
Overall, Boardwalk REIT’s rental operations for the year ended December 31, 2014 reported higher results compared to the same
period in the prior year, with total rental revenue increasing 4 .3% for the year ended December 31, 2014 compared to the prior year .
The increase in rental revenue is the combined effect of increases to market rents with decreases in suite-specific rental incentives
while maintaining high occupancy levels compared to the same period in 2013 . Total rental expenses increased 6 .8% for the year
ended December 31, 2014, compared to 2013, mainly due to higher utilities, particularly higher natural gas expense .
The Trust continues to track in detail the actual work performed by our onsite Associates to assist in the operating effectiveness of
its overall operations . This program results in overall lower costs while allowing the Trust greater control over the timing of its capital
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improvement projects, compared to contracting these same projects out to third parties . As with other estimates used by the Trust,
key assumptions used in estimating the amount of salaries and wages to be capitalized are reviewed on a regular basis and, based
on this review, Management will adjust the amount allocated to more accurately reflect how many internal resources were directed
towards specific capital improvements . The Trust continues to work on improving the gathering of data in this area to further improve
its operating efficiency and make the reported estimate even more accurate .
Utility costs increased by 12 .9% for the year ended December 31, 2014 due primarily to an increase in natural gas expense and, to
a lesser extent, higher water and sewer costs . For the first quarter of 2014, many regions of Canada experienced an extremely cold
winter, resulting in an increase in gas and electricity consumption compared to the prior year . The increase in demand also resulted in a
significant increase to prices, particularly the price of natural gas . The Trust has fixed price physical commodity contracts for much of its
Alberta electricity exposure, which helped mitigate the effects of the higher electricity consumption . In June of 2014, the Trust entered
into two fixed price natural gas contracts to hedge 50% of its Alberta usage at an average price of approximately $4 .24/Gigajoule
(“GJ”) of consumption . The contracts are effective for the period commencing November 1, 2014 and ending October 31, 2016 for 25%
usage for one and October 31, 2017 for 25% usage, for the other . The Trust also renewed its fixed price natural gas contract to hedge
100% of its Saskatchewan usage through two new contracts at an average price of $4 .52/GJ . The new contracts are effective for the
period commencing November 1, 2014, and ending October 31, 2015 for 50% usage for one and October 31, 2017 for 50% usage for
the other . Lastly, the Trust entered into a one-year fixed price natural gas contract to hedge 50% of its usage in Ontario and Quebec at
a price of $3 .62/GJ, commencing November 1, 2014, and ending October 31, 2015 .
The reported increase in property taxes is mainly attributed to higher overall property tax assessments . The Trust is constantly review-
ing property tax assessments and related charges and, where it feels appropriate, will appeal all, or a part, of the related assessment .
It is not uncommon for the Trust to receive property tax refunds and adjustments; however, due to the uncertainty of the amount and
timing of the refunds and adjustments, these amounts are only reported when they are received .
Overall, the operating margin for the year decreased from the same period in 2013 from 62 .7% to 61 .8% .
Boardwalk REIT closely monitors and individually manages the performance of each of its rental properties . For the reader’s conve-
nience, we have provided the following summary of our operations on a province-by-province basis .
segMe nteD operational review
Alberta Rental Operations
In $000’s, except number of suites
Total rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margins
Number of suites at December 31
12 Months
2014
12 Months
2013
$ 297,624
$
280,489
$
$
$
54,188
26,708
22,920
$ 103,816
$ 193,808
65 .1%
19,751
$
$
$
$
$
50,985
23,303
21,659
95,947
184,542
65 .8%
19,743
% Change
6 .1%
6 .3%
14 .6%
5 .8%
8 .2%
5 .0%
Alberta is Boardwalk’s largest operating segment, representing approximately 66 .3% of total reported net operating income and
57 .0% of total apartment units . Boardwalk REIT’s Alberta operations for the year ended December 31, 2014, reported a 6 .1% increase in
total rental revenue, when compared to the same period reported in 2013 . The reported rental revenue change is the combined effect
of increases to in-place occupied rents and decreases in suite-specific incentives while maintaining high overall occupancy levels,
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49
compared to the prior year . Total rental expenses have increased 8 .2% for the year ended December 31, 2014, compared to the prior
year due primarily to increases in utilities .
Operating expenses increased 6 .3% from the prior year due to an increase in wages and salaries and higher repairs and maintenance .
Reported utilities for the year ended December 31, 2013 were up 14 .6% . The reported increase is mainly the result of higher reported
natural gas expense due to an increase in both consumption and natural gas prices as a result of the extreme cold weather in the first
quarter of 2014 . water and sewer costs, another form of property tax charged by the municipalities, were also higher in the current
year compared to 2013 . Currently, the Trust has two electricity contracts, one for Southern Alberta and the other for Northern Alberta,
with two utility companies to supply the Trust with its electrical power needs commencing October 1, 2010 and ending September
30, 2017 (Southern Alberta) and September 30, 2015 (Northern Alberta) . The blended rate of these electricity contracts is $0 .06 per
kilowatt hour (“kwh”) . In June of 2014, the Trust entered into two fixed price natural gas contracts to hedge 50% of its Alberta natural
gas usage . The contracts are effective beginning November 1, 2014 and end October 31, 2016 for 25% usage for the one, and October
31, 2017 for 25% usage for the other, at an average rate of approximately $4 .24/GJ of natural gas consumption .
Property taxes increased 5 .8% for the year ended December 31, 2014, compared to the prior year mainly as a result of higher property
tax assessments as many municipalities look to increase their property tax revenue base .
Net operating income for Alberta increased $9 .3 million, or 5 .0%, In the current year compared to the prior year . Alberta’s operating
margins for the year ended December 31, 2014 decreased marginally to 65 .1%, compared to 65 .8% for the same period in 2013 .
Saskatchewan Rental Operations
In $000’s, except number of suites
Total rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margins
Number of suites at December 31
12 Months
2014
$ 62,202
$ 10,609
$
$
5,728
4,308
$ 20,645
$ 41,557
66 .8%
4,610
12 Months
2013
$ 60,837
$
$
$
9,806
5,292
4,204
$ 19,302
$ 41,535
68 .3%
4,636
% Change
2 .2%
8 .2%
8 .2%
2 .5%
7 .0%
0 .1%
For year ended December 31, 2014, Boardwalk’s Saskatchewan total rental revenue increased by 2 .2% . The revenue increase is mainly
the result of higher rents achieved in both Regina and Saskatoon, despite a decline in occupancy levels . Rental rates also increased as a
result of Boardwalk being able to charge additional rent for cable service provided to its Resident Members . Rental expenses increased
by 7 .0% for the year ended December 31, 2014, compared to the prior year, primarily due to higher operating expenses and utilities .
Operating expenses increased mainly due to higher repairs and maintenance, particularly related to boiler maintenance inspections
performed in the year .
Utility costs for the current year increased from the previous year, primarily due to higher electricity expense, water and sewer charges
and cable costs during the current period . The Trust had a fixed price natural gas supply contract for its Saskatchewan natural gas
consumption, which covered the period from November 1, 2012 and ended October 31, 2014, and fixed the commodity at a price
of $3 .74/GJ . During the third quarter, the Trust renewed its fixed price natural gas hedge with two contracts to hedge 100% of its
Saskatchewan natural gas usage . The contracts are effective beginning November 1, 2014, and end on October 31, 2015 for 50% usage
for one, and October 31, 2017 for 50% usage for the other, at an average rate of approximately $4 .52/GJ of natural gas consumption .
Cable expense was higher as Boardwalk implemented a new bulk cable and internet bundled program in the second half of the year .
The program provides Resident Members a more cost-effective alternative to cable service compared to subscribing individually with
cable service providers .
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Property taxes increased by 2 .5% for the year ended December 31, 2014, due to higher property tax assessments, particularly in the
city of Regina .
Reported operating margins for the year ended December 31, 2014 decreased slightly to 66 .8%, compared to 68 .3% reported for the
prior year .
Ontario Rental Operations
In $000’s, except number of suites
Total rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margins
Number of suites at December 31
12 Months
2014
$ 41,809
$
$
$
7,282
7,654
5,322
$ 20,258
$ 21,551
51 .5%
4,265
12 Months
2013
$
41,402
$
$
$
$
$
7,144
6,978
5,250
19,372
22,030
53 .2%
4,265
% Change
1 .0%
1 .9%
9 .7%
1 .4%
4 .6%
(2 .2)%
Boardwalk REIT’s Ontario operations reported a slight increase in total rental revenue of 1 .0% for the year ended December 31,
2014, compared to the previous year, due to an increase in occupied rents while maintaining occupancy levels . Total rental expenses
increased by 4 .6%, primarily as a result of higher utilities, especially during the first quarter of the year . with a sluggish economic
recovery (especially with the manufacturing sector), and little population growth, coupled with Ontario’s legislated 0 .8% rent increase
guideline for 2014, Boardwalk REIT’s Ontario operations were stable, but relatively flat, for the current year .
The reported increase in utilities was the result of higher electricity costs and natural gas expense as a result of the colder weather
experienced in the region earlier in the year . During the third quarter of 2014, the Trust entered into a fixed price natural gas contract to
hedge 50% of its Ontario and Quebec natural gas usage . The contract is effective beginning November 1, 2014, and ends on October
31, 2015, at an average rate of approximately $3 .62/GJ of natural gas consumption .
Property taxes increased due to higher assessments in 2014 compared to 2013, particularly in the cities of London and kitchener .
As a result of higher utility expense, net operating income declined slightly by 2 .2% in the current year compared to the same period
in the prior year . Reported operating margins for the year ended December 31, 2014 decreased slightly to 51 .5%, compared to 53 .2%
reported for the prior year .
Quebec Rental Operations
In $000’s, except number of suites
Total rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margins
Number of suites at December 31
12 Months
2014
12 Months
2013
$
71,393
$
70,644
$
$
$
$
$
16,857
7,015
7,413
31,285
40,108
56 .2%
6,000
$
$
$
$
$
16,285
6,126
7,034
29,445
41,199
58 .3%
6,000
% Change
1 .1%
3 .5%
14 .5%
5 .4%
6 .2%
(2 .6)%
Boardwalk REIT’s Quebec operations reported a marginal total rental revenue increase of 1 .1% for the year ended December 31, 2014,
compared to the previous year .
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Total rental expenses for the year increased by 6 .2% compared to the prior year, mainly due to higher utility costs .
The reported 14 .5% increase in utilities was due to higher natural gas costs compared to the prior year . During the third quarter, the
Trust entered into a fixed price natural gas contract to hedge 50% of its Ontario and Quebec natural gas usage . The contract is effective
beginning November 1, 2014, and ends on October 31, 2015, at an average rate of approximately $3 .62/GJ of natural gas consumption .
The details of the natural gas contracts are reported in Note 25 of the Trust’s consolidated financial statements for the year ended
December 31, 2014 .
Property taxes for the year increased 5 .4% compared to the prior year due to higher property tax assessments received in 2014 .
As a result of higher utilities reported, net operating income decreased 2 .6% in 2014 compared to the prior year . Reported operating
margins for the year ended December 31, 2013 decreased to 56 .2%, compared to 58 .3% reported for the prior year .
British Columbia Rental Operations
In $000’s, except number of suites
Total rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margins
Number of suites at December 31
12 Months
2014
$ 3,507
$
$
$
799
379
464
$ 1,642
$ 1,865
53 .2%
–
12 Months
2013
$
8,438
$
$
$
$
$
1,288
807
496
2,591
5,847
69 .3%
633
% Change
(58 .4)%
(38 .0)%
(53 .0)%
(6 .5)%
(36 .6)%
(68 .1)%
Earnings from Boardwalk’s British Columbia property portfolio are being presented as discontinued operations as the Trust sold these
non-core asset sales on May 29, 2014 .
operational sensitivities
Boardwalk’s Net Operating Income Optimization Strategy
Boardwalk’s current strategy is to focus on optimizing net operating income . This focus requires us to manage not only revenues
but also related operating costs, and take both into consideration when determining a service and pricing model . Lowering overall
turnover while maintaining reasonable increases in lease rates while continuing to focus on a high quality level of service continue to
be the model that has delivered the most stable and growing income source to date . This strategy is region specific and these variables
are in constant flux .
In a more competitive market, the Trust locks in rentals on selective suites for future months, but does not collect revenues for certain
months in the immediate future . This means the Trust may decide to rent a suite in December with the Customer not moving in
until the following year . Although the suite is rented, it will not generate revenue until the Customer actually moves in, for example,
in January, which corresponds to the next fiscal period . The percentages reported as occupancy levels (see table below) represent
those occupied units generating revenue for the period noted . The Trust closely monitors ‘apartment availability’, which represents
unoccupied units not generating revenue for the period, after taking into account forward-committed leases . Although occupancy
rates provide a good indication of current revenue, apartment availability provides the reader a more relevant indication of future
potential revenue .
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Boardwalk REIt’s Portfolio Occupancy
City
Calgary
Edmonton
Fort McMurray
Grande Prairie
kitchener
London
Montreal
Quebec City
Red Deer
Regina
Saskatoon
Vancouver (1)
Victoria (1)
Verdun
windsor
Total
2014
98 .92%
98 .48%
94 .22%
98 .36%
98 .35%
97 .63%
97 .24%
96 .19%
99 .18%
96 .99%
97 .73%
98 .57%
96 .89%
98 .85%
98 .46%
98 .20%
2013
99 .44%
98 .51%
97 .38%
97 .84%
98 .51%
97 .83%
97 .08%
97 .65%
99 .18%
97 .93%
98 .09%
98 .89%
98 .24%
98 .74%
98 .01%
98 .44%
(1) BC Property Portfolio was sold on May 29, 2014
In fiscal 2014, the Trust reported a slight decrease in overall occupancy rate to 98 .20% from 98 .44% for the prior year on its same store
properties . A softening of all rental markets contributed to the overall occupancy rate decrease . Boardwalk’s overall rental revenue
strategy focuses on the Trust balancing the key inputs, including occupancy levels and existing rental market rates . As a strategy, the
Trust is constantly adjusting market rents based on property-specific demand and supply .
Supply versus Demand & Impact on Reported Occupancy
s
t
u
O
e
v
o
M
/
s
l
a
t
n
e
R
1,600
1,400
1,200
1,000
800
600
400
200
0
Rentals
Move Outs
Occupancy %
J
F
M A M J
J
A
S O N D J
F
M
A M J
J
A
S
O N D J
F M
A M J
J
A
S O N D
J
2012
2013
2014
y
c
n
a
p
u
c
c
O
100%
99%
98%
97%
96%
95%
94%
93%
The issue of demand and supply, as with any industry, is an important performance indicator for multi-family real estate . The above
chart attempts to show the total move-outs (supply) compared to total move-ins (demand) and the resulting impact on reported
occupancy relating to our portfolio . The cumulative impact of demand being greater than supply, or vice versa, is the primary driver in
the reported occupancy rate . In recent years, Boardwalk focused on maintaining high occupancy levels by cautiously adjusting market
rents upward only when warranted while optimizing turnover costs . The reader is cautioned that adjusting market rental rates is an
ongoing process for the Trust and is consistent with its overall strategy of optimizing overall net operating income; consequently, it
will adjust rents upward or downward when it is deemed necessary .
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53
vacancy loss and Incentives
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
s
’
0
0
0
$
Vacancy Loss
Incentives
Total
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2010
2011
2012
2013
2014
Vacancy loss and rental incentives are strong indicators of current and future revenue performance . Depending on specific market
conditions, to best manage overall economic rental revenue, the correct balance between rental incentives and vacancy loss is im-
portant . On a quarterly basis, the chart details rental incentives versus vacancy loss . The slight increase in Boardwalk’s vacancy loss
for the 2014 year is attributable to the softening rental markets in all provinces, . Select incentives were introduced into the Calgary
and Edmonton markets to maintain higher occupancy . Overall, Alberta demonstrates a stable rental market in all regions other than
Fort McMurray . Boardwalk REIT will continue to manage its overall revenues through three key revenue variables, notably, market
rents, occupancy levels, and suite-selective incentives . All three key variables show continued stability in the apartment rental market,
particularly in the cities of Calgary, Edmonton, and Grande Prairie . we continue to focus on maximizing overall revenues through the
management of these key revenue variables .
Occupancy Sensitivity
As with all real estate rental operators, Boardwalk REIT’s financial performance is sensitive to occupancy rates . Based on the current
reported market rents, a 1% annualized change in reported occupancy is estimated to impact overall rental revenue by approximately
$4 .8 million, or $0 .09 per Trust Unit on a diluted basis .
staBilizeD property results
Boardwalk defines stabilized property as one that has been owned by the Trust for a period of 24 months or more from the reporting
date . Boardwalk REIT’s overall percentage of stabilized properties was 99 .7% of its total rental unit portfolio as at December 31, 2014, or
a total of 34,517 units . The table below provides a regional breakdown on these properties for fiscal 2014, as compared to fiscal 2013 .
Dec 31 2014 – 12 M
Calgary
Edmonton
Fort McMurray
Grande Prairie
Red Deer
Ontario
Quebec
Saskatchewan
# of Units
5,310
12,396
352
645
939
4,265
6,000
4,610
34,517
% Revenue
Growth
% Operating
Expense Growth
% Net Operating
Income Growth
5 .3%
6 .4%
(2 .1)%
6 .1%
7 .3%
1 .0%
1 .1%
2 .2%
4 .2%
5 .7%
9 .3%
0 .8%
10 .3%
4 .4%
4 .6%
6 .2%
7 .0%
7 .1%
5 .1%
4 .7%
(3 .2)%
3 .7%
9 .2%
(2 .2)%
(2 .6)%
0 .1%
2 .5%
% of NOI
19 .8%
39 .3%
1 .9%
1 .7%
2 .4%
7 .3%
13 .6%
14 .1%
100 .0%
54
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Stabilized revenue increased by 4 .2% for the year ended December 31, 2014, compared to the prior year . Operating expenses reported
for the year increased by 7 .1% from 2013, resulting in a NOI increase of 2 .5% compared to the prior year . The increase in reported
stabilized revenue was driven by higher in-place occupied rents, particularly in Alberta (except Fort McMurray), which accounts for
approximately 65 .1% of the Trust’s reported stabilized Net Operating Income . Operating expenses increased primarily as a result of
increases in utilities and higher property taxes .
Stabilized Revenue Growth
Calgary
Edmonton
Fort McMurray
Grande Prairie
Red Deer
Ontario
Quebec
Saskatchewan
# of Units
5,310
12,396
352
645
939
4,265
6,000
4,610
34,517
Q4 2014 vs .
Q3 2014
Q4 2014 vs .
Q2 2014
Q4 2014 vs .
Q1 2014
Q4 2014 vs .
Q4 2013
1 .0%
1 .4%
(1 .8)%
1 .8%
(0 .1)%
0 .8%
0 .2%
0 .3%
0 .8%
2 .4%
3 .1%
(6 .1)%
3 .1%
2 .1%
0 .5%
0 .2%
0 .0%
1 .7%
4 .3%
4 .9%
(7 .3)%
4 .5%
3 .9%
1 .6%
0 .5%
1 .1%
3 .1%
5 .4%
6 .1%
(7 .7)%
5 .8%
5 .6%
1 .3%
0 .2%
1 .1%
3 .7%
On a sequential basis, stabilized revenues reported in the fourth quarter of 2014 increased slightly by 0 .8% over Q3 2014, increased
by 1 .7% compared to Q2 2014, increased 3 .1% compared to Q1 2014 and increased by 3 .7% compared to Q4 2014 . The Trust strives
toward balancing the optimum level of rental incentives and occupancy rates in order to achieve its net operating income optimiza-
tion strategy .
Estimated loss-to-lease Calculation
Boardwalk REIT’s estimated loss-to-lease, representing the difference between estimated market rents and actual occupied rents in
December 2014, and adjusted for current occupancy levels, totaled approximately $12 .9 million on an annualized basis, representing
$0 .25 per Unit (Trust & LP B Units) . For the most part, Boardwalk REIT’s rental lease agreements last no longer than twelve months . On
physical turnover, the rental units are then re-leased directly at current market rent . If market rents are increasing and a Boardwalk
Resident Member wishes to renew and he or she is able to demonstrate real financial hardship at the end of the lease agreement, the
Trust’s self-imposed rent control and Rental Increase Forgiveness program will reduce rental increases as appropriate, recognizing
the long term benefits of such goodwill . By providing sustainable rental increases to our Resident Members, the Trust and all its
Stakeholders have historically benefited from lower turnover, reduced expenses, and higher occupancy . The reader should note
estimated loss-to-lease, measured at a point in time, is a non-GAAP measure, and that reported market rents can be very seasonal,
and, as such, will vary from quarter to quarter . The significance of this change could materially affect Boardwalk REIT’s “estimated
loss-to-lease” amount . The importance of this estimate, however, is that it can be an indicator of future rental performance, assuming
continuing economic conditions and trends . The reader should also note that it would take significant time for these market rents
to be recognized by the Trust due to internal and external limitations on its ability to charge these new market-based rents in the
short term .
B O A R Dw A L k R E I T / A R 2 0 1 4
M A N A G E M E N t ’ S D I S C u S S I O N A N D A N A l Y S I S
55
Same Store
Calgary
Edmonton
Fort McMurray
Grande Prairie
Red Deer
Alberta Portfolio
Saskatchewan (2)
Ontario
Quebec
Total Portfolio
December
2014
Occupied Rent (1)
December
2014
Market Rent (1)
Mark to Market
Per Month
$ 1,370
$ 1,272
$ 1,899
$ 1,054
$ 1,040
$ 1,292
$ 1,160
$
838
$ 1,013
$ 1,170
$ 1,453
$ 1,299
$ 1,822
$ 1,094
$ 1,078
$ 1,333
$ 1,203
$
846
$ 1,022
$ 1,202
$
$
$
$
$
$
$
$
$
$
83
27
(77)
40
38
41
43
8
9
32
Annualized
Mark to Market
Adjusted
for Current
Occupancy
levels ($000’s)
$ 5,375
$ 3,865
$
$
$
(339)
302
432
$ 9,635
$ 2,272
$
$
392
595
$ 12,894
weighted
Average
Apartment Units
% of Portfolio
5,419
12,396
352
645
939
19,751
4,610
4,265
6000
34,626
16%
36%
1%
2%
3%
58%
13%
12%
17%
100%
(1) Ancillary rental revenue is included in the calculation of market and occupied rent
(2) Saskatchewan market rent now includes an increase for cable and internet service
The amount reported as mark-to-market of $32 per month represents
2 .7% of December 2014 occupied rent, an amount which is realistically
attainable at lease maturity . The decrease in the loss-to-lease for our
portfolio, from $14 .8 million at December 2013 to $12 .9 million at
December 2014, was due primarily to a slowing growth rate in mar-
ket rents, particularly in Calgary and Edmonton, thus decreasing the
spread between occupied and market rents .
In fiscal 2014, the Trust was able to increase market rents on specific
properties by reducing incentives while maintaining high occupancy
levels . As with prior periods, Boardwalk REIT continues to focus on the
optimization of all rental revenue, with attention to appropriate levels
of market rents and certain occupancy level targets, as well as suite-
selective incentives, when warranted .
$2,500
$2,000
s
d
n
a
s
u
o
h
T
$1,500
$1,000
$500
0
Incentives Vacancy Loss
$2,358
$1,765
$495
$436
Q4 2014
Total Market Rent $118.2M
Q4 2013
Total Market Rent $113.4M
As was previously mentioned, given a softening of the rental markets and the impact uncertainty resulting from lower oil prices,
Boardwalk’s continued focus is on increasing occupancy in the short term by offering various suite-specific incentives in exchange for
longer-term leases .
Investing In Our Properties
Boardwalk is continually re-investing in its properties . A detailed analysis of this investment can be found later in the MD&A under the
section titled, “Capital Improvements” . The purpose of the “Capital Improvements” section is to provide the reader with a consolidated
view of what the Trust spent on its real estate asset base .
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Financing costs
Financing costs for the year ended December 31, 2014 increased from the same period in the prior year, from $88 .8 million to $92 .0
million, directly as a result of the special distribution related to the LP Class B units . Should this special distribution of $6 .3 million, or
$1 .40 per unit, be removed, financing costs decreased from $88 .8 million to $85 .7 million, the combined effect of the Trust being able
to renew maturing mortgages at interest rates substantially below the noted maturing rates and the reduction in mortgages out-
standing during the year . At December 31, 2014, the reported weighted average interest rate of 3 .34% was down from the weighted
average interest rate of 3 .46% at December 31, 2013 . Boardwalk REIT has continued to take advantage of historically low interest rates
to refinance and renew certain mortgages, resulting in a lower overall weighted average interest rate . The average term to maturity
of the Trust’s mortgage portfolio is approximately 4 .1 years . Given the continued low interest rates forecasted for 2015, this average
term is expected to increase in subsequent periods as the Trust continues to renew maturing mortgages for significantly longer terms,
ranging from 5 to 10 years with an emphasis in the longer end of this range .
Boardwalk REIT concentrates on multi-family residential real estate . It is therefore eligible to obtain government-backed insurance
through the NHA program, administered by CMHC . The benefits of purchasing this insurance are two-fold .
The first benefit of using CMHC insurance is Boardwalk REIT can normally obtain lower interest rate spreads on its property financing
as compared to other financing alternatives in either the residential or any other real estate class, leading to lower overall cost of debt,
after including the cost of the NHA insurance .
The second benefit of the CMHC insurance relates to lowering Boardwalk REIT’s overall renewal risk . Once insurance is obtained on
the related mortgage, the insurance is transferable and follows the mortgage for the complete amortization period, typically between
25 and 40 years, depending on the type of asset being insured . with the insurance being transferable between approved lenders, it
lowers the overall risk of Boardwalk REIT not being able to refinance the asset on maturity .
Management cannot over-emphasize the importance of this Government-backed mortgage insurance program administered by
Canada Mortgage and Housing Corporation . Despite past volatility in the overall credit markets, the Trust has been able to find a
number of mortgage lenders willing to assume, or underwrite, additional mortgages under this program .
At December 31, 2014, approximately 99% of Boardwalk REIT’s mortgages were backed by this NHA insurance, with a weighted aver-
age amortization period of approximately 30 years .
As was previously noted, the adoption of IFRS has also had an impact on the amount of financing costs reported on the Trust’s
Consolidated Statement of Comprehensive Income . As a result of the Trust’s LP Class B Units being classified as financial liabilities in
accordance with IAS 32, the corresponding distributions paid to the Unitholders are classified as financing costs under IFRS . The Trust
believes these distribution payments do not truly represent “financing charges” as these amounts are only payable if the Trust declares
distributions, and only for the amount of any distributions declared, both of which are at the discretion of the Board of Trustees as
outlined in the DOT . The total amount of distributions paid to the LP Class B Unitholders for the year ended December 31, 2014, which
have been recorded as financing charges, was $15 .4 million ($8 .8 million – December 31, 2013) . Based on this rationale, these amounts
have been added back in the calculation of FFO .
The reader should also note that under IFRS, financing charges are recorded net of interest income the Trust has earned for the year .
The total amount of interest income earned for the current year was $2 .0 million, compared to $1 .9 million in the prior year .
Interest Rate Sensitivity
Although Boardwalk REIT manages its financing risk in a variety of ways, as discussed later in the MD&A, it is important the reader
understands how significant interest rate changes could impact the Trust as a whole . Due to the size of Boardwalk’s overall mortgage
portfolio, it has been prudent to spread out the maturity of these mortgages over a number of years . In fiscal 2015, the Trust antici-
pates having approximately $427 million of secured mortgages maturing with a weighted average rate of 3 .66% . If we were to renew
these mortgages today with a new 5-year term, we estimate, based upon interactions with possible lenders, the new rate would
B O A R Dw A L k R E I T / A R 2 0 1 4
M A N A G E M E N t ’ S D I S C u S S I O N A N D A N A l Y S I S
57
be approximately 1 .50% (as of February 19, 2015), resulting in an estimated $9 .2 million potential annualized reduction in interest
expense in our soon-to-mature mortgages .
aDMi nistration
Included in administration expenses are costs associated with Boardwalk REIT’s centralized administrative functions . The amount
reported for the year ended December 31, 2014, which relates to corporate administration from continuing operations, was $33 .7
million, compared to $32 .2 million for the same period in the prior year, an increase of approximately 4 .8% . The increase is primarily
due to higher wages and salaries and Associate transition payments in the current year compared to 2013 .
For the year ended December 31, 2014 and prior comparative periods, Boardwalk REIT allocated certain administration costs between
corporate and rental operating expenses . The administration costs allocated to rental operating expenses consist primarily of specific
amounts associated with operation-specific staff and related support initiatives . Total administration costs, combining rental operat-
ing and corporate, were $57 .4 million for the year ended December 31, 2014, compared to $55 .4 million for the same period in the
prior year . The increase in total administration costs of approximately $2 .0 million, or approximately 3 .6%, was primarily the result
of higher wages and salaries and Associate transition payments . The allocation of administration expenses between corporate and
operating general and administration costs has not been materially impacted by the Trust’s adoption of IFRS standards . The transition
payments relate to a short term program that allowed for team Associates that met select criteria to elect a retirement package . The
amount included for this in the 2014 financial statements was $1 .6 million or $0 .03 per Trust Unit .
Depreciation anD aMortization
Depreciation and amortization recorded on the Consolidated Statements of Comprehensive Income is made up of the depreciation of
property, plant and equipment, and the amortization of deferred financing costs .
Depreciation of property, plant and equipment
The Trust has elected to use the cost model under IAS 16 – Property, Plant and Equipment (“IAS 16”) to value its property, plant and
equipment, and, as a result of this method, depreciation expense is a charge taken against earnings to reflect the estimated deprecia-
tion that has occurred to these assets as a result of their use during the reporting period in question .
Amortization of Deferred Financing Costs
The amortization of deferred financing costs relates primarily to the amortization of CMHC premiums, which are paid as part of mort-
gage financing . If Boardwalk REIT replaces an existing mortgage with a new mortgage, all costs associated with the original mortgage,
including the unamortized balance of the CMHC premium, are required to be charged to income in the period that this occurs . As a
result, and due to the variable timing and strategy of each mortgage at maturity, the amounts reported will vary . Rather than refinance
the entire mortgage on term maturity to a higher amount, Boardwalk REIT continues to take advantage of supplementing, rather than
extinguishing, the original mortgage to increase its leverage .
For the year ended December 31, 2014, no deferred financing costs were written off due to the term maturity and payout of mortgages
in Boardwalk’s secured debt portfolio .
Boardwalk reviews its key depreciation and amortization estimates on an ongoing basis and, if warranted, will adjust these estimates
on a prospective basis .
The total amount reported as depreciation and amortization for the year ended December 31, 2014, was $11 .9 million, which was
consistent with the $11 .9 million recorded for the same period in the prior year .
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M A N A G E M E Nt ’ S D I S C u S S I O N A N D A N A l Y S I S
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other incoMe anD expenses
Income tax Expense
Boardwalk REIT qualifies as a ‘mutual fund trust’ as defined in the Income Tax Act (Canada) (the “Tax Act”) . The Tax Act also contains
legislation affecting the tax treatment of publicly traded trusts (the “SIFT Legislation”) and the criteria for qualifying for the real estate
investment trust exemption (the “REIT Exemption”), which would exempt Boardwalk REIT from income tax under the SIFT Legislation .
For 2013 and 2014, the Trust qualified for the REIT Exemption .
Although Boardwalk REIT is exempted from income taxes, provided it distributes all of its taxable income to its Unitholders, this
exemption does not apply to its corporate subsidiaries, which are subject to income taxes .
lP Class B units and the Deferred unit Compensation Plan
The LP Class B Units are non-transferable, except under certain circumstances, but are exchangeable, on a one-for-one basis, into
Boardwalk REIT Units at any time at the option of the holder . The LP Class B Units and the deferred unit-based compensation plan are
classified as financial liabilities in accordance with IFRS standards, and, as a result, are recorded at their fair value at each reporting
date . As at December 31, 2014, the Trust used a price of $61 .54 based on the closing price of the TSX-listed Boardwalk REIT Trust Units
to determine the fair value of these financial liabilities at that date . The total fair value of these units recorded on the Consolidated
Statements of Financial Position at December 31, 2014, was $275 .4 million, and a corresponding fair value loss of $7 .6 million (year
ended December 31, 2013 – fair value gain of $20 .9 million) was recorded on the Consolidated Statements of Comprehensive Income
for the year ended December 31, 2014 .
The deferred unit-based compensation plan had a fair value of $7 .8 million, and a corresponding fair value loss of $1 .1 million (year
ended December 31, 2013 – fair value loss of $0 .3 million) was recorded on the Consolidated Statements of Comprehensive Income
for the year ended December 31, 2014 .
Financial conDition
review oF consoliDateD stateMents oF cash Flows
Operating Activities
Cash Flow from Operations
Boardwalk REIT prepares its financial statements in accordance with International Financial Reporting Standards (“IFRS”) and with
the recommendations of the Real Property Association of Canada (“REALpac”) . REALpac has adopted measurements called Funds
From Operations and Adjusted Funds From Operations to supplement profits or earnings as measures of operating performance .
These measurements are considered to be meaningful and useful measures of real estate operating performance . Boardwalk REIT’s
presentation of FFO and AFFO are materially consistent with the definitions provided by REALpac . These measurements, however,
are not necessarily indicative of cash that is available to fund cash needs and should not be considered alternatives to cash flow as
a measure of liquidity . FFO and AFFO do not represent cash flow from operations as defined by IFRS . Boardwalk REIT considers FFO
and AFFO to be appropriate measurements of the performance of a publicly listed multi-family residential entity . In order to facilitate
a clear understanding of the combined historical operating results of Boardwalk REIT, management feels FFO and AFFO should be
considered in conjunction with profit as presented in the audited consolidated financial statements . Boardwalk REIT’s computation
of FFO from profit is highlighted above in the section titled, “FFO Reconciliations” . Boardwalk REIT’s computation of AFFO from FFO is
highlighted below In the section titled, “Maintenance of Productive Capacity” .
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59
A reconciliation of FFO to cash flow from operating activities as shown in the Consolidated Statements of Cash Flow prepared in
accordance with IFRS is highlighted below .
FFO Reconciliation
In $000’s, except per unit amounts
Cash flow from operating activities
Adjustments
Operating working capital
Deferred financing amortization
Government grant earned
Add back distributions to LP Class B Units recorded as
financing charges (1)
Interest paid
Financing costs
Funds from operations
Funds from operations – per unit
12 months
2014
12 months
2013
$ 173,568
$ 170,107
% Change
(348)
(7,364)
378
15,372
86,196
(91,977)
(3,361)
(7,825)
32
8,838
89,211
(88,818)
$ 175,825
$
3 .37
$ 168,184
$
3 .21
4 .5%
5 .0%
(1)
Under IFRS, the LP Class B Units are considered financial instruments in accordance with IAS 32 – Financial Instruments: Presentation (“IAS 32”) . As a
result of this classification, their corresponding distribution amounts are considered “financing charges” under IFRS . The Trust believes these distribution
payments do not truly represent “financing charges”, as these amounts are only payable if the Trust declares distributions, and only for the amount of any
distributions declared, both of which are at the discretion of the Board of Trustees as outlined in the DOT . Therefore, these distributions are excluded from
the calculation of FFO, consistent with the treatment of distributions paid to all other Unitholders .
The reader is cautioned that Boardwalk REIT’s calculation of FFO may be different from other real estate corporations or REITs and,
as such, a straight comparison may not be warranted . For the fiscal year ended December 31, 2014, Boardwalk REIT reported total
FFO of $175 .8 million, or $3 .37 per fully diluted Trust Unit . This represented an increase of approximately 4 .5% and 5 .0%, respectively,
compared to the $168 .2 million, or $3 .21 per fully diluted Trust Unit, reported for fiscal 2013 . The increase is primarily due to rental
revenue growth and interest expense savings .
Financing Activities
Distributions
Boardwalk distributes payments on a monthly basis to its Unitholders . These payments are referred to as regular distributions . The
distinct nature and classification of these payments are unique to each trust and the components of these distributions may have
differing tax treatments . For fiscal 2014, the Trust declared regular distributions of $106 .3 million to its Trust and LP Class B Unitholders,
in addition to a special distribution of $72 .8 million to Unitholders on record as at December 31, 2014, compared to $103 .4 million
for fiscal 2013 . Regular distributions declared in 2014 represented a FFO payout ratio of 60 .5% compared to 61 .5% for the prior year .
Regular distributions declared in 2014 also represented approximately 61 .2% of cash flow from operating activities compared to
60 .8% for 2013 . As regular distributions are funded by the Trust’s fund and cash flow from operations, these regular distributions
appear sustainable in the foreseeable future .
As noted earlier, the cash required to fund the special distribution of $72 .8 million came directly from the net proceeds on the sale of
non-core properties in 2014 and will not affect the sustainability of the Trust’s regular distributions .
Financing of Revenue Producing Properties
During the year ended December 31, 2014, the refinancing of existing properties totaled approximately $9 .8 million versus $68 .4
million for the year ended December 31, 2013 . During the financing and refinancing process, Boardwalk REIT was able to decrease the
weighted average interest rate on its mortgage portfolio from 3 .46% at December 31, 2013 to 3 .34% at December 31, 2014 .
Acquisitions
There were no new property acquisitions in 2014 and 2013 .
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Due to the nature of multi-family residential real estate, the amount paid for apartment units may vary dramatically based on a num-
ber of parameters, including location, type of ownership (that is, free hold versus land lease) and type of construction . As required
under IFRS, on acquisition, an analysis is performed on the mortgage debt assumed, if any . The analysis focuses on the interest rates
of the debt assumed . If it is determined that the in-place rates are materially below or above market rates, an adjustment is made to
the book cost of the recorded asset . No mortgages were assumed in 2014 and 2013 and, therefore, no adjustment for fiscal 2014 or
2013 was made .
Capital Improvements
Boardwalk has a continuous internal capital program with respect to its
investment properties . The program is designed to extend their useful
lives, improve operating efficiency, enhance appeal, maintain their earn-
ings capacity and meet Resident Members’ expectations, as well as meet
health and safety regulations .
In 2014, Boardwalk REIT invested approximately $89 .4 million, continuing
2014 12M
Operational Capital Investments
Internal Capital
Program 19%
Other
(incl. Equipment)
9%
Building
Improvements 35%
and discontinued operations combined (comprised of $80 .2 million on its
Elevators 8%
stabilized investment properties, $2 .0 million on development properties
Boilers/Mech 6%
Suite Improvements 18%
and $7 .2 million on property, plant and equipment) back into its prop-
erties in the form of equipment and project enhancements to upgrade
existing suites, common areas, building exteriors and systems, compared
Appliances 2% Hallway Improvements 3%
to the $96 .5 million ($73 .8 million on its stabilized investment properties, $15 .5 million on development properties and $7 .2 million
property, plant and equipment) invested in 2013 . The amount of this investment will vary from year-to-year .
A significant part of Boardwalk’s capital improvement program relates to projects that are carried out by Boardwalk’s Associates .
This internal capital program was initiated in 1996 as a way to create more value for the Trust . The Trust recognizes that there are
certain efficiencies and economies of scale available from having Boardwalk Associates perform certain capital projects ourselves,
or “in-house” . This results in the faster execution and greater control of these projects while at the same time eliminating the profit
charged by third-party contractors . The Trust focuses on specific projects where there is the largest opportunity for value creation, like
flooring and painting . Over the last few years, the Trust has intensified this focus of performing capital projects “in-house” rather than
contracting such services . Included in capital improvements is approximately $16 .7 million of on-site wages and salaries that have
been incurred towards these projects for 2014, compared to $17 .8 million for 2013 .
Maintenance of Productive Capacity
The Trust has two separate areas in which capital is invested back into its residential buildings . These are referred to as ‘maintenance
capital expenditures’ and ‘stabilizing and value enhancing capital expenditures’ .
Maintenance capital expenditures are funded from operating cash flows . These expenditures are deducted from FFO in order to es-
timate a sustainable amount, called Adjusted Funds From Operations, that can be distributed to Unitholders . Maintenance capital
expenditures include those expenditures that are not considered betterments, and relate more to maintaining the existing earnings
capacity of our property portfolio . In contrast, stabilizing and value enhancing capital expenditures are more discretionary in nature
and focus on increasing the productivity of the property, with the goal of increasing the FFO generated at that location . In addition,
the Trust invests funds in its portfolio in the form of ongoing repairs and maintenance as well as on-site maintenance Associates . Both
of these expenditures are designed to maintain the operating capacity of our assets .
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61
The following table provides management’s estimate of these expenditure categories .
in $000’s, except for per suite amounts
Maintenance Capital Expenditures
Stabilizing & Value Enhancing Capital (excluding
Property, Plant & Equipment)
12 Months
Dec 31, 2014
Per
Suite
12 Months
Dec 31, 2013
Per
Suite
$ 16,571
$
475
$ 16,757
$
475
$ 63,657
$ 80,228
$ 1,825
$ 2,300
$ 57,068
$ 73,825
$ 1,618
$ 2,093
Items reported as capital are determined as investments in assets that have a useful life longer than the current reporting period .
Management has estimated that for fiscal 2014 and 2013, the amount allocated to maintenance capital was approximately $16 .6
million, or $475 per apartment unit, and $16 .8 million, or $475 per apartment unit, respectively, with investment in value-enhancing
expenditures to its stabilized investment properties totaling $63 .7 million and $57 .1 million, respectively, or $1,825 and $1,618 per
apartment unit .
The amount allocated to maintenance capital in 2014 was approximately $16 .6 million, or $475 per apartment unit, which is consistent
with the $475 per apartment unit in 2013 .
If we compare the funds generated by the Trust after adjusting for the required maintenance capital expenditures, we note the Trust
is currently paying out an estimated 60 .5% of reported FFO and 66 .7% of AFFO for the year ended December 31, 2014, compared to
61 .5% and 68 .3%, respectively, for the previous year . The Trust feels that in addition to FFO, AFFO is an important measure of economic
performance . As an alternate measure to FFO, AFFO is indicative of the Trust’s ability to pay distributions to its Unitholders . AFFO is a
non-GAAP measure which does not have a standard meaning as defined by IFRS and, therefore, it may not be comparable to AFFO as
presented by other entities .
(000’s)
Funds From Operations (FFO)
Maintenance Capital Expenditures
Adjusted Funds From Operations (AFFO)
AFFO per unit (Trust and LP B Units)
Unitholder Distributions – Regular (Trust Units and LP B Units)
Distribution as a % of FFO
Distribution as a % of AFFO
12 months
Dec 31, 2014
12 months
Dec 31, 2013
$ 175,825
$
16,571
$ 159,254
$
3 .05
$ 106,286
60 .5%
66 .7%
$
$
$
$
$
168,184
16,757
151,427
2 .89
103,409
61 .5%
68 .3%
Maintenance capital expenditures for our income-producing properties are dependent upon many factors, including, but not limited
to, the number of suites, age and location of our properties, and the Trust’s policy of ongoing investment, resulting in safe and desir-
able apartments for its Resident Members and Associates .
review oF consoliDateD stateMents oF Financial position
Investment Properties
The Trust has elected to use the fair value model in accordance with IAS 40, Investment Properties to report the value of its investment
properties at each reporting date .
External valuations were obtained from third-party appraisers (the “Appraisers”) based on a cross section of properties from different
geographical locations and markets across the Trust’s rental portfolio, as determined by management, to corroborate the Trust’s inter-
nal fair value calculation for its entire investment property portfolio . External appraisals were obtained as follow:
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Date
December 31, 2014
September 30, 2014
June 30, 2014
March 31, 2014
Date
December 31, 2013
September 30, 2013
June 30, 2013
March 31, 2013
Number of
properties
5
4
4
4
Number of
properties
7
7
6
7
Aggregate
fair value
$ 524,041
$ 348,154
$ 102,104
$ 105,282
Aggregate
fair value
$ 779,487
$ 217,022
$ 211,895
$ 178,609
Percentage
of portfolio
as of that date
9 .1%
6 .0%
1 .8%
1 .8%
Percentage
of portfolio
as of that date
13 .6%
3 .8%
3 .8%
3 .2%
The fair value of the Trust’s investment property portfolio was determined internally by the Trust using the same assumptions and
valuation techniques used by the external valuation professionals . In addition to performing a valuation on a selection of Trust’s
properties (and not performing a valuation on all of the Trust properties) to compare to the Trust’s internal valuation, the Appraisers
provided the Trust with a summary of the major assumptions and market data by city in order for the Trust to complete its internal
valuations .
The key valuation metrics for the Trust’s investment properties are set out in the following tables:
As at
December 31, 2014
December 31, 2013
Capitalization rate
Minimum
Maximum
Forecasted
total
standardized
net operating
income
Capitalization rate
Minimum
Maximum
Forecasted
total
standardized
net operating
income
4 .50%
5 .00%
5 .75%
–%
5 .50%
5 .75%
6 .50%
5 .50%
5 .75%
5 .75%
5 .75%
4 .50%
5 .25%
6 .00%
$ 63,743
5 .50%
7 .25%
–%
5 .50%
6 .00%
7 .00%
6 .25%
6 .25%
6 .00%
6 .00%
7 .25%
126,363
20,643
–
1,754
10,875
6,814
5,510
9,926
23,118
19,675
288,421
15 .09%
$ 28,055
4 .75%
5 .00%
5 .75%
4 .75%
5 .50%
5 .75%
6 .50%
5 .50%
5 .75%
5 .75%
5 .75%
4 .75%
5 .25%
6 .00%
$ 60,110
5 .50%
7 .25%
5 .25%
5 .50%
6 .00%
7 .00%
6 .25%
6 .25%
6 .00%
6 .00%
7 .25%
121,623
20,497
6,195
1,754
11,145
7,068
5,348
9,980
23,156
19,569
286,445
13 .49%
$ 28,337
Calgary
Edmonton
Other Alberta
Vancouver
kitchener
London
windsor
Montreal
Quebec City
Regina
Saskatoon
Land Lease
Overall portfolio weighted average capitalization rates was 5 .48% as at December 31, 2014 and 2013 .
The “Overall Capitalization Rate” method requires a forecasted stabilized net operating income (“NOI”) be divided by a capitalization
rate (“cap rate”) to determine a fair value . NOI is calculated as a one-year income forecast based on rental income from current leases
and key assumptions about rental income, vacancies and inflation rates, among other factors, less property operating costs . As such,
fluctuations in both NOI and cap rates could significantly alter the fair value . Generally, an increase in stabilized NOI will result in an
increase to the fair value of an investment property . An increase In capitalization rate will result in a decrease to the fair value of an
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investment property . when the capitalization rate is applied to NOI to calculate fair value, there is a significant impact whereby the
lower the capitalization rate, the larger the impact . Below are tables that summarize the sensitivity impact of changes in both cap rates
and NOI on the Trust’s fair value of its investment properties (excluding development) as at December 31, 2014 and December 31, 2013:
As at December 31, 2014 (in 000’s)
Net Operating Income
Capitalization Rate
-0 .25%
Cap Rate As Reported
+0 .25%
As at December 31, 2013 (in 000’s)
Net Operating Income
Capitalization Rate
-0 .25%
Cap Rate As Reported
+0 .25%
5 .23%
5 .48%
5 .73%
5 .23%
5 .48%
5 .73%
-3%
-1% As Forecasted
+1%
+3%
$ 306,982
$ 313,311
$ 316,476
$ 319,641
$ 325,970
$ 94,522
$ 215,545
$ 276,057
$ 336,569
$ 457,592
(173,253)
(417,662)
(57,751)
5,775,111
57,751
(307,200)
(251,968)
(196,737)
173,253
(86,274)
-3%
-1%
As Forecasted +1%
+3%
$ 305,339
$ 311,635
$ 314,782
$ 317,930
$ 324,226
$ 94,016
$ 214,392
$ 274,580
$ 334,767
$ 455,143
(172,326)
(415,427)
(57,442)
5,744,205
57,442
(305,556)
(250,620)
(195,684)
172,326
(85,812)
Investment properties with a fair value of $480 .0 million as at December 31, 2014 ($488 .4 million – December 31, 2013) are situated on
land held under ground (or land) leases .
Investment properties with a fair value of $670 .0 million as at December 31, 2014 (December 31, 2013 – $654 .8 million) are pledged as
security against the Trust’s committed revolving credit facility . In addition, investment properties with a fair value of $5 .3 billion as at
December 31, 2014 (December 31, 2013 – $5 .3 billion) are pledged as security against the Trust’s mortgages payable .
For the year ended December 31, 2014, including discontinued operations, the Trust capitalized $80 .2 million in building improve-
ments (and $2 .0 million in development expenditures) and recorded a fair value gain of $104 .1 million on its financial statements as a
result of changes in the fair value of investment properties . Capitalized building improvements represent expenditures that provide
future benefits to the Trust for a period greater than twelve months, some of which may not be immediately reflected in the fair value
of the investment properties, under IFRS, for the current reporting period .
Investment Property Development
In the past, the development of multi-family apartment units by the Trust was not a significant part of its overall strategy . The main
reason was due to management’s opinion that the anticipated return on development was far below other available risk adjusted
capital allocation alternatives, such as the acquisition of existing apartment units in the Trust’s target markets and/or the buyback
of Trust Units for cancellation . Over the last number of years there has been a change in the multi family apartment environment in
Canada . Over this period we have witnessed a significant increase in the market value of rental apartments . This increase, although
somewhat helped by a steady increase in reported market rental rates, has been mainly driven by a significant compression in market
capitalization rates, which in turn has been the result of a prolonged low interest rate environment in Canada .
with this increase in the market value of apartments, there has been a significant decrease in the expected returns from the above
noted allocation alternatives to a level that warrants a measured allocation of capital to the area of new apartment development,
particularly on excess land the Trust currently owns . Accordingly, the Trust pursued new apartment development on some of its excess
density . In 2012, the Trust received development approval from the City of Calgary in Alberta, Canada, and commenced construction
of a 109-unit four storey, elevatored, wood frame building in the Southwest part of the city . The development was substantially com-
pleted on November 7, 2013 and an Occupancy Permit allowing Boardwalk to commence the lease-up of the units was issued by the
City of Calgary for the project . The project was completed on time and within budget totaling approximately $19 million . To assist in
the development cost of this property, the Trust had applied for, and received, approval of a grant from the Province of Alberta in the
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amount of $7 .5 million . As at December 31, 2014, all of the $7 .5 million was received by the Trust . In return for this grant, the Trust has
agreed to classify 54 of the 109 units as ‘affordable’, with market rents set at 10% below average market rates for Calgary for a term
of 20 years . The remainder of the approximate $11 .5 million development funds required came from Boardwalk’s cash on hand . we
estimated the stabilized capitalization rate on this project to be between 6 .5% and 7 .0%, including an estimated allocation of $4 .25
million, or $39 thousand per apartment unit, for the excess land allocated to this project . In accordance with IAS 20 – Accounting for
Government Grants and Disclosure of Government Assistance under IFRS, this grant will be recognized in profit or loss on a systematic
basis over the periods in which the Trust recognizes revenue from the 54 units classified as affordable units, resulting in achievable
rents being much closer to market rents . For the year ended December 31, 2014, $378 thousand (December 31, 2013 – $32 thousand)
was recognized in profit under rental revenue for this grant .
In October of 2014, the Trust commenced the first phase of construction for a 79-unit building on excess land on our property known
as Pines of Normanview in Regina, Saskatchewan . The Trust executed a fixed-price construction contract with an estimated cost to
complete of approximately $14 .1 million, or $178,000 per door . The four-story, wood frame building will consist of 13 one-bedroom
and 66 two-bedroom units . Stabilized capitalization rate is estimated to be between 6 .0% and 6 .5%, excluding land . Internally, we have
valued the land at approximately $12,000 per door . The building is estimated to be completed in Q1 2016 .
It is our intention to continue to investigate further development opportunities, particularity in Alberta and Saskatchewan; however,
each future opportunity will require a separate analysis and, depending on the analysis and economic conditions, Boardwalk REIT
will determine if additional development projects are warranted . Historically, one of the biggest risks to real estate evaluations is
the building of oversupply in a particular market, which results in significant corrections of property values market wide . The Trust
currently mitigates this risk by avoiding leverage and using cash on hand for new development and undertaking development as a
small part of Boardwalk’s overall strategy .
For the year ended December 31, 2014, the Trust expended $2 .0 million on total development costs compared to $15 .5 million for the
prior year .
capital structure anD liquiDity
Liquidity refers to the Trust’s ability to generate, and have available, sufficient cash to fund our ongoing operations and capital commit-
ments as well as its distributions to Unitholders . Generally, distributions are funded from FFO . However, in common with the majority
of real estate entities, we rely on lending institutions for a significant portion of capital required to fund mortgage principal payments,
capital expenditures, acquisitions, unit buybacks, and repayment of maturing debt . Over the past number of years, Boardwalk has
observed a significant increase in borrowing standards of many of our key lending partners as a result of heightened sensitivity to
possible weaknesses in the economy .
To mitigate the risk of renewal, the Trust utilizes NHA mortgage insurance, the benefits of which we discussed in detail above . In
volatile times, the ability to access this product was very beneficial to the Trust as a whole .
The Trust’s current liquidity position remains stable as the following table highlights:
($000)
Cash position December 31, 2014
Special Distribution January 15, 2015
Net cash position
Committed Revolving Credit Facility Available
Total Available Liquidity
$ 139,564
72,794
66,770
$ 195,836
$ 262,606
Note that the total available liquidity of the Trust was reduced by approximately $72 .8 million as a result of the special distribution
declared for Trust and LP Class B Unitholders on record as at December 31, 2014 and paid January 15, 2015 .
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In addition to this, the Trust currently has 3,058 rental apartment units of unencumbered assets, of which 855 units are pledged
against the Trust’s committed revolving credit facility . It is estimated under current CMHC underwriting criteria, that the Trust could
obtain an additional $270 .1 million of new proceeds from the financing of its current unencumbered assets .
Approximately 99% of Boardwalk REIT’s secured mortgages carry NHA insurance . Maturing mortgages already have commitments at
interest rates lower than their existing (maturing) interest rates .
The reader should also be aware that of the $427 .4 million of secured mortgages coming due in 2015 (as shown in the table below),
all have NHA insurance, and represent in aggregate approximately 47% of current estimated “underwriting” values on those individual
secured assets . Currently, interest rates on NHA insured mortgages are slightly below the weighted average interest rate of the $427 .4
million maturing mortgages of 3 .66% . The reader, however, is cautioned these rates do fluctuate and, by the time these maturing
mortgages are set for renewal, with or without additional financing, interest rates may have changed materially . Even with the NHA
insurance program attached to its secured mortgages, the Trust is still susceptible to changes in market interest rates . To address this
risk, the Trust has forward locked or renewed $137 .3 million, or 32%, of its $427 .4 million of 2015 mortgage maturities . The weighted
average contracted interest rate on these renewals is 2 .18%, for an average term of 7 years . These forward locked and renewed mort-
gages represent an annualized interest savings of approximately $3 .0 million .
Mortgages Schedule
Boardwalk REIT’s long-term debt consists entirely of low-rate, fixed-term secured mortgage financing . The maturity dates on the se-
cured mortgages have been staggered to lower the overall interest rate risk on renewal .
Total mortgages payable (net of unamortized transaction costs) on December 31, 2014, were $2 .17 billion, compared to $2 .26 billion
reported on December 31, 2013 .
Boardwalk REIT’s overall weighted average interest rate on its long-term debt has decreased from the prior year . The weighted average
interest rate on December 31, 2014, was 3 .34% compared to 3 .46% on December 31, 2013 . To better maintain cost effectiveness and
flexibility of capital, Boardwalk REIT continuously monitors short and long-term interest rates . If the environment warrants, the Trust
will convert short-term, floating rate debt, if any, to longer term, fixed rate mortgages to reduce interest rate renewal risk .
Year of Maturity
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total Principal Outstanding
Unamortized Deferred Financing Costs
Per Financial Statements
weighted
Average
Interest Rate
By Maturity
3 .66%
3 .89%
2 .92%
3 .27%
3 .00%
3 .86%
3 .67%
3 .37%
3 .01%
3 .37%
3 .10%
3 .34%
Principal
Outstanding as
at Dec 31, 2014
$
427,357
264,455
309,019
176,823
410,292
84,160
55,463
221,639
185,016
93,651
15,755
$ 2,243,630
$
(74,131)
$ 2,169,499
% of Total
19 .0%
11 .8%
13 .8%
7 .9%
18 .3%
3 .7%
2 .5%
9 .9%
8 .2%
4 .2%
0 .7%
100 .0%
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Interest Coverage
Notwithstanding the Trust’s current liquidity situation, Boardwalk’s liquidity and access to capital resources is constrained by certain
tests that have been adopted in both its Declaration of Trust, as well as in its credit facility . The Declaration of Trust stipulates an interest
coverage ratio limit of 1 .5 to 1 . For the purpose of the interest coverage ratio calculation, gains or losses on the sale or disposition
of investment properties are excluded from earnings . Additionally, distributions on the LP Class B Units are excluded from interest
expense, despite the LP Class B Units being classified as a financial liability under IFRS .
The following table sets out the Trust’s interest coverage ratio calculation as at December 31, 2014 and December 31, 2013, based on
the most recently four completed fiscal quarters .
As at
Consolidated EBITDA
Consolidated Interest Expense
Interest Coverage Ratio
Minimum Threshold
December 31, 2014
December 31, 2013
$ 260,531
$ 257,827
77,341
3 .37
1 .50
81,813
3 .15
1 .50
For the year ended December 31, 2014, Boardwalk REIT’s overall interest coverage ratio of adjusted EBITDA (i .e . Earnings Before
Interest, Taxes, Depreciation and Amortization) to interest expense, excluding distributions on LP B Units and fair value gains and
losses, was 3 .37, compared to 3 .15 for the previous year . The reader should note upon the adoption of IFRS standards, the distributions
made to the LP Class B Unitholders are now considered financing charges and is the result of the reclassification of these units as
financial liabilities . The calculation of the interest coverage ratio above does not include these distribution payments in the calculation
of interest expense .
unitholders’ Equity
The following table discloses the changes in REIT Trust Units issued and outstanding:
Summary of unitholders’ Capital Contributions
December 31, 2012
Units issued for vested deferred units
December 31, 2013
Units issued for vested deferred units
Units purchased and cancelled
December 31, 2014
Units
47,851,667
68,297
47,919,964
73,089
(472,100)
47,520,953
Boardwalk REIT has one class of publicly traded voting securities known as “REIT Units” . As at December 31, 2014, there were 47,520,953
REIT Units issued and outstanding . In addition, there were 4,475,000 special voting units issued to holders of “Class B Units” of Boardwalk
REIT Limited Partnership (“LP B Units”), each of which also has a special voting unit in the REIT . Each LP B Unit is exchangeable for a REIT
Unit on a one-for-one basis at the option of the holder . Each LP B Unit, through the special voting unit, entitles the holder to one vote
at any meeting of Unitholders . Accordingly, if all of the LP B Units were exchanged for REIT Units, the total issued and outstanding REIT
Units would be 51,995,953 . These LP Class B Units are classified as “FVTPL” financial liabilities under IFRS and are recorded at their fair
value as liabilities on the Consolidated Statements of Financial Position .
In 2013, the Trust received regulatory approval for a Normal Course Issuer Bid (the “Bid”) to purchase and cancel up to 3,894,712 Trust
Units, representing 10% of the public float at the time of the TSX approval . The Bid commenced July 3, 2013 and terminated July 2,
2014 . The Trust’s daily purchase limit pursuant to the Bid was 22,289 Trust Units .
On June 30, 2014, the Trust received regulatory approval for a Normal Course Issuer Bid (the “Bid”) to purchase and cancel up to
3,901,031 Trust Units, representing 10% of the public float at the time of the TSX approval . The Bid commenced July 3, 2014, and
terminates July 2, 2015, or when the Bid is completed . The Trust’s daily purchase under this Bid will be limited to 15,449 Trust Units .
During 2014, the Trust purchased and cancelled 472,100 Units at an average purchase cost of $67 .01 per Trust Unit .
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Equity
Boardwalk has an equity market capitalization of approximately $3 .2 billion based on the Trust Unit closing price of $61 .54 on the
Toronto Stock Exchange on December 31, 2014 .
Enterprise value
with a total enterprise value of approximately $5 .4 billion (consisting of total debt of $2 .2 billion and market capitalization of $3 .2
billion) as at December 31, 2014, Boardwalk’s total debt is approximately 40% of total enterprise value at the end of the year .
Risks anD Risk ManageMent
Boardwalk REIT, like most real estate rental entities, is exposed to a variety of risk areas . These areas are categorized between general
and specific risks . General risks are the risks associated with general conditions in the real estate sector, and consist mainly of com-
monly exposed risks that affect the real estate industry . Specific risks focus more on risks uniquely identified with the Trust, such as
credit, market, liquidity and operational risks . The following will address each of these risks . In addition, this section should be read in
conjunction with the Trust’s AIF dated February XX, 2015, where additional risks and their related management are also noted .
gen eral risks
Real Estate Industry Risk: Real estate investments are generally subject to varying degrees of risk depending on the nature of the
property . These risks include changes in general economic conditions (such as the availability and cost of mortgage funds), local
conditions (such as an oversupply of space or a reduction in demand for real estate in the area), government regulations (such as new
or revised residential tenant legislation), the attractiveness of the properties to tenants, competition from others with available space,
and the ability of the owner to provide adequate maintenance at an economic cost . Currently, we operate in Canada, in the provinces
of Alberta, Saskatchewan, Ontario and Quebec . Neither of Alberta and Saskatchewan is subject to rent control legislation; however,
under Alberta legislation, a landlord is only entitled to increase rents once every twelve months . A more detailed discussion on rent
controls will follow in a later section .
Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related
charges, must be made regardless of whether or not a property is producing sufficient income to service these expenses . Boardwalk
REIT’s properties are subject to mortgages, which require significant debt service payments . If the Trust were unable or unwilling to
meet mortgage payments on any property, losses could be sustained as a result of the mortgagee’s exercise of its rights of foreclosure
or of sale . Real estate is relatively illiquid . Such illiquidity will tend to limit our ability to vary our portfolio promptly in response to
changing economic or investment conditions . In addition, financial difficulties of other property owners resulting in distress sales may
depress real estate values in the markets in which the Trust operates .
Multi-Family Residential Sector Risk: Income producing properties generate income through rent payments made by tenants of the
properties . Upon the expiry of any lease, there can be no assurance that the lease will be renewed or the tenant replaced . The terms of
any subsequent lease may be less favourable to us than the existing lease . To mitigate this risk, the Trust does not have any one or small
group of significant tenants . Each operating lease signed is for a period of twelve months or less . The Trust is dependent on leasing
markets to ensure vacant residential space is leased, expiring leases are renewed and new tenants are found to fill vacancies . with the
recent drastic drop in oil prices, the risk of a downturn in the economy has dramatically increased . A disruption in the economy could
have a significant impact on how much space tenants will lease and the rental rates paid by tenants . This would affect the income
produced by our properties as a result of downward pressure on rents . [Need to Update for recent drop in oil price]
Environmental Risks: As an owner and manager of real property, Boardwalk REIT is subject to various Canadian federal, provincial,
and municipal laws relating to environmental matters . These laws could encumber us with liability for the costs of removal and reme-
diation of certain hazardous substances or wastes released or deposited on or in its properties or disposed of at other locations . The
failure to remove or remediate such substances, if any, could adversely affect Boardwalk’s ability to sell its real estate, or to borrow
using real estate as collateral, and could potentially also result in claims or other proceedings against Boardwalk REIT . Boardwalk
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REIT is not aware of any material non-compliance with environmental laws at any of its properties . The Trust is also not aware of any
pending or threatened investigations or actions by environmental regulatory authorities in connection with any of its properties or
any material pending or threatened claims relating to environmental conditions at its properties . Boardwalk REIT has formal policies
and procedures to review and monitor environmental exposure . The Trust has made, and will continue to make, the necessary capital
expenditures for compliance with environmental laws and regulations . Environmental laws and regulations can change rapidly and
may become more stringent in the future . Compliance with more stringent environmental laws and regulations could have a material
adverse effect on our business, financial condition or results of operation .
Ground Lease Risk: Five of our properties, located in Banff, Calgary, Edmonton, and two in Montreal, are subject to long-term ground
(or land) leases and similar arrangements; in each instance, the underlying land is owned by a third party and leased to the Trust .
Under the terms of a typical ground lease, the lessee must pay rent for the use of the land and is generally responsible for all costs
and expenses associated with the building and improvements, including taxes, utilities, insurance, maintenance, repairs and replace-
ments . Unless the lease term is extended, the land together with all improvements made will revert to the owner of the land upon
the expiration of the lease term . These leases are set to expire between 2028 and 2095 . Approximately 10% of the Trust’s FFO derives
from the properties in its portfolio which are held as long-term ground leases . The Trust will actively seek to either renew the terms of
such leases or purchase the freehold interest in the lands forming the subject matter of such leases prior to the expiry of their terms .
However, if the Trust cannot or chooses not to renew such leases, or buy the land of which they form the subject matter, as the case
may be, the net operating income and cash flow associated with such properties would no longer contribute to Boardwalk’s results
of operations and could adversely impact its ability to make distributions to Unitholders . The ground lease for the largest Montreal
property, known as the Nuns’ Island portfolio, is also subject to a rent revision clause, which commenced on December 1, 2008 (based
on a valuation date of March 16, 2008) . It is phased in on a property-by-property basis through to 2015, and is based on 75% of the
land value in its current use . After that revision, the land rent will remain constant thereafter through to 2064 . An event of default by
us, under the terms of a ground lease, could also result in a loss of the property, subject to such ground lease, should the default not
be rectified in a reasonable period of time . The Trust is not aware of any default under the terms of the ground leases .
Competition Risk: Each segment of the real estate business is competitive . Numerous other residential developers and apartment
owners compete in seeking tenants . Although it is our strategy to own multi-family properties in premier locations in each market in
which we operate, some of the apartments of our competitors may be newer, better located or better capitalized . The existence of
alternative housing could have a material adverse effect on our ability to lease space in our properties and on the rents charged or
concessions granted, and could adversely affect Boardwalk REIT’s revenues and its ability to meet its obligations .
General Uninsured Losses: Boardwalk REIT carries comprehensive general liability, fire, flood, extended coverage and rental loss insur-
ance with policy specifications, limits and deductibles customarily carried for similar properties . There are, however, certain types of
risks (generally of a catastrophic nature such as war or environmental contamination), which are either uninsurable or not economically
insurable . Boardwalk REIT currently has insurance for earthquake risks, subject to certain policy limits, deductibles and self-insurance
arrangements, and will continue to carry such insurance if it is economical to do so . Should an uninsured or underinsured loss occur,
Boardwalk REIT could lose its investment in, and anticipated profits and cash flows from, one or more of its properties, and would
continue to be obligated to repay any recourse mortgage indebtedness on such properties .
Fluctuations of Cash Distributions: Although Boardwalk REIT intends to continue to make distributions, the actual amount of dis-
tributions in respect of the REIT Units will depend upon numerous factors, including, but not limited to, the amount of principal
repayments, tenant allowances, leasing commissions, capital expenditures and REIT Unit redemptions and other factors that may be
beyond the control of Boardwalk REIT . The distribution policy of Boardwalk REIT is established by the Trustees and is subject to change
at the discretion of the Trustees . The recourse of Unitholders who disagree with any change in policy is limited and could require
such Unitholders to seek to replace the Trustees . Distributions may exceed actual cash available to Boardwalk REIT from time to time
because of items such as principal repayments, tenant allowances, leasing commissions, capital expenditures, and redemption of REIT
Units, if any . Boardwalk REIT may be required to use part of its debt capacity or to reduce distributions in order to accommodate such
items . Boardwalk REIT may temporarily fund such items, if necessary, through an operating line of credit in expectation of refinancing
long-term debt on its maturity .
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Cybersecurity Risk: A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability
of Boardwalk REIT’s information resources . More specifically, a cyber incident is an intentional attack or an unintentional event that
can include gaining unauthorized access to information systems to disrupt operations, corrupt data or steal confidential information .
As Boardwalk REIT’s reliance on technology has increased, so have the risks posed to its systems . Boardwalk REIT’s primary risks that
could directly result from the occurrence of a cyber incident include operational interruption, damage to its reputation, damage to
Boardwalk’s business relationships with its Resident Members/Customers and disclosure of confidential information regarding its
Resident Members and Associates . Boardwalk REIT has implemented processes, procedures and controls to help mitigate these risks,
but these measures, as well as its increased awareness of a risk of a cyber incident, do not guarantee that Its financial results will not
be negatively impacted by such an incident .
workforce Availability
Boardwalk’s ability to provide services to its existing Customers is somewhat dependent on the availability of well-trained Associates
and contractors to service our Customers as well as complete required maintenance and capital upgrades on our buildings . The Trust
must also balance requirements to maintain adequate staffing levels while balancing the overall cost to the Trust .
within Boardwalk, our most experienced Associates are employed full-time; this full-time force is supplemented by additional part-
time Associates as well as specific contract services needed by the Trust . we are constantly reviewing existing overall market factors to
ensure that our existing compensation program is in-line with existing levels of responsibility and, if warranted, we adjust the program
accordingly . we also encourage Associate feedback in these areas to ensure the existing programs are meeting their personal needs .
speciFi c risks
Credit Risk is the risk of loss due to failure of a contracted Customer to fulfill the obligation of required payments.
For us, one of the key credit risks involves the possibility that our Resident Members will be unable or unwilling to fulfill their lease
term commitments . Due to the very nature of the multi–family business, credit risk is not deemed to be very high . The Trust cur-
rently has 34,626 rental apartment units . The result of this is that we are not unduly reliant on any one Resident Member or lease .
To further mitigate this risk, Boardwalk REIT continues to diversify its portfolio to various major centers across Canada . Further, each
of our rental units has its own individual lease agreement, thus Boardwalk REIT has no material financial exposure to any particular
Resident Member or group of Resident Members . The Trust continues to utilize extensive screening processes for all potential Resident
Members including, but not limited to, detailed credit checks .
Market Risk is the risk that the Trust could be adversely affected due to market changes in product supply, interest rates and regional rent controls.
Our principal exposures to market risk are in the areas of new multi-family housing supply, changes to rent controls, utility price
increases, property tax increases, higher interest rates and mortgage renewal risk .
Supply Risk is the risk that the Trust would be negatively affected by the new supply of, and demand for, multi-family residential units in its major
market areas.
key drivers of demand include employment levels, population growth, demographic trends and consumer confidence . Any significant
amount of new construction will typically result in an imbalance in supply and cause downward price pressure on rents . No signs of
significant new rental construction are currently evident in any of our existing markets . Past studies have shown that in order to eco-
nomically justify new rental construction in Boardwalk REIT’s major markets, an increase in existing rental rates of hundreds of dollars
will be necessary . In recent years, however, there has been a change in the multi family apartment environment in Canada . During this
period, we have witnessed a significant increase in the market value of rental apartments . This increase, although somewhat helped
by a steady increase in reported market rental rates, has been mainly driven by a significant compression in market capitalization
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rates, which in turn has been the result of a prolonged low interest rate environment here in Canada . with this increase in the market
value of apartments, there has been a significant decrease in the expected returns from the acquisition of existing multi-family rental
properties to a level that warrants a measured allocation of capital to the area of new apartment development, particularly on excess
land Boardwalk REIT currently owns . Accordingly, the Trust has pursued new apartment development on some of its excess density .
Risk Management for Supply
Our performance will always be affected by the supply and demand for multi-family rental real estate in Canada . The potential for
reduced rental revenue exists in the event that Boardwalk REIT is not able to maintain its properties at a high level of occupancy, or
in the event of a downturn in the economy, which could result in lower rents or higher vacancy rates . Boardwalk REIT has minimized
these risks by:
▲
Increasing Resident Member satisfaction;
▲
Diversifying its portfolio across Canada, thus lowering its exposure to regional economic swings;
▲
Acquiring properties only in desirable locations, where vacancy rates for properties are higher than city-wide averages but can be
reduced by repositioning the properties through better management and selective upgrades;
▲
Holding a balanced portfolio which includes a variety of multi-family building types including high-rise, townhouse, garden and
walkups, each with its own market niche;
▲
Maintaining a wide variety of suite mix, including bachelor suites, one, two, three and four-bedroom units;
▲
Building a broad and varied Resident Member base, thereby avoiding economic dependence on larger-scale tenants;
▲
Focusing on affordable multi-family housing, which is considered a stable commodity;
▲
Developing a specific rental program characterized by rental adjustments that are the result of enhanced service and superior
product; and,
▲
Developing regional management teams with significant experience in the local marketplace, and combining this experience
with our existing operations and management expertise .
Interest Risk is the combined risk that the Trust would experience a loss as a result of its exposure to a higher interest rate environment (Interest
Rate Risk) and the possibility that at the term end of a mortgage the Trust would be unable to renew the maturing debt with either the existing or
an additional lender (Renewal Risk).
with the current world economic and financial situation, there is a heightened risk that not only will existing maturing mortgages be
subject to increased interest rate changes but also the distinct possibility that maturing mortgages will themselves not be able to be
renewed, or, if they are, they will be at significantly lower loan to value ratios . The Trust continues to manage this risk by maintain-
ing a balanced maturing portfolio with no significant amount coming due in any one particular period . In addition, the majority of
Boardwalk REIT’s debt is insured with NHA insurance . This insurance allows us to increase the overall credit quality of the mortgage
and, as such, enable the Trust to obtain preferential interest rates as well as facilitating easier renewal on its due dates .
The use of NHA insurance also assists Boardwalk REIT in managing its renewal risk . Given the increased credit quality of such debt,
the probability of the Trust being unable to renew the maturing debt or transfer this debt to another accredited lending institution is
significantly reduced .
To date, the Trust has had no problem obtaining mortgage renewals on term maturing loans, and additional funds, if needed, continue
to be available on its investment properties . Although we have seen fluctuations in the quoted interest spread over the corresponding
benchmark bonds, the all-in quoted rates, due to a general decline in interest rates, continue to be at levels well below the term
maturing interest rate and, as such, are accretive to the Trust as a whole .
In 2013, the Canadian government announced it has capped the total amount of insurance that CMHC can have in force at $600
billion . This decision has primarily affected the amount of portfolio or bulk insurance CMHC offers to banks, and, to date , has had a
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minimal impact on the renewal of Boardwalk’s mortgages, or the cost of secured debt capital . However, there is no assurance that
the decision to cap the amount of CMHC insurance will not affect mortgages for multi-family residential properties in future periods .
we continue to monitor this situation . Depending on the changes, if any, the Government of Canada places on the NHA insurance
product, the impact on the Trust could vary . It is our understanding that this cap would not affect any pre-existing insurance agree-
ments . Over 99% of Boardwalk’s secured debt has this insurance on it with an average of 30 years of amortization remaining . The
larger risk may be the ability to issue new secured debt under this program at a much lower cost due to the use of this insurance, the
proceeds of which the Trust uses to assist in the execution of its overall strategy .
Structural Subordination
Liabilities of a parent entity with assets held by various subsidiaries may result in the structural subordination of the lenders of the
parent entity . The parent entity is entitled only to the residual equity of its subsidiaries after all debt obligations of its subsidiaries are
discharged . In the event of a bankruptcy, liquidation or reorganization of the Trust, holders of indebtedness of the Trust may become
subordinate to lenders to the subsidiaries of the Trust .
Certain subsidiaries of the Trust will provide a form of guarantee pursuant to which the Indenture Trustee will, subject to the Trust
Indenture, be entitled to seek redress from such subsidiaries for the guaranteed indebtedness . These guarantees are intended to
eliminate structural subordination, which arises as a consequence of the Trust’s assets being held in various subsidiaries . Although
all subsidiaries, which own material assets, will provide a guarantee, not all subsidiaries of the Trust will provide such a guarantee . In
addition, there can be no assurance that the Indenture Trustee will, or will be able to, effectively enforce the guarantee .
Rent Control Risk is the risk of the implementation or amendment of new or existing legislative rent controls in the markets Boardwalk REIT
operates, which may have an adverse impact on the Trust’s operations.
Under Ontario’s rent control legislation, commonly known as “rent de-control”, a landlord is entitled to increase the rent for exist-
ing tenants once every twelve months by no more than the “guideline amount” established by regulation . For the calendar years
2013 and 2014, the guideline amounts have been established at 2 .5% and 0 .8%, respectively, and for 2015 the guideline amount has
been set at 1 .6% . Further details on Ontario’s Annual Rental Increase Guidelines can be found at http://www .landlordselfhelp .com/
RentIncreaseGuideline .htm . This adjustment is meant to take into account the income of the building, the municipal and school taxes,
the insurance bills, the energy costs, maintenance, and service costs . Landlords may apply to the Ontario Rental Housing Tribunal for
an increase above the guideline amounts if annual costs for heat, hydro, water, or municipal taxes have increased significantly, or if
building security costs have increased . when a unit is vacated, however, the landlord is entitled to lease the unit to a new tenant at
any rental amount, after which annual increases are limited to the applicable guideline amount . The landlord may also be entitled to
a greater increase in rent for a unit under certain circumstances, including, for example, where extra expenses have been incurred as
a result of a renovation of that unit .
Under Quebec’s rent control legislation, a landlord is entitled to increase the rent for existing tenants once a year for the rent period
starting after April 1st of the current year but before April 1st of the following year . There is no fixed rate increase specified by the
regulation . Rent increases also take into account a return on capital expenditures (for 2015 this return is 2 .9% compared to 2 .6% for
2014, 2 .6% for 2013 and 2 .9% for 2012), if such expenditures were incurred, and an indexing of the net income of the building . Average
rent increase estimates for the period starting after April 1st, 2015 and before April 2nd, 2016, before any consideration for increases
to municipal and school taxes as well as capital expenditures, are: 1 .0% for electricity heated dwellings, 1 .8% for gas heated dwellings,
1 .4% for oil heated dwellings and 0 .6% for non-heated dwellings .
Presently, rent control legislation does not exist in, and is not planned for, Alberta or Saskatchewan, although in April of 2007, the
province of Alberta amended its existing rental legislation the details of which will be discussed in more detail later in this document .
To manage this risk prior to entering a market where rent controls are in place, an extensive amount of time is spent researching the
existing rules, and, where possible, the Trust will ensure it employs Associates who are experienced in working in these controlled
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environments . In addition, the Trust adjusts forecast assumptions on new acquisitions to ensure they are reasonable given the rent
control environment .
Utility and Property Tax Risk relates to the potential loss the Trust may experience as a result of higher resource prices as well as its exposure to
significant increases in property taxes.
Over the past few years, property taxes have increased as a result of re-valuations of municipal properties and their adherent tax
rates . For us, these re-valuations have resulted in significant increases in some property assessments due to enhancements, which
are not represented on our balance sheet (as such representations are contrary to existing IFRS reporting standards) . To address this
risk, Boardwalk REIT has compiled a specialized team of property reviewers who, with the assistance of outside authorities, constantly
review property tax assessments and, where warranted, appeal them .
Utility expenses, mainly consisting of natural gas and electricity service charges, have been subject to considerable price fluctuations
over the past several years . In recent years, water and sewer costs have increased significantly as another form of “taxes” imposed by
various municipalities . Any significant increase in these resource costs that Boardwalk REIT cannot pass on to the Customer may have a
negative material impact on the Trust . To mitigate this risk, the Trust has begun to play a more active role in controlling the fluctuation
and predictability of this risk . Through the combined use of financial instruments and resource contracts with varying maturity dates,
exposure to these fluctuations has been reduced . In addition to this, the following steps have been implemented:
▲
where possible, economical electrical sub-metering devices are being installed, passing on the responsibility for electricity
charges to the end Customer .
▲
In other cases, rents have been, or will be, adjusted upward to cover these increased costs .
Operational Risk is the risk that a direct or indirect loss may result from an inadequate or failed technology, from a human process, or
from external events . The impact of this loss may be financial loss, loss of reputation, or legal and regulatory proceedings .
The Trust endeavors to minimize losses in this area by ensuring that effective infrastructure and controls exist . These controls are
constantly reviewed and improvements are implemented, if deemed necessary .
certain tax risks
Mutual Fund trust Status
Boardwalk qualified as a mutual fund trust for Canadian income tax purposes . It is the current policy of Boardwalk to annually distrib-
ute all of its taxable income to Unitholders and is therefore generally not subject to tax on such amount . In order to maintain its current
mutual fund trust status, Boardwalk is required to comply with specific restrictions regarding its activities and the investments held by
it . If Boardwalk was to cease to qualify as a mutual fund trust, the consequences could be adverse .
In accordance with the Income Tax Act (Canada) (the “Tax Act”), for fiscal 2013 and 2014, the Trust qualified as a real estate investment
trust (“REIT”) for income tax purposes and, as such, was exempted from the specified investment flow-through rules (the SIFT Rules”) .
A REIT is defined under the SIFT Rules as a trust that is resident in Canada throughout the taxation year and that satisfies all of the
following criteria:
(a)
at each time in the taxation year the total fair market value at that time of all non-portfolio properties that are qualified REIT
properties held by the trust is at least 90% of the total fair market value at that time of all non-portfolio properties held by the
trust;
(b)
not less than 90% of the trust’s gross REIT revenue for the taxation year is from one or more of the following: rent from real or
Immovable properties, interest, dispositions of real or immovable properties that are capital properties, dividends, royalties, and
dispositions of eligible resale properties;
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(c)
not less than 75% of the trust’s gross REIT revenue for the taxation year is from one or more of the following: rent from real
or immovable properties, interest from mortgages, or hypothecs, on real or Immovable properties, and dispositions of real or
immovable properties that are capital properties,
(d)
at each time in the taxation year an amount, that is equal to 75% or more of the equity value of the trust at that time, is the amount
that is the total fair market value of all properties held by the trust each of which is a real or immovable property that is a capital
property, an eligible resale property, an indebtedness of a Canadian corporation represented by a bankers’ acceptance, a property
described by either paragraph (a) or (b) of the definition “qualified investment” In section 204, or a deposit with a credit union;
and,
(e)
investments in the trust are, at any time in the taxation year, listed or traded on a stock exchange or other public market .
For this purpose, “real or immovable property” includes a security of any trust, corporation or partnership that itself satisfies the above
criteria, but does not include any depreciable property of a prescribed class for which the rate of capital cost allowance exceeds 5% .
If Boardwalk REIT, or any other trust, does not qualify as a real estate investment trust, it will no longer be able to deduct for tax
purposes its taxable distributions, and, as such, will be required to pay tax on this amount prior to distribution . Any amount distributed
that is determined to be a return of capital would not be subject to this tax .
Existing tax Filing Positions
Although Boardwalk REIT is of the view that all expenses to be claimed by Boardwalk REIT, the Operating Trust and the Partnership
will be reasonable and deductible, that the cost amount and capital cost allowance claims of entities indirectly owned by Boardwalk
REIT will have been correctly determined and that the allocation of the Partnership’s income for purposes of the Tax Act among its
partners is reasonable, there can be no assurance that the Tax Act or the interpretation of the Tax Act will not change, or that the
Canada Revenue Agency (“CRA”) will agree . If the CRA successfully challenges the deductibility of such expenses or the allocation of
such income, the Partnership’s allocation of income to the Operating Trust, and indirectly the taxable income of Boardwalk REIT and
the Unitholders, may be adversely affected . The extent to which distributions will be tax-deferred in the future will depend in part on
the extent to which entities indirectly owned by Boardwalk REIT are able to deduct capital cost allowance relating to the Contributed
Assets held by them, which was acquired by Boardwalk REIT on May 3, 2004 pursuant to a Plan of Arrangement under section 193 of
the Business Corporations Act (Alberta) .
Since the Partnership acquired the relevant properties on a tax-deferred basis, its tax cost in certain properties may be less than their
fair market value . Accordingly, if one or more properties are disposed of, the gain recognized by the Partnership may be in excess of that
which it would have realized if it had acquired the properties at their fair market values . Immediately prior to the Plan of Arrangement
becoming effective, the Corporation transferred the Contributed Assets to the Partnership and received, as consideration therefore, (i)
an assumption of all of the indebtedness of the Corporation associated with the Contributed Assets (other than the Retained Debt), (ii)
the LP Note, and (iii) a credit to the capital accounts in respect of each of the LP Class B Units and the LP Class C Units, all of which were
owned at that time by the Corporation . See “Overview of the Acquisition and the Arrangement Replacing the Corporation as a Public
Entity with Boardwalk REIT – Pre-Arrangement Reorganization” in the AIF dated February XX, 2015 . The transfer and contribution were
effected as a “rollover” under subsection 97(2) of the Tax Act, and the Corporation, based on the advice of legal counsel, is of the view
that there is no income tax payable in connection therewith . There can be no assurance that the CRA will not take a contrary view;
however, the Corporation has been advised by counsel that, in such event, the CRA would not be successful . If, contrary to this, the
CRA successfully challenges the rollover, income tax may be payable by the Corporation in connection with the transfer and contri-
bution of the Contributed Assets at the applicable tax rate on the value of the capital contribution in respect of the LP Class C Units .
The Partnership has agreed to indemnify the Corporation for all liabilities incurred by it in connection with the Acquisition and the
Arrangement, including the transfer and contribution of the Contributed Assets to the Partnership and any associated tax that might
be payable by the Corporation in respect thereof . See “Overview of the Acquisition and the Arrangement replacing the Corporation as
a Public Entity with Boardwalk REIT – Ancillary Agreements in Connection with the Arrangement” in the AIF dated February XX, 2015 .
The amount of such indemnification would be significant and have a material adverse effect on the amount of distributable cash of
the Partnership and, consequently, on the distributions of Boardwalk REIT .
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risks associateD with Disclosure controls anD proceDures & internal control over
Financial reporting
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over
financial reporting .
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not pre-
vent all errors, misstatements or misrepresentations . while management continues to review the design and effectiveness of our
disclosure controls and procedures and internal control over financial reporting, we cannot assure you that our disclosure controls
and procedures or internal control over financial reporting will be effective in accomplishing all control objectives all of the time .
Deficiencies, particularly material weaknesses, in internal control over financial reporting which may occur in the future could result
in misstatements of our results of operations, restatements of our financial statements, a decline in our trust unit price, or otherwise
materially adversely affect our business, reputation, results of operation, financial condition or liquidity .
accounting anD contRol MatteRs
cr itical accounting policies
The Trust adopted IFRS as its basis of financial reporting, effective January 1, 2011 . The significant accounting policies adopted by the
Trust are included in Note 2 of the notes to the audited Consolidated Financial Statements for the year ended December 31, 2014 .
These statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) and with the recommenda-
tions of the Real Property Association of Canada (“REALpac”) . In applying these policies, in certain cases, it is necessary to use estimates
and judgments . In determining estimates, management uses the information available to the Trust at the time . Management reviews
key estimates on a quarterly basis to determine their appropriateness . Any change to these estimates is applied prospectively in
compliance with IFRS . we believe that the application of judgments and assessments is consistently applied and produces financial
information that fairly depicts the results of operations for all periods presented . Boardwalk REIT considers the following policies to be
critical in determining the judgments that are involved in the preparation of the consolidated financial statements and the uncertain-
ties that could affect the reported results .
(a)
Investment properties
Investment properties consist of multi-family residential properties held to earn rental income, properties being constructed or de-
veloped for future use to earn rental income, and include interests held under long-term operating land leases . Investment properties
are measured initially at cost . Cost includes all amounts relating to the acquisition (excluding transaction costs related to a business
combination) and improvement of the properties . All costs associated with upgrading and extending the economic life of the existing
facilities, other than ordinary repairs and maintenance, are capitalized to investment property . Included in these costs are amounts
that are internal amounts, which are capitalized to the extent that they upgrade or extend the economic life of the asset .
Subsequent to initial recognition, investment properties are recorded at fair value in accordance with International Accounting
Standard (“IAS”) 40 – Investment Property (“IAS 40”) . Fair value is determined based on a combination of internal and external pro-
cesses and valuation techniques . Gains or losses arising from differences between current period fair value and the sum of previously
measured fair value and capitalized costs as described above are recorded in profit or loss in the period in which they arise .
Any directly attributable costs incurred on investment properties under development are capitalized . Such costs include direct
development costs, property taxes and other costs directly attributable to the development . These costs are directly related to the
construction of a qualifying asset and will be incurred and capitalized until such time that substantially all of the activities required to
prepare the qualifying asset for its intended use are complete .
Properties owned by the Trust where a significant portion of the property is used for administrative purposes by the entity are consid-
ered “Property, Plant and Equipment” and, therefore, fall within the scope of IAS 16 – Property, Plant and Equipment (“IAS 16”) and are
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recorded in accordance with that standard . where part of a building is used for administrative purposes by the Trust, but this portion
is considered insignificant, this space is included as part of the Investment Property under IAS 40 .
Investment properties are reclassified to ‘Assets held for sale’ when the criteria set out in IFRS 5 – Non-Current Assets Held for Sale and
Discontinued Operations (“IFRS 5”) are met .
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no
future economic benefits are expected from the disposal . Prior to its disposal, the carrying value of the investment property is adjusted
to reflect its fair value as outlined in the purchase and sale agreement (as the purchase and sale agreement is the best evidence of fair
value) . This adjustment shall be recorded as a fair value gain (loss) . Any remaining gain or loss arising on derecognition of the property
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in
the period in which the property is derecognized .
Excess land represents land owned by the Trust located contiguous to land included as Investment Property . The Trust has the ability
to develop additional multi-family residential buildings on this land or sell it separately from the Investment Property at a later date .
Excess land is held for capital appreciation and is, therefore, treated as Investment Property and recorded in accordance with IAS 40 as
outlined above . when determining the fair value of a project with excess land, the capitalization rate used in determining the value is
adjusted accordingly .
(b) Property, plant and equipment
Tangible assets that are held for use in the production or supply of goods and services, or for administrative purposes, and are ex-
pected to be used during more than one period, except when another accounting standard requires or permits a different accounting
treatment, are recorded in accordance with IAS 16 using the cost model . IAS 16, therefore, excludes tangible assets that are accounted
for in accordance with IAS 40 .
In accordance with IAS 16, the cost model, after initial recognition of the property, plant and equipment, requires the tangible asset to
be carried at its costs less accumulated depreciation and any accumulated impairment losses (see NOTE 2(h)) . Depreciation is recog-
nized in a manner that reflects the pattern in which the future economic benefits of the tangible asset are expected to be consumed
and realized by the Trust . The amount of depreciation will be charged systematically to the consolidated statement of comprehensive
income and is the cost less residual value of the tangible asset over its useful economic life . IAS 16 also requires that the cost and
useful economic life of each significant component of a depreciable tangible asset be determined based on the circumstances of each
tangible asset . The method of depreciation, residual values and estimates of the useful economic life of a depreciable tangible asset,
or other property, plant and equipment, are reviewed at each financial year-end and any changes are accounted for as a change in
accounting estimate in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) .
Property, Plant and Equipment (“PP&E”) is valued using the cost model under IAS 16 . PP&E is categorized into the following classes
and their respective useful economic life is used to calculate the amount of depreciation or amortization for each period . Categories
of PP&E with the same or similar useful lives are included in the same class .
PP&E Class
PP&E Category (NOTE 6)
Useful Life / Depreciation Rate
Depreciation method used
Administrative building
Administrative building
Site equipment
Automobile
warehouse assets
Corporate assets
Computer hardware
Computer software*
Site equipment and other assets
Site equipment and other assets
Site equipment and other assets
Site equipment and other assets
Corporate technology assets
Corporate technology assets
40 years
15%
20%
10% to 20%
10% to 20%
35%
35%
Straight-line
Declining balance
Declining balance
Declining balance
Declining balance
Declining balance
Declining balance
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(c) Business combinations
In accordance with IFRS 3 – Business Combinations (“IFRS 3”), the acquisition of an asset or group of assets is recorded as a business
combination if the assets acquired and the liabilities assumed constitute a business . A business is defined as an integrated set of
activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends,
lower costs or other economic benefit . Building and other asset acquisitions, which meet the above definition of a business, are
recorded as business combinations and the acquisition method of accounting for these transactions is applied . Building and other
asset acquisitions, which do not meet the above definition, are recorded as an asset addition based on the purchase price .
The acquisition method requires that an acquirer be identified, a specific acquisition date be determined (which is typically the date
on which control changes), all identifiable assets and liabilities assumed, as well as any non-controlling interest in the acquiree, be
recognized and measured, and any goodwill or gains from a bargain purchase price are recognized and measured at fair value, includ-
ing contingent liabilities when these contingent considerations are part of the consideration being transferred . All acquisition costs
associated with a transaction, if identified as a business combination, are expensed as incurred .
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed . If, after the assessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of
any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the
excess is recognized immediately in profit as a bargain purchase gain .
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net
assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share
of the recognized amounts of the acquiree’s identifiable net assets . The choice of measurement basis is made on a transaction-by-
transaction basis . Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in
another IFRS .
when the consideration transferred by the Trust in a business combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the
consideration transferred in a business combination . Changes in the fair value of the contingent consideration that qualify as mea-
surement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill . Measurement period
adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed
one year from the acquisition date and is shorter than one year if all information is received) about facts and circumstances that existed
at the acquisition date .
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified . Contingent consideration classified as equity is not remea-
sured at subsequent reporting dates and its subsequent settlement is accounted for within equity . Contingent consideration classified
as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 – Financial Instruments: Recognition
and Measurement, or IAS 37 – Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or
loss being recognized in profit or loss in the consolidated statement of comprehensive income .
when a business combination is achieved in stages, the Trust’s previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date (i .e . the date when the Trust obtains control) and the resulting gain or loss, if any, is recognized in profit or
loss in the consolidated statement of comprehensive income . Amounts arising from interests in the acquiree prior to the acquisition
date, and that have previously been recognized in other comprehensive income, are reclassified to profit or loss where such treatment
would be appropriate if that interest was disposed of .
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Trust reports provisional amounts for the items for which the accounting is incomplete . These provisional amounts are adjusted
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during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained
about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at
that date .
(d) Assets held for sale and discontinued operations
(i) Assets (or disposal groups) held for sale
Non-current assets and groups of assets and liabilities, which comprise disposal groups, are categorized as assets held for sale
where the asset (or disposal group) is available for sale in its present condition, and the sale is highly probable . For this purpose,
a sale is highly probable: (a) if management is committed to a plan to achieve the sale, (b) there is an active program to find a
buyer, (c) the non-current asset (or disposal group) is being actively marketed at a reasonable price, (d) the sale is anticipated
to be completed within one year from the date of classification, and (e) it is unlikely there will be changes to the plan . where
an asset (or disposal group) is acquired with a view to resale, it is classified as a non-current asset (or disposal group) held for
sale if the disposal is expected to take place within one year of the acquisition and it is highly likely that the other conditions
referred to above will be met within a short period following the acquisition . Retrospective application is not required; therefore,
comparative figures will not be adjusted to reflect non-current assets held for sale . The gains or losses arising on a sale of assets (or
disposal groups) that does not meet the definition of discontinued operations will be recognized as part of continuing operations
while the gains or losses arising on a sale of assets (or disposal groups) that meets the definition of discontinued operations will
be reported as part of discontinued operations in the consolidated statement of comprehensive income .
(ii) Discontinued operations
An asset or group of assets will be classified as a discontinued operation when it is a component of an entity that has either been
disposed of or is classified as held for sale and represents a separate major line of business, it is part of a single coordinated plan
to dispose of a separate major line of business or geographical area of operations, or it is a subsidiary acquired exclusively with
a view to resell . Profits and gains or losses related to the disposal of discontinued operations are measured based on fair value
less cost to sell or on the disposal of the assets (or disposal groups) and are presented in the financial statements on an after tax
basis in accordance with IFRS 5 . In addition, retrospective application is required; therefore, comparative figures will be changed
to reflect discontinued operations . As an individual building does not constitute a major line of business, individual building sales
are not treated as discontinued operations .
(e)
Impairment of assets
At the end of each reporting period, assets, other than those identified in the standard as not being applicable to IAS 36 – Impairment
of Assets (“IAS 36”), such as investment properties recorded at fair value, are assessed for any indication of impairment . Should the
indication of impairment exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any) . where it is not possible to estimate the recoverable amount of an individual asset, the Trust estimates the recoverable
amount of the cash-generating unit to which the asset belongs . where a reasonable and consistent basis of allocation can be iden-
tified, corporate assets are also allocated to individual cash-generating units, otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent allocation basis can be identified .
Recoverable amount is defined as the higher of an asset’s “fair value less cost to sell” and its “value-in-use” . In assessing value-in-use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assess-
ments of the time value of money and the risks specific to the asset for which the estimate of future cash flows have not been adjusted .
where the carrying amount of an asset exceeds the recoverable amount determined, an impairment loss is recognized in the con-
solidated statement of comprehensive income . After the recognition of an impairment loss, the depreciation charge related to that
asset is also revised for the adjusted carrying amount on a systematic basis over the remaining useful life of the asset . Should this
impairment loss be determined to have reversed in a future period (with the exception of goodwill), a reversal of the impairment loss is
recorded in profit or loss . However, in accordance with IAS 36, the reversal of an impairment loss will not increase the carrying amount
that would have been determined (net of amortization) had no impairment loss been recognized .
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(f)
Inventories
Inventories are measured at the lower of cost and net realizable value . The costs of inventories comprise the purchase price, import
duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and third-party trans-
port, handling and other costs directly attributable to the acquisition of goods and materials, less any trade discounts, rebates and
other similar items, using the first-in, first-out method of cost assignment . Net realizable value represents the estimated selling price
for inventories less all estimated costs necessary to make the sale .
(g) taxation
For fiscal 2013 and 2014, Boardwalk REIT was a “mutual fund trust” and qualified as a real estate investment trust (“REIT”) as defined
under the Income Tax Act (Canada) (the “Tax Act”) . Accordingly, the Trust is not taxable on its income to the extent that its taxable
income is distributed to its Unitholders . This exemption, however, does not extend to the corporate subsidiaries of Boardwalk REIT
that are subject to income tax .
Current tax
The tax currently payable is based on taxable profit for the year for certain corporate subsidiaries of the Trust . Taxable profit differs from
profit as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible . The Trust’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the reporting period .
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities of corporate subsidiaries
included in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit .
Deferred income tax liabilities are generally recognized for all taxable temporary differences . Deferred income tax assets are rec-
ognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is
probable that deductions, tax credits and tax losses can be utilized . The carrying amounts of deferred income tax assets are reviewed
at each reporting date and reduced to the extent it is no longer probable that the income tax assets will be recovered . Deferred income
tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability
settled, based on tax rates and laws that have been enacted or substantively enacted at the reporting date . In addition deferred
income tax assets and liabilities are measured using the rate that is consistent with the expected manner of recovery (i .e . using the
asset versus selling the asset) . where applicable, current and deferred income taxes relating to items recognized directly in equity or
comprehensive income are also recognized directly in equity or comprehensive income, respectively .
(h) Provisions
In accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”), a provision is a liability of uncertain
timing or amount . Provisions are recognized when the entity has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated . Provisions
are not recognized for future operating losses . Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation using a discounted rate that reflects current market assessment of the time value of money and the
risks and uncertainties specific to the obligation . Provisions are re-measured at each reporting date using the current discount rate .
The increase in the provision due to the passage of time is recognized as a financing cost .
(i) unit-based payments
Equity-settled unit-based payments to employees and Trustees are measured at the fair value of the deferred unit at the grant date
and expensed over the vesting period based on the Trust’s estimate of the deferred units that will actually vest . At the end of each
reporting period, the Trust revises its estimate of the number of equity instruments expected to vest . The impact of the revision of the
original estimates, if any, is recognized in profit or loss prospectively such that the cumulative expense reflects the revised estimate . In
accordance with IAS 32 – Financial Instruments: Presentation (“IAS 32”), the deferred units are presented as a liability on the statement
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of financial position as the Trust is obliged to provide the holder with REIT Units once the deferred units vest . Under IAS 39 – Financial
Instruments: Recognition and Measurement (“IAS 39”), the deferred units are classified as ‘fair value through profit or loss’ and are
measured at each reporting period at fair value with changes in fair value recognized in the consolidated statement of comprehensive
income . Fair value of the deferred units is calculated based on the observable market price of Boardwalk REIT’s Trust Units .
(j) Government assistance and grants
The Trust receives government assistance in order to complement and partially assist the Trust’s initiatives in providing affordable
housing to low income earning individuals . Government grants are not recognized until there is reasonable assurance that the Trust
will comply with the conditions attached to them and that the grants will be received . In accordance with IAS 20 – Accounting for
Government Grants and Disclosure of Government Assistance, grant proceeds will be recognized in profit or loss on a systematic basis
over the periods in which the Trust recognizes revenue or incurs expenses .
(k) Revenue recognition
(i)
Rental revenue
The Trust has retained substantially all of the risks and benefits of ownership of its investment properties and, therefore, accounts
for leases with its tenants as operating leases . Revenue recognition under a lease commences when the tenant has a right to use
the leased asset . Generally, this occurs on lease inception date when the tenant occupies their leased space . Rental revenue is
recognized systematically over the term of the lease, which is generally not more than twelve months . Any suite specific incen-
tives offered or initial direct costs incurred in negotiating and arranging an operating lease are also amortized over the term of
the operating lease . Rental revenue is recorded based on the amount received or to be received in accordance with the operating
lease .
(ii)
Building sales
The gain or loss from the sale of an investment property is recognized when title passes to the purchaser (control is transferred)
upon closing, at which time all, or substantially all, of the funds are receivable, or have been received, and the conditions of the
sale have been completed .
(iii)
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Trust and the
amount of income can be measured reliably . Interest income is accrued on a time basis when earned, by reference to the prin-
cipal outstanding and at the effective interest rate applicable . Interest income is included in financing costs in the consolidated
statement of comprehensive income .
(iv)
Ancillary rental income
Ancillary rental income comprises revenue from coin laundry machines and income received from telephone and cable providers
and is recorded as earned .
(l)
Financial instruments and derivatives
Financial instruments and derivatives are accounted, presented, and disclosed in accordance with IFRS 7 – Financial Instruments:
Disclosures (“IFRS 7”), IAS 32 and IAS 39 . Financial assets and financial liabilities are initially measured at fair value . Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to, or deducted from, the fair value of the financial assets
or financial liabilities, as appropriate, on initial recognition . Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss .
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Financial assets
Financial assets are classified into the following specified categories: financial assets at ‘fair value through profit or loss’ (“FVTPL”),
‘held-to-maturity’ investments, ‘available-for-sale’ financial assets and ‘loans and receivables’ . The classification depends on the nature
and purpose of the financial asset and is determined at the time of initial recognition . Financial assets are classified as at FVTPL when
the financial asset either is held for trading or is designated as at FVTPL . Financial assets categories are defined and measured as
follows:
Classification
Definition
Measurement
FVTPL
Classified as FVTPL when the financial asset is either held for trading or it is
designated as at FVTPL as discussed below:
Classified as held for trading if: it has been acquired principally for the purpose
of selling it in the near term; or on initial recognition it is part of a portfolio
of identified financial instruments that the Trust manages together and has a
recent actual pattern of short-term profit taking; or it is a derivative that is not
designated and effective as a hedging instrument .
Classified as FVTPL upon initial recognition if: such designation eliminates or
significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or the financial asset forms part of a group which is managed
and its performance is evaluated on a fair value basis; or it forms part of a
contract containing one or more embedded derivatives .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Held-to-maturity
investments
Non-derivative financial assets with fixed or determinable payments and
fixed maturity dates that the Trust has the positive intent and ability to hold to
maturity .
Measured at amortized cost using
the effective interest method less
any impairment . (1) (2)
Available-for-sale
Non-derivative financial assets that either are designated as available-for-sale or
are not classified as (a) loans and receivables, (b) held-to-maturity investments or
(c) financial assets at FVTPL .
Measured at fair value through
other comprehensive income .
Loans and
receivables
Non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market .
Measured at amortized cost using
the effective interest method less
any impairment . (1) (2)
(1)
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant
period . The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument or
where appropriate, a shorter period, to the net carrying amount on initial recognition .
(2)
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period . Generally, the carrying amount
of the financial asset is reduced by the impairment loss .
Boardwalk REIT’s financial assets are as follows:
Financial asset
Classification
Measurement
Trade and other receivables
Loans and receivables
Amortized cost
Segregated tenants’ security deposits
Loans and receivables
Amortized cost
Cash
Loans and receivables
Amortized cost
The Trust derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset (and substantially all the risks and rewards of ownership of the asset) to another entity .
Financial liabilities and equity
Debt and equity instruments issued are classified either as financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an equity instrument . An equity instrument is any contract
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that evidences a residual interest in the assets of an entity after deducting all of its liabilities . Equity instruments issued by the Trust are
recognized at the proceeds received, net of direct issue costs . Repurchase of Boardwalk REIT’s own equity instruments is recognized
and deducted directly in equity . No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Trust’s
own equity instruments . Distributions paid on the Trust’s equity instruments subsequent to, declared prior to, and with a record date
at or prior to, the reporting date, are recorded as a liability .
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’ . Financial liabilities categories are
defined and measured as follows:
Classification
Definition
Measurement
FVTPL
Classified as FVTPL when the financial liability is either held for trading or it is
designated as at FVTPL as discussed below:
Classified as held for trading if: it has been acquired principally for the purpose
of repurchasing it in the near term; or on initial recognition it is part of a portfolio
of identified financial instruments that the Trust manages together and has a
recent actual pattern of short-term profit taking; or it is a derivative that is not
designated and effective as a hedging instrument .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Classified as FVTPL upon initial recognition if: such designation eliminates or
significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or the financial liability forms part of a group which is managed
and its performance is evaluated on a fair value basis; or it forms part of a
contract containing one or more embedded derivatives .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Other financial
liabilities
All other liabilities .
Measured at amortized cost using
the effective interest method . (1)
(1)
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant
period . The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or
where appropriate, a shorter period, to the net carrying amount on initial recognition .
Boardwalk REIT’s financial liabilities are as follows:
Financial liability
Mortgages payable
LP Class B Units
Deferred unit-based compensation
Classification
Measurement
Other financial liabilities
Amortized cost
FVTPL
FVTPL
Fair value
Fair value
Refundable tenants’ security deposits
Other financial liabilities
Amortized cost
Trade and other payables
Other financial liabilities
Amortized cost
The Trust derecognizes a financial liability when, and only when, the Trust’s obligations are discharged, cancelled, or they expire . The
difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized
in profit or loss .
Derivatives
The Trust may enter into a variety of derivative financial instruments to manage its exposure to interest rate risks, including interest
rate swaps and bond forward contracts . Further details of derivative financial instruments are disclosed in NOTE 13 and NOTE 27 .
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently measured
at their fair value at the end of each reporting period . The resulting gain or loss is recognized in profit or loss immediately unless the
derivative is designated, and effective, as a hedging instrument, in which case the timing of the recognition in profit or loss depends
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on the nature of the hedge relationship . Derivatives embedded in host contracts are treated as separate derivatives when their risks
and characteristics are not closely related to the host contracts and the host contracts are not measured at FVTPL . For the years ended
December 31, 2014 and December 31, 2013, the Trust had no embedded derivatives requiring separate recognition .
(m) Hedge accounting
The Trust applies hedge accounting to derivative financial instruments in cash flow hedging relationships . At the inception of the
hedging relationship, the Trust documents the relationship between the hedging instrument and the hedged item, along with its risk
management objectives and its strategy for undertaking various hedge transactions . Furthermore, at inception of the hedge and on
an ongoing basis, the Trust documents whether the hedging instrument is highly effective in offsetting changes in cash flows of the
hedged item attributable to the hedged risk .
In cash flow hedging relationships, the effective portion of the change in the fair value of the hedging derivative is recognized in the
consolidated statement of comprehensive income as other comprehensive income (“OCI”) while the ineffective portion is recognized
immediately in profit or loss . Hedging gains and losses previously recognized in OCI and accumulated in equity are reclassified to
profit or loss in the periods when the hedged item is recognized in profit or loss, in the same line of the consolidated statement of
comprehensive income as the recognized hedged item .
Hedge accounting is discontinued when the Trust revokes the hedging relationship, when the hedging instrument expires or is sold,
terminated, or exercised, or when it no longer qualifies for hedge accounting . Any gain or loss recognized in OCI, and accumulated in
equity at that time, remains in equity, and is recognized when the forecast transaction is ultimately recognized in profit or loss . when a
forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss .
(n) Cash and cash equivalents
Cash is comprised of bank balances, interest-earning bank accounts and term deposits not greater than 90 days .
(o) Critical judgment in applying accounting policies
The following are the critical judgments, apart from those involving estimations (see below) that have been made in applying the
Trust’s accounting policies and that have the most significant effect on the reported amounts in the consolidated financial statements:
(i)
Income taxes
The Trust applies judgment in determining the tax rates applicable to its corporate subsidiaries, and in identifying the temporary
differences in each such legal subsidiaries in respect of which deferred income taxes are recognized . Deferred taxes related to
temporary differences arising from its corporate subsidiaries are measured based on the tax rates that are expected to apply in
the year when the asset is realized or the liability is settled . Temporary differences are differences that are expected to reverse in
the future and arise from differences between accounting and tax asset values .
(ii)
Leases
The Trust’s revenue recognition policy related to leases is described in the consolidated financial statements . The Trust makes
judgments in determining whether certain leases, in particular, tenant leases, as well as leased warehouse space and long-term
ground leases, which are considered leases under IFRS, and where the Trust is the lessor, are operating or finance leases . The Trust
has determined that all of its leases are operating leases .
(iii)
Investment property and internal capital program
The Trust’s accounting policy relating to investment property is described in NOTE (a) above . In applying this policy, judgment is
applied in determining the extent and frequency of utilizing independent, third-party appraisals to measure the fair value of the
Trust’s investment property . Additionally, judgment is applied in determining the appropriate classes of investment properties
in order to measure fair value . The Trust also undertakes capital improvements and upgrades . Such work is specifically identified,
and the Trust applies judgment in the estimated amount of directly attributable to on-site wages relating to capital improve-
ments and upgrades of its real estate assets to be capitalized .
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(iv)
Financial instruments
The Trust’s accounting policies relating to financial instruments are described in the consolidated financial statements . Critical
judgments inherent in these policies and related to applying the criteria set out in IAS 39 to designate financial instruments into
categories (i .e . FVTPL, etc .) assess the effectiveness of hedging relationships (for the Trust’s cash flow hedges) and determine the
identification of embedded derivatives, if any, in certain hybrid instruments that are subject to fair value measurement .
(v)
Basis of consolidation
The consolidated financial statements of the Trust include the accounts of Boardwalk REIT and its wholly owned subsidiaries, as
well as entities over which the Trust exercises control on a basis other than ownership of voting interest within the scope of IFRS
10 – Consolidated Financial Statements (“IFRS 10”) . Judgment is applied in determining if an entity meets the criteria of control
as defined in the accounting standard
(vi) Deferred unit-based compensation
The Trust applied judgment in determining the best available estimate of the number of deferred units that are expected to vest
at each reporting period .
(p) Key accounting estimates and assumptions
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year . Actual results could differ from estimates .
(i)
Investment property
The choice of valuation method for fair valuing and the critical estimates and assumptions underlying the fair value determi-
nation of investment properties are set out in NOTE 4 of the consolidated financial statements . Significant estimates used in
determining the fair value of the Trust’s investment properties includes capitalization rates and net operating income (which is
influenced by inflation rates, vacancy rates, and standard costs) used in the overall capitalization rate valuation method as well as
discount rates and forecasted cash flows used in the discounted cash flow valuation method . A change to any one of these inputs
could significantly alter the fair value of an investment property . Please refer to NOTE 4 for sensitivity analysis .
(ii) Property, plant and equipment
The useful economic life of property, plant and equipment for the purposes of calculating depreciation and amortization, as
disclosed in NOTE 6, and forecast of economic factors to determine recoverable amounts for the purpose of determining any im-
pairment of assets, are based on data and information from various sources including industry practice and entity specific history .
(iii)
Internal Capital Program
The Trust’s internal capital program is based on internal allocations including parts, supplies and on-site wages identified as part
of the specific upgrade .
(iv) Utility accrual
Amount of utility accrual for charges related to the current or prior year is based on estimates of usage and price for the time
period in which invoices have not been received from the utility providers .
(v) Deferred unit-based compensation plan
The compensation costs relating to the deferred unit plan are based on estimates of how many deferred units will actually vest
and be exercised .
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(vi) Deferred taxes
The amount of the temporary differences between the accounting carrying value of the Trust’s assets and liabilities versus the tax
basis of those assets and liabilities held in various corporate subsidiaries, and the tax rates at which the differences will be realized,
are outlined in NOTE 16 .
application oF new anD reviseD iFrss anD Future accounting policies
Boardwalk REIT monitors new IFRS accounting pronouncements to assess the applicability and impact, if any, these new pronounce-
ments may have on the consolidated financial statements and note disclosures .
(a) Application of new and revised IFRSs
In the current year, the Trust has applied a number of new and revised IFRSs issue by the IASB . The following highlights these changes
and the effect, if any, on the Trust’s consolidated financial statements .
Financial Instruments
Amendments were made to IAS 32, which clarify the requirements relating to the offset of financial assets and financial liabilities .
Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-off” and “simultaneous realization
and settlement” . These amendments did not have a significant impact on the Trust’s consolidated financial statements, as the Trust
does not have any financial assets and financial liabilities that qualify for offset .
Additionally, amendments were made to IAS 39, which provide relief from the requirement to discontinue hedge accounting when a
derivative designated as a hedging instrument is novated under certain circumstances . The amendments also clarify that any change
to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment
and measurement of hedge effectiveness . These amendments did not have an impact on the Trust .
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities
The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment
entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated
and separate financial statements . The Trust does not have any investment entities, and as such these amendments did not have an
impact on its consolidated financial statements .
IFRS Interpretation Committee 21 – Levies (“IFRIC 21”)
Effective January 1, 2014, the Trust adopted IFRIC 21 . within IFRIC 21, a levy is defined as an outflow of resources embodying economic
benefits that is imposed by governments on entities in accordance with legislation (i .e . laws and/or regulations), other than:
(a)
those outflows of resources that are within the scope of other standards (such as income taxes that are within the scope of
IAS 12); and
(b) fines or other penalties that are imposed for breaches of the legislation .
‘Government’ refers to government, government agencies and similar bodies whether local, national or international . IFRIC 21 pro-
vides an interpretation for the recognition of liabilities for obligations to pay levies that are within the scope of IFRIC 21 .
The adoption of IFRIC 21 did not have an impact on the Trust’s consolidated financial statements .
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Amendments to IAS 36 Impairment of Assets
The overall effect of the amendments is to reduce the circumstances in which the recoverable amount of assets or cash-generating
units is required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement to disclose the discount rate
used in determining impairment (or reversals) where recoverable amount (based on fair value less costs of disposal) is determined
using a present value technique . The Trust does not have an impaired assets, and as such these amendments did not have an impact
on its consolidated financial statements .
(b) Future accounting policies
The following accounting standards under IFRS have been issued or revised; however, they are not yet effective, and, as such, have not
been applied to these consolidated financial statements .
New or amended
standards
IFRS 9 – Financial
Instruments
Summary of requirements
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 . IFRS 9
includes revised guidance on the classification and measurement of financial
instruments, including a new expected credit loss model for calculating
impairment on financial assets, and the new general hedge accounting
requirements . It also carries forward the guidance on recognition and
derecognition of financial instruments from IAS 39 .
IFRS 9 is effective for annual reporting periods beginning on or after January 1,
2018, with early adoption permitted .
Possible impact on consolidated
financial statements
The Trust is assessing the
potential impact on its
consolidated financial statements
but does not expect it to have a
significant impact .
IFRS 15 – Revenue
from Contracts
with Customers
(“IFRS 15”)
IFRS 15 establishes a comprehensive framework for determining whether, how
much and when revenue is recognized . It replaces existing revenue recognition
guidance, including IAS 18 – Revenue (“IAS 18”), IAS 11 – Construction Contracts
and IFRIC 13 – Customer Loyalty Programmes .
The Trust is assessing the potential
impact on its consolidated
financial statements .
IFRS 15 is effective for annual reporting periods beginning on or after January 1,
2017, with early adoption permitted .
Accounting for
Acquisitions
of Interests in
Joint Operations
(Amendments
to IFRS 11 – Joint
Arrangements
(“IFRS 11”)
The amendments to IFRS 11 provide guidance on how to account for the
acquisition on an interest in a joint operation in which the activities constitute
a business combination as defined in IFRS 3 . Specifically, the amendments state
that the relevant principles on accounting for business combinations in IFRS 3
and other standards should be applied .
The amendments to IFRS 11 apply prospectively for annual periods beginning on
or after January 1, 2016 .
The Trust is assessing the potential
impact on its consolidated
financial statements .
The following new or amended standards are not expected to have a significant impact or any impact on the Trust’s consolidated
financial statements:
▲
IFRS 14 – Regulatory Deferral Accounts
▲
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38)
▲
Agriculture Bearer Plants (Amendments to IAS 16 and IAS 41 – Agriculture)
▲
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19 – Employee Benefits)
▲
Equity method in Separate Financial Statements (Amendments to IAS 27)
▲
Disclosure Initiative (Amendments to IAS 1)
▲
Investment Entities: Applying the Consolidated Exception (Amendments to IFRS 10, IFRS 12, and IAS 28)
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Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle
The IASB has released the final amendments for the 2010-2012 and 2011-2013 annual improvement project with the majority of these
amendments applying for annual periods beginning on or after July 1, 2014 . Only those which may have a significant impact on the
Trust are included below .
Standard
Details of amendment
Expected impact
2010-2012 Cycle
IFRS 3 – Business
Combinations
2011-2013 Cycle
IFRS 3 – Business
combinations
An obligation to pay contingent consideration that meets the definition
of a financial instrument is classified as a financial liability or equity on the
basis of the definitions in IAS 32 . Non-equity consideration is measured at
fair value at each reporting date, with changes recognized in the income
statement .
The Trust will determine the impact
of this amendment should a
business combination occur .
The amendment clarifies that IFRS 3 does not apply to the formation of any
joint arrangement and that the scope exemption only applies in the financial
statements of the joint arrangement itself .
The Trust will determine the impact
of this amendment should a
business combination occur .
IAS 40 – Investment
property
The amendment clarifies that IAS 40 and IFRS 3 are not mutually exclusive .
IAS 40 assists preparers to distinguish between investment property and
owner-occupied property . IFRS 3 determines whether the acquisition of an
investment property is a business combination .
The Trust will determine the
impact of this amendment should
the acquisition of an investment
property occur .
international Financial reporting stanDarDs
These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as is-
sued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Committee (“IFRIC”) .
Disclosure Controls and Procedures & Internal Control Over Financial Reporting
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and report-
ed to senior management, including the CEO, President, and CFO on a timely basis so appropriate decisions can be made regarding
public disclosure .
The preparation of this information is supported by a set of disclosure controls and procedures (“DC&P”) implemented by manage-
ment . In fiscal 2014, these controls and procedures were reviewed and the effectiveness of their design and operation was evaluated .
This evaluation confirmed the effectiveness of both the design and the operation of disclosure controls and procedures as at December
31, 2014 . The evaluation was performed in accordance with the Committee of Sponsoring Organizations of the Treadway Commission
(“2013 COSO”) control framework (the “2013 Framework”) adopted by the Trust and the requirements of National Instrument 52-109
of the Canadian Securities Administrators titled, Certification of Disclosure in Issuers’ Annual and Interim Filings .
There were no changes made to our disclosure controls and procedures during the year ended December 31, 2014 . Boardwalk REIT
continues to review the design of disclosure controls and procedures to provide reasonable assurance that material information
relating to Boardwalk REIT is properly communicated to certifying officers responsible for establishing and maintaining disclosure
controls and procedures, as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and
Interim Filings .
B O A R Dw A L k R E I T / A R 2 0 1 4
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87
As at December 31, 2014, Boardwalk REIT confirmed the effectiveness of both the design and the operation of its internal control
over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial statements and information .
Boardwalk REIT may, from time to time, make changes aimed at enhancing their effectiveness and ensuring that our systems evolve
with our business . There were no changes made in our internal controls over financial reporting during the year ended December 31,
2014, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting .
2015 Financial outlook anD MaRket guiDance
At the end of the third quarter of 2014, the Trust announced its financial outlook for the upcoming 2015 year . The following table
highlights the key financial objectives for the 2015 fiscal year as well as our performance for the 2014 year .
Description
2015 Objectives
2014 Actual
Investment Properties
Stabilized Building NOI Growth
FFO Per Unit
AFFO Per Unit
No new apartment acquisitions,
dispositions or developments
Sold one project in Edmonton, Alberta,
and all of its British Columbia assets .
No new acquisitions or developments .
1% to 4%
$3 .40 to $3 .60
$3 .07 to $3 .27
2 .5%
$3 .37
$3 .05
In deriving these forecasts, we have adjusted for the treatment of the LP B Units to be treated as equity (versus debt under IFRS) and
their related treatment of the distributions paid (which are classified as financing charges under IFRS) . In addition, we are assuming no
additional acquisition or disposition of properties .
The reader is cautioned that this information is forward-looking and actual results may vary materially from those reported . One of
the key estimates is the performance of the Trust’s stabilized properties . Any significant change in assumptions deriving ‘Stabilized
Building NOI performance’ would have a material effect on the final reported amount . The trust reviews these key assumptions quar-
terly and based on this review may change its outlook .
In addition to the above financial guidance for 2015, the Trust has assumed the following capital will be reinvested in its existing
portfolio for the 2015 fiscal year .
Capital Budget
2015 Budget
Per Suite
2014 Actual
Per Suite
Total Operational Capital Approved
(including Property, Plant & Equipment)
Maintenance Capital
Stabilizing & Value Added Capital
(including Property, Plant & Equipment)
Development Capital Approved
$ 98,837
$ 17,326
$ 81,511
$ 98,837
$ 12,158
$
$
$
$
2,854
500
2,354
2,854
$
$
$
$
$
87,420
16,571
70,849
87,420
1,995
$
$
$
$
2,506
475
2,031
2,506
In total, we expect to invest $98 .8 million (or $2,854 per apartment unit) on operational capital in 2015 as compared to $87 .4 million
(or $2,506 per apartment unit) actually spent in 2014 . Approximately $17 .3 million, or $500 per apartment unit, will be in the form of
maintenance capital and the balance of $81 .5 million will be in stabilizing and value-added capital .
For 2015, the Trust has included a budget of $12 .2 million allocated towards development, which in addition to determining the
viability of development on various excess land the Trust currently owns, will be directed towards the completion of construction of
the development at the Trust’s Pines of Normanview project in Regina, Saskatchewan .
88
M A N A G E M E Nt ’ S D I S C u S S I O N A N D A N A l Y S I S
B O A R D w A L k R E I T / A R 2 0 1 4
se lecteD consoliDateD Financial inForMation
The following selected financial information should be read in conjunction with ‘‘Management’s Discussion and Analysis’’, the audited
consolidated financial statements and accompanying notes for the years ended December 31, 2014 and 2013, and the unaudited
interim consolidated financial statements of Boardwalk REIT and accompanying notes, both incorporated herein by reference .
The statements of comprehensive income and financial position information set forth in the following tables has been derived from
the audited consolidated financial statements referred to above and the unaudited consolidated financial statements of the Trust for
various quarterly interim periods .
Annual Comparative
Cdn$ Thousands, except per unit amount
Total rental revenue
Profit
Funds from operations
Profit per unit
– Basic
– Diluted
Funds from operations per unit
– Basic
– Diluted
Mortgages and debentures
Total assets
Number of apartment units
Rentable square feet (000’s)
Twelve Months Ended
Dec 31, 2014
Dec 31, 2013
473,245
246,791
175,825
5 .17
5 .17
3 .68
3 .37
2,169,499
5,971,645
34,626
29,466
453,584
337,730
168,184
7 .05
6 .22
3 .51
3 .21
2,261,412
5,925,683
35,386
30,022
Quarterly Comparative
Cdn$ Thousands, except per unit amounts
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2013
Mar 31,
2013
Three Months Ended
Total rental revenue
Profit
Funds from operations
Profit per unit
– Basic
– Diluted
Funds from operations per unit
– Basic
– Diluted
Additional Information
119,853
118,885
117,954
116,553
115,511
113,987
113,042
111,044
(14,546)
43,704
55,102
46,792
83,856
45,313
122,379
(27,511)
159,244
112,633
40,015
41,442
44,969
42,564
93,364
39,209
(0 .31)
(0 .28)
0 .92
0 .84
1 .15
1 .15
0 .98
0 .90
1 .75
1 .75
0 .95
0 .86
2 .56
2 .46
0 .83
0 .76
(0 .57)
(0 .28)
0 .86
0 .79
3 .32
3 .02
0 .94
0 .86
2 .35
1 .83
0 .89
0 .81
1 .95
1 .65
0 .82
0 .75
Additional information relating to Boardwalk Equities Inc . and Boardwalk REIT, including the Annual Information Form of Boardwalk
REIT, is available on SEDAR at www .sedar .com .
Respectfully,
Roberto A . Geremia
President
February 19, 2015
william wong
Chief Financial Officer
B O A R Dw A L k R E I T / A R 2 0 1 4
M A N A G E M E N t ’ S D I S C u S S I O N A N D A N A l Y S I S
89
ManageMent’s RepoRt
To the Unitholders of Boardwalk Real Estate Investment Trust
The accompanying consolidated financial statements and all information in the Annual Report are the responsibility of management .
The consolidated financial statements have been prepared by management in accordance with the accounting policies in the notes
to the consolidated financial statements . In the opinion of management, the consolidated financial statements have been prepared
within acceptable limits of materiality, and are in accordance with International Financial Reporting Standards appropriate in the
circumstances . The financial information elsewhere in the Annual Report has been reviewed to ensure consistency with that in the
consolidated financial statements .
Management maintains appropriate systems of internal control . Policies and procedures are designed to give reasonable assurance
that transactions are properly authorized, assets are safeguarded and financial records properly maintained to provide reliable infor-
mation for the preparation of consolidated financial statements .
The consolidated financial statements have been further examined by the Board of Trustees and by its Audit and Risk Management
Committee which meets regularly with the auditors and management to review the activities of each . The Audit and Risk Management
Committee, which comprises of three independent Trustees, reports to the Board of Trustees .
Deloitte LLP, an independent firm of chartered accountants, has been engaged to audit the consolidated financial statements in
accordance with Canadian generally accepted auditing standards and provide an independent auditors’ opinion .
Sam kolias
Chief Executive Officer
February 18, 2015
Roberto A . Geremia
President
william wong
Chief Financial Officer
90
C O N S Ol I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
inDepenDent auDitoRs’ RepoRt
To the Unitholders of Boardwalk Real Estate Investment Trust
we have audited the accompanying consolidated financial statements of Boardwalk Real Estate Investment Trust, which comprise the
consolidated statements of financial position as at December 31, 2014 and December 31, 2013, and the consolidated statements of
comprehensive income, consolidated statements of changes in unitholders’ equity and consolidated statements of cash flows for the
years then ended, and a summary of significant accounting policies and other explanatory information .
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error .
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits . we conducted our audits in
accordance with Canadian generally accepted auditing standards . Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement .
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements . The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstate-
ment of the consolidated financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements .
we believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion .
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Boardwalk Real
Estate Investment Trust as at December 31, 2014 and December 31, 2013, and its financial performance and its cash flows for the years
then ended in accordance with International Financial Reporting Standards .
Chartered Accountants
February 18, 2015
Calgary, Alberta
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91
consoliDateD stateMents oF Financial position
(CDN $ THOUSANDS)
As at
Assets
Non-current assets
Investment properties
Property, plant and equipment
Deferred tax assets
Current assets
Inventories
Prepaid assets
Trade and other receivables
Segregated tenants’ security deposits
Cash and cash equivalents
total Assets
liabilities
Non-current liabilities
Mortgages payable
LP Class B Units
Other non-current liabilities
Deferred unit-based compensation
Deferred tax liabilities
Deferred government grant
Current liabilities
Mortgages payable
Deferred unit-based compensation
Deferred government grant
Refundable tenants’ security deposits
Trade and other payables
total liabilities
Equity
Unitholders’ equity
total Equity
Note
Dec 31, 2014
Dec 31, 2013
4
6
16
7
8
9
10
11
12
13
14
16
17
11
14
17
15
18
$
5,778,108
$
5,745,207
26,124
378
5,804,610
3,594
4,493
7,246
12,138
139,564
167,035
23,625
455
5,769,287
3,585
4,209
4,819
12,704
131,079
156,396
$
5,971,645
$
5,925,683
$
1,702,179
$
1,790,625
275,392
267,829
972
4,510
13
6,775
3,364
4,872
50
6,436
1,989,841
2,073,176
467,320
3,250
378
15,900
136,968
623,816
2,613,657
3,357,988
3,357,988
470,787
3,453
380
16,375
61,990
552,985
2,626,161
3,299,522
3,299,522
total liabilities and Equity
$
5,971,645
$
5,925,683
See accompanying notes to these consolidated financial statements
Guarantees, contingencies, commitments and other (NOTE 25)
On behalf of the Trust:
Sam kolias
Trustee
Gary Goodman
Trustee
92
C O N S Ol I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
consoliDateD stateMents oF coMpRehensive incoMe
(CDN $ THOUSANDS)
Rental revenue
Ancillary rental income
Total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income
Financing costs
Administration
Depreciation and amortization
Profit from continuing operations before the undernoted
Loss on sale of assets
Fair value gains
Profit from continuing operations before income tax expense
Income tax expense
Profit from continuing operations
Profit from discontinued operations, net of tax
Profit for the year
Other comprehensive income
total comprehensive income
See accompanying notes to these consolidated financial statements
Note
19
20
21
22
5
23
16
5
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
466,435
$
446,626
6,810
473,245
93,180
47,572
40,091
292,402
91,977
33,732
11,933
154,760
(235)
81,126
235,651
(41)
235,610
11,181
246,791
2,445
6,958
453,584
89,002
42,121
38,272
284,189
88,818
32,202
11,920
151,249
–
174,424
325,673
(538)
325,135
12,595
337,730
2,149
$
249,236
$
339,879
B O A R Dw A L k R E I T / A R 2 0 1 4
C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
93
consoliDateD stateMents oF changes in
unitholDeRs’ equity
(CDN $ THOUSANDS)
Trust Units
Cumulative
profit
Cumulative
distributions
to
Unitholders
Accumulated
other
comprehensive
income (loss)
(NOTE 18(c))
Total
Unitholders’
equity
Retained
earnings
Balance, December 31, 2012
$ 191,110 $ 3,597,307 $ (732,708) $ 2,864,599
$ (5,608) $ 3,050,101
Units issued
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Distributions declared to Unitholders
4,113
–
–
–
–
–
337,730
–
337,730
–
–
–
–
–
(94,571)
–
337,730
–
337,730
(94,571)
–
–
2,149
2,149
–
4,113
337,730
2,149
339,879
(94,571)
Balance, December 31, 2013
$ 195,223 $ 3,935,037 $ (827,279) $ 3,107,758
$ (3,459) $ 3,299,522
Units issued
Units purchased and cancelled
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Distributions declared to Unitholders
4,573
(3,845)
–
–
–
–
–
(27,789)
246,791
–
246,791
–
–
–
–
–
–
(27,789)
246,791
–
246,791
–
–
–
2,445
2,445
4,573
(31,634)
246,791
2,445
249,236
–
(163,709)
(163,709)
–
(163,709)
Balance, December 31, 2014
$ 195,951 $ 4,154,039 $ (990,988) $ 3,163,051
$ (1,014) $ 3,357,988
See accompanying notes to these consolidated financial statements
94
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consoliDateD stateMents oF cash Flows
(CDN $ THOUSANDS)
Operating activities
Profit for the year
Profit from discontinued operations, net of tax
Loss on sale of assets
Financing costs
Interest paid
Fair value gains
Income tax expense
Income tax paid
Government grant amortization
Depreciation and amortization
Net cash operating inflows from discontinued operations
Net change in operating working capital
Investing activities
Improvements to investment properties
Development of investment properties
Additions to property, plant and equipment
Net cash investing inflows (outflows) from discontinued operations
Net cash proceeds from sale of investment properties
Net change in investing working capital
Financing activities
Distributions paid
Unit repurchase program
Proceeds from mortgage financings
Mortgages repayments on maturity
Scheduled mortgage principal repayments
Deferred financing costs incurred
Bond forward settlement, net of amortization
Government grant proceeds
Net cash financing outflows from discontinued operations
Net change in financing working capital
Net increase (decrease) in cash
Cash, beginning of year
Cash, end of year
See accompanying notes to these consolidated financial statements
Note
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
246,791
$
337,730
21
16
16
17
22
5
32
4
4
6
5
5
32
32
17
5
32
(11,181)
235
91,977
(86,196)
(81,126)
41
(1)
(378)
11,933
172,095
1,125
348
173,568
(79,662)
(1,995)
(7,192)
136,981
13,265
1,929
63,326
(97,008)
(31,634)
9,779
–
(46,977)
(1,313)
54
715
(62,496)
471
(228,409)
8,485
131,079
(12,595)
–
88,818
(89,211)
(174,424)
538
(5)
(32)
11,920
162,739
4,007
3,361
170,107
(72,727)
(15,479)
(7,149)
(1,098)
–
2,911
(93,542)
(94,320)
–
68,411
(13,663)
(44,098)
(4,041)
61
4,565
(1,162)
105
(84,142)
(7,577)
138,656
$
139,564
$
131,079
B O A R Dw A L k R E I T / A R 2 0 1 4
C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
95
notes to the consoliDateD Financial stateMents
For the Years Ended December 31, 2014 and 2013
(Tabular amounts in Cdn $ thousands, except number of units and per unit amounts UNLESS OTHERWISE STATED)
note 1:
organization oF the trust
Boardwalk Real Estate Investment Trust (“Boardwalk REIT” or the “Trust” or the “Entity”) is an unincorporated, open-ended
real estate investment trust created pursuant to the Declaration of Trust (“DOT”), dated January 9, 2004, and as amended
and restated on various dates between May 3, 2004 and May 14, 2014, under the laws of the Province of Alberta . Boardwalk
REIT was created to invest in multi-family residential investment properties or similar interests, initially through the acqui-
sition of the assets and operations of Boardwalk Equities Inc . (the “Corporation”), which was acquired on May 3, 2004 .
Boardwalk REIT Trust Units are listed on the Toronto Stock Exchange under the symbol ‘BEI .UN’ . The registered office of the
Trust and its head office operations are located at First west Place, Suite 200, 1501 1st Street Sw, Calgary, Alberta, T2R 0w1 .
note 2:
signiFicant accounting policies
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) .
(b) Basis of presentation
The Trust’s consolidated financial statements have been prepared on the historical cost basis, except for investment
properties and certain financial instruments that are measured at fair value, as explained in the accounting policies below .
Historical cost is generally based on the fair value of the consideration given in exchange for assets . These consolidated
financial statements were prepared on a going concern basis and have been presented in Canadian dollars rounded to the
nearest thousand . The accounting policies set out below have been applied consistently in all material respects . Standards
and guidelines not effective for the current accounting period are described in NOTE 3 .
Certain comparative figures have been reclassified to conform to the presentation of the current period . within the state-
ment of comprehensive income, discontinued operations net of tax have been disclosed . Additionally, within the cash flow
statement, disclosure was made of cash flows from discontinued operations .
(c) Basis of consolidation
These consolidated financial statements include the accounts of the Trust and its consolidated subsidiaries (see NOTE
30), which are the entities over which Boardwalk REIT has control . Control is achieved when the entity has power over the
investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its
power to affect its returns . The Trust reassesses whether or not it controls an investee if facts, circumstances and events
indicate that there are changes to one or more of the three elements of control listed above .
In accordance with IFRS 10 – Consolidated Financial Statements (“IFRS 10”), an entity can exercise control on a basis other
than ownership of voting interests . when the Trust has less than a majority of the voting rights of an investee, it has power
over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the
investee unilaterally . The Trust considers all relevant facts and circumstances in assessing whether or not the Trust’s voting
rights in an investee are sufficient to give it power . These facts and circumstances can include: the size of the Trust’s holding
of voting rights relative to the size and dispersion of holdings of the other vote holders; potential voting rights held by the
Trust, other vote holders or other parties; rights arising from contractual arrangements; and any other additional facts or
circumstances .
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B O A R D w A L k R E I T / A R 2 0 1 4
Currently, the Trust has control over all of the subsidiaries reported in the consolidated financial statements (either directly
or indirectly) and non-controlling interests either do not exist or are immaterial for the Trust at this time . All intra-group
transactions, balances, revenues and expenses eliminate on consolidation .
(d)
Investment properties
Investment properties consist of multi-family residential properties held to earn rental income, properties being construct-
ed or developed for future use to earn rental income and include interests held under long-term operating land leases .
Investment properties are measured initially at cost (which is equivalent to fair value) . Cost includes all amounts relating to
the acquisition (excluding transaction costs related to a business combination as outlined in NOTE 2(f)) and improvement
of the properties . All costs associated with upgrading and extending the economic life of the existing facilities, other than
ordinary repairs and maintenance, are capitalized to investment property . Included in these costs are internal amounts that
are directly attributable, which are capitalized to the extent that they upgrade or extend the economic life of the asset .
Subsequent to initial recognition, investment properties are recorded at fair value, in accordance with International
Accounting Standard (“IAS”) 40 – Investment Property (“IAS 40”) . Fair value is determined based on a combination of
internal and external processes and valuation techniques . Gains or losses arising from differences between current period
fair value and the sum of previously measured fair value and capitalized costs as described above are recorded in profit or
loss in the period in which they arise .
Any directly attributable costs incurred on investment properties under development are capitalized . Such costs include
direct development costs, property taxes and other costs directly attributable to the development . These costs are directly
related to the construction of a qualifying asset and will be incurred and capitalized until such time that substantially all of
the activities required to prepare the qualifying asset for its intended use are complete .
Properties owned by the Trust where a significant portion of the property is used for administrative purposes by the
Trust are considered “Property, Plant and Equipment” and, therefore, fall within the scope of IAS 16 – Property, Plant and
Equipment (“IAS 16”) and are recorded in accordance with that standard . where part of a building is used for administrative
purposes by the Trust, but this portion is considered insignificant, this space is included as part of Investment Property
under IAS 40 .
Investment properties are reclassified to ‘Assets held for sale’ when the criteria set out in IFRS 5 – Non-Current Assets Held
for Sale and Discontinued Operations (“IFRS 5”) are met (see NOTE 2(g)) .
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from
use and no future economic benefits are expected from the disposal . Prior to its disposal, the carrying value of the invest-
ment property is adjusted to reflect its fair value as outlined in the purchase and sale agreement (as the purchase and sale
agreement is the best evidence of fair value) . This adjustment shall be recorded as a fair value gain or loss . Any remaining
gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized .
Excess land represents land owned by the Trust located contiguous to land included as investment property . The Trust has
the ability to develop additional multi-family residential buildings on this land or sell it separately from the Investment
Property at a later date . Excess land is held for capital appreciation and, therefore, is treated as Investment Property and
recorded in accordance with IAS 40 as outlined above . when determining the fair value of a project with excess land, the
capitalization rate used in determining the value is adjusted accordingly .
(e) Property, plant and equipment
Tangible assets that are held for use in the production or supply of goods and services, or for administrative purposes, and
are expected to be used during more than one period, except when another accounting standard requires or permits a
different accounting treatment, are recorded in accordance with IAS 16 using the cost model . IAS 16, therefore, excludes
tangible assets that are accounted for in accordance with IAS 40 (see NOTE 2(d) above) and IFRS 5 (see NOTE 2(g) below) .
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In accordance with IAS 16, the cost model, after initial recognition of the property, plant and equipment, requires the
tangible asset to be carried at its cost less accumulated depreciation and any accumulated impairment losses (see NOTE
2(h)) . Depreciation is recognized in a manner that reflects the pattern in which the future economic benefits of the tangible
asset are expected to be consumed and realized by the Trust . The amount of depreciation will be charged systematically
to the consolidated statement of comprehensive income and is the cost less residual value of the asset over its useful
economic life . IAS 16 also requires that the cost and useful economic life of each significant component of a tangible asset
be determined based on the circumstances of each tangible asset . The method of depreciation, residual values and esti-
mates of the useful economic life of a tangible asset, or other property, plant and equipment, are reviewed at each financial
year-end and any changes are accounted for as a change in accounting estimate in accordance with IAS 8 – Accounting
Policies, Changes in Accounting Estimates and Errors (“IAS 8”) .
Property, Plant and Equipment (“PP&E”) is valued using the cost model under IAS 16 . PP&E is categorized into the following
classes and their respective useful economic life is used to calculate the amount of depreciation or amortization for each
period . Categories of PP&E with the same or similar useful lives are included in the same class .
PP&E Class
PP&E Category (NOTE 6)
Administrative building
Administrative building
Site equipment
Automobiles
Site equipment and other assets
Site equipment and other assets
warehouse assets
Site equipment and other assets
Corporate assets
Site equipment and other assets
Computer hardware
Corporate technology assets
Computer software*
Corporate technology assets
Useful Life /
Depreciation Rate
Depreciation method used
40 years
15%
20%
10% to 20%
10% to 20%
35%
35%
Straight-line
Declining balance
Declining balance
Declining balance
Declining balance
Declining balance
Declining balance
* In addition to the purchase of software from external sources, the Trust capitalizes certain programmers’ salaries related to internally
developed software applications used in the normal course of operations of Boardwalk REIT . The programmers’ work is directly attributable
to software development .
(f) Business combinations
In accordance with IFRS 3 – Business Combinations (“IFRS 3”), the acquisition of an asset or group of assets is recorded as
a business combination if the assets acquired and the liabilities assumed constitute a business . A business is defined as
an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a
return in the form of dividends, lower costs or other economic benefit . Building and other asset acquisitions, which meet
the above definition of a business, are recorded as business combinations and the acquisition method of accounting for
these transactions is applied . Building and other asset acquisitions, which do not meet the above definition of a business,
are recorded as an asset addition .
The acquisition method requires that an acquirer be identified, a specific acquisition date be determined (which is typically
the date on which control changes), all identifiable assets and liabilities assumed, as well as any non-controlling interest in
the acquiree, be recognized and measured, and any goodwill or gains from a bargain purchase price are recognized and
measured at fair value, including contingent liabilities when these contingent considerations are part of the consideration
being transferred . All acquisition costs associated with a transaction identified as a business combination are expensed
as incurred .
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest
in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the
acquisition-date amounts of the identifiable assets acquired and the liabilities assumed . If, after the assessment, the net of
the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consider-
ation transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously
held interest in the acquiree (if any), the excess is recognized immediately in profit as a bargain purchase gain .
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’
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proportionate share of the recognized amounts of the acquiree’s identifiable net assets . The choice of measurement basis
is made on a transaction-by-transaction basis . Other types of non-controlling interests are measured at fair value or, when
applicable, on the basis specified in another IFRS .
when the consideration transferred by the Trust in a business combination includes assets or liabilities resulting from a con-
tingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included
as part of the consideration transferred in a business combination . Changes in the fair value of the contingent consideration
that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against
goodwill . Measurement period adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date and is shorter than one year if all informa-
tion is received) about facts and circumstances that existed at the acquisition date .
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measure-
ment period adjustments depends on how the contingent consideration is classified . Contingent consideration that is
classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within
equity . Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in
accordance with IAS 39 – Financial Instruments: Recognition and Measurement, or IAS 37 – Provisions, Contingent Liabilities
and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss in the consol-
idated statement of comprehensive income .
when a business combination is achieved in stages, the Trust’s previously held equity interest in the acquiree is remeasured
to fair value at the acquisition date (i .e . the date when the Trust obtains control) and the resulting gain or loss, if any, is
recognized in profit or loss in the consolidated statement of comprehensive income . Amounts arising from interests in the
acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified
to profit or loss where such treatment would be appropriate if that interest was disposed of .
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combina-
tion occurs, the Trust reports provisional amounts for the items for which the accounting is incomplete . These provisional
amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to
reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would
have affected the amounts recognized at that date .
(g) Assets held for sale and discontinued operations
(i)
Assets (or disposal groups) held for sale
Non-current assets and groups of assets and liabilities, which comprise disposal groups, are categorized as assets
(or disposal groups) held for sale where the asset (or disposal group) is available for sale in its present condition, and
the sale is highly probable . For this purpose, a sale is highly probable: (a) if management is committed to a plan to
achieve the sale, (b) there is an active program to find a buyer, (c) the non-current asset (or disposal group) is being
actively marketed at a reasonable price, (d) the sale is anticipated to be completed within one year from the date of
classification, and (e) it is unlikely there will be changes to the plan . where an asset (or disposal group) is acquired
with a view to resale, it is classified as a non-current asset (or disposal group) held for sale if the disposal is expected
to take place within one year of the acquisition and it is highly likely that the other conditions referred to above will
be met within a short period following the acquisition . Retrospective application is not required; therefore, compar-
ative figures will not be adjusted to reflect non-current assets held for sale . The gains or losses arising on a sale of
assets (or disposal groups) that does not meet the definition of discontinued operations will be recognized as part of
continuing operations, while the gains or losses arising on a sale of assets (or disposal groups) that meets the defini-
tion of discontinued operations will be reported as part of discontinued operations in the consolidated statement of
comprehensive income .
(ii) Discontinued operations
An asset or group of assets will be classified as a discontinued operation when it is a component of an entity that has
either been disposed of or is classified as held for sale and represents a separate major line of business, it is part of a
single coordinated plan to dispose of a separate major line of business or geographical area of operations, or it is a
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subsidiary acquired exclusively with a view to resell . Profits and gains or losses related to the disposal of discontinued
operations are measured based on fair value less cost to sell or on the disposal of the assets (or disposal groups) and
are presented in the consolidated financial statements on an after tax basis in accordance with IFRS 5 . In addition,
retrospective application is required; therefore, comparative figures will be changed to reflect discontinued opera-
tions . As an individual building does not constitute a major line of business, individual building sales are not treated
as discontinued operations .
(h)
Impairment of assets
At the end of each reporting period, assets, other than those identified in the standard as not being applicable to IAS
36 – Impairment of Assets (“IAS 36”), such as investment properties recorded at fair value, are assessed for any indication
of impairment . Should the indication of impairment exist, the recoverable amount (see below) of the asset is estimated in
order to determine the extent of the impairment loss (if any) . where it is not possible to estimate the recoverable amount
of an individual asset, the Trust estimates the recoverable amount of the cash-generating unit to which the asset belongs .
where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reason-
able and consistent allocation basis can be identified .
Recoverable amount is defined as the higher of an asset’s “fair value less cost to sell” and its “value-in-use” . In assessing val-
ue-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimate of future
cash flows have not been adjusted .
where the carrying amount of an asset exceeds the recoverable amount determined, an impairment loss is recognized in
the consolidated statement of comprehensive income . After the recognition of an impairment loss, the depreciation charge
related to that asset is also revised for the adjusted carrying amount on a systematic basis over the remaining useful life of
the asset . Should this impairment loss be determined to have reversed in a future period (with the exception of goodwill),
a reversal of the impairment loss is recorded in profit or loss . However, the reversal of an impairment loss will not increase
the carrying amount that would have been determined (net of amortization) had no impairment loss been recognized .
(i)
Inventories
Inventories are measured at the lower of cost and net realizable value . The costs of inventories comprise the purchase
price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities),
and third-party transport, handling and other costs directly attributable to the acquisition of goods and materials, less any
trade discounts, rebates and other similar items, using the first-in, first-out method of cost assignment . Net realizable value
represents the estimated selling price for inventories less all estimated costs necessary to make the sale .
(j) taxation
For fiscal 2013 and 2014, Boardwalk REIT qualified as a “mutual fund trust” as defined under the Income Tax Act (Canada)
(the “Tax Act”) and as a Real Estate Investment Trust (“REIT”) eligible for the ‘REIT Exemption’ in accordance with the rules
affecting the tax treatment of publicly traded trusts . Accordingly, the Trust is not taxable on its income provided that all of
its taxable income is distributed to its Unitholders . This exemption, however, does not extend to the corporate subsidiar-
ies of Boardwalk REIT that are subject to income tax (NOTE 30 summarizes the Trust’s subsidiaries, including its corporate
subsidiaries) .
Current tax
The tax currently payable, if any, is based on taxable profit for the year for certain corporate subsidiaries of the Trust .
Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of
items of income or expense that are taxable or deductible in other years and items that are never taxable or deduct-
ible . The Trust’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the end of the reporting period .
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Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used in the computation of taxable profit .
Deferred income tax liabilities are generally recognized for all taxable temporary differences . Deferred income tax
assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized . The carrying amounts
of deferred income tax assets are reviewed at each reporting date and reduced to the extent it is no longer probable
that the income tax assets will be recovered . Deferred income tax assets and liabilities are measured at the tax rates
that are expected to apply in the year when the asset is realized or the liability settled, based on tax rates and laws that
have been enacted or substantively enacted at the reporting date . In addition, deferred income tax assets and liabil-
ities are measured using the rate that is consistent with the expected manner of recovery (i .e . using the asset versus
selling the asset) . where applicable, current and deferred income taxes relating to items recognized directly in equity
or comprehensive income are also recognized directly in equity or comprehensive income, respectively .
(k) Provisions
In accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”), a provision is a liability of
uncertain timing or amount . Provisions are recognized when the entity has a present legal or constructive obligation as a
result of past events and when it is probable that an outflow of resources will be required to settle the obligation and the
amount can be reliably estimated . Provisions are not recognized for future operating losses . Provisions are measured at
the present value of the expenditures expected to be required to settle the obligation using a discounted rate that reflects
current market assessment of the time value of money and the risks and uncertainties specific to the obligation . Provisions
are re-measured at each reporting date using the current discount rate . The increase in the provision due to the passage
of time is recognized as a financing cost .
(l) unit-based payments
Equity-settled unit-based payments to employees and Trustees are measured at the fair value of the deferred unit at the
grant date and expensed over the vesting period based on the Trust’s estimate of the deferred units that will actually
vest . At the end of each reporting period, the Trust revises its estimate of the number of equity instruments expected to
vest . The impact of the revision of the original estimates, if any, is recognized in profit or loss prospectively such that the
cumulative expense reflects the revised estimate . In accordance with IAS 32 – Financial Instruments: Presentation (“IAS 32”),
the deferred units are presented as a liability on the consolidated statement of financial position as the Trust is obliged
to provide the holder with REIT Units once the deferred units vest . Under IAS 39 – Financial Instruments: Recognition and
Measurement (“IAS 39”), the deferred units are classified as ‘fair value through profit or loss’ and are measured at each
reporting period at fair value with changes in fair value recognized in the consolidated statement of comprehensive
income . Fair value of the deferred units is calculated based on the observable market price of Boardwalk REIT’s Trust Units .
(m) Government assistance and grants
The Trust receives government assistance in order to complement and partially assist the Trust’s initiatives in providing
affordable housing to low income-earning individuals . Government grants are not recognized until there is reasonable
assurance that the Trust will comply with the conditions attached to them and that the grants will be received . In accor-
dance with IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance, grant proceeds will be
recognized in profit or loss on a systematic basis over the periods in which the Trust recognizes revenue or incurs expenses .
(n) Revenue recognition
(i)
Rental revenue
The Trust has retained substantially all of the risks and benefits of ownership of its investment properties, and, there-
fore, accounts for leases with its tenants as operating leases . Revenue recognition under a lease commences when
the tenant has a right to use the leased asset . Generally, this occurs on lease inception date when the tenant occupies
their leased space . Rental revenue is recognized systematically over the term of the lease, which is generally not more
than twelve months . Any suite specific incentives offered or initial direct costs incurred in negotiating and arranging
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an operating lease are also amortized over the term of the operating lease . Rental revenue is recorded based on the
amount received or to be received in accordance with the operating lease .
(ii) Building sales
The gain or loss from the sale of an investment property is recognized when title passes to the purchaser (control is
transferred) upon closing at which time all or substantially all of the funds are receivable, or have been received, and
the conditions of the sale have been completed .
(iii)
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the
Trust and the amount of income can be measured reliably . Interest income is accrued on a time basis when earned,
by reference to the principal outstanding and at the effective interest rate applicable . Interest income is included in
financing costs in the consolidated statement of comprehensive income .
(iv) Ancillary rental income
Ancillary rental income comprises revenue from coin laundry machines located on the Trust’s existing building sites,
and income received from telephone and cable providers and is recorded when earned .
(o) Financial instruments and derivatives
Financial instruments and derivatives are accounted for, presented, and disclosed in accordance with IFRS 7 – Financial
Instruments: Disclosures (“IFRS 7”), IAS 32 and IAS 39 . Financial assets and financial liabilities are initially measured at fair
value . Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the
fair value of the financial assets or financial liabilities, as appropriate, on initial recognition . Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized
immediately in profit or loss .
Financial assets
Financial assets are classified into the following specified categories: financial assets at ‘fair value through profit or loss’
(“FVTPL”), ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’ . The classification
depends on the nature and purpose of the financial asset and is determined at the time of initial recognition . Financial
assets are classified as at FVTPL when the financial asset either is held for trading or is designated as at FVTPL . Financial
assets categories are defined and measured as follows:
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Classification
Definition
Measurement
FVTPL
Classified as FVTPL when the financial asset is either held for
trading or it is designated as at FVTPL as discussed below:
Classified as held for trading if: it has been acquired principally for
the purpose of selling it in the near term; or, on initial recognition,
it is part of a portfolio of identified financial instruments that the
Trust manages together, and has a recent actual pattern of short-
term profit taking; or, it is a derivative that is not designated and
effective as a hedging instrument .
Classified as FVTPL upon initial recognition if: such designation
eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or the financial asset
forms part of a group which is managed and its performance
is evaluated on a fair value basis; or it forms part of a contract
containing one or more embedded derivatives .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Held-to-maturity
investments
Non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Trust has the positive
intent and ability to hold to maturity .
Measured at amortized cost
using the effective interest
method less any impairment . (1) (2)
Available-for-sale
Non-derivative financial assets that either are designated as
available-for-sale or are not classified as (a) loans and receivables,
(b) held-to-maturity investments or (c) financial assets at FVTPL .
Measured at fair value through
other comprehensive income .
Loans and
receivables
Non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market .
Measured at amortized cost
using the effective interest
method less any impairment . (1) (2)
(1) The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over
the relevant period . The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life
of the debt instrument or where appropriate, a shorter period, to the net carrying amount on initial recognition .
(2) Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period . Generally, the
carrying amount of the financial asset is reduced by the impairment loss .
Boardwalk REIT’s financial assets are as follows:
Financial asset
Classification
Measurement
Trade and other receivables
Loans and receivables
Amortized cost
Segregated tenants’ security deposits
Loans and receivables
Amortized cost
Cash
Loans and receivables
Amortized cost
The Trust derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity .
Financial liabilities and equity
Debt and equity instruments issued are classified either as financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument . An equity instrument
is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities . Equity instru-
ments issued by the Trust are recognized at the proceeds received, net of direct issue costs . Repurchase of Boardwalk REIT’s
own equity instruments is recognized and deducted directly in equity . No gain or loss is recognized in profit or loss on the
purchase, sale, issue or cancellation of the Trust’s own equity instruments . Distributions paid on the Trust’s equity instru-
ments subsequent to, declared prior to, and with a record date at or prior to, the reporting date, are recorded as a liability .
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Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’ . Financial liabilities cate-
gories are defined and measured as follows:
Classification
Definition
Measurement
FVTPL
Classified as FVTPL when the financial liability is either held for
trading or it is designated as at FVTPL as discussed below:
Classified as held for trading if: it has been acquired principally
for the purpose of repurchasing it in the near term; or, on
initial recognition, it is part of a portfolio of identified financial
instruments that the Trust manages together and has a recent
actual pattern of short-term profit taking; or, it is a derivative that
is not designated and effective as a hedging instrument .
Classified as FVTPL upon initial recognition if: such designation
eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or the financial liability
forms part of a group which is managed and its performance
is evaluated on a fair value basis; or it forms part of a contract
containing one or more embedded derivatives .
Other financial
liabilities
All other liabilities .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Stated at fair value, with gains or
losses arising on measurement
recognized in profit or loss .
Measured at amortized cost
using the effective interest
method . (1)
(1) The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over
the relevant period . The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected
life of the financial liability or where appropriate, a shorter period, to the net carrying amount on initial recognition .
Boardwalk REIT’s financial liabilities are as follows:
Financial liability
Classification
Measurement
Mortgages payable
Other financial liabilities
Amortized cost
LP Class B Units
Deferred unit-based compensation
FVTPL
FVTPL
Fair value
Fair value
Refundable tenants’ security deposits
Other financial liabilities
Amortized cost
Trade and other payables
Other financial liabilities
Amortized cost
The Trust derecognizes a financial liability when, and only when, the Trust’s obligations are discharged, cancelled or they
expire . The difference between the carrying amount of the financial liability derecognized and the consideration paid and
payable is recognized in profit or loss .
Derivatives
The Trust may enter into a variety of derivative financial instruments to manage its exposure to interest rate risks, including
interest rate swaps and bond forward contracts . Further details of derivative financial instruments are disclosed in NOTE
13 and NOTE 27 . Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and
are subsequently measured at their fair value at the end of each reporting period . The resulting gain or loss is recognized
in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which case the
timing of the recognition in profit or loss depends on the nature of the hedge relationship . Derivatives embedded in host
contracts are treated as separate derivatives when their risks and characteristics are not closely related to the host contracts
and the host contracts are not measured at FVTPL . For the years ended December 31, 2014 and 2013, the Trust had no
embedded derivatives requiring separate recognition .
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(p) Hedge accounting
The Trust applies hedge accounting to derivative financial instruments in cash flow hedging relationships . At the inception
of the hedging relationship, the Trust documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions . Furthermore, at
inception of the hedge and on an ongoing basis, the Trust documents whether the hedging instrument is highly effective
in offsetting changes in cash flows of the hedged item attributable to the hedged risk .
In cash flow hedging relationships, the effective portion of the change in the fair value of the hedging derivative is recog-
nized in the consolidated statement of comprehensive income as other comprehensive income (“OCI”) while the ineffective
portion is recognized immediately in profit or loss . Hedging gains and losses previously recognized in OCI and accumulated
in equity are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss, in the same
line of the consolidated statement of comprehensive income as the recognized hedged item .
Hedge accounting is discontinued when the Trust revokes the hedging relationship, when the hedging instrument expires
or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting . Any gain or loss recognized in OCI
and accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately rec-
ognized in profit or loss . when a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity
is recognized immediately in profit or loss .
(q) Cash and cash equivalents
Cash is comprised of bank balances, interest-earning bank accounts and term deposits not greater than 90 days
(r) Critical judgment in applying accounting policies
The following are the critical judgments, apart from those involving estimations (see NOTE 2(s) below) that have been
made in applying the Trust’s accounting policies and that have the most significant effect on the reported amounts in the
consolidated financial statements:
(i)
Income taxes
The Trust applies judgment in determining the tax rates applicable to its corporate subsidiaries and identifying the
temporary differences in each of such legal subsidiaries in respect of which deferred income taxes are recognized .
Deferred taxes related to temporary differences arising from its corporate subsidiaries are measured based on the tax
rates that are expected to apply in the year when the asset is realized or the liability is settled . Temporary differences
are differences that are expected to reverse in the future and arise from differences between accounting and tax asset
values .
(ii)
Leases
The Trust’s revenue recognition policy related to leases is described in NOTE 2(n)(i) . The Trust makes judgments in
determining whether certain leases, in particular tenant leases, as well as leased warehouse space and long-term land
leases, which are considered leases under IFRS, where the Trust is the lessor, are operating or finance leases . The Trust
has determined that all of its leases are operating leases .
(iii)
Investment property and internal capital program
The Trust’s accounting policy relating to investment property is described in NOTE 2(d) above . In applying this
policy, judgment is applied in determining the extent and frequency of utilizing independent, third-party appraisals
to measure the fair value of the Trust’s investment property . Additionally, judgment is applied in determining the
appropriate classes of investment properties in order to measure fair value . The Trust also undertakes internal capital
improvements and upgrades . Such work is specifically identified, and the Trust applies judgment in the estimated
amount of directly attributable on-site wages to be allocated to capital improvements and upgrades of its real estate
assets .
(iv) Financial instruments
The Trust’s accounting policies relating to financial instruments are described in NOTE 2(o) . Critical judgments inherent
in these policies related to applying the criteria set out in IAS 39 to designate financial instruments into categories
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(i .e . FVTPL, etc .), assess the effectiveness of hedging relationships (for the Trust’s cash flow hedges) and determine the
identification of embedded derivatives, if any, in certain hybrid instruments that are subject to fair value measurement .
(v) Basis of consolidation
The consolidated financial statements of the Trust include the accounts of Boardwalk REIT and its wholly owned sub-
sidiaries, as well as entities over which the Trust exercises control on a basis other than ownership of voting interest
within the scope of IFRS 10 . Judgment is applied in determining if an entity meets the criteria of control as defined in
the accounting standard .
(vi) Deferred unit-based compensation
The Trust applies judgment in determining the best available estimate of the number of deferred units that are
expected to vest at each reporting period .
(s) Key accounting estimates and assumptions
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end
of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year . Actual results could differ from estimates .
(i)
Investment property
The choice of valuation method for fair valuing and the critical estimates and assumptions underlying the fair value
determination of investment properties are set out in NOTE 4 . Significant estimates used in determining the fair value
of the Trust’s investment properties includes capitalization rates and net operating income (which is influenced by
inflation rates, vacancy rates and standard costs) used in the overall capitalization rate valuation method as well as
discount rates and forecasted cash flows used in the discounted cash flow valuation method . A change to any one
of these inputs could significantly alter the fair value of an investment property . Please refer to NOTE 4 for sensitivity
analysis .
(ii) Property, plant and equipment
The useful economic life of property, plant and equipment for the purposes of calculating depreciation and amorti-
zation, as disclosed in NOTE 6 and forecast of economic factors to determine recoverable amounts for the purpose
of determining any impairment of assets, are based on data and information from various sources including industry
practice and entity specific history .
(iii)
Internal Capital Program
The Trust’s internal capital program is based on internal allocations, including parts, supplies and on-site wages iden-
tified as part of the specific upgrade or capital improvement .
(iv) Utility accrual
Amount of utility accrual for charges related to the current or prior year is based on estimates of usage and price for
the time period in which invoices have not been received from the utility providers .
(v) Deferred unit-based compensation plan
The compensation costs relating to the deferred unit plan are based on estimates of how many deferred units will
actually vest and be exercised .
(vi) Deferred taxes
The amount of the temporary differences between the accounting carrying value of the Trust’s assets and liabilities
held in various corporate subsidiaries versus the tax bases of those assets and liabilities and the tax rates at which the
differences will be realized are outlined in NOTE 16 .
106
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B O A R D w A L k R E I T / A R 2 0 1 4
note 3:
application oF new anD reviseD iFrss anD Future accounting policies
(a) Application of new and revised IFRSs
In the current year, the Trust has applied a number of new and revised IFRSs issued by the IASB, and incorporated in the
Chartered Professional Accountants of Canada Handbook . The following highlights these changes and the effect, if any, on
the Trust’s consolidated financial statements .
Financial Instruments
Amendments were made to IAS 32, which clarify the requirements relating to the offset of financial assets and financial
liabilities . Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-off” and
“simultaneous realization and settlement” . These amendments did not have a significant impact on the Trust’s consolidat-
ed financial statements, as the Trust does not have any financial assets and financial liabilities that qualify for offset .
Additionally, amendments were made to IAS 39, which provide relief from the requirement to discontinue hedge account-
ing when a derivative designated as a hedging instrument is novated under certain circumstances . The amendments also
clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation
should be included in the assessment and measurement of hedge effectiveness . These amendments did not have an
impact on the Trust .
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities
The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an
investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or
loss in its consolidated and separate financial statements . The Trust does not have any investment entities and, as such,
these amendments did not have an impact on its consolidated financial statements .
IFRS Interpretations Committee 21 – levies (“IFRIC 21”)
Effective January 1, 2014, the Trust adopted IFRIC 21 . within IFRIC 21, a levy is defined as an outflow of resources embodying
economic benefits that is imposed by governments on entities in accordance with legislation (i .e . laws and/or regulations),
other than:
(a)
those outflows of resources that are within the scope of other standards (such as income taxes that are within the
scope of IAS 12); and
(b)
fines or other penalties that are imposed for breaches of the legislation .
‘Government’ refers to government, government agencies and similar bodies whether local, national or international .
IFRIC 21 provides an interpretation for the recognition of liabilities for obligations to pay levies that are within the scope
of IFRIC 21 .
The adoption of IFRIC 21 did not have an impact on the Trust’s consolidated financial statements .
Amendments to IAS 36 – Impairment of Assets
The overall effect of the amendments is to reduce the circumstances in which the recoverable amount of assets or
cash-generating units is required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement
to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fair value
less costs of disposal) is determined using a present value technique . The Trust does not have any impaired assets, and, as
such, these amendments did not have an impact on its consolidated financial statements .
B O A R Dw A L k R E I T / A R 2 0 1 4
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107
(b) Future accounting polices
The following accounting standards under IFRS have been issued or revised; however, they are not yet effective, and, as
such, have not been applied to these consolidated financial statements:
New or amended
standards
Summary of requirements
IFRS 9 – Financial
Instruments
IFRS 9, published in July 2014, replaces the existing guidance in
IAS 39 . IFRS 9 includes revised guidance on the classification and
measurement of financial instruments, including a new expected
credit loss model for calculating impairment on financial assets,
and the new general hedge accounting requirements . It also
carries forward the guidance on recognition and derecognition of
financial instruments from IAS 39 .
IFRS 9 is effective for annual reporting periods beginning on or
after January 1, 2018, with early adoption permitted .
Possible impact on
consolidated financial
statements
The Trust is assessing the
potential impact on its
consolidated financial
statements but does not expect
it to have a significant impact .
IFRS 15 – Revenue
from Contracts
with Customers
(“IFRS 15”)
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognized . It replaces
existing revenue recognition guidance, including IAS 18 – Revenue
(“IAS 18”), IAS 11 – Construction Contracts and IFRIC 13 – Customer
Loyalty Programmes .
The Trust is assessing the
potential impact on its
consolidated financial
statements .
IFRS 15 is effective for annual reporting periods beginning on or
after January 1, 2017, with early adoption permitted .
Accounting for
Acquisitions
of Interests in
Joint Operations
(Amendments
to IFRS 11 – Joint
Arrangements
(“IFRS 11”)
The amendments to IFRS 11 provide guidance on how to account
for the acquisition of an interest in a joint operation in which the
activities constitute a business combination as defined in IFRS 3 .
Specifically, the amendments state that the relevant principles
on accounting for business combinations in IFRS 3 and other
standards should be applied .
The amendments to IFRS 11 apply prospectively for annual periods
beginning on or after January 1, 2016 .
The Trust is assessing the
potential impact on its
consolidated financial
statements .
The following new or amended standards are not expected to have a significant impact or any impact on the Trust’s con-
solidated financial statements:
▲
IFRS 14 – Regulatory Deferral Accounts
▲ Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38)
▲ Agriculture Bearer Plants (Amendments to IAS 16 and IAS 41 – Agriculture)
▲ Defined Benefit Plans: Employee Contributions (Amendments to IAS 19 – Employee Benefits)
▲ Equity method in Separate Financial Statements (Amendments to IAS 27)
▲ Disclosure Initiative (Amendments to IAS 1)
▲
Investment Entities: Applying the Consolidated Exception (Amendments to IFRS 10, IFRS 12, and IAS 28)
108
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle
The IASB has released the final amendments for the 2010-2012 and 2011-2013 annual improvement project with the
majority of these amendments applying for annual periods beginning on or after July 1, 2014 . Only those which may have
a significant impact on the Trust are included below .
Standard
Details of amendment
Expected impact
2010-2012 Cycle
IFRS 3 – Business
Combinations
2011-2013 Cycle
IFRS 3 – Business
combinations
IAS 40 –
Investment
property
An obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as a financial
liability or equity on the basis of the definitions in IAS 32 . Non-
equity consideration is measured at fair value at each reporting
date, with changes recognized in the income statement .
The Trust will determine the
impact of this amendment
should a business combination
occur .
The amendment clarifies that IFRS 3 does not apply to the
formation of any joint arrangement and that the scope exemption
only applies in the financial statements of the joint arrangement
itself .
The Trust will determine the
impact of this amendment
should a business combination
occur .
The amendment clarifies that IAS 40 and IFRS 3 are not mutually
exclusive . IAS 40 assists preparers to distinguish between
investment property and owner-occupied property . IFRS 3
determines whether the acquisition of an investment property is a
business combination .
The Trust will determine the
impact of this amendment
should the acquisition of an
investment property occur .
note 4:
investMent properties
As at
Balance, beginning of year
Additions
Building improvements (incl . internal capital program)
Building improvements discontinued operations
Development of investment properties
Dispositions
Fair value gains, unrealized, from continuing operations
Fair value gains, realized, from discontinued operations
Balance, end of year
Revenue producing properties
Development (1)
Total
Dec 31, 2014
Dec 31, 2013
$
5,745,207
$
5,493,448
79,662
566
1,995
(153,420)
89,781
14,317
$
$
$
5,778,108
5,775,111
2,997
5,778,108
$
$
$
72,727
1,098
15,479
–
153,761
8,694
5,745,207
5,744,205
1,002
5,745,207
(1) For the year ended December 31, 2013, a development project was completed in December 2013, totaling $19 .1 million in costs, and was
reclassified from development to revenue producing properties (December 31, 2014 – $nil) .
Subsequent to initial recognition at cost, investment properties are recorded at fair value, in accordance with IAS 40 . Fair
value is determined based on a combination of internal and external processes and valuation techniques . Fair value under
IFRS is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date . Investment properties are valued on a highest and best use basis .
For all of the Trust’s investment properties the current use is considered to be the highest and best use . For the year ended
December 31, 2014, there has been no change to the valuation technique .
B O A R Dw A L k R E I T / A R 2 0 1 4
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
109
In determining the appropriate classes of investment properties in order to determine the fair value measurement, the
Trust has considered the nature, characteristics and risk of its properties . The classification of investment properties are
based primarily on the geographical location of the asset, with the exception of properties situated on land leases . Below
is a continuity schedule based on investment property classes:
Year ended December 31, 2014
Building
improvements
(incl . internal
capital
program and
discontinued
operations)
Balance,
beginning
of year
Development
of investment
properties Dispositions
Fair value
gains
(losses),
unrealized,
from
continuing
operations
Fair value
gains,
realized,
from
discontinued
operations
Balance,
end of year
$ 1,204,095
$ 10,598
$
82 $
– $ 63,399
$
– $ 1,278,174
2,303,868
316,819
125,052
31,890
193,722
104,664
92,985
168,008
387,046
328,949
488,109
29,363
5,694
566
956
4,620
3,196
2,306
4,831
5,828
5,586
6,684
5
–
–
–
–
–
–
–
1,908
–
–
(13,485)
–
(139,935)
76,969
(2,748)
–
–
2,396,720
319,765
–
14,317
–
–
–
–
–
–
–
–
(949)
(9,506)
(6,925)
587
(5,896)
(6,402)
(3,928)
(14,820)
–
–
–
–
–
–
–
–
–
31,897
188,836
100,935
95,878
166,943
388,380
330,607
479,973
Recurring
measurements
Investment properties
Calgary
Edmonton
Other Alberta
Vancouver/Victoria
kitchener
London
windsor
Montreal
Quebec City
Regina
Saskatoon
Land leases
Total
$ 5,745,207
$ 80,228
$ 1,995 $ (153,420) $ 89,781
$ 14,317 $ 5,778,108
Year ended December 31, 2013
Building
improvements
(incl . internal
capital
program)
Balance,
beginning
of year
Development
of investment
properties
Dispositions
Fair value
gains
(losses),
unrealized,
from
continuing
operations
Fair value
gains
(losses),
unrealized,
from
discontinued
operations
Balance,
end of year
Recurring
measurements
Investment properties
Calgary
Edmonton
Other Alberta
Vancouver/Victoria
kitchener
London
windsor
Montreal
Quebec City
Regina
Saskatoon
Land leases
$ 1,155,452
$ 9,342
$ 15,307
$
–
$ 23,994
$
– $ 1,204,095
2,176,033
25,886
71
294,477
115,284
30,766
187,864
94,418
95,881
170,578
373,301
316,891
482,503
3,889
1,074
2,085
3,418
2,609
2,088
1,783
7,442
4,099
10,110
–
–
–
–
–
–
–
101
–
–
–
–
–
–
–
–
–
–
–
–
–
101,878
18,453
–
–
–
8,694
(961)
2,440
7,637
(4,984)
(4,353)
6,202
7,959
(4,504)
–
–
–
–
–
–
–
–
2,303,868
316,819
125,052
31,890
193,722
104,664
92,985
168,008
387,046
328,949
488,109
Total
$ 5,493,448
$ 73,825
$ 15,479
$
–
$ 153,761
$ 8,694 $ 5,745,207
110
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
Investment properties measured at fair value in the statement of financial position are categorized by level according to the
significance of the inputs used in making the measurements . The levels of inputs are defined as follows:
Level 1 inputs:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date .
Level 2 inputs:
Inputs other than quoted prices included within Level 1 that are observable for the asset or the liability,
either directly or indirectly .
Level 3 inputs: Unobservable inputs for the asset or liability .
The Trust’s policy is to recognize transfers out of fair value hierarchy levels as of the date of the event or change in cir-
cumstances that caused the transfer . As at December 31, 2014, all of the Trust’s investment properties were Level 3 inputs .
There were no transfers in or out of Level 3 fair value measurements for investment properties held as at December 31,
2014 and 2013 .
External valuations were obtained from third-party external valuation professionals (“the Appraisers”) based on a cross
section of properties from different geographical locations and markets across the Trust’s rental portfolio as determined
by the Trust’s management . The Appraisers are an independent valuation firm not related to the Trust and employ valua-
tion professionals who are members of the Appraisal Institute of Canada and the Ordre des Evaluateurs Agrees du Quebec
who have appropriate qualifications and recent experience in the valuation of properties in the relevant locations . External
appraisals were obtained as follows:
Date
December 31, 2014
September 30, 2014
June 30, 2014
March 31, 2014
Date
December 31, 2013
September 30, 2013
June 30, 2013
March 31, 2013
Number of properties
5
4
4
4
Number of properties
7
7
6
7
Aggregate
fair value
$ 524,041
$ 348,154
$ 102,104
$ 105,282
Aggregate
fair value
$ 779,487
$ 217,022
$ 211,895
$ 178,609
Percentage of portfolio
as of that date
9 .1%
6 .0%
1 .8%
1 .8%
Percentage of portfolio
as of that date
13 .6%
3 .8%
3 .8%
3 .2%
The fair value of the remainder of the Trust’s investment property portfolio was determined internally by the Trust using
the same assumptions and valuation techniques used by the external valuation professionals . In addition to performing a
valuation on a selection of the Trust’s properties (and not performing a valuation on all of the Trust’s properties) to corrob-
orate the Trust’s internal valuation, the Appraisers provided the Trust with a summary of the major assumptions and market
data by city in order for the Trust to complete its internal valuations .
The third-party valuation technique of the Trust’s investment property portfolio primarily utilizes the “Overall Capitalization
Rate” method . This method requires that rental income from current leases and key assumptions about rental income,
vacancies and inflation rates, among other factors, be used to determine a one-year income forecast for each individual
property within the Trust’s portfolio, and also considers any capital expenditures anticipated within the year . Given the
short term nature of residential leases (typically one year), revenue and costs are not discounted . A Capitalization Rate
was also determined for each property based on market information related to the external sale of similar buildings
within a similar geographic location . These factors were used to determine the fair value of investment properties at each
reporting date .
Five of the Trust’s properties: one in Calgary, one in Banff, one in Edmonton and two in Montreal, are subject to long-
term land leases and similar arrangements in which the underlying land is owned by a third party and leased to the Trust .
B O A R Dw A L k R E I T / A R 2 0 1 4
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111
Under the terms of a typical land lease, the lessee must pay rent for the use of the land and is generally responsible for
all costs and expenses associated with the building and improvements, including taxes, utilities, insurance, maintenance,
repairs and replacements in respect of all the leased premises . Unless the lease term is extended, the land together with all
improvements made will revert to the owner of the land upon the expiration of the lease term . Due to the relatively short
term remaining on one of the land leases in Montreal (with an expiry date of 2028) and an anticipated significant land rent
escalation in 2016 for the land lease in Calgary, these two properties utilized the Discounted Cash Flow (“DCF”) approach to
derive the fair value . The DCF Method calculates the present value of the future cash flows over a specified time period to
determine the fair value for each property at each reporting date . The most significant assumption using the DCF method is
the discount rate applied over the term of the lease . The discount rates reflect the uncertainty regarding the renegotiation
of the land lease payments and the ability to extend the land lease at the expiry date . Forecasted cash flows are reduced
for contractual land lease payments during the term of the leases .
The key valuation metrics (and significant unobservable inputs in Level 3) for the Trust’s investment properties are set out
in the following tables:
Dec 31, 2014
Dec 31, 2013
Capitalization rate
Minimum
Maximum
Forecasted
total
standardized
net operating
income
Capitalization rate
Minimum
Maximum
Forecasted
total
standardized
net operating
income
4 .50%
5 .00%
5 .75%
–%
5 .50%
5 .75%
6 .50%
5 .50%
5 .75%
5 .75%
5 .75%
4 .50%
5 .25%
6 .00%
$ 63,743
5 .50%
7 .25%
–%
5 .50%
6 .00%
7 .00%
6 .25%
6 .25%
6 .00%
6 .00%
7 .25%
126,363
20,643
–
1,754
10,875
6,814
5,510
9,926
23,118
19,675
288,421
15 .09%
$ 28,055
4 .75%
5 .00%
5 .75%
4 .75%
5 .50%
5 .75%
6 .50%
5 .50%
5 .75%
5 .75%
5 .75%
4 .75%
5 .25%
6 .00%
$ 60,110
5 .50%
7 .25%
5 .25%
5 .50%
6 .00%
7 .00%
6 .25%
6 .25%
6 .00%
6 .00%
7 .25%
121,623
20,497
6,195
1,754
11,145
7,068
5,348
9,980
23,156
19,569
286,445
13 .49%
$ 28,337
As at
Calgary
Edmonton
Other Alberta
Vancouver
kitchener
London
windsor
Montreal
Quebec City
Regina
Saskatoon
land lease
The overall weighted average Capitalization Rates for fair valuing the Trust’s investment properties at December 31, 2014
and 2013, was 5 .48% .
The “Overall Capitalization Rate” method requires that a forecasted stabilized net operating income (“NOI”) be divided
by a Capitalization Rate (“Cap Rate”) to determine a fair value . NOI is calculated as a one-year income forecast based on
rental income from current leases and key assumptions about rental income, vacancies and inflation rates, among other
factors, less property operating costs . As such, fluctuations in both NOI and Cap Rates could significantly alter the fair value .
Generally, an increase in stabilized NOI will result in an increase to the fair value of an investment property . An increase
in capitalization rate will result in a decrease to the fair value of an investment property . when the capitalization rate is
applied to NOI to calculate fair value, there is a significant impact as the lower the capitalization rate, the larger the impact .
Below are tables that summarize the impact of changes in both the Cap Rates and NOI on the Trust’s fair value of investment
properties (excluding development):
112
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
As at December 31, 2014
Net Operating Income
Capitalization Rate
-0 .25%
Cap Rate As Reported
+0 .25%
As at December 31, 2013
Net Operating Income
Capitalization Rate
-0 .25%
Cap Rate As Reported
+0 .25%
-3%
-1% As Forecasted
+1%
+3%
$ 306,982
$ 313,311
$ 316,476
$ 319,641
$ 325,970
5 .23%
$ 94,522
$ 215,545
$ 276,057
$ 336,569
$ 457,592
5 .48%
5 .73%
(173,253)
(417,662)
(57,751)
5,775,111
57,751
(307,200)
(251,968)
(196,737)
173,253
(86,274)
-3%
-1% As Forecasted
+1%
+3%
$ 305,339
$ 311,635
$ 314,782
$ 317,930
$ 324,226
5 .23%
$
94,016
$ 214,392
$ 274,580
$ 334,767
$ 455,143
5 .48%
5 .73%
(172,326)
(415,427)
(57,442)
(305,556)
5,744,205
57,442
(250,620)
(195,684)
172,326
(85,812)
Investment properties with a fair value of $480 .0 million (December 31, 2013 – $488 .4 million) are situated on land held
under land leases .
Investment properties with a fair value of $670 .0 million (December 31, 2013 – $654 .8 million) are pledged as security
against the Trust’s committed revolving credit facility . Assets pledged as security for the committed revolving credit
facility may also be pledged as security for the Trust’s mortgages payable . In addition, investment properties with a fair
value of $5 .3 billion (December 31, 2013 – $5 .3 billion) are pledged as security against the Trust’s mortgages payable . As
at December 31, 2014, there are no contractual obligations to purchase, construct or develop investment properties or for
repairs, maintenance and enhancements .
For the years ended December 31, 2014 and 2013, investment properties earned rental revenue (excluding ancillary rental
income) of $466 .3 million and $445 .8 million, respectively . Direct operating expenses in relation to investment properties
were $176 .0 million and $164 .1 million for the years ended December 31, 2014 and 2013, respectively .
note 5:
loss on sale oF assets anD DiscontinueD operations
On May 5, 2014, the Trust disposed of a 102-unit project in Edmonton, Alberta (Alberta segment) . The loss on sale was as
follows:
Cash received
Cost of disposition
Net proceeds
Net book value
Loss on sale of assets
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
13,500
$
(235)
13,265
(13,500)
$
(235)
–
–
–
–
–
B O A R Dw A L k R E I T / A R 2 0 1 4
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113
On May 29, 2014, the Trust disposed of all its properties (633 units) located in the province of British Columbia . As the Trust
disposed of all of its British Columbia operations, which represents a separate, identifiable geographical segment, the profit
from discontinued operations, net of tax, is summarized below:
Rental revenue
Ancillary rental income
Total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income
Financing costs
Administration
Depreciation and amortization
Profit before the undernoted
Loss on sale of assets
Fair value gains
Profit before income tax expense
Income tax expense
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
3,447
$
8,289
60
3,507
799
379
464
1,865
736
4
43
1,082
(4,218)
14,317
11,181
–
149
8,438
1,288
807
496
5,847
1,833
7
106
3,901
–
8,694
12,595
–
Profit from discontinued operations, net of tax
$
11,181
$
12,595
The loss on sale of assets was as follows:
Cash received
Cost of disposition
Net proceeds
Net book value
Loss on sale of assets
The cash flows from discontinued operations were as follows:
Profit from discontinued operations, net of tax
Loss on sale of assets
Financing costs
Interest paid
Fair value gains
Depreciation and amortization
Net cash inflows from operating activities
Improvements to investment properties
Net cash proceeds from sale of investment properties
Net cash inflows (outflows) from investing activities
Scheduled mortgage principal repayments
Mortgages on investment properties sold
Net cash outflows from financing activities
Total cash inflows from discontinued operations
Year ended
Dec 31, 2014
$ 140,000
(4,218)
135,782
(140,000)
$
(4,218)
Year ended
Dec 31, 2013
$
$
–
–
–
–
–
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
11,181
$
12,595
4,218
736
(736)
(14,317)
43
1,125
(566)
$
$
137,547
$ 136,981
$
$
$
(499)
(61,997)
(62,496)
75,610
–
1,833
(1,833)
(8,694)
106
4,007
(1,098)
–
(1,098)
(1,162)
–
(1,162)
1,747
$
$
$
$
$
$
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note 6:
property, plant anD equipMent
The carrying amounts of PP&E were as follows:
As at
Dec 31, 2014
Accumulated
depreciation
Cost
Carrying
amount
Dec 31, 2013
Accumulated
depreciation
Cost
Carrying
amount
Administration building
$ 5,944
$
(2,551)
$ 3,393
$
5,659
$
(2,282)
$
3,377
Site equipment and
other assets
Corporate technology
assets
Total
40,288
(21,039)
19,249
35,082
(18,233)
16,849
26,572
(23,090)
3,482
25,034
(21,635)
3,399
$ 72,804
$ (46,680)
$ 26,124
$ 65,775
$ (42,150)
$ 23,625
The following table outlines a reconciliation of the carrying amount of PP&E as at December 31, 2014:
Dec 31, 2013
opening
carrying
amount
Additions
Disposals
Depreciation
Dec 31, 2014
closing
carrying
amount
Administration building
$ 3,377
$
285
$
–
$
(269)
$ 3,393
Site equipment and other assets
Corporate technology assets (1)
16,849
3,399
5,360
1,547
Total
$ 23,625
$ 7,192
$
(79)
(2)
(81)
(2,881)
(1,462)
19,249
3,482
$
(4,612)
$ 26,124
(1) Included in computer software is $597 thousand of capitalized programmers’ salaries related to the internally developed software
applications used by the Trust in the normal course of its operations .
The following table outlines a reconciliation of the carrying amount of PP&E as at December 31, 2013:
Administration building
Site equipment and other assets
Corporate technology assets (1)
Total
Dec 31, 2012
opening
carrying
amount
Additions
Depreciation
Dec 31, 2013
closing
carrying
amount
$ 2,929
$
689
$
(241)
$ 3,377
14,418
3,330
4,963
1,497
(2,532)
(1,428)
16,849
3,399
$ 20,677
$ 7,149
$
(4,201)
$ 23,625
(1) Included in computer software is $610 thousand of capitalized programmers’ salaries related to the internally developed software
applications used by the Trust in the normal course of its operations .
PP&E is reviewed at each reporting date to ensure their useful economic lives remain appropriate . In addition, PP&E is
reviewed at each reporting date for indicators of impairment . where impairment exists, the PP&E asset is written down by
the impaired amount . Should this impairment no longer exist, the impairment write-down is reversed up to the net book
value which would have existed had the impairment not occurred . As at December 31, 2014 and 2013, there were no indi-
cators of impairment in relation to the Trust’s PP&E .
As at December 31, 2014 and 2013, none of the Trust’s PP&E was pledged as security for debt .
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note 7:
inventories
Inventory consists of parts and supplies and items such as baseboards, carpet and linoleum, which the Trust routinely uses
in the maintenance and upgrading of its investment properties . These items are kept on hand so they are readily available
for use . when items of inventory are used, they are expensed as part of maintenance expense or they are capitalized to
investment properties depending on the nature of the inventory used and whether or not the useful life of an asset has
been extended as a result of its use . The Trust’s inventories are as follows:
As at
Parts and supplies
Baseboard, carpet and linoleum
note 8:
prepaiD assets
The major components of prepaid assets are as follows:
As at
Prepaid property taxes
Prepaid land leases
Prepaid expenses and other
note 9:
traDe anD other receivaBles
Dec 31, 2014
Dec 31, 2013
$ 3,500
$ 3,537
94
48
$ 3,594
$ 3,585
Dec 31, 2014
Dec 31, 2013
$
793
$ 1,049
2,783
917
2,460
700
$ 4,493
$ 4,209
Trade and other receivables consist mainly of mortgage holdbacks, refundable mortgage fees and amounts owed to
Boardwalk REIT by tenants, insurers and revenue-sharing business partners and totalled $7 .2 million at December 31, 2014
(December 31, 2013 – $4 .8 million)
As at
Trade and other receivables
Mortgage holdbacks and refundable mortgage fees
Dec 31, 2014
Dec 31, 2013
$ 6,968
$ 4,819
278
–
$ 7,246
$ 4,819
Refer to NOTE 29 (b) for the Trust’s exposure to credit risk in relation to its trade and other receivables and how the Trust
accounts for past due balances .
note 10: segregateD tenants’ security Deposits
Segregated tenants’ security deposits are considered restricted cash as they are held in trust bank accounts and subject
to the contingent rights of third parties . Restricted cash and deposits totaled $12 .1 million at December 31, 2014 and $12 .7
million at December 31, 2013 .
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note 11: Mortgages payaBle
As at
Dec 31, 2014
Dec 31, 2013
weighted
Average Interest
Debt
Balance
weighted
Average Interest
Debt
Balance
Mortgage payable
Fixed rate
Total
Current
Non-current
3 .34%
$ 2,169,499
3 .46%
$ 2,261,412
2,169,499
$
467,320
1,702,179
$ 2,169,499
2,261,412
$
470,787
1,790,625
$ 2,261,412
Estimated future principal payments required to meet mortgage obligations as at December 31, 2014 are as follows:
2015
2016
2017
2018
2019
Subsequent
Unamortized deferred financing costs
Unamortized mark-to-market adjustment
Secured By
Investment Properties
$
467,320
294,423
324,468
186,376
385,137
585,906
2,243,630
(74,188)
57
$ 2,169,499
Canada Mortgage and Housing Corporation (“CMHC”) provides mortgage loan insurance in connection with mortgages
made to Boardwalk REIT . In an agreement dated September 13, 2002, and as amended and restated on January 19, 2005
and April 25, 2006, the Trust agreed to provide certain financial information to CMHC and be subject to certain restrictive
covenants, including limitation on additional debt, payment of distributions in respect of Unitholders’ capital in the event
of default, and maintenance of certain financial ratios . In the event of default, the Trust’s total financial liability under this
Agreement is limited to a one-time penalty payment of $250 thousand under a Letter of Credit issued in favor of CMHC .
During the years ended December 31, 2014 and 2013, the Trust had a committed revolving credit facility with a major
financial institution . This credit facility was secured by a first or second mortgage charge on specific real estate assets .
The maximum amount available varies with the value of pledged assets to a maximum not to exceed $200 million and
an available limit of $200 million as at December 31, 2014 (December 31, 2013 – $200 million) . The credit facility requires
monthly interest payments and is renewable annually subject to the mutual consent of the lender and the Trust . This credit
facility currently has a maturity date of July 27, 2017 . In the event the committed revolving credit facility is not extended,
the drawn-down principal would be due on the maturity date of the credit agreement .
There was no amount outstanding at December 31, 2014 (December 31, 2013 – $nil) under this facility, except for Letters
of Credit (“LCs”) issued and outstanding . The LCs totaled $4 .2 million as at December 31, 2014 (December 31, 2013 – $4 .2
million) . As such, approximately $195 .8 million was available from this facility on December 31, 2014 (December 31, 2013 –
$195 .8 million) . The credit facility carries interest rates ranging from prime to prime plus 1 .0% per annum and has no fixed
terms of repayment .
The covenants in relation to the credit facility are discussed in NOTE 29 (d) .
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note 12: lp class B units
The LP Class B Units, representing an aggregate fair value of $275 .4 million at December 31, 2014 (December 31, 2013 –
$267 .8 million), are non-transferable, except under certain circumstances, but 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
these exchangeable units in an amount equivalent to the distributions which would have been made had the units been
exchanged for Boardwalk REIT Units . 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 Unitholders . There is no value assigned to the Special Voting
Units . The LP Class B Units have been classified as “FVTPL” financial liabilities in accordance with IAS 39 . Gains or losses
resulting from changes in the fair value at each reporting date are recorded in the consolidated statement of comprehen-
sive income and are discussed in NOTE 23 .
As at December 31, 2014 and 2013, there were 4,475,000 LP Class B Units issued and outstanding .
note 13: other non-current liaBilities
Other non-current liabilities represents the fair value of the Trust’s interest rate swaps (as described below) and totaled $1 .0
million as at December 31, 2014 (December 31, 2013 – $3 .4 million) .
During the first quarter of 2008, Boardwalk REIT entered into an interest rate swap agreement on the mortgages of specific
properties within its portfolio in an effort to hedge the variability in cash flows attributed to fluctuating interest rates . The
Trust evaluates the effectiveness of these cash flow hedges at each reporting date and measures them at fair value . Any
gains or losses, which arise as a result of the “effectiveness” of the hedge, will be recognized in OCI . The ineffective portion
of the hedging gain or loss on the swap transaction will be recognized immediately in profit or loss . On recognition of the
financial liability of the hedged item on the consolidated statement of financial position, the associated gains or losses
that were recognized in OCI will be reclassified into net earnings in the same period or periods during which the interest
payments of the hedged item affect net earnings . However, if all, or a portion, of the net loss recognized in OCI will not be
recovered in one or more future periods, this amount will be immediately reclassified into profit or loss . At December 31,
2014 and December 31, 2013, the Trust has determined that these cash flow hedges were effective under IFRS and hedge
accounting has been applied to these agreements in accordance with IAS 39 . As such, the change in fair value has been
recorded in OCI as outlined in NOTE 18(c) .
As at December 31, 2014 and December 31, 2013, the fair value measurement of the interest rate swaps was based on Level
2 inputs (as defined in NOTE 4) . At each reporting date, the Trust’s lender determines the fair value by applying a discount
rate to the future payments at the current market borrowing rates reflective of the Trust’s credit risk .
Settlements on both the fixed and variable portion of the interest rate swaps will occur on a monthly basis . The fixed
interest rate has been set at 4 .15%, plus a stamping fee of 0 .25%, while the total amount of mortgage debt subject to the
interest rate swaps was approximately $83 .2 million at December 31, 2014 (December 31, 2013 – $84 .7 million) . The mort-
gages of these specific properties have been included in the mortgage payable balance above (NOTE 11) . These mortgages
are set to mature on May 1, 2015 .
note 14: DeFerreD unit-BaseD coMpensation
Deferred unit-based compensation is comprised of the following:
As at
Current
Non-current
Dec 31, 2014
Dec 31, 2013
$ 3,250
4,510
$ 7,760
$ 3,453
4,872
$ 8,325
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The total of $7 .8 million represents the fair value of the underlying deferred units at December 31, 2014 (December 31,
2013 – $8 .3 million) . These units have been classified as “FVTPL” financial liabilities in accordance with IAS 39 . Gains or
losses resulting from changes in the fair value at each reporting date are recorded in the consolidated statement of
comprehensive income .
Details of the deferred unit-compensation plan:
During 2006, the Trust implemented a deferred unit-based compensation plan . The plan entitles Trustees and executives, at
the participant’s option, to receive deferred units in consideration for trustee fees or a portion of executive cash bonuses,
respectively, with the Trust matching the number of units received . The deferred units in consideration for trustee fees or
a portion of executive cash bonuses vest immediately while the matching number of units received 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 to receive
an equivalent number of Trust Units representing the vesting deferred units and the corresponding additional deferred
units . Cash is granted for any fractional units . The deferred unit plan was approved by Unitholders on May 10, 2006 and
amended on May 13, 2008 and 2009 .
As at December 31, 2014, the unexpired deferred units, in whole or in part, were granted as follows:
Deferred units
granted in
2010
2011
2012
2013
2014
Number
Grant date
Expiry Date
57,720
51,620
50,946
53,206
55,098
February, June & December 2010
February, June & December 2015
February, June & December 2011
February, June & December 2016
February, June & December 2012
February, June & December 2017
February, June & December 2013
February, June & December 2018
February, June & December 2014
February, June & December 2019
Fair value at
grant date
$ 2,291
$ 2,456
$ 2,946
$ 3,234
$ 3,409
$ 14,336
The initial cost of the deferred unit-based transactions is determined, in accordance with IFRS 2 – Share-based Payments
(“IFRS 2”), as the fair value of the units on the grant date . The fair value of each unit granted is determined based on the
weighted average observable closing market prices of Boardwalk REIT’s Trusts Units ten trading days preceding the grant
date . This initial cost of deferred units in consideration for trustee fees or a portion of executive cash bonuses is expensed
immediately while the cost of the matching deferred units is generally expensed over the vesting period as follows, unless
earlier vesting is triggered in certain events:
One third of the 50%, which vests in year 3, is recognized in each of years 1, 2 and 3 .
One quarter of the 25%, which vests in year 4, is recognized in each of years 1, 2, 3 and 4 .
One fifth of the 25%, which vests in year 5, is recognized in each of years 1, 2, 3, 4 and 5 .
For the year ended December 31, 2014, total costs of $2 .9 million (December 31, 2013 – $3 .1 million for the year) were
recognized in profit related to executive bonuses and trustee fees under the deferred unit plan .
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119
The status of the outstanding deferred units was as follows:
Balance, December 31, 2012
Deferred units granted
Additional deferred units earned on units
Deferred units converted to Trust Units or cash
Balance, December 31, 2013
Deferred units granted
Additional deferred units earned on units
Deferred units converted to Trust Units or cash
Balance, December 31, 2014
# of Units Outstanding
# of Units vested
220,568
53,206
7,320
(68,297)
212,797
55,098
6,693
(73,089)
201,499
–
71,651
10,980
(68,297)
14,334
49,729
9,026
(73,089)
–
note 15: traDe anD other payaBles
The components of the Trust’s accounts payable and accrued liabilities are as follows:
As at
Trade payables and accrued liabilities
Distributions payable
Provisions
Dec 31, 2014
Dec 31, 2013
$
51,717
$
49,792
81,634
3,617
8,645
3,553
$ 136,968
$
61,990
Included in trades payable and accrued liabilities and distributions payable as at December 31, 2014 was a special distribu-
tion declared for LP Class B and Boardwalk REIT Trust Unit holders on record as at December 31, 2014 totaling $6 .3 million
and $66 .5 million, respectively, or $1 .40 per unit, payable on January 15, 2015 . As at December 31, 2014 and 2013, the Trust’s
most significant provision relates to vacation payable to its employees within each employee’s individual employment
agreement . The remaining provisions relate to insignificant legal claims arising from minor tenant injuries . As at December
31, 2014 and 2013, the Trust does not have any material contingent liabilities .
note 16:
incoMe taxes
Current income tax
As at December 31, 2014 and 2013, none of the Trust’s corporate entities has current taxes payable . Each corporate entity
either has sufficient tax deductions to offset any taxable income or has operating losses from previous years to apply
against any taxable income . As such, no current income taxes payable was recorded for the Trust’s corporate entities .
Deferred income tax
For fiscal 2013 and 2014, Boardwalk REIT is a “mutual fund trust” as defined under the Income Tax Act (Canada) (the “Tax
Act”) and as a Real Estate Investment Trust (“REIT”) eligible for the ‘REIT Exemption’ in accordance with the rules affecting
the tax treatment of publicly traded trusts . Accordingly, the Trust is not taxable on its income provided all of its taxable
income is distributed to its Unitholders . This exemption, however, does not extend to the corporate subsidiaries of
Boardwalk REIT that are subject to income tax .
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The source of deferred tax balances and movements were as follow:
As at
Deferred tax assets (liabilities) related to:
Operating losses
Differences in tax base and carrying amount,
net, investment properties and PP&E for
corporate entities
Other
Net deferred tax assets (liabilities)
Deferred tax assets
Deferred tax liabilities
Dec 31, 2013
Recognized
in profit
Dec 31, 2014
$ 455
$
(77)
$ 378
(45)
(5)
$ 405
$ 455
(50)
37
–
(40)
(77)
37
$
$
(8)
(5)
$ 365
$ 378
(13)
$ 365
Net deferred tax assets (liabilities)
$ 405
$
(40)
As at
Deferred tax assets (liabilities) related to:
Operating losses
Differences in tax base and carrying amount,
net, investment properties and PP&E for
corporate entities
Other
Net deferred tax assets (liabilities)
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets (liabilities)
Dec 31, 2012
Recognized
in profit
Dec 31, 2013
$ 832
$
(377)
$ 455
111
(5)
$ 938
$ 945
(7)
$ 938
(156)
–
$
(533)
$
(490)
(43)
$
(533)
(45)
(5)
$ 405
$ 455
(50)
$ 405
No current income taxes or deferred income taxes were recognized in equity, other than through profit or OCI, for the years
ended December 31, 2014 and 2013 .
As at December 31, 2014, wholly owned Canadian corporate subsidiaries have deferred tax assets of $0 .4 million (December
31, 2013 – $0 .5 million) related to operating losses, which expire over the next thirteen to twenty years . The Trust believes
that future income of these entities, which gave rise to the deferred tax assets, will be sufficient to utilize these deferred
tax assets prior to their expiration .
The major components of income tax expense include the following:
Current tax expense
Deferred tax expense
total income tax expense
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
1
40
$ 41
$
5
533
$ 538
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121
The income tax expense for the year can be reconciled to the accounting profit as follows:
Profit before income tax expense
Remove profit from non-taxable entities
Accounting profit subject to tax
Deduct management fee charged to corporate entities
Taxable profit
weighted average substantively enacted tax rate
Calculated income tax expense
Changes to other deferred tax liabilities
total income tax expense
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$ 246,832
$ 338,268
(205,475)
41,357
(40,911)
446
26 .94%
120
(79)
41
$
(295,367)
42,901
(42,198)
703
26 .97%
190
348
538
$
As at December 31, 2014 and 2013, the Trust does not have any unrecognized deductible temporary differences, unrecog-
nized tax losses and unused tax credits .
note 17: DeFerreD governMent grant
In December 2013, the Trust completed the construction of a 109-unit, four storey, elevatored, wood frame building in the
southwest part of Calgary, Alberta (the “Project” or “Development”) . The Development was constructed on excess land
density the Trust currently had on a property known as ‘Spruce Ridge’ . In conjunction with this Development, the Trust
applied for and received a government grant from the Province of Alberta totaling approximately $7 .5 million . In return for
this grant, the Trust has agreed to provide 54 of the 109 units at rents to be 10% below the average market rates for Calgary
(“affordable units”) for a term of 20 years .
The grant proceeds were paid to Boardwalk REIT in four installments based on certain completion milestones .
a)
30% upon the Province of Alberta’s receipt of appropriate paperwork indicative of commencement of the Project;
b)
30% upon 30% completion of the Project;
c)
30% upon 60% completion of the Project; and
d)
The remaining 10% to be paid when the Project has been completed and final documents have been audited .
As at December 31, 2014, all of the $7 .5 million was received by the Trust (December 31, 2013 – $6 .8 million) . Since the $7 .5
million grant did not exceed 65% of the contracted construction costs of the Development attributable to the affordable
units, including the land value attributed to the affordable units, no amount of the grant will require immediate repayment .
However, a portion of the grant is repayable to the Province of Alberta, in proportion to the years remaining in the 20-year
term, if the agreement to provide affordable units terminates earlier .
In accordance with IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance, this grant will be
recognized in profit or loss on a systematic basis over the periods in which the Trust recognizes revenue from the 54 units
classified as affordable units . For the year ended December 31, 2014, $378 thousand was recognized in profit under rental
revenue for this grant (December 31, 2013 – $32 thousand) .
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note 18: unitholDers’ equity
The Plan of Arrangement (the “Arrangement”) converting the Corporation from a share corporation to a real estate invest-
ment trust was completed on May 3, 2004 . On conversion of the Corporation to Boardwalk Real Estate Investment Trust,
the Corporation incurred $10 .3 million in restructuring costs . Under the Arrangement, the former shareholders of the
Corporation received Boardwalk REIT Units or Class B Limited Partnership Units (“LP Class B Units”) of a controlled limited
partnership of the Trust, Boardwalk REIT Limited Partnership . 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
LP Class B Units are classified as a financial liability in accordance with IAS 32 and are discussed in NOTE 12 .
(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 .
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 .
Units issued and outstanding are as follows:
As at
REIT Units outstanding, beginning of year
Units issued for vested deferred units
Units purchased and cancelled
REIT Units outstanding, end of year
Dec 31, 2014
47,919,964
73,089
(472,100)
Dec 31, 2013
47,851,667
68,297
–
47,520,953
47,919,964
On a periodic basis, Boardwalk REIT will apply to the Toronto Stock Exchange (“TSX”) for approval of Normal Course Issuer
Bids (the “Bids”) . Pursuant to regulations of these Bids, Boardwalk REIT will receive approval to purchase and cancel a spec-
ified number of Trust Units, representing 10% of the public float of its Trust Units at the time of the TSX approval . The Bids
will terminate on the earlier of the termination date or at such time as the purchases under the Bid are completed .
On June 28, 2013, Boardwalk REIT requested and received regulatory approval for a Bid (Boardwalk’s seventh Bid since its
first Bid in August of 2007), which commenced on July 3, 2013 and terminated on July 2, 2014 . The Bid allowed Boardwalk
REIT to purchase and cancel up to 3,894,712 Trust Units .
On June 30, 2014, Boardwalk REIT requested and received regulatory approval for a Bid (Boardwalk’s eighth Bid since its first
Bid in August of 2007), which commenced on July 3, 2014 and terminates on July 2, 2015 . The Bid allows Boardwalk REIT to
purchase and cancel up to 3,901,031 Trust Units .
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123
For the year ended December 31, 2014, Boardwalk REIT purchased and cancelled the following Trust Units:
Bid Number
7/8
Year ended Dec 31, 2014
Number of trust units
Purchased and Cancelled
Purchase Cost
Cost per trust unit
472,100
$ 31,634
$ 67 .01
For the year ended December 31, 2013, Boardwalk REIT did not purchase and cancel any Trust Units .
Since the Trust began utilizing normal course issuer bids in 2007, Boardwalk REIT has purchased and cancelled 4,853,947
Trust Units at a total purchase cost of $195 .4 million, or an average cost of $40 .26 per Trust Unit .
(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 Units or other securities 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 .
In summary, the Trust has the following capital securities outstanding:
units outstanding
Dec 31, 2014
Monthly
Distribution (1)
Units outstanding
Dec 31, 2013
Boardwalk REIT Units
Special Voting Units
47,520,953
4,475,000
$0 .17/unit
N/A
47,919,964
4,475,000
Monthly
Distribution
$0 .165/unit
N/A
(1) In addition to the regular monthly distribution, as at December 31, 2014, the Trust recorded a distribution payable in the amount of $66 .5
million in relation to a $1 .40 special distribution to be paid on January 15, 2015 to all Boardwalk REIT Units with a record date of December
31, 2014 .
Monthly distributions and special distributions are determined at the discretion of the Board of Trustees . The Board of
Trustees declares distributions to be paid on, or about, the 15th of the month following the record date . Distributions to
be paid on the Boardwalk REIT Units with a record date of January 30, 2015 (to be paid on February 16, 2015) totaled $8 .1
million ($0 .17 per unit) and have not been included as a liability in the consolidated statement of financial position as at
December 31, 2014 .
(c) Accumulated other comprehensive income (“AOCI”)
For the years ended December 31, 2014 and 2013, AOCI consists of the following amounts:
AOCI, beginning of year
Change in fair value of the effective portion of the interest rate swaps
Losses on settlement of effective bond forward
AOCI, end of year
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
(3,459)
$
(5,608)
2,391
54
2,088
61
$
(1,014)
$
(3,459)
In 2008, Boardwalk REIT entered into an interest rate swap agreement on the mortgages of specific properties within its
portfolio in an effort to hedge the variability in cash flows attributed to fluctuating interest rates . Details of the interest rate
swap agreement are disclosed in NOTE 27 .
In 2008, the Trust entered into a forward bond transaction (the “Transaction”) with a major Canadian financial institution .
Details of the forward bond transaction are disclosed in NOTE 27 .
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(d) Earnings per unit
Numerator – continuing operations
Profit from continuing operations – basic
Distribution declared on LP Class B units
(Gain) on fair value adjustment to LP Class B units
(Gain) on fair value adjustments to unexercised deferred units
Profit from continuing operations – diluted
Numerator – discontinued operations
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$ 235,610
$ 325,135
–
–
–
8,838
(20,943)
(67)
$ 235,610
$ 312,963
Profit from discontinued operations basic and diluted
$
11,181
$
12,595
Denominator
weighted average units outstanding – basic
Conversion of LP Class B units
Unexercised deferred units
weighted average units outstanding – diluted
Earnings per unit – continuing operations
– basic
– diluted
Earnings per unit – discontinued operations
– basic
– diluted
47,774,547
–
–
47,884,020
4,475,000
39
47,774,547
52,359,059
$ 4 .93
$ 4 .93
$ 0 .23
$ 0 .23
$
$
$
$
6 .79
5 .98
0 .26
0 .24
All dilutive elements were included in the calculation of diluted per unit amounts . For the year ended December 31,
2014, the conversion of LP Class B units was anti-dilutive, as their conversion to REIT Units increases earnings per unit . As
such, they were excluded from the calculation of diluted earnings per unit . As there were no unexercised deferred units
at December 31, 2014, they had no impact on the per unit calculations . For the year ended December 31, 2013, both the
conversion of LP Class B units and the unexercised deferred units were dilutive as their conversion to REIT Units decreases
earnings per unit .
note 19: rental revenue
As lessor, the Trust leases residential rental properties under operating leases generally with a term of not more than 12
months and in many cases tenants lease rental space on a month-to-month basis . Rental incentives may be offered as part
of a rental agreement and the costs associated with these incentives are amortized over the term of the lease and netted
against residential rental revenue . As such, rental revenue represents all revenue earned from the Trust’s operating leases
and totaled $466 .4 for the year ended December 31, 2014 (December 31, 2013 – $446 .6 million) .
As at December 31, 2014, under its non-cancellable operating leases, Boardwalk REIT was entitled to the following
minimum future payments:
Operating leases
within 12 months
$ 150,233
2 to 5 years
$
11,847
Over 5 years
$
1,271
B O A R Dw A L k R E I T / A R 2 0 1 4
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125
note 20: ancillary rental incoMe
Ancillary rental income was comprised of the following:
Revenue from coin laundry machines
Revenue from telephone and cable providers
Total
note 21: Financing costs
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
5,406
$
5,391
1,404
1,567
$
6,810
$
6,958
Financing costs are comprised of interest on mortgages payable, distributions paid to the LP Class B Unitholders and other
interest charges . Financing costs are net of interest income earned . Financing costs total $92 .0 million for the year ended
December 31, 2014 (December 31, 2013 – $88 .8 million) and can be summarized as follows:
Interest on secured debt (mortgages payable)
LP Class B unit distribution
Other interest charges
Interest income
Total
note 22: Depreciation anD aMortization
The components of depreciation and amortization were as follows:
Amortization of deferred financing costs
Depreciation of property, plant and equipment
Total
note 23: Fair value gains
The components of fair value gains were as follows:
Investment properties
Financial liabilities designated as FVTPL
Deferred unit-based compensation
LP Class B Units
Total fair value gains
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$ 77,176
$ 80,364
15,372
1,478
(2,049)
8,838
1,536
(1,920)
$ 91,977
$ 88,818
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
7,325
$
7,730
4,608
4,190
$ 11,933
$ 11,920
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$ 89,781
$ 153,761
(1,092)
(7,563)
(280)
20,943
$ 81,126
$ 174,424
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note 24: operating leases
As lessee, the Trust has entered into various lease agreements as part of the normal course of its operations . The following
represents the major type of leases the Trust maintains as lessee, all of which qualify as operating leases in accordance with
IAS 17 – Leases (“IAS 17”):
(i)
Land leases
The Trust has entered into non-cancellable land leases for land related to five of its properties, which sit on land that
is not owned by the Trust . Approximate remaining terms of the Trust’s land leases range from 14 to 81 years as at
December 31, 2014 . Two of the land leases provide for annual rent and one of the land leases provides for annual rent
and additional rent based on rental revenue collected .
(ii) Warehouse and office space leases
The Trust has entered into lease agreements for warehouse and some office and data centre space it utilizes but does
not own . All of the leasing arrangements related to warehouse space have renewal options of between one and five
years, with the exception of one of the leasing arrangements for which no renewal option exists . The lease agreement
for the office space and the sublease agreement for the data centre space are for five years and both end on December
15, 2017 .
As at December 31, 2014, future minimum lease payments related to these leases were as follows:
Land leases
warehouse and office space
Total future minimum lease payments
within 12 months
$ 4,327
595
$ 4,922
2 to 5 years
$ 17,607
1,607
$ 19,214
Over 5 years
$ 161,126
–
$ 161,126
The Trust recognized lease expenses of $5 .4 million for the year ended December 31, 2014 ($5 .1 million for the year ended
December 31, 2013) .
note 25: guarantees, contingencies, coMMitMents anD other
As discussed in NOTE 24 above, the Trust has five properties that are situated on land leases . One of the land leases situated
in Montreal is set to expire in 2028 . The Trust is actively seeking to either renew the term of this lease or purchase the
freehold interest in the land prior to the expiry of the lease term . However, if the Trust cannot or chooses not to renew the
lease, or buy the land, as the case may be, the net operating income and cash flow associated with the property would
no longer contribute to Boardwalk’s results of operations and could adversely impact its ability to make distributions to
Unitholders . Another land lease, situated in Calgary, which expires in 2065, is scheduled for a reset to the annual rent in 2016
to 7% of the agreed upon land value in 2016 . Since the agreed upon land value in 2016 cannot be predicted or estimated
with certainty, the Trust continues to reflect the existing rental amount throughout the term of this lease .
From time to time, the Trust enters into various physical supply contracts for energy commodities to hedge its own usage,
which are summarized below:
Natural Gas:
Area
Alberta
Alberta
Saskatchewan
Saskatchewan
Saskatchewan
Ontario and Quebec
Usage Coverage
Term
Cost
25%
25%
100%
50%
50%
50%
November 1, 2014 to October 31, 2016
$4 .25/Gigajoule (“GJ”)
November 1, 2014 to October 31, 2017
November 1, 2012 to October 31, 2014
November 1, 2014 to October 31, 2015
November 1, 2014 to October 31, 2017
November 1, 2014 to October 31, 2015
$4 .22/GJ
$3 .74/GJ
$4 .51/GJ
$4 .53/GJ
$3 .62/GJ
B O A R Dw A L k R E I T / A R 2 0 1 4
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127
Electrical:
Area
Usage Coverage
Term
Southern Alberta
Northern Alberta
100%
100%
October 1, 2010 to September 30, 2017
October 1, 2010 to September 30, 2015
$0 .06/kwh
Cost
$0 .06/kilowatt-hour
(“kwh”)
Boardwalk REIT, in the normal course of operations, will become subject to a variety of legal and other claims against the
Trust, most of which are minor in nature . 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 the
outcome of claims of this nature at December 31, 2014 and at December 31, 2013 will not have a material impact on the Trust .
In the normal course of business, various agreements may be entered that may contain features that meet the definition
of a contingent liability in accordance with IFRS . with the BC Property Portfolio sale, mortgage balances totaling approx-
imately $62 .0 million were assumed by the purchaser . Two of the three mortgages assumed by the purchaser have an
indirect guarantee provided to the lender until these mortgages are renewed or refinanced by the purchaser, whichever
occurs sooner . The term maturity date is February 1, 2015 with a mortgage balance of approximately $16 .4 million on one
and October 1, 2022 with a mortgage balance of approximately $23 .2 million on the other . In the event of default by the
purchaser, the Trust would be liable for the outstanding mortgage balance . These guarantees are considered contingent
liabilities as payment of the amount will only occur if the purchaser defaults . If the purchaser does not default, the balance
is not payable . Boardwalk REIT’s maximum exposure at December 31, 2014 is approximately $39 .2 million (December
31, 2013 – $nil) . In the event of default by the purchaser, Boardwalk REIT’s recourse for recovery includes the sale of the
respective building assets . Boardwalk REIT expects that the proceeds from the sale of the building assets will cover, and
in most likelihood exceed, the maximum potential liability associated with the amount being guaranteed . Therefore, at
December 31, 2014, no amounts have been recorded in the consolidated financial statements with respect to the above
noted indirect guarantees .
note 26: capital ManageMent anD liquiDity
The Trust defines capital resources as the aggregate of Unitholders’ equity at market value, debt (both secured and unse-
cured), cash flows from operations, and amounts available under credit facilities net of cash on hand . The Trust’s capital
management framework is designed to maintain a level of capital that allows it to implement its business strategy while
complying with investment and debt restrictions pursuant to Boardwalk REIT’s DOT as well as existing debt covenants and
continue building long-term Unitholder value while maintaining sufficient capital contingency . The main components of
the Trust’s capital allocation are approved by its Unitholders as stipulated in the Trust’s DOT and on a regular basis by its
Board of Trustees (the “Board”) through its annual review of the Trust’s strategic plan and budget, supplemented by periodic
Board and Board Committee meetings . Capital adequacy is monitored by the Trust by assessing performance against the
approved annual plan throughout the year, which is updated accordingly, and by monitoring adherence to investment and
debt restrictions contained in the DOT and debt covenants . Boardwalk REIT’s DOT, as amended, provides for a minimum
interest coverage ratio of 1 .5 to 1 calculated on the most recently completed four fiscal quarters . The DOT also defines
interest expense to exclude distributions on the LP Class B Units, which under IFRS are considered financing charges .
The following table highlights Boardwalk REIT’s interest service coverage ratio in accordance with the DOT:
As at
Consolidated EBITDA (1) (12 months ended)
Consolidated interest expense (12 months ended)
Interest coverage ratio
Minimum threshold
(1) Earnings Before Interest, Taxes, Depreciation and Amortization
Dec 31, 2014
Dec 31, 2013
$
260,531
$
257,827
77,341
3 .37
1 .50
81,813
3 .15
1 .50
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The Trust employs a broad range of financing strategies to facilitate growth and manage financial risk . The Trust’s objective
is to reduce its weighted average cost of capital and improve Unitholder distributions through value enhancement initia-
tives and consistent monitoring of the balance between debt and equity financing . As at December 31, 2014, the Trust’s
weighted average cost of capital was 4 .29% .
The following schedule details the components of the Trust’s capital and the related costs thereof:
As at
Dec 31, 2014
Dec 31, 2013
Cost of Capital (1)
underlying value (2)
Cost of Capital (1)
Underlying Value (2)
liabilities
Mortgages payable
LP Class B Units
Deferred unit-based
compensation
unitholders’ equity
Boardwalk REIT Units
Total
3 .34%
$ 2,251,098
3 .46%
$ 2,294,167
4 .96%
4 .96%
275,392
7,760
4 .83%
4 .83%
267,829
8,325
4 .96%
2,924,439
4 .29%
$ 5,458,689
4 .82%
2,868,010
4 .25%
$ 5,438,331
(1) As a percentage of average carrying value unless otherwise noted .
(2) Underlying value of liabilities represents carrying value or the cost to retire on maturity . Underlying value of equity is based on the
closing stock price of the Trust’s Units .
Mortgages payable – These are the mortgages outstanding on the Trust’s investment properties . The debt is primarily fixed
rate debt and approximately 99% of this debt at December 31, 2014 is insured under the National Housing Act (“NHA”) and
administered by CMHC . These financings are typically structured on a loan to appraised value basis between 75-80% . The
Trust currently has a level of indebtedness of approximately 38% of the fair value of the Trust’s investment properties . This
level of indebtedness is considered by the Trust to be within its target .
LP Class B Units – These units are non-transferable, except under certain circumstances, but 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 Unitholders . There is no value assigned to the Special Voting Units .
The LP Class B Units have been classified as “FVTPL” financial liabilities in accordance with IAS 32 . Gains or losses resulting
from changes in the fair value at each reporting date are recorded in the consolidated statement of comprehensive income .
As outlined in NOTE 29 (d), Boardwalk REIT’s committed revolving credit facility agreements contain financial covenants .
Available liquidity as at December 31, 2014 included cash and cash equivalent on hand of $139 .6 million (December 31,
2013 – $131 .1 million) as well as an unused committed revolving credit facility of $195 .8 million (December 31, 2013 – $195 .8
million) . The Trust monitors its ratios and as at December 31, 2014 and 2013, the Trust was in compliance with all covenants
in both its DOT and all existing debt facilities .
B O A R Dw A L k R E I T / A R 2 0 1 4
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129
note 27: Financial instruMents
Hedging transactions
In 2008, the Trust entered into a bond forward transaction (the “Transaction”) with a major Canadian financial institution .
In total, the Transaction, which comprised bond forward contracts on specific mortgages set to mature and be renewed
in 2008, was for a total notional amount of $101 .6 million with a weighted average term and interest rate of 7 .2 years and
3 .63%, respectively; except for one of the contracts, all remaining contracts were assessed to be ineffective hedges . The
bond forward contract assessed to be an effective hedge was settled for a loss of $284 thousand, which will be amortized
over the term of the hedged item . As at December 31, 2014, the unamortized balance was $41 thousand (December 31, 2013
– $95 thousand) and $54 thousand was recognized in profit under financing charges for the year ended December 31, 2014
($61 thousand for the year ended December 31, 2013) .
During the first quarter of 2008, the Trust entered into an interest rate swap agreement on the mortgages of specific prop-
erties within its portfolio in an effort to hedge the variability in cash flows attributed to fluctuating interest rates . These
interest rate swap agreements were designated as cash flow hedges on March 11, 2008 . The effective date of the hedge was
May 1, 2008 and the agreements will continue to be designated as such until May 1, 2015 . Settlements on both the fixed
and variable portion of the interest rate swap will occur on a monthly basis . The fixed interest rate is 4 .15%, plus a stamping
fee of 0 .25%, while the total amount of the mortgage debt subject to the interest rate swap is $83 .2 million (December 31,
2013 – $84 .7 million) .
The Trust has determined the interest rate swap agreement described above to be an effective cash flow hedge in accor-
dance with IAS 39 . The effectiveness of the hedging relationship has been assessed at the transition date to IFRS and will
be reviewed on a quarterly basis and measured at fair value . The portion of the gain or loss on the swap transaction that
is determined to be an effective hedge will be recognized in other comprehensive income (“OCI”) . To date, these interest
rates swaps have been effective, and therefore all gains or losses have been recorded to OCI . The ineffective portion of the
hedging gain or loss on the swap transaction will be recognized immediately in net earnings . However, to date there have
been no ineffective portions on these swaps . On recognition of the financial liability of the hedged item on the consoli-
dated statement of financial position, the associated gains or losses that were recognized in OCI will be reclassified into
profit or loss in the same period or periods during which the interest payments of the hedged item affected profit or loss .
However, if all or a portion of the net loss recognized in OCI will not be recovered in one or more future periods, the amount
not expected to be recovered will be immediately reclassified into profit or loss .
As at December 31, 2014, the interest rate swap agreement was reassessed to be an effective hedge and, consistent with
the previous periods, any gains or losses on the interest rate swap agreement were recognized in profit or loss in the
periods during which the interest payments on the hedged items were recognized . For the year ended December 31, 2014,
a gain of $2 .4 million was recognized in OCI for the fair value change of the interest rate swaps (December 31, 2013 – gain
of $2 .1 million) .
note 28: Fair value MeasureMent
(a) Fair value of financial instruments
Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date . The fair value of interest bearing financial assets and liabilities is
determined by discounting the contractual principal and interest payments at estimated current market interest rates for
the instrument . Current market rates are determined by reference to current benchmark rates for similar term and current
credit spreads for debt with similar terms and risk . The fair values of the Trust’s financial instruments were determined as
follows:
(i)
the carrying amounts of trade and other receivables, segregated tenants’ security deposits, cash, refundable
tenants’ security deposits and trade and other payables approximate their fair values due to their short-term nature .
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(ii)
the fair values of the Trust’s mortgages payable are estimates made at a specific point in time, based on relevant
market information . These estimates are based on quoted market prices for the same or similar issues or on the current
rates offered to the Trust for similar financial instruments subject to similar risks and maturities .
(iii) the fair values of the deferred unit compensation plan and the LP Class B Units are estimates at a specific point in
time, based on the closing market price of the REIT Units listed on the Toronto Stock Exchange .
(iv) the fair values of the effective portion of the interest rate swaps, reported as other non-current liabilities, are
estimates at a specific point in time, based on quoted prices in markets that are not active for substantially the same
term as the remaining effective portion of the derivatives .
These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision . Changes in estimates could significantly affect fair values . The significant financial
instruments of Boardwalk REIT and their carrying values as at December 31, 2014 and December 31, 2013 are as follows:
As at
Dec 31, 2014
Dec 31, 2013
Carrying value
Fair value
Carrying Value
Fair Value
Financial liabilities carried at amortized
cost
Mortgages payable
Financial liabilities carried at FVTPL
LP Class B Units
Other non-current liabilities
Deferred unit-based compensation
$ 2,169,499
$ 2,251,098
$ 2,261,412
$ 2,294,167
275,392
972
7,760
275,392
972
7,760
267,829
3,364
8,325
267,829
3,364
8,325
The fair value of the Trust’s mortgages payable exceeded the recorded value by approximately $81 .6 million at December 31,
2014 (December 31, 2013 – $32 .8 million), due to changes in interest rates since the dates on which the individual mortgages
were last contracted . The fair values of the mortgages payable have been estimated based on the current market rates
for mortgages with similar terms and conditions . The fair value of the Trust’s mortgages payable is an amount computed
based on the interest rate environment prevailing at December 31, 2014 and December 31, 2013, respectively; the amount
is subject to change and the future amounts will converge . There are no additional costs or penalties to Boardwalk REIT if
the mortgages are held to maturity .
As at December 31, 2014 and 2013, the Trust had no embedded derivatives requiring separate recognition .
The nature of these financial instruments and the Trust’s operations expose the Trust to certain principal financial risks . The
main objective of the Trust’s risk management process is to properly identify financial risks and minimize the exposure to
potential losses arising from those risks . The principal financial risks to which the Trust is exposed are described in NOTE 29 .
(b) Assets and liabilities measured at fair value
The fair value hierarchy of assets and liabilities measured at fair value on a recurring basis in the consolidated statement of
financial position is as follows:
As at
Assets
Dec 31, 2014
Dec 31, 2013
level 1
level 2
level 3
Level 1
Level 2
Level 3
Investment properties
$
– $
– $ 5,778,108 $
– $
– $ 5,745,207
Liabilities
LP Class B Units
Other non-current liabilities
Deferred unit-based
compensation
275,392
–
–
4,510
7,760
–
–
–
–
267,829
–
8,325
–
3,364
–
–
–
–
B O A R Dw A L k R E I T / A R 2 0 1 4
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131
The three levels of the fair value hierarchy are described in NOTE 4 .
Transfers between levels in the fair value hierarchy are recognized on the date of the event or change in circumstances
that caused the transfer . For assets and liabilities measured at fair value as at December 31, 2014 and 2013, there were no
transfers between Level 1, Level 2 and Level 3 assets and liabilities during the year .
note 29: risk ManageMent
(a)
Interest rate risk
The Trust is exposed to interest rate risk as a result of its mortgages payable and credit facilities; however, this risk is min-
imized through the Trust’s current strategy of having the majority of its mortgages payable in fixed-term arrangements .
As such, the Trust’s cash flows are not significantly impacted by a change in market interest rates . In addition, the Trust
structures its financings so as to stagger the maturities of its debt, thereby minimizing the Trust’s exposure to interest rates
in any one year . The majority of the Trust’s mortgages are also insured by the CMHC under the National Housing Act (“NHA”)
mortgage program . This added level of insurance offered to lenders allows the Trust to receive advantageous interest rates
while minimizing the risk of mortgage renewals or extensions, and significantly reduces the potential for a lender to call
a loan prematurely . In addition, management is constantly reviewing its committed revolving credit facility (floating-rate
debt) and, if market conditions warrant, the Trust has the ability to convert its existing floating-rate debt to fixed rate debt .
As at December 31, 2014, the Trust had no amount outstanding on its committed revolving credit facility and, as such, of
the Trust’s total debt at December 31, 2014, 100% was fixed-rate debt and none was floating-rate debt . For the year ended
December 31, 2014, all else being equal, the increase or decrease in net earnings for each 1% change in market interest rates
would be $nil (December 31, 2013 – $nil) .
(b) Credit risk
The Trust is exposed to credit risk as a result of its trade and other receivables . This balance is comprised of mortgage hold-
backs and refundable mortgage fees, accounts receivable from significant customers and insurers and tenant receivables .
As at December 31, 2014 and 2013, no balance relating to mortgage holdbacks, refundable mortgage fees or accounts
receivable from significant customers and insurers was past due .
In relation to mortgage holdbacks and refundable mortgage fees, the Trust’s exposure to credit risk is low given the nature
of these balances . These funds will be advanced when the Trust has met the conditions pursuant to the mortgage agree-
ment (in the case of the mortgage holdback) or when financing is completed (in the case of refundable mortgage fees),
both of which are expected to occur .
Similar to mortgage holdbacks and refundable mortgage fees, the Trust assesses the credit risk on accounts receivable to
be low due to the assured collection of these balances . The majority of the balance relates to money owing from the Trust’s
revenue sharing initiatives . Given the Trust’s collection history and the nature of these customers, credit risk is assessed as
low . Additionally, an amount is owed by insurance companies in relation to current outstanding claims . In all circumstances,
the insurance deductible has been paid and amounts incurred and owing for reimbursement are due to an insurable event .
Recoverability may differ from the amount owing solely due to discrepancies between the Trust and the insurance provider
regarding the value of replacement costs .
with tenant receivables, credit risk arises from the possibility tenants may experience financial difficulty and be unable to
fulfill their lease term commitments . The maximum exposure to credit risk is equal to the carrying value of the financial
assets . Rent payments from tenants are due on the first of the month and tenants generally pay a security deposit – both
of these actions mitigate against bad debts .
As stated above, the carrying amount of tenant receivables reflects management’s assessment of the credit risk associated
with its tenants; however, the Trust mitigates this risk of credit loss by geographically diversifying its existing portfolio, by
limiting its exposure to any one tenant and by conducting thorough credit checks with respect to all new rental-leasing
132
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B O A R D w A L k R E I T / A R 2 0 1 4
arrangements . In addition, where legislation allows, the Trust obtains a security deposit from a tenant to assist in the
recovery of monies owed to the Trust .
Past due receivables (receivables which are greater than 30 days) are reviewed by management on a monthly basis and
tenant receivables are considered for impairment on a case-by-case basis . The Trust takes into consideration the tenant’s
payment history, their credit worthiness and the current economic environment; however, tenant receivable balances
exceeding 60 days are typically written off to bad debt expense as the Trust does not utilize an allowance for doubtful
accounts . The amount of the loss is recognized in the consolidated statement of comprehensive income as part of oper-
ating expenses . Subsequent recoveries of amounts previously written off are credited against operating expenses during
the period of settlement . As tenant receivables are typically written off after 60 days, none of the balance is considered
to be past due by the Trust . For the year ended December 31, 2014, bad debt expense totaled $3 .3 million (year ended
December 31, 2013 – $3 .2 million) .
The credit risk of both Boardwalk REIT and the counter party have been taken into account in determining the fair value of
Boardwalk REIT’s trade and other receivables .
(c) liquidity risk
Liquidity risk is the risk that the Trust will not be able to meet its financial obligations as they become due . The Trust main-
tains what it believes to be conservatively leveraged assets and can finance any future growth through one or a combi-
nation of internally generated cash flows, borrowing under an existing committed revolving credit facility, the issuance of
debt, or the issuance of equity, according to its capital management objectives . In addition, the Trust structures its financ-
ings so as to stagger the maturities of its debt, thereby minimizing the Trust’s exposure to liquidity risk in any one year . In
addition, cash flow projections are completed and reviewed on a regular basis to ensure the Trust has sufficient cash flows
to make its monthly distributions to its Unitholders . Finally, financial assets, such as cash and trade and other receivables,
will be realized within the next twelve months and can be utilized to satisfy the Trust’s financial liabilities . Given the Trust’s
currently available liquid resources (from both financial assets and on-going operations) as compared to its contractual
obligations, management assesses the Trust’s liquidity risk to be low .
The following table details the Trust’s remaining contractual maturity for its non-derivative and derivative (i .e . vested
deferred units) financial liabilities listed by year of maturity date:
weighted
average
interest
rate
Year of Maturity
Mortgage
principal
outstanding
Mortgage
interest (1)
Deferred
unit-based
compensation
Tenants’
security
deposits
Distribution
Payable
Trades
and other
payables
Total
2015
2016
2017
2018
2019
Subsequent
Unamortized
deferred
financing costs
Unamortized
mark-to-market
adjustment
3 .66% $ 427,357 $ 65,551
$
3 .89%
2 .92%
3 .27%
3 .00%
3 .35%
264,455
309,019
176,823
410,292
655,684
51,798
41,679
33,763
27,048
52,005
3 .34%
2,243,630
271,844
(74,188)
57
–
–
$ 2,169,499 $ 271,844
$
–
–
–
–
–
–
–
–
–
–
$ 15,900 $ 81,634 $ 55,334 $ 645,776
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
316,253
350,698
210,586
437,340
707,689
15,900
81,634
55,334
2,668,342
–
–
–
–
–
–
(74,188)
57
$ 15,900 $ 81,634 $ 55,334 $ 2,594,211
(1) Based on current in-place interest rates for the remaining term to maturity .
B O A R Dw A L k R E I T / A R 2 0 1 4
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133
(d) Debt covenants
As outlined in its mortgages payable agreements, the Trust is required to make equal monthly payments of principal and
interest based on the respective amortization period . Additionally, the Trust must ensure that all property taxes have been
paid in full when they become due and that no arrears exist .
CMHC provides mortgage loan insurance in connection with mortgages made to Boardwalk REIT . In an agreement dated
September 13, 2002, and as amended and restated on January 19, 2005 and April 25, 2006, the Trust agreed to provide
certain financial information to the CMHC and be subject to certain restrictive covenants, including limitation on additional
debt, payment of distributions in respect to Unitholders’ capital in the event of default, and maintenance of certain finan-
cial ratios . In the event of default, the Trust’s total financial liability under this agreement is limited to a one-time penalty
payment of $250 thousand under a Letter of Credit issued in favor of CMHC .
The Trust has a committed revolving credit facility with a major financial institution . This credit facility is secured by a
pledge of a group of specific real estate assets (fair value at December 31, 2014 of approximately $670 .0 million) . The
amount available through the committed revolving credit facility varies with the value of the pledged assets, with a
maximum limit not to exceed $200 .0 million and an available limit of $195 .8 million as at December 31, 2014 (December 31,
2013 – $195 .8 million) . The revolving facility requires monthly interest payments, is for a three-year term maturing on July
27, 2017, and can be extended annually thereafter, subject to the mutual consent of the lender and the Trust . In the event
the committed revolving credit facility is not extended, the drawn-down principal would be due on the maturity date of
the credit agreement .
The credit facility contains three financial covenants as follows:
(i)
The Trust will maintain an overall Debt Service Coverage Ratio of at least 1 .20, calculated on the most recent
completed trailing four fiscal quarter basis . As at December 31, 2014, this ratio was 2 .09 (December 31, 2013 – 2 .03) .
(ii) The Trust will maintain a Debt Service Coverage Ratio, specific to the Security Portfolio of at least 1 .15 (tested
semi-annually) . As at December 31, 2014, this ratio was 1 .98 (December 31, 2013 – 1 .80) .
(iii) Total indebtedness of the Trust will not exceed 75% of the Gross Book Value (“GBV”) of all assets for the two most
recent quarters as defined in the credit agreement . As at December 31, 2014, this ratio was 35 .8% (December 31, 2013
– 37 .8%) .
As at December 31, 2014 and 2013, the Trust was in compliance with all covenants .
(e) utility risk
The Trust is exposed to utility risk as a result of fluctuations in the prices of natural gas and electricity service charges .
As outlined in NOTE 25, the Trust has commitments to certain utility contracts to reduce the risk of exposure to adverse
changes in commodity prices .
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note 30: suBsiDiaries
The entities included in the Trust’s consolidated financial statements are as follows:
Entity
type
Relationship
Boardwalk Real Estate Investment Trust (“BREIT”)
Trust
Parent
Boardwalk Real Estate Management Ltd .
Corporation
100% owned by BREIT
Top Hat Operating Trust (“TOT”)
Trust
100% owned by BREIT
BPCL Holdings Inc . (“BPCL”)
Corporation
Meets the principle of control
Boardwalk REIT Limited Partnership (“BLP”)
Partnership
A Units are 100% owned by TOT
B Units and C Units are 100% owned by BPCL
Boardwalk REIT Properties Holdings (Alberta) Ltd .
Corporation
100% owned by BLP
Boardwalk REIT Quebec Inc .
Corporation
100% owned by BLP
Boardwalk Quebec Trust
Trust
100% owned by BLP
Boardwalk St . Laurent Limited Partnership
Partnership
99 .99% owned by Boardwalk Quebec Trust
0 .01% owned by 9165-5795 Quebec Inc .
9108-4749 Quebec Inc .
Corporation
100% owned by BLP
9165-5795 Quebec Inc .
Corporation
100% owned by 9108-4749 Quebec Inc .
Nun’s Island Trust 1
Nun’s Island Trust 2
Trust
Trust
100% owned by BLP
100% owned by BLP
Metropolitan Structures (MSI) Inc .
Corporation
100% owned by BLP
Boardwalk GP Holding Trust
Trust
100% owned by BLP
6222285 Canada Inc .
Corporation
100% owned by BLP
Boardwalk GP Operating Trust
Trust
100% owned by 6222285 Canada Inc .
Boardwalk General Partnership (“BGP”)
Partnership
99 .99% owned by Boardwalk GP Holding Trust
0 .01% owned by Boardwalk GP Operating Trust
Boardwalk REIT Properties Holdings Ltd .
Corporation
100% owned by BGP
2044760 Ontario Inc .
Corporation
100% owned by BGP
BPCL represents the only entity which is not 100% owned by the Trust or one of its subsidiaries . BPCL (formerly called
Boardwalk Equities Inc .) was created to accomplish a narrow and well-defined objective, which was to transfer the benefi-
cial interest in the Corporation’s assets (the “Assets”) (pursuant to the Master Asset Contribution Agreement) . The Trust does
not have any voting interest in BPCL; however, the Trust controls BPCL because the Trust has the decision-making powers to
obtain the majority of the benefits of the activities of BPCL and the Trust retains the majority of the residual or ownership
risks related to BPCL . Specifically, BLP controls all of the Assets previously held by BPCL, and is responsible for BPCL’s debt
by guaranteeing the principal and interest owed to the lenders . BLP must make distributions to the LP Class C Units equiv-
alent to the principal and interest owed on BPCL’s debt . As beneficial owner of the Assets, BLP has power over BPCL as it
can direct their relevant activities (i .e . impose and collect rental income, manage and pay operating costs, etc .) in order to
generate cash flows and make distributions on the LP Class C Units . It has exposure, or rights, to variable returns based on
its beneficial ownership of the Assets . The Trust controls BPCL, because the Trust has the decision making power to obtain
the majority of the benefits from the activities of BPCL . Due to the above, BPCL is part of the Trust’s consolidated group .
B O A R Dw A L k R E I T / A R 2 0 1 4
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
135
note 31: relateD party Disclosures
IAS 24 – Related Party Disclosures requires entities to disclose in their financial statements information about transactions
with related parties . Generally, two parties are related to each other if one party controls, or significantly influences, the
other party . Balances and transactions between the Trust and its subsidiaries (as outlined in NOTE 30), which are related
parties of the Trust, have been eliminated on consolidation and are not disclosed in this note disclosure .
The following outlines the individuals considered key personnel of the Trust:
(a) trustees
The Trustees of Boardwalk REIT during the year ended December 31, 2014 and up to the date of this report were:
James R . Dewald
Gary Goodman
Arthur L . Havener, Jr .
Sam kolias
Samantha kolias
Al w . Mawani
Andrea Stephen
(b) Key management personnel
key management personnel of the Trust during the year ended December 31, 2014 and up to the date of this report were:
P . Dean Burns, General Counsel & Corporate Secretary
william Chidley, Senior VP, Corporate Development
Roberto Geremia, President
Sam kolias, Chief Executive Officer
Van kolias, Senior VP, Quality Control
william wong, Chief Financial Officer
The remuneration of the Trust’s key management personnel was as follows:
Short-term benefits
Post-employment benefits
Other long-term benefits
Deferred unit-based compensation
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$ 1,044
$
1,012
49
6
1,775
48
6
2,027
$ 2,874
$
3,093
In addition, the LP Class B Units are held by Sam kolias (Chairman of the Board, Chief Executive Officer and Trustee) and Van
kolias (Senior Vice President, Quality Control) . Under IAS 32 Financial Instruments: Presentation the LP B Units issued by a
wholly owned subsidiary of the Trust are considered financial liabilities, and are reclassified from equity to liabilities on the
consolidated financial statements . Additionally, as the LP Class B Units are liabilities, all distributions paid (both regular and
special) are recorded as a financing charge under IFRS . For the year ended December 31, 2014, distributions on the LP Class
B Units totaled $15 .4 million (December 31, 2013 – $8 .8 million) . Distributions on the LP Class B Units are made on terms
equal to distributions made on Boardwalk REIT Units .
As at December 31, 2014, there was $7 .0 million owed to related parties (December 31, 2013 – $738 thousand) based on
the LP Class B Units distribution outlined above . The balance of $7 .0 million is comprised of $761 thousand in relation to
the monthly regular LP Class B Units distribution and $6 .3 million in relation to the $1 .40 special distribution on the LP
Class B Units .
136
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
note 32: other inForMation
(a) Supplemental cash flow information
Net change in operating working capital
Net change in inventories
Net change in prepaid assets
Net change in trade and other receivables
Net change in segregated and refundable tenants’ security deposits
Net change in deferred unit-based compensation
Net change in trade and other payables
Net change in investing working capital
Net change in trade and other payables
Net change in financing working capital
Net change in trade and other payables
Distributions paid
Distributions declared
Distributions declared in prior year paid in current year
Distributions declared in current year paid in next year
Distributions paid
Year ended
Dec 31, 2014
Year ended
Dec 31, 2013
$
$
(9)
(284)
(2,427)
91
2,917
60
$
348
$
(352)
(417)
(2,358)
43
2,800
3,645
3,361
$
1,929
$
2,911
$
471
$
105
$ (163,709)
$
(94,571)
(7,907)
74,608
(7,656)
7,907
$ (97,008)
$
(94,320)
(b)
Included in administration costs is $2 .4 million relating to Registered Retirement Savings Plan matching for the year
ended December 31, 2014 ($2 .2 million for the year ended December 31, 2013) .
(c)
Included in operating expenses is $1 .0 million related to transition payments paid to eligible associates for the year
ended December 31, 2014 ($nil for the year ended December 31, 2013) .
B O A R Dw A L k R E I T / A R 2 0 1 4
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
137
note 33: segMenteD inForMation
Boardwalk REIT specializes in multi-family residential housing and operates primarily within one business segment in five
provinces located wholly in Canada . Each provincial segment operates with a high degree of autonomy . Management
monitors the operating results on a regional basis . Segment performance is evaluated on a number of measures, including
net profit . Financial information reported is on the same basis as used for internal evaluation and allocation of resources .
Boardwalk REIT does not have any one major tenant or a significant group of tenants . Either expiring leases are renewed
or new tenants are found .
Net debt, interest income and expenses, and income taxes are managed on a group basis . Transfer prices between
locations are set on an arm’s-length basis in a manner similar to transactions with third parties and are eliminated upon
inter-company consolidation .
Corporate represents corporate functions, technology assets, activities incidental to operations, and certain comparative
data for divested assets .
Details of segmented information are as follows:
As at
Assets
Liabilities
As at
Assets
Liabilities
Dec 31, 2014
Alberta
British
Columbia
$ 4,065,612
$
1,510,504
–
–
Saskatchewan
Ontario
Quebec
Corporate
total
$ 718,186
$ 322,418
$ 737,031
$ 128,398
$ 5,971,645
262,837
117,808
320,734
401,774
2,613,657
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
Dec 31, 2013
$ 3,895,491
$ 125,430
$ 717,052
$ 330,907
$ 738,129
$ 118,674
$ 5,925,683
1,530,107
61,415
269,407
120,778
326,526
317,928
2,626,161
138
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
Rental revenue
Ancillary rental income
total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income (loss)
Financing costs (a)
Administration
Depreciation and amortization (b)
Profit (loss) from continuing operations
before fair value gains (losses) and
income tax expense
Loss on sale of assets
Fair value gains (losses)
Profit (loss) before income tax expense
Income tax expense (c)
Year ended Dec 31, 2014
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
total
$ 293,242
$
–
$ 61,627
$ 40,940
$ 70,441 $
185 $ 466,435
4,382
297,624
54,188
26,708
22,920
193,808
52,673
896
3,418
136,821
(235)
135,468
272,054
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
575
869
952
62,202
41,809
71,393
32
217
6,810
473,245
10,609
5,728
4,308
41,557
10,086
158
660
7,282
7,654
5,322
21,551
4,114
97
281
16,857
7,015
7,413
40,108
10,555
157
3,562
4,244
467
128
93,180
47,572
40,091
(4,622)
292,402
14,549
32,424
4,012
91,977
33,732
11,933
30,653
17,059
25,834
(55,607)
154,760
–
–
–
–
(235)
(10,329)
(17,380)
(17,978)
(8,655)
81,126
20,324
–
(321)
–
7,856
(64,262)
235,651
–
(41)
(41)
Profit (loss) from continuing operations $ 272,054
$
–
$ 20,324
$
(321)
$ 7,856 $
(64,303) $ 235,610
Profit from discontinued operations,
net of tax
–
–
–
–
–
11,181
11,181
Profit (loss) for the period
$ 272,054
$
–
$ 20,324
$
(321)
$ 7,856 $
(53,122) $ 246,791
Other comprehensive income
1,384
total comprehensive income (loss)
$ 273,438
Additions to non-current assets (d)
$ 48,149
–
–
–
$
$
1,061
–
–
–
2,445
$ 21,385
$
(321)
$ 7,856 $
(53,122) $ 249,236
$ 11,596
$ 8,815
$ 11,413 $
9,442 $ 89,415
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139
Rental revenue
$ 275,976
–
$ 60,183 $ 40,569 $ 69,685 $
213 $ 446,626
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
Year ended Dec 31, 2013
Ancillary rental income (loss)
total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income (loss)
Financing costs (a)
Administration
Depreciation and amortization (b)
Profit (loss) from continuing operations
before gain on sale of assets, fair value
gains (losses) and income tax expense
Loss on sale of assets
Fair value gains (losses)
4,513
280,489
50,985
23,303
21,659
184,542
54,282
63
3,672
126,525
–
148,038
–
–
–
–
–
–
–
–
–
–
–
–
654
60,837
9,806
5,292
4,204
41,535
10,295
12
640
833
41,402
7,144
6,978
5,250
22,030
4,744
20
296
959
70,644
16,285
6,126
7,034
41,199
11,307
259
3,681
(1)
212
6,958
453,584
4,782
422
125
89,002
42,121
38,272
(5,117)
284,189
8,190
31,848
3,631
88,818
32,202
11,920
30,588
16,970
25,952
(48,786)
151,249
–
–
–
–
–
14,160
9,116
(17,552)
20,662
174,424
Profit (loss) before income tax recovery $ 274,563
–
$ 44,748 $ 26,086 $
8,400 $
(28,124) $ 325,673
Income tax expense (c)
–
–
–
–
–
(538)
(538)
Profit (loss) from continuing operations $ 274,563
–
$ 44,748 $ 26,086 $
8,400 $
(28,662) $ 325,135
Profit from discontinued operations,
net of tax
–
–
–
–
–
12,595
12,595
Profit (loss) for the period
$ 274,563
–
$ 44,748 $ 26,086 $
8,400 $
(16,067) $ 337,730
Other comprehensive income
1,209
total comprehensive income (loss)
$ 275,772
Additions to non-current assets (d)
$ 39,905
–
–
–
940
–
–
–
2,149
$ 45,688 $ 26,086 $
8,400 $
(16,067) $ 339,879
$ 11,645 $
8,174 $ 12,939 $ 23,790 $ 96,453
140
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
B O A R D w A L k R E I T / A R 2 0 1 4
(a) Financing costs
Financing costs were as follows:
Interest on secured debt
(mortgages payable)
LP Class B unit distribution
Other interest charges
Interest income
Total
Interest on secured debt
(mortgages payable)
LP Class B unit distribution
Other interest charges
Interest income
Total
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
total
Year ended Dec 31, 2014
$ 52,529 $
–
$ 10,067 $
4,051 $ 10,529 $
– $ 77,176
–
144
–
–
–
–
19
–
–
63
–
–
27
(1)
15,372
1,225
15,372
1,478
(2,048)
(2,049)
$ 52,673 $
–
$ 10,086 $
4,114 $ 10,555 $ 14,549 $ 91,977
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
Year ended Dec 31, 2013
$ 54,147 $
–
$ 10,274 $
4,641 $ 11,301 $
1 $ 80,364
–
135
–
–
–
–
–
21
–
–
103
–
–
31
(25)
8,838
1,246
8,838
1,536
(1,895)
(1,920)
$ 54,282 $
–
$ 10,295 $
4,744 $ 11,307 $
8,190 $ 88,818
(b) Depreciation and amortization
This represents depreciation and amortization on items carried at cost and primarily includes deferred financing charged,
corporate assets, technology assets, site equipment and other assets . These figures exclude any impairment charges .
(c)
Income tax recovery
This relates to any current and deferred taxes .
(d) Additions to non-current assets (other than financial instruments and deferred tax assets)
This represents the total cost incurred during the year to acquire non-current assets (other than financial instruments and
deferred tax assets), measured on an accrual basis .
note 34: suBsequent events
On January 15, 2015, the Trust paid out the Special Distribution totaling $72 .8 million, or $1 .40 per unit, to Trust and LP Class
B Unitholders on record as at December 31, 2014 .
On January 19, 2015, the Trust closed on the purchase of its office space and warehouse in Verdun, Montreal on Nun’s Island
for a total purchase price of $3 .1 million .
note 35: approval oF consoliDateD Financial stateMents
The consolidated financial statements were approved by the Board of Trustees and authorized for issue on February 18, 2015 .
B O A R Dw A L k R E I T / A R 2 0 1 4
N O t E S t O C O N S O l I D A t E D F I N A N C I A l S t A t E M E N t S
141
Five yeaR suMMaRy
($000’s except per unit and per square foot)
2010
(IFRS)
2011
(IFRS)
2012
(IFRS)
2013
(IFRS)
2014
(IFRS)
Assets
Investment properties
Other assets
total assets
Mortgages payable
Debenture
Other liabilities
Deferred income taxes
Unitholders’ equity
$ 4,318,242
$ 4,793,895
$ 5,493,448
$ 5,745,207
$ 5,778,108
267,683
295,128
181,854
180,476
193,537
$ 4,585,925
$ 5,089,023
$ 5,675,302
$ 5,925,683
$ 5,971,645
$ 2,153,206
$ 2,218,731
$ 2,248,176
$ 2,261,412
$ 2,169,499
112,211
267,613
112,390
313,102
–
–
–
377,018
364,699
444,145
$ 2,533,030
$ 2,644,223
$ 2,625,194
$ 2,626,111
$ 2,613,644
740,359
10
7
50
13
1,312,536
2,444,790
3,050,101
3,299,522
3,357,988
total liabilities and unitholders’ equity
$ 4,585,925
$ 5,089,023
$ 5,675,302
$ 5,925,683
$ 5,971,645
Trust unit outstanding (000) (including LP B Units)
52,366
52,264
52,327
52,395
51,996
Trust unit price at year-end ($)
Market capitalization ($MM)
Number of rental units
Fair value per rental unit ($000)
Long-term debt per rental unit ($000)
Net rentable square feet (000)
Fair value per square foot ($)
Long-term debt per square foot ($)
Average net rentable SF per unit
$
41 .25
$
50 .44
$
64 .53
$
59 .85
$
61 .54
2,160 .1
35,277
122
64
2,636 .2
35,277
136
66
3,376 .7
35,277
156
64
3,135 .8
35,386
162
64
3,199 .8
34,626
167
63
29,936
29,936
29,936
30,022
29,466
144
76
849
160
78
849
184
75
849
191
75
848
196
74
851
l/t debt weighted average interest rate
4 .27%
4 .14%
3 .69%
3 .46%
3 .34%
142
F I v E Y E A R Su M M A R Y
B O A R D w A L k R E I T / A R 2 0 1 4
Five yeaR suMMaRy
($000’s except per unit)
Rental revenue
Ancillary rental income
total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income
Operating margin
Financing costs
Administration
Depreciation and amortization
Profit from continuing operations before
the undernoted
Gain (loss) on sale of assets
Fair value gains
Profit from continuing operations before income tax
(expense) recovery
Income tax (expense) recovery
Profit from continuing operations
2010
(IFRS)
2011
(IFRS)
2012
(IFRS)
2013
(IFRS)
2014
(IFRS)
$ 414,033
$ 416,152
$ 433,205
$ 446,626
$ 466,435
6,399
6,575
6,696
6,958
6,810
420,432
422,727
439,901
453,584
473,245
76,624
42,222
36,529
84,400
40,340
35,328
87,143
39,921
36,773
89,002
42,121
38,272
93,180
47,572
40,091
265,057
262,659
276,064
284,189
292,402
63%
62%
112,638
105,569
25,995
10,294
26,264
10,520
63%
98,062
28,909
10,922
63%
88,818
32,202
11,920
62%
91,977
33,732
11,933
116,130
120,306
138,171
151,249
154,760
(3,047)
–
135
–
211,157
364,389
549,986
174,424
(235)
81,126
324,240
(47,448)
484,695
740,391
222
276,792
1,225,086
688,514
688,292
325,673
235,651
(538)
325,135
12,595
337,730
2,149
(41)
235,610
11,181
246,791
2,445
Profit from discontinued operations, net of tax
–
–
–
Profit for the year
Other comprehensive income (loss)
276,792
1,225,086
688,514
(695)
(1,871)
2,850
Total comprehensive income
$ 276,097
$ 1,223,215
$ 691,364
$ 339,879
$ 249,236
Earnings per unit – continuing operations
– diluted
Earnings per unit – discontinued operations
– diluted
Funds from operations
$
5 .82
$
24 .40
$
14 .40
$
5 .98
$
4 .93
$
–
$
–
$
–
$
0 .24
$
0 .23
$ 129,728
$ 131,808
$ 150,343
$ 168,184
$ 175,825
Funds from operations per unit – fully diluted
$
2 .47
$
2 .52
$
2 .87
$
3 .21
$
Interest Coverage Ratio, Continuing operations
2 .34
2 .42
2 .76
3 .15
3 .37
3 .37
Fiscal year ended December 31, 2013 has been restated to present discontinued operations consistent with fiscal year ended December 31, 2014 .
B O A R Dw A L k R E I T / A R 2 0 1 4
F I v E Y E A R S u M M A R Y
143
2014 quaRteRly Results
(in $000’s except per unit amounts)
Q1
Q2
Q3
Q4
31-Dec-14
$ 114,892
$ 116,167
$ 117,229
$ 118,147
$ 466,435
1,661
1,787
1,656
1,706
116,553
117,954
118,885
119,853
Rental revenue
Ancillary rental income
total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income
Financing costs
Administration
Depreciation and amortization
Profit from continuing operations before
the undernoted
Loss on sale of assets
Fair value gains (losses)
Profit (loss) from continuing operations before
income tax (expense) recovery
Income tax (expense) recovery
Profit (loss) from continuing operations
Profit (loss) from discontinued operations, net of tax
Profit (loss) for the period
Other comprehensive income
6,810
473,245
93,180
47,572
40,091
292,402
91,977
33,732
11,933
23,587
9,074
10,382
75,842
21,313
7,839
3,138
23,500
12,383
10,361
73,609
27,219
9,831
2,689
43,552
33,870
154,760
–
–
11,942
(48,451)
(235)
81,126
55,494
(14,581)
235,651
(73)
55,421
(319)
55,102
611
54
(14,527)
(19)
(14,546)
620
(41)
235,610
11,181
246,791
2,445
22,853
15,808
9,593
68,299
21,802
7,735
3,023
35,739
–
73,594
109,333
49
109,382
12,997
122,379
597
23,240
10,307
9,755
74,652
21,643
8,327
3,083
41,599
(235)
44,041
85,405
(71)
85,334
(1,478)
83,856
617
Total comprehensive income (loss)
$ 122,976
$
84,473
$
55,713
$
(13,926)
$ 249,236
Earnings (loss) per unit
– continuing operations – diluted
$
2 .21
$
1 .78
$
1 .16
$
(0 .22)
Earnings (loss) per unit
– discontinued operations – diluted
$
0 .25
$
(0 .03)
$
0 .01
$
–
$
$
4 .93
0 .23
Funds from operations
$
40,015
$
45,313
$
46,792
$
43,704
$ 175,825
Funds from operations per unit – fully diluted
$
0 .76
$
0 .86
$
0 .90
$
0 .84
$
3 .37
144
Q u A Rt E R l Y R E S u l t S
B O A R D w A L k R E I T / A R 2 0 1 4
2013 quaRteRly Results
(in $000’s except per unit amounts)
Q1
Q2
Q3
Q4
31-Dec-13
Rental revenue
Ancillary rental income
total rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Net operating income
Financing costs
Administration
Depreciation and amortization
Profit from continuing operations before
the undernoted
Fair value gains (losses)
Profit (loss) from continuing operations before
income tax (expense) recovery
Income tax (expense) recovery
Profit (loss) from continuing operations
Profit from discontinued operations,net of tax
Profit (loss) for the period
Other comprehensive income
$ 109,402
$ 111,273
$ 112,233
$ 113,718
$ 446,626
1,642
1,769
1,754
1,793
111,044
113,042
113,987
115,511
22,514
9,560
9,257
71,711
22,368
8,001
2,985
38,357
68,503
22,204
8,481
10,066
73,236
21,904
7,728
2,954
22,878
11,722
9,929
70,982
21,892
8,897
3,120
40,650
115,240
37,073
(66,597)
6,958
453,584
89,002
42,121
38,272
284,189
88,818
32,202
11,920
151,249
174,424
106,860
155,890
(29,524)
325,673
(23)
(88)
106,837
155,802
5,796
3,442
112,633
159,244
930
368
(142)
(29,666)
2,155
(27,511)
484
(538)
325,135
12,595
337,730
2,149
21,406
12,358
9,020
68,260
22,654
7,576
2,861
35,169
57,278
92,447
(285)
92,162
1,202
93,364
367
Total comprehensive income (loss)
$
93,731
$ 113,563
$ 159,612
$
(27,027)
$ 339,879
Earnings (loss) per unit
– continuing operations – diluted
$
1 .63
$
1 .72
$
2 .96
$
(0 .33)
Earnings (loss) per unit
– discontinued operations – diluted
$
0 .02
$
0 .11
$
0 .07
$
0 .04
$
$
5 .98
0 .24
Funds from operations
$
39,209
$
42,564
$
44,969
$
41,442
$ 168,184
Funds from operations per unit – fully diluted
$
0 .75
$
0 .81
$
0 .86
$
0 .79
$
3 .21
B O A R Dw A L k R E I T / A R 2 0 1 4
Q u A R t E R l Y R E S u l t S
145
MaRket anD unitholDeR inFoRMation
SOlICItORS
Gowling lafleur Henderson llp
1600, 421 - 7 Avenue Sw
Calgary AB T2P 4k9
Butlin Oke Roberts & Nobles
100, 1501 - 1 Street Sw
Calgary, Alberta T2R 0w1
BANKERS
toronto Dominion Bank
Suite 1100, 421 - 7th Avenue Sw
Calgary, Alberta T2P 4k9
AuDItORS
Deloitte llP
700, 850 – 2 Street Sw
Calgary, Alberta T2P 0R8
REGIStRAR & tRANSFER AGENt
Computershare trust Company of Canada
Our Transfer Agent can help you with a variety of
unitholder related services, including change of address,
tax forms, accounts consolidation and transfer of stock .
600, 530 – 8 Avenue Sw
Calgary, Alberta T2P 3S8
Telephone: 403 267-6800
INvEStOR RElAtIONS
Unitholders seeking financial and operating
information may contact:
James Ha, Director; Mortgage and Finance
Telephone: 403 531-9255
Investor Relations Toll Free: 1-855-626-6739
Fax: 403 531-9565
web: www .BoardwalkREIT .com
Email: investor@bwalk .com
ONlINE INFORMAtION
For an online version of the current and past annual reports,
quarterly reports, press releases and other Trust information,
please visit our investor website at www .BoardwalkREIT .com .
ANNuAl GENERAl MEEtING
The Annual General Meeting of the Unitholders of Boardwalk REIT
will be held at the Petroleum Club, 319-5 Ave Sw, Calgary, Alberta,
at 3:00 pm (Mountain Standard Time) on May 14, 2015 .
Unitholders are encouraged to attend and those unable to do so
are requested to complete the Form of Proxy and forward it at
their earliest convenience .
EXCHANGE lIStINGS
the toronto Stock Exchange
Symbol: BEI .uN
tRADING PROFIlE
TSX: Jan 1, 2014 to Dec 31, 2014
High: $71 .40
Low: $58 .13
Year End Closing Price: $61 .54
Monthly Distributions
Month
Per unit
Annualized
Record Date
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
$0 .165
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$0 .170
$1 .400
$0 .170
$0 .170
$0 .170
$0 .170
$1 .98
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
$2 .04
Special
Distribution
$2 .04
$2 .04
$2 .04
$2 .04
Distribution
Date
17-Feb-14
17-Mar-14
15-Apr-14
15-May-14
31-Jan-14
28-Feb-14
31-Mar-14
30-Apr-14
30-May-14
16-Jun-14
30-Jun-14
15-Jul-14
31-Jul-14
15-Aug-14
29-Aug-14
15-Sep-14
30-Sep-14
15-Oct-14
31-Oct-14
17-Nov-14
28-Nov-14
15-Dec-14
31-Dec-14
15-Jan-15
31-Dec-14
30-Jan-15
27-Feb-15
31-Mar-15
15-Jan-15
16-Feb-15
16-Mar-15
15-Apr-15
30-Apr-15
15-May-15
146
M A R K E t A N D u N I t H O l D E R I N F O R M A t I O N
B O A R D w A L k R E I T / A R 2 0 1 4
coRpoRate inFoRMation
EXECutIvE OFFICE
BOARD OF tRuStEES
SENIOR MANAGEMENt
First west Professional Building
Suite 200, 1501 – 1 Street Sw
Calgary, Alberta T2R 0w1
Phone: 403 531-9255
Investor Relations Toll Free:
1-855-626-6739
Fax: 403 531-9565
web: www .BoardwalkREIT .com
Sam Kolias
Chairman of the Board
Calgary, Alberta
Jonathan Brimmell
Vice President, Operations, Ontario and
Quebec
James Dewald (3)
Calgary, Alberta
Gary Goodman (2)
Toronto, Ontario
Art Havener (1) (2) (3)
St . Louis, MO
Samantha Kolias
Calgary, Alberta
Al Mawani (3)
Thornhill, Ontario
Andrea Stephen (2)
Toronto, Ontario
(1) Lead Trustee
(2) Member of the Audit and Risk Management
Committee
(3) Member of the Compensation, Governance
and Nominations Committee
Dean Burns
General Counsel and Secretary
william Chidley
Senior Vice President, Corporate
Development
Ian Dingle
Vice President, Purchasing and Contracts
Roberto Geremia
President
Michael Guyette
CIO, VP Operations for Southern Alberta
and BC
Sam Kolias
Chief Executive Officer
van Kolias
Senior Vice President, Quality Control
Kelly Mahajan
Vice President, Customer Service and
Process Design
Helen Mix
Vice President, Human Resources
lisa Russell
Vice President, Acquisitions, western
Canada
william wong
Chief Financial Officer
Bill Zigomanis
Vice President, Investments
B O A R Dw A L k R E I T / A R 2 0 1 4
C O R P O R A t E I N F O R M A t I O N
147
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BOARDWALK REIT
First West Professional Building
Suite 200, 1501 – 1 Street SW
Calgary, Alberta T2R 0W1
Phone: 403 531-9255 Fax: 403 531-9565
Website: www.BoardwalkREIT.com
printed in Canada