INSPIRING COMMUNITY,
BUILDING A FUTURE
OF BELONGING.
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
West Edmonton Village
Edmonton, AB
West Edmonton Village
Edmonton, AB
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
1
TABLE OF CONTENTS2 | CORPORATE PROFILE3 | 2021 HIGHLIGHTS4 | THE BOARDWALK PORTFOLIO6 | LETTER TO UNITHOLDERS11 | PORTFOLIO PROFILES19 | ESG REPORT94 | FINANCIAL REVIEW95 | MANAGEMENT’S DISCUSSION AND ANALYSIS161 | MANAGEMENT’S REPORT162 | INDEPENDENT AUDITOR’S REPORT165 | FINANCIAL STATEMENTS169 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS221 | CORPORATE INFORMATION INSPIRING COMMUNITY,
BUILDING A FUTURE OF BELONGING
Boardwalk strives to be Canada’s friendliest and preeminent multi-family community
provider, building long-lasting relationships with more than 60,000 Resident Members
across Canada, spanning five provinces. Our diverse product offering across our three
brands provides affordable and high-quality housing options to current and prospective
Resident Members across their rental housing life cycle.
CORPORATE PROFILE
Boardwalk REIT strives to be Canada’s friendliest
community provider and is a leading owner/operator of
multi-family rental communities. Providing homes in more
than 200 communities, with over 33,000 residential units
totaling over 28 million net rentable square feet,
Boardwalk has a proven long-term track record of building
better communities, where love always livesTM. Our
three tiered and distinct brands: Boardwalk Living,
Boardwalk Communities, and Boardwalk Lifestyle, cater
to a large diverse demographic and has evolved to capture
the life cycle of all Resident Members. Boardwalk’s
disciplined approach to capital allocation, acquisition,
development, purposeful re-positioning, and
management of apartment communities allows the
Trust to provide its brand of community across Canada
creating exceptional Resident Member experiences.
Differentiated by its peak performance culture, Boardwalk
is committed to delivering exceptional service, product
quality and experience to our Resident Members who
reward us with high retention and market leading
operating results, which in turn, lead to higher free cash
flow and investment returns, stable monthly distributions,
and value creation for all our stakeholders.
Boardwalk REIT’s Trust units are listed on the Toronto Stock
Exchange, trading under the symbol BEI.UN. Additional
information about Boardwalk REIT can be found on the
Trust’s website at www.bwalk.com/investors.
2
Greentree Village
Edmonton, AB
2021 HIGHLIGHTS
$446.3M
PROFIT (LOSS)
$2.94
FFO PER UNIT (1)
7.3%
GROWTH IN FFO
PER UNIT (1)
$3.3B
UNITHOLDERS'
EQUITY
$66.87
$306M
NET ASSET VALUE
PER UNIT (1)
TOTAL AVAILABLE LIQUIDITY
AT THE END OF 2021
$72.3M
PROPERTY
ACQUISITIONS
$127M
INVESTMENT IN
CAPITAL ASSETS
>25%
MANAGEMENT
OWNERSHIP
(1)
A non-GAAP measure. Please refer to the Trust's Management Discussion & Analysis for the years ended December 31, 2021 and 2020 for definitions, reconciliations
and the basis of presentation of Boardwalk REIT’s non-GAAP measures.
3
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 THE BOARDWALK PORTFOLIO
Comprised of over 33,000 apartment units across Canada, with three distinct brands,
Boardwalk aims to serve all rental demographics where love always livesTM. Boardwalk is
committed to owning and operating a diverse portfolio to continue to provide affordable
housing to all its Resident Members across Canada.
Boardwalk Centre
Edmonton, AB
RESIDENTIAL UNITS
1
4
4
2
2
,
1
2
8
4
2
,
9
8
8
5
2
,
6
2
3
9
2
,
9
3
2
,
1
3
9
5
1
,
2
3
8
9
2
3
3
,
7
0
2
4
3
,
7
8
4
6
3
,
5
8
7
6
3
,
9
1
4
6
3
,
7
7
2
5
3
,
7
7
2
5
3
,
7
7
2
5
3
,
6
8
3
,
5
3
6
2
6
4
3
,
7
4
9
2
3
,
3
7
7
3
3
,
7
8
1
,
3
3
7
1
4
3
3
,
6
9
3
,
3
3
4
6
2
3
3
,
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
4
6
6
6
1
2
7
5
10
City/Market
1
2
3
4
5
6
7
8
9
Edmonton/St. Albert/Spruce Grove
Calgary/Airdrie/Banff
Montreal
London
Regina
Red Deer/Fort McMurray/Grande Prairie
Saskatoon
Quebec City
Kitchener/Waterloo/Cambridge
10 Victoria
Total
Under development
GTA
Victoria
8
3
4
9
Percentage of Portfolio
38%
18%
14%
7%
6%
6%
5%
4%
2%
-
Units
12,882
5,960
4,681
2,256
1,974
1,936
1,531
1,319
611
114
33,264
365
Approximately 500 units in planning stage
5
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
LETTER TO UNITHOLDERS
Dear Unitholders,
On a solid foundation of some of the most affordable rents in Canada, our commitment
of delivering the best product quality, service and experience to our Resident Members
was rewarded in 2021 with strong operating results. Our key performance metric,
Funds from Operations (“FFO”) per Unit result of $2.94 was 7.3% higher than the year
before, and compounds on our current track record of FFO growth through difficult
economic conditions.
SAM KOLIAS
Chairman and Chief
Executive Officer
“ Boardwalk is well-positioned in our core markets with some of the most
affordable rents in Canada, and continuing to lead in providing the best
value in housing to our Resident Members.”
6
Our Boardwalk team continued to focus on optimizing
revenue through the varying pandemic environment in
2021 and delivering our essential service of affordable
housing to Canadians. Most of the Trust’s portfolio saw
balanced market conditions, which allowed for
inflationary adjustments to rental rates in the second
half of 2021 in those markets. Our team’s focus on finding
innovative and efficient ways to deliver our product
quality, service and experience to our Resident Members
offset some of the non-controllable expense increases
resulting in positive same property Net Operating Income
(“NOI”) performance with improved operating margins.
Revenue Optimization
The majority of our markets are positioned with high
occupancy and have begun to see a reduction of
previously provided rental incentives. These reductions in
incentives allow for a significant revenue opportunity for
the Trust. Boardwalk is positioned to increase revenues in
lower occupancy areas by maintaining and further gaining
occupancy and in higher occupancy areas through
positive adjustments in rental rates and reduction in
incentives to improve operating margins on the
foundation of high affordability within our portfolio.
In the Right Places at the Right Time
Housing fundamentals in our core markets continue to
improve from the pandemic pause with higher population
growth and moderated housing supply. With the improved
macro backdrop of a more diversified economy, stronger
commodity prices, and high affordability of our
unregulated Western Canadian portfolio, we believe
Boardwalk’s portfolio is well positioned to continue on
our track record of delivering strong growth in both FFO
per unit, and NAV per unit.
Our Resident Members
One of our largest stakeholders, our Resident Members,
have continued to recognize and reward Boardwalk with
high retention rates, long average tenant stays, and
consistent positive feedback on our community and
customer experience initiatives that differentiate our
homes and communities from others. Our Net Promoter
Score ("NPS") in 2021 of 76 continues to grow higher
relative to our own past records and is considered a
world-class customer satisfaction score.
Southpointe Plaza
Regina, SK
7
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Investing in our Portfolio
Opportunistic Investments
In addition to ensuring the longevity of our portfolio, our
value-enhancing capital improvement strategy remains
disciplined and focused on investments that provide
targeted stabilized returns on our investments. The
development of our value-add program has significantly
improved our in-house, supply chain management and
renovations processes and allowed us to pivot and respond
quickly to the ever-changing demands of the rental market.
The majority of our value-enhancing capital improvement
investments are focused on affordability, great value for our
Resident Members, which yield strong returns. These
renovations include partial suite renovations as opposed to
full suite renovations, which yield more affordable units, as
well as refreshed common area repositions in our
community and living brands to attract customers and
increase our market share.
Boardwalk's three distinct brands and price points within
its portfolio provide a diverse product offering to our
Resident Members and caters to a broader housing
demographic. This has resulted in increased demand
stability within Boardwalk’s portfolio.
Solid Financial Foundation
Boardwalk’s growing FFO combined with a maximum
cash retention and recycling strategy provides significant
cashflow for re-investment. This approach has allowed
the Trust to re-invest cashflow into its own portfolio,
and position the Trust for further growth.
The continued low interest rate environment has
presented a tailwind for the Trust’s FFO. Over 98% of
Boardwalk mortgages carry insurance from Canada
Mortgage and Housing Corporation, providing access to
low-cost financing and limiting future renewal risk.
This low-cost financing provides Boardwalk the
opportunity to reduce our interest expense, providing
increased cashflow to further re-invest into housing
through improvements, acquisition, and development.
The Trust’s leverage metrics continue to improve and
present an opportunity for the Trust to take advantage
of the current low interest rate environment to accelerate
future growth.
In 2021, we continued to accretively grow our portfolio with
the acquisition of two large communities in Banff, AB, and
in Victoria, BC. These new additions to our portfolio provide
additional scale in these markets, while also providing
additional cashflow to the portfolio. In addition, the Trust
continues to be active in developing new residential
communities in supply constrained markets. Boardwalk’s
development in Brampton, ON continues on budget and
on-time with delivery of our first tower slated for the
second half of 2022. Our two development sites in Victoria
are nearing appropriate entitlements, and we are looking
forward to creating amazing communities in these markets.
Boardwalk’s non-core asset recycling continued in 2021
with the sale of four non-core assets. These sales provided
the Trust with attractive capital for recycling with some
proceeds invested in Boardwalk’s own portfolio via our
normal course issuer bid. In 2021, Boardwalk repurchased
and cancelled 438,000 Trust Units at an average price of
$54.84. The sale of non-core assets at or at a premium to
their implied value, and the recycle of proceeds to
Boardwalk’s own Trust Units at a discount represents an
attractive and accretive use of proceeds from non-core
asset sales.
2022 Outlook
We are well positioned to continue our organic growth
strategy by further gaining market share, continuing our
success on sustainable incentive reductions in our Alberta
and Saskatchewan portfolios, while also focused on
optimizing rental rates on turnover in our Ontario and
Quebec portfolios.
Affordability and value remains essential in all housing
markets, and Boardwalk is well-positioned in our core
markets with some of the most affordable rents in
Canada. We are continuing to lead in providing the best
value in housing to our Resident Members.
The Trust will maintain a strong financial foundation,
while taking advantage of our flexible balance sheet for
opportunistic investments. To ensure our ability to take
advantage of opportunities that arise, adequate liquidity
will continue to be maintained. We are committed to
growth in our key performance metrics of FFO per unit
8
Our Goals
2021 Results
Organic Growth
Achieved stabilized property NOI growth of 0.1%
Achieved NOI margin improvement of 50 basis points
Total rental revenue growth of 1.1%
Accretive Capital Recycling
Sold 327 non-core units in Edmonton and Saskatoon
Acquired 114 units in Victoria, BC and 81 units in Banff, AB
Repurchased and cancelled 438,400 Trust Units at an average purchase cost of $54.85 per Trust Unit
through normal course issuer bid
Increasing Asset Value
Repositioned/renovated 15 properties and renovated over 1,790 apartment suites
Cumulatively renovated 45% of common areas & 29% of suites
Net Asset Value per Unit (1) growth of 16%
Solid Financial Foundation
98% of mortgages are CMHC insured
Interest coverage at 2.97
Profit (loss) of $446,267
FFO (1) of $150,207; AFFO (1) of $117,920
CREATING STAKEHOLDER VALUE
FFO per Unit (1) of $2.94 (2021 Guidance range of $2.89 – $2.95)
AFFO per Unit (1) of $2.31 (2021 Guidance range of $2.24 – $2.30)
2021 Total Return of 63%
(1)
A non-GAAP measure. Please refer to the Trust's Management Discussion & Analysis for the years ended December 31, 2021 and 2020 for definitions, reconciliations
and the basis of presentation of Boardwalk REIT's non-GAAP measures.
and NAV per unit, and as such will continue to focus in on
optimizing our largest opportunity of strong organic
growth, combined with accretive acquisitions in the
markets we have identified that provide both cashflow
and capital appreciation. The trading of non-core assets
provides access to low cost equity capital toward unique
arbitrage opportunities such as our own Trust Units
which are currently trading below valuations seen in
the private market.
Boardwalk’s Trust Units are currently trading at an
equivalent value of $170,000 per apartment door, and
approximately at a 4.9% cap rate on our most recent fiscal
year NOI. This compares to our estimated NAV of
approximately $190,000 per apartment door which
represents a 5.2% cap rate using stabilized NOI, or a
4.5% cap rate on our 2021 NOI. Replacement costs
continue to trend higher with inflating input costs and are
significantly higher than our current valuation.
Thank you to you, our Unitholders for your support, as we
continue to focus on continuing our track record of strong
and sustainable financial performance.
Thank you to CMHC and our financial partners for your
support in the delivery of the best product quality, service
and experience to our Resident Members.
Thank you to our Boardwalk Team of Heroes who work
persistently and tirelessly to ensure we are providing our
essential service of housing.
And lastly, thank you to our Resident Members for calling
Boardwalk Home.
With love always,
SAM KOLIAS
9
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 OUR COVID RESPONSE
Our top priority remains the health and safety of both our Resident Members and our Team
in delivering our essential service of housing to our Residents across the country. We remain
ever grateful for our front line and essential service providers, including our Boardwalk Team
of Heroes who work tirelessly to provide safe and affordable housing in all our markets.
Doing Our Part
• All team members equipped with PPE
• Increased cleaning and sanitization of common areas
• Launch of online, self-service application (Yuhu)
• Launched a dedicated Resident Member COVID
− Online rental payments
− Online maintenance requests
− Online chat for Resident Members
− Virtual showings
− Digital lease signing
information website: www.bwalk.info
• Reiterated Boardwalk’s flexible payment options
• Financial support for Residents in need
• Community engagement between Residents and
local businesses
• Regular communication and updates between
Residents and Associates
Executive Team
10
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
PORTFOLIO PROFILES
Multi-Family Property Portfolio
Edmonton, Spruce Grove & St. Alberta, AB
Property*
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
West Edmonton Village
Whitehall Square
Boardwalk Centre
Fairmont Village
Meadowview Manor
Sturgeon Point Villas
Boardwalk Villages
Riverview Plaza
Morningside Estates
Sir William Place
Pembroke Estates
Greentree Village
Maple Gardens
Northridge Estates
Briarwynd Court
Westbrook Estates
Galbraith House
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
HR, WU & TH
1,176
1,138,368
HR & WU
Highrise
Walk-Up
Walk-Up
Walk-Up
Townhouse
Walk-Up
Walk-Up
HR & WU
Walk-Up
Walk-Up
Walk-Up
Walk-Up
TH & WU
Walk-Up
Highrise
598
597
424
348
280
255
252
223
220
198
192
181
180
172
172
163
545,934
471,871
362,184
284,490
284,953
258,150
203,740
167,064
126,940
198,360
156,000
163,840
103,270
144,896
148,616
110,400
968
913
790
854
818
1,018
1,012
808
749
577
1,002
813
905
574
842
864
677
West Edmonton Village
Edmonton, AB
11
Edmonton, Spruce Grove & St. Alberta, AB (continued)
Property*
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Springwood Place Apartments
Lord Byron Towers
Corian Apartments
Primrose Lane Apartments
Habitat Village
Meadowside Estates
Lord Byron Townhouses
Cedarville Apartments
Leewood Village
Pinetree Village
Imperial Tower
The Westmount
Tamarack East & West
Brookside Terrace
Redwood Court
Terrace Garden Estates
Castleridge Estates
Kew Place
Cambrian Place
Monterey Pointe
Parkview Estates
Victorian Arms
The Palisades
Westridge Estates B
Westridge Estates C
Castle Court
West Edmonton Court
Sandstone Pointe
Aspen Court
Lorelei House
Royal Heights
Point West Townhouses
Village Plaza
Breton Manor
Camelot
Carmen
Westridge Manor
Fontana Place
Suncourt Place
Warwick Apartments
Westborough Court
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Lowrise
Highrise
Garden
Walk-Up
Townhouse
Walk-Up
Townhouse
Walk-Up
Walk-Up
Walk-Up
Highrise
Highrise
Garden
TH & WU
Lowrise
Walk-Up
Townhouse
Walk-Up
Walk-Up
Walk-Up
Townhouse
Walk-Up
Highrise
Lowrise
Lowrise
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Highrise
Townhouse
Townhouse
Walk-Up
Walk-Up
Walk-Up
Garden
Lowrise
Walk-Up
Walk-Up
Walk-Up
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
12
160
158
153
153
151
148
147
144
142
142
138
133
132
131
116
114
108
108
105
104
104
96
94
91
90
89
82
81
80
78
74
69
68
66
64
64
64
62
62
60
60
122,640
133,994
167,400
151,310
129,256
104,036
172,369
122,120
129,375
106,740
112,050
124,825
212,486
196,779
107,680
101,980
124,524
105,776
105,008
83,548
88,432
91,524
77,200
56,950
56,950
93,950
73,209
83,800
68,680
65,870
41,550
72,810
65,280
57,760
54,625
54,625
69,038
40,820
55,144
49,092
50,250
767
848
1,094
989
856
703
1,173
848
911
752
812
939
1,610
1,502
928
895
1,153
979
1,000
803
850
953
821
626
633
1,056
893
1,035
859
844
561
1,055
960
875
854
854
1,079
658
889
818
838
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Edmonton, Spruce Grove & St. Alberta, AB (continued)
Property*
Garden Oaks
Marlborough Manor
Westmoreland Apartments
Valley Ridge Tower
Granville Square
Westwinds of Summerlea
Christopher Arms
Summerlea Place
Viking Arms
Ermineskin Place
Southgate Tower
Wimbledon
Capital View Tower
Tower On The Hill
Fort Garry House
Maureen Manor
Prominence Place
Solano House
Terrace Tower
Tower Hill
Riverview Manor
Deville Apartments
Lansdowne Park
The Edge
Park Place Tower
Axxess
Vita Estates
Insignia Tower
Totals:
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Living
Living
Living
Living
Living
Living
Living
Living
Garden
Walk-Up
Lowrise
Highrise
Townhouse
Garden
Lowrise
Garden
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Highrise
Community
Midrise
Lifestyle
Lifestyle
Lifestyle
Lifestyle
Lowrise
Highrise
Lowrise
Lowrise
Lifestyle
Highrise
56
56
56
49
48
48
45
39
240
226
170
165
115
100
93
91
91
91
84
82
81
66
62
182
179
165
162
124
47,250
49,582
45,865
30,546
53,376
53,872
29,900
43,297
257,410
181,788
153,385
117,216
71,281
85,008
70,950
64,918
73,310
79,325
66,000
46,360
62,092
47,700
48,473
163,103
162,049
149,565
135,454
112,864
12,882
11,352,470
844
885
819
623
1,112
1,122
664
1,110
1,073
804
902
710
620
850
763
713
806
872
786
565
767
723
782
896
905
906
836
910
881
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
Below: West Edmonton Village
Edmonton, AB
13
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Calgary, Airdrie & Banff, AB
Property*
Russet Court
Radisson Village I
Radisson Village II
Radisson Village III
Vista Gardens
Travois Apartments
Hillside Estates
Pineridge Apartments
Flintridge Place
Willow Park Gardens
McKinnon Manor Apartments
McKinnon Court Apartments
Patrician Village
Richmond Towers
Spruce Ridge Estates
Oak Hill Estates
Boardwalk Heights
O'Neil Tower
Westwinds Village
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Garden
TH & WU
TH & WU
Townhouse
Townhouse
Walk-Up
Walk-Up
Lowrise
Midrise
Walk-Up
Walk-Up
Walk-Up
Community
Walk-Up
Community
HR & MR
Community
Walk-Up
Community
Townhouse
Community
Highrise
Community
Highrise
Community
Walk-Up
Tower Lane Terrace Apartments
Community
Walk-Up
Ridgeview Gardens
Northwest Pointe
Skygate Tower
Community
Townhouse
Community
Walk-Up
Community
Highrise
Boardwalk Retirement Community
Community
Highrise
Lakeview Apartments
Community
Walk-Up
Brentview Tower
Broadway Centre
Dorsett Square
Community
Highrise
Community
Highrise
Community
Highrise
Spruce Ridge Gardens
Community
Walk-Up
Lakeside Estates
Glamorgan Manor
Royal Park Plaza
Community
Walk-Up
Community
Walk-Up
Community
Highrise
Mountainview Estates
Community
TH & WU
Elk Valley Estates*
Community
Walk-Up
Prominence Place Apartments
Community
Walk-Up
Randal House
Community
Highrise
Varsity Place Apartments
Community
Walk-up
Beddington Court
Village Vale
Community
Walk-Up
Community
Townhouse
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
14
206
124
124
118
100
89
76
76
68
66
60
48
392
376
284
240
202
187
180
163
160
150
142
124
120
115
115
109
109
89
86
86
81
76
75
70
70
66
54
213,264
108,269
108,015
124,379
121,040
61,350
58,900
52,275
55,023
44,563
43,740
36,540
295,600
301,720
196,464
236,040
160,894
131,281
137,815
130,920
151,080
102,750
113,350
82,130
107,680
69,310
80,424
98,948
86,351
77,732
63,510
66,137
75,624
53,340
55,920
56,600
47,090
50,919
66,366
1,035
873
871
1,054
1,210
689
775
688
809
675
729
761
754
802
692
984
797
702
766
803
944
685
798
662
897
603
699
908
792
873
738
769
934
702
746
809
673
772
1,229
Calgary, Airdrie & Banff, AB (continued)
Property*
Varsity Square Apartments
Auburn Landing
Chateau Apartments
Centre Pointe West
BRIO
Totals:
Montreal, QC
Property*
Le Bienville
Jardins Viva
Brand
Lifestyle
Lifestyle
Lifestyle
Lifestyle
Lifestyle
Brand
Living
Living
Nuns' Island Portfolio
Community
HR, WU & TH
Domaine d'Iberville Apartments
Community
Highrise
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
MR & LR
Lowrise
Highrise
Midrise
Highrise
297
238
145
123
81
241,128
209,976
110,545
110,611
71,500
5,960
4,867,113
812
882
762
899
883
817
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
168
112
3,100
720
322
259
4,681
115,600
91,000
3,106,110
560,880
276,324
153,500
4,303,414
688
813
1,002
779
858
593
919
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Walk-up
Walk-up
Community
Highrise
Community
Highrise
Brand
Living
Walk-Up
Community
MR & WU
Community
Highrise
Complexe Deguire
Le Quatre Cent
Totals:
London, ON
Property*
Noel Meadows
Heritage Square
Forest City Estates
Maple Ridge On The Parc
Community
Highrise
Landmark Towers
Topping Lane Terrace
Westmount Ridge
Community
Highrise
Community
Midrise
Community
Midrise
Meadowcrest Apartments
Community
Walk-Up
Castlegrove Estates
The Bristol
Sandford Apartments
Villages of Hyde Park
Abbey Estates
Ridgewood Estates
Totals:
Community
Lowrise
Community
Highrise
Community
Walk-Up
Community
Townhouse
Community
Townhouse
Community
Townhouse
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
105
359
272
257
213
189
179
162
144
138
96
60
53
29
72,600
270,828
221,000
247,166
173,400
177,880
131,700
110,835
126,420
109,059
77,594
57,850
59,794
31,020
2,256
1,867,146
691
754
813
962
814
941
736
684
878
790
808
964
1,128
1,070
828
15
Regina, SK
Property*
Wascana Park Estates
Qu'appelle Village III
Centennial South
Qu'appelle Village I & II
Eastside Estates
Evergreen Estates
Pines of Normanview
Lockwood Arms Apartments
Grace Manors
Greenbriar Apartments
Centennial West
The Meadows
Southpointe Plaza
Pines Edge
Pines Edge II
Pines Edge III
Totals:
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Townhouse
Walk-Up
Garden
TH & WU
Townhouse
Walk-Up
Garden
Walk-Up
Townhouse
Walk-Up
Garden
Townhouse
Community
Midrise
Community
Garden
Lifestyle
Lifestyle
Garden
Garden
316
180
170
154
150
150
133
96
72
72
60
52
140
79
79
71
303,360
144,160
129,080
133,200
167,550
125,660
115,973
69,000
69,120
57,600
46,032
57,824
117,560
67,298
67,298
62,818
1,974
1,733,533
960
801
759
865
1,117
838
872
719
960
800
767
1,112
840
852
852
885
878
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
Kings Tower
Kitchener, ON
16
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Red Deer, Fort McMurray & Grande Prairie, AB
Property*
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Boardwalk Park Estates I
Prairie Sunrise
Canyon Pointe Apartments
Riverbend Village Apartments
Taylor Heights Apartments
Chanteclair Apartments
Inglewood Terrace Apartments
McMurray Manor
The Granada
The Valencia
Mallard Arms
Boardwalk Park Estates II
Edelweiss Terrace
Hillside Manor
Birchwood Manor
Heatherton Apartments
Cloverhill Terrace
Westridge Estates
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
Living
TH & WU
HR & WU
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Lowrise
Lowrise
Walk-Up
Walk-Up
Walk-Up
Townhouse
Walk-Up
Walk-Up
Walk-Up
Walk-Up
Community
Midrise
Community
Townhouse
Parke Avenue Square
Community
Walk-up
Community
Midrise
Community
Midrise
369
244
163
150
140
79
68
44
44
40
36
32
32
30
24
23
120
112
88
50
48
306,850
201,992
114,039
114,750
103,512
68,138
42,407
30,350
35,775
33,850
30,497
30,210
27,226
21,248
18,120
16,750
102,225
113,664
87,268
43,988
53,762
1,936
1,596,621
832
828
700
765
739
863
624
690
813
846
847
944
851
708
755
728
852
1,015
992
880
1,120
825
Watson Tower
Saratoga Tower
Totals:
Saskatoon, SK
Property*
Palace Gates
Meadow Park Estates
Stonebridge Apartments
St. Charles Place
Heritage Townhomes
Stonebridge Townhomes
Lawson Village
Wildwood Ways B
Regal Towers
Carlton Tower
Living
Living
Living
Living
Living
Living
Living
Living
Walk-Up
Townhouse
Walk-Up
Walk-Up
Townhouse
Townhouse
Walk-Up
Walk-Up
Community
Highrise
Community
Highrise
206
200
162
156
104
100
96
54
161
158
82
52
142,525
192,000
131,864
123,000
99,840
135,486
75,441
43,961
122,384
155,138
61,550
48,608
Penthouse Apartments
Community
Lowrise
Dorchester Tower
Community
Highrise
Totals:
1,531
1,331,797
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
692
960
814
788
960
1,355
786
814
760
982
751
935
870
17
Quebec City, QC
Property*
Place Chamonix
Brand
Living
Townhouse
Les Jardins de Merici
Community
Highrise
Les Appartements Du Verdier
Community
Walk-Up
L'Astre
Community
Midrise
Place Samuel de Champlain
Community
Highrise
Community
Midrise
Community
Midrise
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
246
346
195
183
130
111
108
236,630
300,000
152,645
134,480
104,153
81,746
82,624
1,319
1,092,278
962
867
783
735
801
736
765
828
Place du Parc
Place Charlesbourg
Totals:
Victoria, BC
Property*
Aurora
Totals:
Property*
Kings Tower
Westheights Place
Elmridge Heights
Courtland Place
Mayfieldview Court
Cambridge Court
Wesley Park
Totals:
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Lifestyle
Walk-Up
114
114
95,756
95,756
840
840
KWC (Kitchener, Waterloo, Cambridge), ON
Brand
Building Type**
# of Units
Net Rentable Sq. Ft.
Average Unit Size (Sq. Ft.)
Community
Highrise
Community
Midrise
Community
Walk-Up
Community
Walk-Up
Community
Walk-Up
Community
Townhouse
Community
Walk-Up
226
103
70
60
60
56
36
611
171,100
91,920
71,420
61,152
61,440
66,550
41,960
565,542
757
892
1,020
1,019
1,024
1,188
1,166
926
866
Total Portfolio – As at Dec. 31, 2021:
33,264
28,805,670
* Ordered by brand, followed by descending number of units.
** HR – Highrise; MR – Midrise; TH – Townhouse; WU – Walk-Up
Below: Beddington Court,
Calgary, AB
18
BUILDING A
SUSTAINABLE FUTURE
FOR OUR COMMUNITIES
BOARDWALK REIT | ESG REPORT | 2021
ENVIRONMENT, SOCIAL AND
GOVERANCE (“ESG”) AT BOARDWALK
Boardwalk is focused on creating value by committing to ESG practices that reduce our
environmental impact, have a positive impact on the communities in which we own and
operate, as well as for our team of Associates, and our Resident Members who choose to
call Boardwalk 'home'.
TABLE OF CONTENTS
22 | BOARDWALK AT A GLANCE
24 | 2021 QUICK FACTS
25 | LETTER FROM THE CEO
26 | ESG AT BOARDWALK
30 | 2021 COMMITMENTS AND PERFORMANCE
32 | UNITED NATIONS' SUSTAINABLE DEVELOPMENT
34 | ENVIRONMENT
52 | SOCIAL
64 | OUR PEOPLE
74 | GOVERNANCE
81 | LOOKING AHEAD
82 | ESG DATA AND PERFORMANCE
85 | ESG DISCLOSURE INDEXES
20
Dorsett Square
Calgary, AB
ESG HIGHLIGHTS
Environment
3.2%
Social
76
Governance
69
DECREASE IN
GREENHOUSE GAS SCOPE 1
AND 2 EMISSIONS FROM
2019 BASELINE
WORLD-CLASS
NET PROMOTER SCORE
BASED ON RESIDENT
MEMBER SURVEYS
2021 GRESB SCORE, A 47%
IMPROVEMENT FROM 2020
GRESB SCORE OF 47
0.15
4th
THE TRUST’S GREENHOUSE
GAS EMISSIONS INTENSITY
PER SQUARE FOOT WHICH
IS A 4.1% DECREASE FROM
2019 BASELINE
YEAR BEING RECOGNIZED AS
ONE OF ALBERTA’S
TOP 75 EMPLOYERS
#5 out of 23
GLOBE AND MAIL
BOARD GAMES,
REAL ESTATE ISSUERS
1.5%
~7
#56 out of 220
DECREASE IN
WATER USAGE FROM
2019 BASELINE
YEARS AVERAGE
LENGTH OF SERVICE FOR
BOARDWALK ASSOCIATES
GLOBE AND MAIL
BOARD GAMES,
ALL ISSUERS
21
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 BOARDWALK AT A GLANCE
Boardwalk Real Estate Investment
Trust (REIT), based in Calgary, Alberta,
strives to be Canada’s friendliest landlord
and is a leading owner/operator of multi-
family rental communities. Providing
homes in more than 200 communities,
with over 33,000 residential units totaling
over 28 million net rentable square feet,
Boardwalk has a proven long-term track
record of building better communities,
where love always lives™.
Our three tiered and distinct brands: Boardwalk Living,
Boardwalk Communities and Boardwalk Lifestyle, cater to
a large and diverse demographic and has evolved to
capture the lifecycle of all Resident Members. Boardwalk’s
disciplined approach to capital allocation, acquisition,
development, purposeful re-positioning and management
of apartment communities allows the Trust to provide its
brand of community across Canada creating exceptional
Resident Member experience. Differentiated by its peak
performance culture, Boardwalk is committed to
delivering exceptional service, product quality and
experience to our Resident Members who reward us with
high retention and market leading operating results;
which in turn, lead to higher free cashflow and investment
returns, stable monthly distributions and value creation
for all its stakeholders.
OUR PURPOSE, MISSION, VISION,
VALUES & VIRTUES
Our mission to provide the best quality communities
for our Resident Members. It is our privilege to take care of
people in one of the most important facets of their lives –
their home. Our top priority is the health and safety of our
communities and fostering a real sense of belonging for
our Resident Members. We live by our Golden Foundation
in all that we do: treat others as you would like to
be treated, be good, love community, have fun, and
love always.
22
We recognize that all of these components form a virtuous
circle. By creating an amazing organizational culture, our
team of Associates are motivated and inspired, drive
customer service satisfaction, which results in
extraordinary brand loyalty and drives sustainability and
value for all stakeholders.
L'Astre
Quebec City, QC
OUR CULTURE
For over 30 years, Boardwalk has been driven by
community, forging relationships and creating memories.
We believe our communities are more than just a place to
live: every Boardwalk building is a place where our
Resident Members feel a sense of family and community,
a place they can call home.
Our focus on people, genuine relationships, and shared
values have created a truly unique and defining culture
that differentiates a Boardwalk community. We put our
heart and soul into everything we do, and we take pride in
knowing that our communities are a place where
Residents celebrate life’s precious moments.
Today, we continue to draw inspiration from our early
days, taking pride in who we are, what we do, and are
rooted in the same values that have helped us successfully
navigate through decades of growth and change. From
our humble beginnings to expanding across the country,
our pursuit of creating community in our communities
remains. Though always looking ahead to the future, we
cannot help, but remember where we came from.
23
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 2021 QUICK FACTS
1,560
NUMBER OF ACTIVE
ASSOCIATES
33,264
APARTMENT
SUITES
$3.3B
UNITHOLDERS’ EQUITY
$66.87
NET ASSET VALUE
PER UNIT (1)
$446M
PROFIT (LOSS)
$2.94
FUNDS FROM
OPERATIONS
PER UNIT (1)
>25%
MANAGEMENT
OWNERSHIP
0.1%
SAME-PROPERTY
NOI GROWTH
7.3%
GROWTH IN FFO
PER UNIT
(1)
A non-GAAP measure. Please refer to the Trust Management Discussion & Analysis for the years ended December 31, 2021 and 2020 for definitions, reconciliations and
the basis of presentation of Boardwalk REIT’s non-GAAP measures.
Less than 1,000 Apartment Suites
Grande Prairie
Red Deer
Fort McMurray
Kitchener
Greater Toronto Area (under development)
Victoria
1,000 to 5,000 Apartment Suites
Saskatoon
Regina
London
Montreal
Quebec City
Greater than 5,000 Apartment Suites
Calgary
Edmonton
24
LETTER FROM THE CEO
We are pleased to present Boardwalk REIT’s third annual Environmental, Social and
Governance (“ESG”) report which will provide an overview of our many environmental,
social and governance accomplishments and initiatives from 2021.
Our actions and initiatives are predicated on a foundation
of always aiming to do what is right. Our approach and
strategy remain consistent as we aim to build the best
culture and brand. Boardwalk strives to attract and retain
caring, peak performers while ensuring all our Resident
Members who live in our communities are proud to call
Boardwalk their home. Our impact with ESG involvement
includes the ability to reduce our greenhouse gas (“GHG”)
emissions, to empower our Associates, to foster satisfied
Resident Members, and to create value for all our
stakeholders through disciplined governance.
We continue to prioritize environmental initiatives which
result in decreases in our GHG emissions and corresponding
operating costs. We are pleased to announce a long-term
GHG reduction target of 15% to be achieved by 2030 (using
2019 as the base year) as well as a 15% reduction in water
usage. We have identified our GHG emissions reduction
pathways to work towards achieving these reductions while
continuing to engage with our Resident Members.
We see an opportunity to continue to work with our
Associates, to attract, retain, promote and encourage
employment satisfaction. In 2021 we implemented an
employee Net Promoter Score to allow us to assess and
improve upon employee satisfaction. We will continue to
be an equal opportunity employer who does not
discriminate, but who recognizes Associates for hard work
and strong engagement. Our Boardwalk Team recognizes
the importance of the role that our Associates play in
contributing toward our ESG goals and objectives.
We will continue to not only serve the communities in
which we are located but also the broader cities in which
we operate. We strive to provide affordable housing to all
while maintaining our superior standards in customer
service, product quality, and experience.
Our Board of Trustees will continue to provide the highest
level of governance and oversight including ongoing
involvement with our ESG strategy. We strive to be a
leader across all elements of ESG.
We see the future as an opportunity and commend our
Associates and partners for the incredible work of 2021.
Focusing on ESG initiatives benefits our environment, our
Associates, our Resident Members and our stakeholders,
while attracting and retaining Associates and encouraging
Resident Members to want to live with us. We will continue
to operate and grow under our Golden Foundation: “Treat
others as we would like to be treated, be good, love
community, and have fun.”
With love always,
SAM KOLIAS
Chairman and Chief Executive Officer
25
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 ESG AT BOARDWALK
We have always recognized the importance of leading practices regarding Boardwalk's
ESG accountability. We are committed to continuing the development of our ESG strategy,
which will include further integration of current activities, opportunities and partnerships
that provide value to our customers, Unitholders and communities as we transition to a
more sustainable future.
Tower on the Hill
Edmonton, AB
“ Boardwalk continues to focus on ESG
practices and initiatives that positively
impact our Communities, Associates and
Resident Members who call Boardwalk
home. By implementing best in class ESG
practices, the Trust will benefit from
reduced greenhouse gas emissions,
engaged Associates, satisfied Resident
Members, and disciplined governance.
26
LISA SMANDYCH
Chief Financial Officer
This report reveals many of the ways we lived up to our
purpose in 2021 and highlights our ongoing commitment
to lead with integrity, providing affordable housing, and
strengthening the communities we operate in and create
the most value for those we serve.
Our Environment, Social and
Governance Strategy and Approach
Boardwalk includes sustainability as part of its strategy
development and includes sustainability goals that
provide accountability towards its targets. As we look
back on 2021, Boardwalk continued to enhance its ESG
strategy and risk management assessment, while
analyzing key metrics and setting targets.
This ESG report, for the fiscal year 2021, has been
prepared in accordance with the Global Reporting
Initiatives Standards (“GRI”): Core option and using the
Sustainability Accounting Standards Board (SASB) Real
Estate Sustainability Accounting Standard. Additionally,
the Trust referred to the disclosure elements used by the
Global Real Estate Sustainability Benchmark (“GRESB”) as
well as the Task Force on Climate-related Financial
Disclosures (“TCFD”). In 2021, the Trust completed its
second GRESB assessment, recognizing an increased
score of 47% from 47 in 2020 to 69 in 2021. Areas of
strength highlighted in our 2021 GRESB assessment
included policies, reporting, risk management and
stakeholder engagement, while areas for improvement
focus on environmental management systems and
targets. This feedback is valuable as we act on the
recommendations provided by our assessments and
honour our commitment along with our industry peers.
Role of the Board with ESG
The Trust has formed the appropriate operational
committees to support all its ESG initiatives, risks and
opportunities. With having done so, the Board will
become more involved in identifying and managing
economic, environmental and social impacts while also
evaluating the effectiveness of the Trust’s risk
management processes. The Board will be involved in
reviewing ESG topics, assessing and approving ESG
materiality. The Board will also consider and approve ESG
metrics and targets. The governance of ESG is included in
the mandate of the Compensation, Governance,
Nominations and Sustainability Committee, while the
adherence to metrics and targets is the responsibility
of the Audit and Risk Management Committee.
West Edmonton Village
Edmonton, AB
27
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 STAKEHOLDER ENGAGEMENT
Boardwalk recognizes the importance of identifying and including, all its stakeholders when devising its strategy for
ESG along with assessing materiality. Below is a list of the Trust’s stakeholders along with the current means by which it
engages its stakeholders. Going forward, the Trust will continue to ensure all stakeholders are identified and engage
with all pertinent stakeholders.
Investors
Resident Members
Stakeholders
Environment/
Industry
Community
Associates
Annual General Meeting
Resident Member portal
Participation on various
REALPac Committees
Municipality meetings
Continuous
feedback loop
Quarterly conference
calls, including
Question & Answer
period
Social Media
Attendance at
speaking engagements
at industry functions
Social media
Peak performance
culture
Press releases
Community events
Corporate website
Newsletters
Municipality offered
benchmarking
programs
Environmental
assessments
Corporate website
Benchmarking to beat
personal bests
Volunteer work
Annual TEAM meetings
One-on-one meetings
Resident Member
surveys
Sponsorship events
Annual performance
review
Building tours with
investors
Government
Committees
Unanimous surveys
Social events
Boardwalk Connect
28
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
MATERIALITY MATRIX:
WHAT MATTERS MOST
Our materiality matrix is the result of an extensive stakeholder engagement process. It draws on input from our
executive and management teams, institutional Investors, lenders, analysts, and Resident Members. Conducted in 2020,
the consultation process achieved three important goals: 1. It allowed us to understand our stakeholders’ business and
sustainability priorities. 2. It identified the reporting topics that matter most to our stakeholders. 3. It uncovered
important areas where Boardwalk can collaborate with our stakeholders to improve sustainability results. During the
consultations, we learned that our stakeholders appreciate the opportunity to contribute their opinions and insights.
We also learned that our stakeholders are placing increasing importance on five topics: business ethics and integrity,
regulatory compliance, data security and privacy, health wellness and safety, diversity equality and inclusion. The Trust
will update its materiality assessment in 2022.
s
r
e
d
l
o
h
e
k
a
t
S
o
t
e
c
n
a
t
r
o
p
m
I
Governance
Social
Environmental
6
8
10
11
12
9
14
16
15
18
17
13
Importance to Boardwalk
1
2
4
3
5
7
29
1 Business ethics and integrity2 Regulatory compliance3 Data security and privacy4 Health, wellness and safety5 Diversity, equality and inclusion6 Affordability7 Associate engagement, training and development8 Board governance and composition9 Resident Member engagement and satisfaction10 Energy and water management11 Insurance and risk management12 Financial performance13 Compensation and benefits14 Waste management15 Sustainable development and building design16 Climate change-related risks and opportunities17 Community engagement and partnerships18 Greenhouse gas emissions (GHG)
2021 COMMITMENTS
AND PERFORMANCE
2021 Commitments
Results/Initiatives
Set long-term energy performance targets
Complete Greenhouse Gas (“GHG”)
intensity analysis
Environment
Provide Resident Member education on
water conservation and waste behaviors
Conduct waste audits at select sites
The Trust is pleased to announce its reduction in both energy
and water consumption targets, whereby the Trust aims to reduce
both its energy and water consumption by 15% by 2030 (using 2019
as its baseline).
In 2021, a GHG intensity analysis was completed, which identified
those properties which have higher GHG emissions on a per
square foot basis. In addition, all properties are benchmarked
for GHG emissions.
Various Resident Member engagement initiatives were completed
across the portfolio throughout the calendar year. Examples
include, but are not limited to:
(1)
(2)
(3)
a Resident Member Sustainability Contest, where
Resident Members provided suggestions on sustainability
improvements and the winning ideas will be implemented;
updated signage explaining the difference between waste,
recycling and composting; and
a cold water washing campaign which included explaining
the environmental benefits of cold water washing.
During 2021, waste audits were completed at select sites to help
Boardwalk better understand its waste composition. In addition,
the Trust entered into partnership with CheckSammy, a
sustainability company which provides collection bins for all
household recyclable and reusable goods.
L'Astre
Quebec City, QC
30
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
2021 Commitments
Results/Initiatives
Introduce an eNPS to our Associates
Broaden the reach of our
Wellness Committee
Social
We introduced our Employee Net Promoter Score (“eNPS”) in 2021,
and earned a preliminary score of 61 for fiscal 2021. The goal of
having an eNPS is to both engage with our Associates while also
gaining a better understanding of Associate sentiment.
We introduced the Bwell Certification Program which was the
culmination of Boardwalk’s long-standing commitment to
health and well-being of our Communities, Resident Members
and Associates.
In addition, Boardwalk completed a wellness survey which was
offered to all Associates and aimed to better understand our
Associates needs and wants. This survey resulted in the expansion
of our internal wellness website with content focused on findings
from the wellness survey.
Better understand our ethnic diversity
while continuing to focus on inclusion
During 2021 the Trust established a Diversity, Equity and Inclusion
(“DEI”) Committee and through the committee conducted a
preliminary survey to better understand our Associates. Results of
this survey can be found on page 67 of this report.
Work with suppliers to implement a
Supplier Code of Conduct
During 2021, we developed a Supplier Code of Conduct which we are
beginning to work through with select suppliers to determine if
modifications are required. We will continue to work through this
initiative in fiscal 2022.
Increase ESG disclosure on our website
The Trust continues to update the website on a
timely basis.
Complete second annual
GRESB assessment
The Trust is pleased to announce that it completed its second
GRESB assessment with an improved score of 47% from 47 in
2020 to 69 in 2021.
Governance
Evaluate the GRI framework, SASB
framework and TCFD requirements
When preparing this report, the GRI framework, SASB framework
and TCFD requirements were considered. Please refer to the
ESG Disclosure Indexes beginning on page 85.
Further involve the Board of Trustees
in ESG approach, risk evaluation
and processes
The Board continued to be involved with ESG, including discussions
around the Trust’s ESG approach and risk evaluation. More
recently, the Board approved the Trust’s long-term energy and
water reduction targets.
31
UNITED NATIONS’ SUSTAINABLE
DEVELOPMENT GOALS
From the United Nations “The 2030 Agenda for Sustainable Development, adopted by all
United Nations Member States in 2015, provides a shared blueprint for peace and
prosperity for people and the planet, now and into the future. At its heart are the 17
Sustainable Development Goals (SDGs), which are an urgent call for action by all countries –
developed and developing – in a global partnership.
They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health
and education, reduce inequality, and spur economic growth – all while tackling climate change and working to
preserve our oceans and forests.” Boardwalk has assessed these goals and believes some of its activities are aligned
with the SDGs as summarized on the following page. As we look at future periods, Boardwalk intends to formally align
with the United Nations’ SDGs.
Broadway Centre
Calgary, AB
32
• Diversity, equity and inclusion program
• Water conservation measures
• Energy reduction targets
• Target 50/50 male to female ratios
• Water use reduction targets
• Energy usage tracking
• Diversity target on the Board of
Trustees of 65/35 male to female
• Engagement with Associates and
•
Identified pathways for GHG reductions
Resident Members
• Engagement with Associates
and Resident Members
• Equal opportunities for career
growth and advancement
• Diversity, equity and inclusion program
• Health, safety and well-being programs
• Consistently seeking new, innovative
technologies to do things differently
and more effectively and efficiently
• Annual dedicated capital budget,
including sustainability initiatives
• Sustainability focus on
new developments
• Leading class net promoter score for
Resident Member satisfaction
•
Introduction of Bwell Certification
program to promote well-being
• Focus on affordable housing
• Focus on reducing greenhouse
gas emissions
• Long-term reduction targets for both
energy consumption and water usage
• Asset profiling to understand climate
related risks and opportunities
• Tracking of energy consumption,
water usage and waste
• Focused capital deployment
geared towards energy efficiency
• Resident Member and Associate
• Long-term energy consumption
engagement programs
reduction targets
• Engaging with suppliers to understand
commitment to sustainability
33
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 ENVIRONMENT
The World Commission on Environment and Development defines Sustainable
Development as “development which meets the needs of the present without
compromising the ability of future generations to meet their own needs”.
Our Approach to the Environment
Boardwalk strives to provide its Resident Members
with a place to call home, while aiming to minimize our
environmental impact for future generations to come.
Boardwalk is committed to responsible energy, gas and
water management, as part of an overall environmental
sustainability strategy, while maintaining operational
goals and providing exceptional working and living
environments for our Associates and Resident Members.
In doing so, Boardwalk aims to decrease operating costs
while increasing overall resident satisfaction and
Unitholder value. Through efficient management of
energy utilization, Boardwalk aims to minimize energy,
gas, water use and costs, and the environmental impact of
harmful emissions. Boardwalk is fully committed to
achieving best practice benchmark standards in energy
efficiency compared to our peers.
Boardwalk established a “Green Initiative Committee”
which works to consider environmentally friendly
practices as well as products and services for reducing
carbon emissions, optimizing existing technologies and
creating a better future. The Committee is comprised of
Associates from different departments across the country,
including mid to senior operations leaders, all working
together to consider Boardwalk’s environmental impact
first. This Committee manages a dedicated capital budget
specific to emissions reducing capital initiatives, above
and beyond standard environmental initiatives already
being completed by the Trust. It evaluates allocating this
budget by considering both emissions savings and the
return on investment. Boardwalk’s environmental policy
involves benchmarking buildings within our portfolio to
determine emission intensities and evaluating capital
spend at those sites with the highest intensity in a goal to
reduce our carbon emissions. In addition, the Trust
participates in REALPAC’s ESG Committee to gather
valuable expertise from others in its industry. REALPAC is
the national industry association dedicated to advancing
the long-term vitality of Canada’s real property sector.
Climate Change-related Risks and
Opportunities
The Trust considers the recommendations outlined by the
Task Force on Climate-Related Financial Disclosures (“TCFD”)
to evaluate its climate change-related opportunities and
risks. Through 2021, the Trust formalized its policies
surrounding the core elements of recommended climate-
related financial disclosures being Governance, Strategy,
Risk Management, and Metrics and Targets, and will be
continuing this process in 2022. Additionally, the Trust will
continue to monitor the trends and best practices
surrounding climate change and climate change disclosures.
Boardwalk is committed to better understanding its climate
change-related risks and opportunities.
RISKS
The TCFD divided climate-related risks into two
major categories (1) risks related to the transition to a
lower-carbon economy and (2) risks related to the physical
impacts of climate change. As it relates to the Trust,
Boardwalk believes its transitional risks include being
slower in adopting policies, allocating capital and
adopting new technologies to lower its carbon emissions.
Physical risks resulting from climate change can be event
driven (acute) or longer-term shifts (chronic) in climate
patterns. In the past, the Trust has experienced the impact
of these acute events such as the fires in Fort McMurray
and the floods in Calgary. The Trust recognizes that it is
34
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Sustainability Mascot "Norman"
Plantsie Initiative
“ Boardwalk has amplified our commitment
to long-term sustainability with further steps
taken to improve our environmental
performance by reducing our energy and
water usage and working to minimize our
waste generation. Boardwalk was pleased to
see our efforts recognized by the Calgary
Residential Rental Association (CRRA) with
the 2021 Environmental Excellence Award.”
35
SHEILA ODIE
Director, Operational
Accounting & Sustainability
exposed to both acute and chronic risks and will address
its response to these risks in the opportunities section
below and in its long-term strategy moving forward.
OPPORTUNITIES
The Trust continuously attempts to mitigate and adapt
to the climate change-related risks identified above,
which produces opportunities such as resource
efficiencies and cost savings. Currently with all
replacement, renovation or development, the Trust
utilizes products with lower emissions, including, but
not limited to, LED fixtures and lightbulbs, low flow
toilets/showerheads/faucets, energy star appliances,
higher efficiency boilers, variable frequency drive pumps
and improved windowpanes. By upgrading these
products, the Trust is reducing its carbon emissions,
decreasing its operating costs and increasing its
Resident Members satisfaction.
As it relates to acute and physical risks, the Trust has
undertaken the appropriate steps to attempt to mitigate
this risk. To begin with, every site has an evacuation plan
to ensure the safety of our Residents and Associates in the
event of an emergency. In order to avoid a significant
financial loss, the Trust carries adequate insurance.
Working with our insurance providers, the Trust has
identified that within its portfolio one project (its Nuns'
Island Portfolio in Montreal, QC) is located on a 100-year
flood path. As it relates to Nuns’ Island, given its location
on the St. Laurent river, physical barriers are more
difficult, therefore the Trust ensured the portfolio has
adequate emergency generators installed.
Greenhouse Gas (“GHG”) Emissions,
Energy, Water and Waste Management
Starting in 2021, we completed our GHG inventory of our
entire portfolio, and we have established 2019 as our
baseline year for Scope 1 and Scope 2 emissions reduction
efforts. The Trust has now developed an ambitious plan to
reduce our GHG emissions and our water consumption for
the entire portfolio with a long-term reduction target of
15% to achieve by 2030.
This year, as part of our commitment to improve our
measurement and tracking of our environmental impacts,
we began disclosing our Scope 3 emissions, specifically
emissions from employee commuting, waste disposal,
business travel and product transport.
The GHG Protocol defines direct and indirect emissions
as follows:
• Direct GHG emissions are emissions from sources that
are owned or controlled by the reporting entity; and,
• Indirect GHG emissions are emissions that are a
consequence of the activities of the reporting entity but
occur at sources owned or controlled by another entity.
The GHG Protocol further categorizes these direct and
indirect emissions into three broad scopes:
• Scope 1: All direct GHG emissions;
• Scope 2: Indirect GHG emissions from consumption
of purchased electricity, heat or steam; and,
• Scope 3: Other indirect emissions, such as the
extraction and production of purchased material and
fuels, transport-related activities in vehicles not owned
or controlled by the reporting entity, electricity-related
activities not covered in Scope 2, outsourced activities,
waste disposal, etc.
On the following page is our 2021 Environmental Score
Card detailing our annual energy and water consumption
waste disposal and GHG emissions with comparison to our
baseline of 2019, where applicable.
The Trust saw an overall decrease in both energy and
water consumption in 2021 compared to 2019. The
increase in our overall utilities in 2021 when compared to
2020, can primarily be attributed to the continuation of
Covid 19 related work from home and other health
restrictions that impacted the entire year. As well, our new
utilities tracking system now captures and reports suite
level consumption the Trust processes.
36
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
2021 ENVIRONMENTAL SCORECARD
Indicator
Energy
2021
% Change
from Baseline
2020
% Change
from Baseline
2019
(Baseline)
Natural Gas consumption (GJ)
2,248,751
(3.32)%
2,127,801
(8.52)%
2,326,067
Electricity (MWh)
104,801
(5.21)%
108,707
(1.68)%
110,560
Emissions
Scope 1 emissions (tCO2e)
Scope 2 emissions (tCO2e)
112,972
38,247
107,030
41,727
117,243
38,950
Total GHG emissions
151,219
(3.18)%
148,757
(4.76)%
156,193
GHG emissions intensity (kgCO2e/sq ft)
4.45
(4.09)%
4.42
(4.74)%
4.64
Water
Water consumption (M3)
4,576,938
(1.52)%
4,629,650
(0.38)%
4,647,471
Water use intensity (M3/sq ft)
0.15
0.17
0.17
Waste Generation
% Change
from 2020
Waste to landfill (tonnes)
194,008
(8.15)%
211,213
not available
Waste diverted (tonnes)
70,959
(6.71)%
76,064
not available
Total waste generated (tonnes)
264,967
(7.77)%
287,277
not available
Percentage waste diversion
27%
26%
37
ENERGY MANAGEMENT
WASTE MANAGEMENT
Boardwalk is committed to using energy in an efficient,
cost effective and environmentally responsible manner.
This year, the Trust has implemented many new
sustainability initiatives, including greatly expanding our
energy use benchmarking, investing in, and deploying
new energy efficiency technologies, and increasing our
education and engagement of associates and Resident
Members on energy conservation best practices.
WATER MANAGEMENT
As a provider of multi-family homes, our properties use in
excess of 4.6 cubic meters of water per year. The Trust is
committed to continue our effort on reducing water
consumption across our portfolio. In 2021, the Trust
developed a turf management program that focuses on
best practices to reduce landscape irrigation with drought
resistant grasses and plants. We have converted
traditionally higher maintenance landscaped areas to
natural green spaces at select sites in Alberta and Quebec.
We continue to only install certified Water sense faucets and
low flow toilets and we are piloting a toilet leak detection
sensor system to further our water conservation efforts.
In 2021, we expended effort to gather all available data to
determine our total waste disposal, including landfill,
composting, and recycling as part of our Scope 3 emissions.
Working with its Resident Members and Associates, the Trust
works to minimize the amount of waste it sends to local
landfills. Boardwalk piloted a new partnership with
CheckSammy, a sustainability company that provides
collection bins for all household recyclable and reusable
goods. Since being launched in September 2021 at ten sites
across our portfolio, we have diverted over 12,000 pounds of
goods from the regular waste stream, and we plan to expand
this program in 2022. We also continued our partnership with
Diabetes Canada with a total of 265,281 pounds of collected
donations into charitable funds for Diabetes Canada in
2021. Since partnering with Diabetes Canada, Boardwalk
has become one of Canada’s top diversion partner under
its Declutter program (https://declutter.diabetes.ca/).
In 2022, Boardwalk will continue to focus on measures to
decrease waste, including expanding compost recycling in
our Saskatchewan and Edmonton regions, making mixed
recycling easier and more accessible, and developing
other partnerships such as the one with CheckSammy and
Diabetes Canada to determine if other products can be
donated to charities.
Galbraith House
Edmonton, AB
38
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Kings Tower
Kitchener, ON
Prominence Place Apartments
Calgary, AB
39
GHG Emissions Reduction Pathways
Boardwalk has developed several reduction strategies to address emissions from Scope 1, 2 and 3 which are itemized in
the following table as current, planned, and future considerations as integral of our roadmap to moving toward our
reduction targets.
Initiative
GHG Reduction Potential
Timing
Indicators
Structural Measures
Comprehensive Preventive
Maintenance program for
all mechanical systems
Assessment of
weather-stripping
and window sealing
Installation of Building
Automation system for
heating/cooling systems
High efficiency boiler,
hot water tank and
pump upgrades
Scope 1 emissions
Ongoing
Scope 1 emissions
Ongoing
Scope 1 and
Scope 2 emissions
2022
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Scope 1 emissions
Ongoing as opportunity/
funding arises
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Window and Building
Envelope upgrades
Scope 1 emissions
Ongoing as opportunity/
funding arises
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
New Energy Performance
Monitoring Program
Supportive of all
GHG emissions sources
2021 and ongoing
Develop a Fleet
Management Program
Scope 1 emissions
2022
LED Lighting Retrofits
Scope 2 emissions
Ongoing
Installation of lighting
controls (motion and
occupancy sensors)
All installed appliances
are high efficiency,
EnergyStar certified
Scope 2 emissions
Ongoing
Scope 2 emissions
Ongoing
Installation of low flow
faucets and showerheads
Water use
Ongoing
a) Operations leaders have access to
building performance; b) EUIs can be
accurately calculated and tracked
Reduction of Scope 1 emissions
through lower fuel consumption and
idling time
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building water use
intensity; b) building water cost
intensity ($/sq ft)
40
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Initiative
GHG Reduction Potential
Timing
Indicators
Structural Measures (continued)
Installation of leak-detection
technologies
Water use
Development of bio-diverse
natural green spaces
Supportive of Scope 1
(mobile gas) and water use
Pursue Green
Building Certifications
Supportive of all
GHG emissions sources
2022
2021
2022
Behavior Measures (Resident Members & Associates)
Resident cold water washing
informational campaign
Scope 1 emissions
2021
Use of smart home
automation provider to
remotely adjust insuite
temperature and lighting
Signage for lights-off
reminders as well as standby
settings on electronics
Future Considerations
Scope 1 and
Scope 2 emissions
2021
Scope 2 emissions
Ongoing
Reduction of: a) building water use
intensity; b) building water cost
intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
1. Certification earned; 2. Reduction of:
a) building Energy Intensity (GJ/sq ft);
b) building energy cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Reduction of: a) building Energy
Intensity (GJ/sq ft); b) building energy
cost intensity ($/sq ft)
Investigate Renewable
Energy sources
Scope 2 emissions
2022 for study
a) renewable energy identified;
b) Kwhac produced; c) reduction of
building energy intensity (GJ/sq ft)
Building Energy
Management Training
Supportive of all
GHG emissions sources
2022 for study
a) training needs are identified;
b) training occurs
Dorsett Square
Calgary, AB
41
Investing in Energy Efficiency and Long-Term Sustainability
In 2021, the Trust continued to invest in capital expenditures that will improve the energy efficiency and climate change
resilience of our buildings across our portfolio. The following summary highlights our investments made in 2021:
GHG Reduction Potential
Initiative
Scope 1
Scope 2
Scope 1, 2, 3
Window and Building Envelope upgrades
LED Lighting upgrades and replacements
Interior renovations with insulation,
plumbing, and electrical upgrades
Number of
Projects
Total Capital
Investment
13
24
9
10,600,000
305,000
1,260,000
Building Energy Benchmarking Programs
In 2021, Boardwalk committed to benchmarking 100% of
our assets in Energy Star’s Portfolio Manager platform. To
date, we have approximately 85% of our buildings' energy
and water consumption data entered in the platform.
Energy Star’s benchmarking and scoring system helps
building owners and operators measure and track
building energy performance to improve efficiency,
contribute to energy savings and affordability, and reduce
greenhouse gas emissions to help limit global climate
change. The benefits of participating in these types of
programs include:
• Provides reliable, standardized and up to date
information on building energy consumption,
energy costs and greenhouse gas emissions;
• Establishes baseline reference points for
performance and promotes continuous optimization
of building systems;
• Provides a platform for comparing our building
performance against others;
• Prioritize poorly performing buildings for energy
efficiency measure implementation; and,
• Enables measurement and verification of energy
efficiency project results.
In 2021, the Trust participated in the second year of the
City of Calgary’s Commercial and Institutional Building
Energy Benchmarking Program. The Trust expanded its
participation for year 2 of the program from 10 properties
(a total of 1,738 rental units, or approximately 31% of our
Calgary portfolio), to 37 qualifying properties, which
represents 5,006 units and approximately 84% of our
Calgary portfolio. Boardwalk is the largest multi-family
participant in the City’s program.
In 2021, the Trust continued in its participation in the City
of Edmonton Energy Benchmarking Program for the fourth
year with a significant increase from 25 properties in 2020
(totaling 2,352 rental units, or approximately 19% of our
Edmonton portfolio) to a total of 70 properties in 2021,
which represents 10,769 units and approximately 90% of
our Edmonton portfolio. The Trust discloses the highest
number of buildings in the multi-unit residential building
category. Similar to the City of Calgary program, our
participation in this program is a foundation element of
our organization’s energy management strategy as we
believe you cannot manage what you do not measure, and
therefore receiving important data and comparable
information influences decision making. We are awaiting
the benchmarking results from the City for our most recent
submission. In recognition of our year three results,
Boardwalk earned three awards in May 2021 for best
multi-year improvement, Redwood Court, and Imperial
Tower was awarded the Best Year Over Year improvement
for its decline in its EUI score. Lastly, Boardwalk was
awarded runner-up Leadership in Transparency Award for
its ongoing participation in this program.
42
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Patrician Village
Calgary, AB
AAwwaarrdd ooff EExxcceelllleennccee
The City of Edmonton proudly presents this
AAwwaarrdd ooff EExxcceelllleennccee
The City of Edmonton proudly presents this
Award for Leadership in Transparency
Award for Best Multi-Year Improvement
to Boardwalk Rental Communities
for 25 buildings
to Boardwalk Rental Communities
for Redwood Court
Thank you for your leadership in Edmonton’s Building Energy Benchmarking Program and your commitment to high
performing, energy efficient buildings.
Thank you for your leadership in Edmonton’s Building Energy Benchmarking Program and your commitment to high
performing, energy efficient buildings.
_______________________________
Mark Brostrom, Director, City Environmental Strategies
City of Edmonton
May 20, 2021
_______________________________
Mark Brostrom, Director, City Environmental Strategies
City of Edmonton
May 20, 2021
AAwwaarrdd ooff EExxcceelllleennccee
The City of Edmonton proudly presents this
Award for Best Year-over-Year Improvement
to Boardwalk Rental Communities
for Imperial Tower
Thank you for your leadership in Edmonton’s Building Energy Benchmarking Program and your commitment to high
performing, energy efficient buildings.
_______________________________
Mark Brostrom, Director, City Environmental Strategies
City of Edmonton
May 20, 2021
43
L'Astre Library
Quebec City, QC
The City of Edmonton’s Corporate Climate Leaders Program
Beginning in 2020, the Trust enrolled in the above program
with approximately one quarter of its Edmonton portfolio.
As members of the program, participating organizations
have made specific commitments to pursue climate
action. The purpose of this programs is:
The Trust developed and submitted our first GHG emissions
reduction targets plan in June 2021 for 2025. We have
committed to an absolute reduction target of 15% by 2025
from our baseline year of 2019 and will submit our longer-
term 2035 and 2050 reduction targets shortly.
• To encourage, support and power Edmonton companies
to reduce their GHG emissions and increase their
climate resilience;
• To promote collaboration of Edmonton companies
in sharing best practices (re: climate action) and
advancing low carbon business opportunities;
Base Year
tCO2e
2019
Base Year Emissions (Absolute)
21,481.47
• To fast-track the transition to a green economy by
2019 Emissions (Absolute)
building industry capacity; and,
• To showcase the climate actions of member
corporations as a way of inspiring action on the
part of all Edmontonians.
As members, Boardwalk had made three commitments:
1.
To establish and maintain a corporate GHG inventory
in accordance with the World Resource Institute
Greenhouse Gas Protocol, ISO 14064-1, or other
internationally recognized standard, with the
expectation that this GHG inventory will be
updated annually.
2.
To develop plans and targets for reducing GHG
emissions (such targets will be absolute GHG
reduction targets for the years 2025 and 2035).
3. To share these commitments publicly.
44
Scope 1
Scope 2
Scope 3
13,687.37
5,308.99
2,485.11
2025 Target
15% reduction
Also in 2021, we updated our GHG Inventory report with
2020 consumption data. We are pleased to share that our
total GHG emissions for the ten properties in the program
decreased by 14% from our base year 2019 and decreased
by 15% from 2017.
TOTAL GHG EMISSIONS BY YEAR
2017
2018
2019 (BY)
2020
Change
from BY
Change
from 2017
Total Emissions (tCO2e)
42,160
41,671
41,560
35,664
-14%
-15%
Scope 1 – Direct Emissions
13,550
13,654
13,316
2018
2019
2020
Fuel – Natural Gas
Mobile – Gasoline
Mobile – Diesel
13,384
13,502
13,171
35
131
36
116
31
115
Scope 2 – Indirect Emissions
5,436
5,275
4,818
Electricity
5,439
5,275
4,818
Scope 3 – Other Indirect Emissions
22,685
22,632
17,530
Water
617
576
594
Waste – Mixed Trash – Landfilled
20,430
20,430
16,014
Waste – Mixed Recyclables – Recycled
Waste – Mixed Paper – Recycled
Product Transport
Employee Commuting
Total Emissions
-
-
1,479
1,479
0.12
159
0.12
147
786
-
0.46
135
41,671
41,560
35,664
45
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Global ESG Benchmarking – GRESB and CDP
Established in 2009, Global Real Estate Sustainability Benchmark (GRESB) has become the leading ESG benchmark for
real estate and infrastructure investments globally. It covers US$5.7 trillion of assets under management and provides
reporting solutions for investors, asset managers and the wider industry.
We completed our second submission in 2021 (for 2020 performance) and we were encouraged to earn a 22 point
increase from our inaugural score in 2020 (for 2019 performance).
CDP is a not-for-profit charity that administers a global disclosure system for investors, companies, and governments to
manage their environmental impacts. CDP receives environmental disclosures from various entities from over 90
countries annually. The Trust submitted its 2021 environmental performance data and received an overall C rating,
a substantial improvement from prior year submissions. Starting in 2021, we measured and disclosed our Scope 3
emissions, and the Trust is committed to continue to refine and improve our data collection to accurately disclose
emissions within this category. Below represents our 2020 Scope 3 emissions:
L'Astre
Quebec City, QC
46
Scope 3 CDP Category
2020 Emissions (MT CO2e)
Source
Upstream transportation and distribution
1,317
Waste generated in operations
Employee commuting
Business travel
Downstream leased assets
78,758
1,225
31
164
81,496
World Resources Institute (2015). GHG Protocol
tool for mobile combustion. Version 2.6.
EPA Waste Reduction Model (WARM) tool v15 (2020).
World Resources Institute (2015). GHG Protocol
tool for mobile combustion. Version 2.6.
World Resources Institute (2015). GHG Protocol
tool for mobile combustion. Version 2.6.
Environment and Climate Change Canada. National
Inventory Report 1990–2019: Greenhouse Gas
Sources and Sinks in Canada Parts 1 & 2.
L'Astre
Quebec City, QC
47
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 SHOWCASE PROPERTY
West Edmonton Village
West Edmonton Village is a 1,175 unit community located
in the Collingwood area of West Edmonton with 1, 2 and
3 bedroom units and townhouses that totals over
1.4 million square feet. In 2021, the Trust completed
several capital investment projects to improve the energy
efficiency and overall sustainability of the buildings.
• Renovations of our lobbies and hallways included
the installation of high efficiency windows and
doors, insulation upgrades, and water efficient
plumbing upgrades.
• Attic insulation upgrades to all low-rise buildings to
reduce natural gas consumption.
The work completed includes:
• A full replacement of all common area lighting to high
efficiency LED fixtures and the installation of 112
motion sensors in all laundry rooms, garbage chutes
and garbage rooms to reduce electricity consumption.
• Initiated a landscape naturalization project to increase
biodiversity and reduce water and fuel consumption
from traditional irrigation and mowing. A custom native
grass mix and wildflowers were planted surrounding the
existing trees.
West Edmonton Village High-Rise
Edmonton, AB
48
West Edmonton Village Exterior
Edmonton, AB
Right: West Edmonton Village
Naturalization Sites
West Edmonton Village Reception
Edmonton, AB
49
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 SUSTAINABLE DEVELOPMENT
AND BUILDING DESIGN
45 Railroad
Development of 45 Railroad continues and builds upon
Boardwalk’s approach of focusing on the highest impact
systems which effect carbon efficiency. Boardwalk’s
long-term ownership view allows us to invest in
infrastructure and systems that yield the lowest lifecycle
cost by benefiting from products designed for long
duration that perform well far into the future.
• Building envelope – high performance window wall
assemblies with high effective R values, with attention
to installation details which provide for long-term base
building performance.
• Mechanical – highly efficient hybrid heat-pump system
provides tempered heat and cooling from efficient
common building equipment. Scavenging of excess heat
or cool is redirected into other area of the building to
balance heat/cool requirements. Cold only domestic
water distribution reduces distribution inefficiencies
and provides point-of-use control.
• Electrical – individually metered units allow Resident
Members to manage energy consumption, which
includes individual excess heating and cooling from
the heat-pump system, along with in-suite electricity
consumption. Electric vehicle charging stations
included to provide for low carbon transportation.
• Water – leak detection in suite allows water usage
and damage to be minimized by signaling Resident
Members as well as building operators. Usage is
individually metered to allow Resident Members to
manage consumption.
45 Railroad
Brampton, ON
50
45 Railroad
Brampton, ON
45 Railroad
Brampton, ON
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
51
SOCIAL – OUR RESIDENT MEMBERS
Our social purpose is simple: to strengthen community, give back, build trust and love
always. Covid-19 has changed the way we live, work and play. 2021 confirmed above all
else, that we are stronger together.
Ice Cream Day
For Resident Members
52
West Edmonton
Village Associates
Building Community – Stronger Together
Bwell Certification Program
Overcoming the unprecedented restrictions posed by
lockdowns and social distancing rules, online connection
has continued to take up new meaning. It has played an
indispensable role in overcoming isolation and loneliness.
This was a year of deep listening and responding to the
needs, concerns and challenges of our Associates and
Resident Members.
With a community mindset, our learnings pushed us to
new heights and allowed us to innovate and bring people
together through meaningful, community-driven
programming, partnerships and experiences.
This was a defining year for us.
Our new, industry leading Bwell Certification Program was
the culmination of our long-standing commitment to the
health and well-being of our communities, Resident
Members and Associates. This certification prioritized the
design, development and integration of innovative
programs and strategies compliant with the safety,
inclusivity, diversity and sustainability of all Resident
Members and Associates.
BWell Certification
Program National
Russet Court Movie Day
Calgary, AB
53
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 UNIQUE PROGRAMS & PARTNERSHIPS
Phase one of the roll-out, celebrated unique initiatives such
as: the Boardwalk Food Pantry, a response to the food
scarcity gap within Canada, The Rise Scholarship Fund for
Resident Members which empowers people through further
access to higher education, a Boardwalk Community Watch
to increase the safety and security of our communities, an
impactful urban beekeeping initiative with Alveole,
several game-changing partnerships with Dress for
Success, My Best Friend’s Closet and The Calgary
Immigrant Women’s Association, to further empower
women through attire and professional training resources,
and several upcoming transformational urban farming
projects with MicroHabitat.
Boardwalk Urban Beehive
Alveole Partnership
Park Place Tower, Edmonton AB
54
Boardwalk Food Pantries Drive
National Initiative
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Impact Pillars
1. Building Community
Health & Well-Being
2. Supporting Diversity,
Equity & Inclusion
3. Promoting
Occupant Safety
4. Strengthening Our
Communities Through
Sustainable Initiatives
Boardwalk communities participating in these initiatives
received a Bwell crest, which was prominently displayed
within their communities. Seeking to certify all our
communities, we will continue to align and tailor National
programs against our four impact pillars which will be
rooted in strengthening communities, promoting
sustainability awareness, nurturing well-being and
fostering a deeper sense of belonging for all Resident
Members and Associates.
Boardwalk Food Pantries Support
National Initiative
National Resident Member
Scholarship Initiative
55
West Edmonton Village
Edmonton, AB
Feed the Need
Boardwalk’s annual Feed the Need campaign is just
one of the many opportunities for our Resident Members
and Associates to give back throughout the year. We held
our second annual Feed the Need campaign in September
2021. Our Resident Members generously donated over
$3,000 and Boardwalk proudly matched their donation for
a total of $6,000 raised for Food Banks across Canada.
Sharing the Warmth
Our Sharing the Warmth campaign also returned for
the second year, providing our Resident Members with the
opportunity to donate $20 to purchase a winter care
package for another family in the Boardwalk Community.
Together, our Boardwalk Family raised over $5,000,
providing essential winter clothing and goods to
240 families in need.
56
Sharing the Warmth Campaign
Edmonton & Calgary, AB
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
INITIATIVES TO GIVE BACK
Some of the unique initiatives we hosted throughout the
year included our Spring Cleaning campaign where
Resident Members were encouraged to donate clothing
to Diabetes Canada; our Letters to Veterans campaign
where Resident Members submitted letters of thanks
to the Veterans in our Boardwalk Community; our
Back to School contest where Boardwalk donated $10
to Feeding Canadian Kids for every Resident submission
received; and more.
It does not stop here – Boardwalk also continues to run
contests, giveaways and community engagement
initiatives such as:
• Pet of the Month Contest
• All For You Campaign
• Boardwalk Be Thankful Contest
• Balcony Makeover Contest
• Give Love Contest
• Earth Day Challenge
• Holiday-themed Contests and Giveaways
Richmond Tower – Backyard Makeover
Calgary, AB
Pet of the Month Recognition
National
Regal Towers – Green Initiative
Saskatoon, SK
57
Kids Club
Calgary, Edmonton,
Saskatoon & Regina
Kids Club
Monthly Activity Delivery
Kids Club
Calgary Zoo, AB
Our Boardwalk Kids Club
The COVID-19 pandemic changed many things, from our
daily routines to new public health measures that limited
in-person gatherings.
The Boardwalk Kids Club was developed in response to
the pandemic. Since its inception in late 2020, Boardwalk
has been ensuring that the children in our communities,
and their families, still have the opportunity to make
meaningful connections and memories in a safe and
welcoming environment, all while having fun.
For just $25, Kids Club Members receive an array of
at-home activities, exclusive events, giveaways and
contests, and more. Today, the Boardwalk Kids Club
serves approximately 200 children in Edmonton, Calgary,
Regina and Saskatoon.
58
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
Kids Club
Varsity Place Apartments
Calgary, AB
Affordable & Subsidized Housing Advocacy
At Boardwalk, we are passionate about people,
community, and about bringing everyone home to where
love always livesTM.
Proudly committed to social responsibility, we continue to
provide a significant number of units in support of
affordable housing. Boardwalk honors an “Internal
Subsidy Program” whereby Resident Members who are
experiencing financial hardship are offered various
methods of rent assistance, including subsidy, and
reducing or withholding rental increases. This program is
internally mandated and self-regulated. Additionally, we
collaborate with many agencies across Canada, helping to
ensure affordable housing is accessible to many in need.
The following are examples of agencies with which we
work: Calgary Housing, Calgary Alpha House, Homeless
Housing Society of Calgary, Accessible Housing Society,
Capital Region Housing, Housing First, Bent Arrow,
Bissell Centre, Boyle Street, Diverse City Housing,
George Spady, Homeward Trust, Hope Mission, YWCA,
Wood Buffalo Housing, Red Deer Housing, Pathways to
Housing, Grande Spirit Foundation, London Housing,
Edmonton Mennonite Centre for Newcomers and
Edmonton Catholic Social Services.
At Boardwalk, we strive for zero evictions as we navigate
the individual and unique experiences of each Resident
Member. When evictions stem from an inability to pay
rent, we work closely and directly with our Residents to
build modified payment schedules. Where a Resident is
still unable to pay according to the revised terms, we
acknowledge the fairness of the payment plan and our
genuine efforts toward resolution. In such instances,
eviction is most often mutually agreed upon.
59
“ Giving back to our communities is fundamental to our culture"
Creating Social Value
Giving back to our communities is fundamental to our
culture and is part of our DNA. Each engagement
opportunity encourages our Resident Members and
Associates to give back to their communities, both local
and extended, in meaningful ways, totaling some 60
community sponsorships and initiatives each year. In
addition, every Boardwalk Associate receives four
volunteer hours per year. Many of our partnering agencies
are listed below:
Social Services: Alberta Adolescent Recovery Centre,
Food Banks, Coldest Night of The Year, Calgary Youth
Centre Food Program, Mustard Seed, St Mary’s Feed the
Hungry, Calgary Women’s Emergency Shelter, Hope
Mission Meals, Salvation Army, Canadian Red Cross,
Humane Society, , United Way, Les Amis de Samuel
Health: Diabetes Canada, Walk for Wellsprings, Fresh Start
Recovery U, One2Many, Canadian Cancer Society, Canadian
Mental Health Association, Heart & Stroke Foundation
Education The Princess Shop Scholarship,
Adopt-A School, Kids on Track, Legacy One
Arts: Ice on Whyte, Sand on Whyte
Calgary Women's Emergency Shelter
Blanket Drive
Top and bottom: National Spring
Cleaning Initiative
60
Exceptional Customer Service
As a people-centered company, Boardwalk is committed to
providing exceptional customer service throughout the
entire Resident Member journey. Whether it is helping a
new Resident Member get settled into their home or a quick
response to a maintenance request, all our actions are
rooted in a commitment to creating a memorable living
experience. Our Team of exceptional Associates are
dedicated to listening and to our Resident Members’
feedback and resolving concerns immediately as they arise.
As part of this, Boardwalk strives to respond to all online
and offline comments and reviews. We consistently strive
to improve and encourage continuous Resident Member
feedback across our communities, including corporate
social media platforms, such as Facebook, Instagram, and
YouTube. We also offer a 24/7 call center where Resident
Members enjoy the convenience of around-the-clock
support. We have enhanced how our Resident Members
manage their account through our partnership with Yuhu.
The website allows our Resident Members to conveniently
gain access to information about their rental account, pay
their rent, make maintenance requests, enter contests,
and RSVP to Boardwalk community events and initiatives.
Varsity Square
CRRA Renovation of the Year
BRINGING HOME THE HARDWARE
61
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Greentree Village
Edmonton, AB
Customer Satisfaction & Loyalty
Boardwalk uses Net Promoter Score (NPS) to measure our
Resident Members’ satisfaction with the customer service
we provide. Net Promoter Score is an index ranging from 0
to 10 and measures the willingness of Resident Members to
recommend a company’s products or services to others.
Resident Members are asked to complete a survey at key
customer experience touchpoints: move-in experience, in
suite maintenance experience, move out experience, and at
any time along the customer journey. These surveys use a
10-point scale and focus on one central question: The
likelihood of recommending the company or brand to a
friend, family member or colleague. There are three
possible classifications of response: 1) Detractors (rating of
0-6), 2) Passives (rating of 7 or 8), and 3) Promoters (rating of
9 or 10). An overall NPS score is derived by creating a total
percent for Promotors by dividing the total number of
promotor surveys by the total number of surveys submitted
(including passives). Next, a total percent of Detractors is
calculated similarly by dividing the total number of
detractor surveys by the total number of surveys submitted
(again, including passives in this calculation). Finally, a Net
Promotor Score is derived by taking the % Promotors and
subtracting by the % Detractors. A NPS of 50 plus is
62
considered excellent whereas a score above 70 is
considered world class. For 2021, Boardwalk is so proud of
our entire Team who together earned a NPS of 76. We are
extremely proud to have achieved a NPS score in line with
other high performing, world-class companies such as
Apple, Microsoft and Google.
76
NPS
Separate from NPS, Boardwalk continuously requests
feedback from future, current and past Resident Members
to identify areas for improvement. These surveys seek to
better understand Resident Member needs, and identify
what makes each of our communities most desirable.
These surveys are taken when new Resident Members join
our communities, throughout the lease term, and
following a Resident Member’s move out. The feedback is
used to identify opportunities for improvement and
directs potential amenity updates and additions.
West Edmonton Village
Edmonton, AB
Newcomer Initiatives
National
Newcomer Initiatives
To promote greater access for persons who are new to
Canada, Boardwalk worked with community partners
dedicated to removing barriers and providing access to
services, programming and housing. We are proud to
make a positive impact with the following partners:
Calgary Catholic Services, Immigrant Calgary Services,
The Edmonton Mennonite Centre for Newcomers and
Open Door Society Regina.
Recognizing that many newcomers to Canada face various
barriers when entering the Canadian workforce,
Boardwalk partnered with Making Changes and My Best
Friend’s Closet, a charitable organization that provides
professional clothing, business training and workshops to
immigrant women.
63
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 SOCIAL – OUR PEOPLE
Our story starts with our people. We are committed to advancing a collaborative, inclusive
and diverse culture that creates unique career opportunities for our Associates. Our
culture is rooted in our Golden Foundation – treat others how we would like to be treated,
to be good, love community, have fun and love always.
Building and Attracting Talent
We invest in attracting and retaining talent. We believe in
creating a welcoming culture of care and inclusivity which
empowers everyone regardless of gender, race, age,
abilities or background. We value and embrace
uniqueness and individuality and are committed to the
growth and development of our people.
Russet Court
Calgary, AB
64
Alberta’s Top Employer
We are committed to being a Top Employer and will
continue to work hard to create an environment that
people want to work in. It is validating to know that we are
offering them an award-winning workplace in return for
their great work. Being named one of the province's Top
Employers for the fourth consecutive year validates our
continued commitment to investing, nurturing and
developing our extraordinary people.
West Edmonton Village Mural
Edmonton, AB
People of Boardwalk Campaign
Saskatoon, SK
65
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 L'Astre
Quebec City, QC
LEARNING AND
GROWTH
At Boardwalk, we are committed to individual development
planning, in a very personalized way, that enables
Associates to continually grow and dive into meaningful
work that makes an impact on our brand, the world, and
their career. We continue to do our part to open up new
opportunities and create new educational pathways in
order for our Associate to achieve their peak potential and
to gain fluency in other lines of the business.
TRAINING AND DEVELOPMENT
• 221 unique courses/programs completed
by our teams last year
• 84 of those courses were developed and
delivered in-house
• 998 Associates from different departments
participated in training, completing 8,432 courses
in total
• $125,000 was spent on external training
66
Diversity, Equity & Inclusion
Our values guide our actions and have helped us become
the diverse company we are today. With operations across
the country, it is our priority to be a true reflection of the
communities we serve. Our differences make us stronger
and our commitment to acting with integrity and treating
everyone with respect is core to our culture.
We have instituted Boardwalk’s first-ever enterprise-wide
Diversity, Equity & Inclusion (DEI) Council. Made up of
diverse thinkers from across Canada, the Council is
tasked with advancing Boardlwalk’s vision for building
and sustaining a diverse and inclusive workforce in
service of our Resident Members, communities and
other stakeholders. The Council’s mission is to cover
representation gaps and strengthen equity, diversity
and inclusion so that all team members feel equally
supported, inspired and heard.
Looking ahead, you can expect to see more detailed
diversity data being gathered about our workforce,
communities, and vendors to help us make the most
impactful and informed efforts as an inclusive
organization. We will also continue to audit our talent
processes and policies to eliminate any risk of systemic
exclusion and ensure our talent pool is made up of
the most competent and diverse people at all levels of
our organization.
Saskatoon Open Door Society
Annual Diversity Awards
SURVEY RESULTS
" I believe diversity & inclusion
are priorities of Boardwalk."
88%
YES
" I believe Boardwalk has programs in
place to ensure fairness in performance
and compensation decisions."
55%
YES
" I believe Boardwalk has
programs in place to promote
diverse leaders."
56%
YES
" I identify as a
visible minority."
46%
54%
YES
NO
67
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 BOARDWALK ASSOCIATES
BY THE NUMBERS
ASSOCIATES BY GENDER
ASSOCIATES LENGTH OF SERVICE
Total
Executive
Leader
37%
63%
FEMALE
MALE
33%
67%
FEMALE
MALE
43%
57%
FEMALE
MALE
ASSOCIATES AGE
20.5% Less than one year
16.0% 1 to 3 years
15.7% 3 to 5 years
17.8% 5 to 10 years
30.1% Greater than 10 years
8.9% Less than 30 years old
23.6% 30 to 40 years old
31.5% 40 to 50 years old
24.2% 50 to 60 years old
11.8% Greater than 60 years old
Solano House
Edmonton, AB
68
Women in Leadership
Chairman’s Scholarship
Gender parity in the workforce is crucial. Today,
33% of Boardwalk’s executive officer positions are
occupied by women and the Board benefits from the
contribution and leadership of two talented female
Board Members.
While we are proud to have been recognized for our
diversity and inclusion efforts in Women Lead Here (2021),
we know the work is not done. We will continue to take
pride increasing women's representation across the
pipeline in order to create a more gender-balanced world.
Knowledge is power. Boardwalk’s Chairman’s Scholarship
Program is designed to assist children of Boardwalk
Associates to pursue post-secondary education. In order
to qualify, candidates must demonstrate exceptional
achievement in the following areas: scholastics, extra-
curriculars and community engagement. Scholarships are
awarded annually to selected students entering or
attending University or College. In 2021, 23 students
received scholarship funding.
Below: Chairman's
Scholarship Winners
Below: Women Lead Here
69
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Associate Engagement
Workplace Health & Safety
Engagement and productivity always go hand in hand.
Associates who truly enjoy their work are more likely to be
engaged, motivated and happy and continue to put effort
into their work. Therefore, we focus on creating a dynamic
and inspired environment that offers our Associates a
collaborative place to grow and thrive.
Listening to our Associates helps us identify ways in which
improve everyone's experience at Boardwalk. Conducting
frequent real-time targeted surveys allows us to assess
and validate the needs of our Associates. Our Associate
Engagement and Satisfaction Survey allows Associates an
opportunity to candidly share their confidential feedback
about working at Boardwalk, what is going well, and areas
of improvement.
In 2021, we introduced our ENPS survey to better
understand and measure our Associates’ experience.
We received incredible feedback and a strong score of
61 within our first year!
Nothing is more important to us than the safety and
well-being of our Associates. At Boardwalk we believe all
injuries are preventable. Our goal of zero injuries is based
on the idea that safety in the workplace is the joint
responsibility of every Associate.
In order to create a safe work environment, we provide
regular training/ education to our Associates and
reinforces health and safety procedures (including WHMIS
refreshers) through ongoing online training.
All new Associates are required to complete a mandatory
health and safety training during orientation. Regular
safety updates and communications are also shared with
Associates on a weekly basis. Our on-site Associate also
conduct monthly inspections for health and safety as well
as annual emergency evacuation drills.
ZERO INJURY DAYS
19.8% < 1 year
26.2% > 1 year, < 3 years
11.4% > 3 years, < 5 years
42.6% > 5 years
Below: Greentree Village,
Edmonton, AB
61
ENPS
70
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
BUILDING A CULTURE OF WELL-BEING
The emphasis we place on our overall health and well-
being is of paramount importance. In addition to offering
a comprehensive medical, vision and dental package to
full-time Associates, we offer fitness reimbursements up
to a maximum of $500 each year. Eligible expenses include
memberships, equipment, fitness classes, education,
mindfulness apps and more.
751
ASSOCIATES TOOK
ADVANTAGE OF THE FITNESS
REIMBURSEMENT IN 2021
Created in 2020, Boardwalk’s Health Committee’s
mandate continues to:
1.
2.
3.
Increase and promote awareness around mental
health and physical well-being.
Empower and inspire Associates to take responsibility
for their overall well-being.
Create a sense of community and mindfulness
through shared health and wellness resources.
Our goal is to inspire and engage people to make small,
achievable changes in their daily routines. Our Wellness
Site on Sharepoint Connect, serves as a great resource for
Associates to access tips and tricks, lifestyle hacks,
financial literacy tools and a whole lot more.
Boardwalk Associate Olympics
71
SUPPLY CHAIN RESPONSIBILITY
At Boardwalk, responsible Supply Chain Management is
an integral component of our overall ESG program.
We focus on both people and planet, first by partnering
with the most reputable product and service providers in
market to ensure adherence to all applicable legislation,
health and safety policies such as Worker’s Compensation
and insurance coverage, business ethics and integrity
standards, privacy and information security, human rights
concerns and fair and inclusive employment and labor
standards practices.
Additionally, we engage in ethical sourcing practices,
surveying our major Tier 1 (direct) suppliers to ensure they
in turn require ethical sourcing and manufacturing
guidelines be in place for their downstream suppliers and
manufacturers, cultivating integrated supply chains all
focused on lowering environmental impacts.
We investigate and pursue greener product options
wherever possible, and continuously work to lower our
carbon footprint through both process improvements
such as paperless purchase orders, payment through
electronic funds transfer, and transportation reduction by
utilization of local suppliers and combined last mile
distribution from our regional warehouses.
Supply Chain Responsibility
72
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021
BUSINESS TRANSFORMATION TECH
Digital Snow Logs
In 2021, we identified and implemented within our Alberta
portfolio a mobile based approach to capture snow
clearance logs, replacing the existing paper-based
process. With the success of this implementation,
continued rollout will occur across the portfolio, with a
completion date pegged in Q2 of 2022.
Yuhu
Our Resident Members have access to a wide variety of
technologies that save them time when interacting with
our site associates granting an opportunity to improve our
margin and our Residents’ experience. Within 2021, over
75% of our Resident Members interactions for rent
payments, communication, maintenance requests, and
leasing occurred online further promoting sustainability
by reducing our use of paper and printing resources.
SmartHome
We continue to make investments in innovation and
technologies that improve our Resident Members quality
of life, reduce our risk and increase operational efficiency.
In 2021, we completed our installation of SmartHome
technology packages in 238 homes at our Auburn Landing
Community in Calgary.
The improvements deliver increased control to our
residents through smart locks and smart thermostats,
through residents’ smart mobile devices, removing the
need for physical keys, configuring temporary access codes
and transparency to every event leading to the opening and
closure of that lock. The thermostats provide remote ability
to manage heating and cooling needs, facilitating the ability
to lower utility usage and diminish their environmental
impact. Integrated flood sensors, assist in identifying leaks
and floods early on, so our teams can react to reduce water
loss. We look forward to continued rollout of this
technology in select Communities in 2022.
eWaste
Our long-time partnership with ERA (Electronic Recycling
Association), a non-profit working tirelessly to reduce
unnecessary electronic waste making its way to the
landfill, by purposeful recycling or repurposing electronic
equipment to individuals in need.
Fleet Management
A successful pilot was completed in 2021 analyzing the
state of our fleet of vehicles, and the solutions we may
implement to increase awareness of fuel consumption
and emissions, using those insights to drive measured
changes on our associate behavior, like idle time, to lower
the environmental impact.
73
GOVERNANCE
Boardwalk’s Corporate Governance Policy sets out the rules, practices and processes that
direct and control the Trust.
Overview
Boardwalk prides itself on being honest, accountable and
transparent to all Stakeholders, which is evidenced in
Boardwalk’s corporate reporting, as excellence in
corporate governance has been a foundation over the
past 37 years. Boardwalk was proud to be recognized by
The Journal of the Institute of Corporate Directors for
effective communication regarding its application of
International Financial Reporting Standards (“IFRS”), and
as the winner of the Chartered Professional Accountants
of Canada Award of Excellence in Corporate Reporting
over multiple years for the Real Estate sector.
The Trust strives to provide information to Stakeholders in
a timely manner, following which, open dialogue with
Stakeholders is encouraged to ensure transparency. The
Board of Trustees follows a mandate, as described in their
Statement of Corporate Governance Practices, which
explicitly defines the expectations and limits of both the
Board and of Management. This comprehensive statement
of governance principles gives both authority and
autonomy to the Board through the articulation of key
issues, including specific functions, integrity and
independence, Trustee selection, and composition of the
Board and committees.
As a publicly traded Trust is listed on the Toronto Stock
Exchange (“TSX”), Boardwalk either meets or exceeds the
guidelines set out by the TSX and Canadian Securities
Administrators regarding effective corporate governance.
Governance of the Trust is based on the mandate of its
Board of Trustees, its Code of Business Conduct and its
guiding “Mission, Vision and Values”, which all Associates,
Management and Trustees are expected to uphold.
Boardwalk REIT has been recognized by the Globe and
Mail’s annual “Board Games” as one of Canada’s corporate
boards which provide governance well beyond the
minimum mandatory requirements imposed by
regulators, which ranked the Trust in the top quartile
amongst its peers in both the Real Estate sector and
amongst all companies in Canada in 2021.
Boardwalk is built on four pillars which we call our Golden Foundation:
Golden Rule:
Golden Goal:
Golden Vision:
Golden Mission:
“Treat others as you would like to be treated.”
“Be Good”
“Love Community”
"Have Fun”
74
Business Ethics and Integrity
As we continue to grow, we strive to attract others who
share our vision and values. We are committed to
providing a loving environment and, in doing so, continue
building our rich family culture that is every bit as caring,
passionate and vibrant as the communities we create.
With our guiding mission “To serve and provide our
Resident Members with quality rental communities”,
Boardwalk persists in exploring excellence and diversity
in community, while focusing on the benefits created
for its Associates, Resident Members, Communities
and Unitholders. Regardless of economic conditions,
Boardwalk is committed to abiding by its Golden
Foundation. Our friendly, community-living and
member-experience driven approach reflects that
Boardwalk remains focused on maximizing value for
all its stakeholders.
CODE OF CONDUCT
Boardwalk’s Code of Business Conduct outlines standards
and expectations that guide and assist us in making the
right choice. It defines individual and corporate
responsibilities, and it is provided to all Boardwalk
Associates, contractors, agents, officers and Board of
Trustees of Boardwalk REIT. Each individual is responsible
for understanding the Code of Conduct and is accountable
for their business conduct. Although the Code outlines
many legal and ethical business situations, there will be
circumstances in which someone would question legal or
ethical compliance. The Code must be used together with
common sense and good judgement.
WHISTLEBLOWER POLICY
The Board of Trustees have ensured that an effective
anonymous “whistle blowing” procedure exists to:
1)
2)
3)
Protect the integrity, reputation and business
interests of Boardwalk, as well as its relationships
with its Associates, Unitholders, consultants,
contractors, professionals, suppliers, Resident
Members and its greater communities;
Permit and encourage stakeholders to confidentially
and anonymously express concerns regarding
accounting or financial matters to an appropriately
independent individual for safe reporting of any
accounting and other financial irregularities and
monitor compliance; and,
Set out procedures for stakeholders of Boardwalk and
its subsidiaries to file reports on a confidential and
anonymous basis regarding any concerns about
accounting, internal accounting controls or financial
irregularities and to report potential violations of law
or suspected wrongdoing.
As part of its reporting, Boardwalk proudly advises
that there were no critical concerns sent to Whistleblower
in 2021.
Below: Beddington Court
Calgary, AB
75
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Governance Structure
The Board of Trustees (the “Board “or the “Trustees”) is
fixed at seven members and is comprised of five
independent members and two non-independent
members. The Board is comprised of 29% female
representatives and 71% male representatives. During
2020, the Board of Trustees added a diversity policy to its
Corporate Governance Manual which is summarized below.
DIVERSITY POLICY
Boardwalk recognizes the benefits of having a diverse
Board. Nomination and appointment of candidates which
provide for multiple perspectives, skills, expertise, industry
experience and personal characteristics such as age,
gender, ethnicity and other distinctions, all contribute to
Boardwalk’s continued success. At Boardwalk, these
differences will be considered in determining the optimum
composition of the Board and when possible will be
balanced appropriately. For purposes of Board
composition, diversity includes, but is not limited to,
business experience, geography, age, gender and ethnicity
and aboriginal status. In particular, the Board should
include women and visible minority directors.
This Diversity Policy is intended to set out the framework
for Boardwalk’s approach to Board diversity and also
outline the key criteria for the composition of the Board
that promotes the Trust’s commitment and aspirational
targets to diversity and inclusion.
TRUSTEE
COMPOSITION
TARGET TRUSTEE
COMPOSITION
(based on 7 person board)
NOMINATING/SELECTING BOARD MEMBERS
AND COMMITTEE MEMBERS
Under the Trust’s mandate, as set out in the Declaration of
Trust, a Trustee majority must be independent of
Management and free from any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with a Trustee’s ability to
act with a view to the best interests of the Trust and its
Unitholders. Currently, five of the seven Board members
are independent.
The Board has appointed the Compensation, Governance,
Nominations and Sustainability Committee (“CGNS
Committee”), which is responsible for (i) reviewing the size
and composition of the Board, (ii) recommending
candidates for election to the Board, (iii) reviewing
credentials of nominees for re-election, and
(iv) recommending candidates for filing vacancies on the
Board. The CGNS Committee maintains an active list of
potential qualified nominees to the Board. The CGNS
Committee aims to ensure an appropriate mix of
individuals with real estate, accounting, financial, legal,
capital markets, real estate investment trust, ESG and
general business experience.
ROLE OF BOARD IN SETTING PURPOSE,
VALUES AND STRATEGY
Financial sustainability is attained through the guidance
of Boardwalk’s Board of Trustees, Management team and
stakeholders. Through valued input and guidance from its
Trustees and conservative fiscal management, Boardwalk
continues to maintain a strong balance sheet and provides
consistent, ongoing value to Unitholders, opportunities to
enhance its net asset value, and to continue the Trust’s
mandate of “building better communities” which in turn
provides happy, safe, and sustainable communities for
Boardwalk’s Resident Members and Associates in which
to live and work.
28.6% Female
71.4% Male
43.0% Female
57.0% Male
76
In addition to assuming responsibility for the stewardship
of the Trust, the Board of Trustees 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, discussing and approving the Trust’s
• Reviewing how the Trust communicates and
Strategic Plan which addresses, among other things,
opportunities and risks of the business.
interacts with analysts and the public to avoid
selective disclosure.
• Identifying principal risks (including those risks
• Managing the integrity of internal controls and
concerning credit, market, liquidity and operations),
in addition to reviewing risk management policies
and processes of the Trust’s business and ensuring
implementation of appropriate systems to manage
those risks.
• Reviewing the performance of the CEO and other senior
executives of the Trust.
• Creating and maintaining the communication policy
of the Trust, including approving the contents of major
disclosure documents of the Trust.
management information systems.
STRUCTURE OF THE BOARD
The Board is comprised of three committees: (1) Audit
and Risk Management; (2) Compensation, Governance,
Nominations and Sustainability; and (3) Corporate
Development. Authority is delegated from the Board of
Trustees to the Chief Executive Officer through to
Executive Management.
Beddington Court
Calgary, AB
77
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 COLLECTIVE KNOWLEDGE OF THE BOARD
Name
Title
Committee
Trustee Since
k
l
a
w
d
r
a
o
B
n
o
i
t
a
t
n
e
s
e
r
p
e
R
Andrea
Goertz
Gary
Goodman
Art
Havener
Sam
Kolias
Samantha
Kolias-Gunn
Scott
Morrison
Brian
Robinson
Chair, ARM
Lead
Chairman/
CEO
Chair, CGNS
ARM/CGNS
ARM
CGNS
CDC
ARM/CGNS
CGNS/CDC
2019
2009
2007
Founder
2013
2018
2017
Insider/Independent
Indep.
Indep.
Indep.
Insider
Insider
Indep.
Indep.
s Gender
c
i
F
M
M
M
F
M
M
h
p
a
r
g
o
m
e
D
e
c
n
e
i
r
e
p
x
E
d
n
a
d
n
u
o
r
g
k
c
a
B
s
s
e
n
i
s
u
B
Geographic Location
British
Columbia
Ontario
U.S.A.
Alberta
Alberta
Ontario
Alberta
Age
54
79
55
60
Company Title
CC&SO
CEO/CFO
Pres./VP
CEO
Other Public Board
Other Board
ESG
HR
Real Estate
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
34
CFO
N
N
Y
Y
Y
51
CEO
N
Y
Y
Y
Y
65
CFO
Y
Y
Y
Y
N
Real Estate Type
Other
MF, Other
MF, Other
MF
MF
MF, Other
N/A
Finance/Investment Analysis
CA
Legal
Strategy
Board/Marketing
REIT
Y
N
N
Y
Y
N
Y
Y
N
Y
Y
Y
Y
N
N
Y
N
Y
Y
N
N
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
N
Y
Y
N
r
e
h
t
O
Professional/Academic
Designations
MBA, DEP
CA, DEP
DEP, MBA
B.Sc. (Civil
Eng.), CPM
CA, DEP
CFA
CA
CA – Chartered Professional Accountant
MBA – Master of Business Administration
CFA – Certified Financial Analyst
MF – Multi-family
DEP – Director Education Program
78
EVALUATING BOARD PERFORMANCE
Conflict of Interest
Each of the Board, its Committees and individual Trustees
are evaluated on their effectiveness on an annual basis.
Each Trustee is provided with a survey to be completed
and returned to the Chair of the CGNS Committee. The
survey covers the effectiveness and contribution of:
• the Board as a whole;
• each of the Committees; and
• individual Trustees.
In particular, the survey ensures the following
important outcomes:
• provides for quantitative ratings in key areas; and
• seeks subjective comment in relevant areas, including
areas for improvement and important issues relevant
to the Board and/or its Committees.
In addition to the survey, the Chairman of the CGNS
Committee meets with each Trustee on a one-on-one
basis to assess the effectiveness and contribution of each
individual Trustee. Both the survey and the Trustee
interviews allow Trustees to comment on areas for
improvement to ensure the continued effectiveness of the
Board and its Committees.
Matters raised through the Board, Committee and
individual Trustee evaluations are summarized and
presented to both the CGNS Committee and the full Board.
The Declaration of Trust contains “conflict of interest”
provisions that serve to protect Unitholders without
creating undue limitations on Boardwalk, which:
(a)
requires each Trustee to disclose any interest in a
material contract or transaction or proposed material
contract or transaction with Boardwalk or the fact
that such person is a director or officer of or otherwise
has a material interest in any person who is a party to
a material contract or transaction or proposed
material contract or transaction with Boardwalk; and,
(b)
enquires into and determines the appropriate
resolution of any conflict of interest in respect of audit
or financial matters.
Below: Primrose Lane
Edmonton, AB
79
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Remuneration
The Board, through its CGNS Committee, reviews
the adequacy and form of compensation of Trustees
and executive officers annually. The CGNS Committee
considers the time commitment, risks and responsibilities
of Trustees and executive officers, and takes into account
the types of compensation and the amounts paid to
directors, trustees and executive officers of comparable
publicly traded Canadian companies and income trusts.
Of the three (3) members of the CGNS Committee, all are
independent Trustees.
Boardwalk compensates Associates on the basis of
performance, experience and work-related criteria. The
Trust is dedicated to equitable and competitive
compensation for all Associates in order to compete
effectively in the labour market.
All compensation changes are initiated by the Trust’s
management, with the process being as follows:
Program &
Philosophy Review
Market
Compensation
Analysis
Compensation
Recommendation
Decision
Human Resources
Department
Compensation
Surveys
CGNS Committee
Q4 Meeting
Board
Approval
CGNS Committee
Q1 Meeting
Recommend
officer incentive
Board Approval
CEO
Recommendations
re: officer compensation
& executive compensation
targets for following year
Enterprise Security and Privacy
Boardwalk has implemented a wide-ranging security
program that provides real-time monitoring of cyber
threats, next-generation firewalls, and increased
awareness training for our Associates.
In 2021, Boardwalk blocked on average 30,000 probes,
scans and attacks daily and rejected over 8,000 emails daily
due to malware and spam. Annually all associates must
complete a Cyber Security awareness training course
coupled with a proficiency test. Regular phishing tests for
Associates ensure we continue to reinforce and increase
awareness of the various tactics used by threat actors.
We obtained an overall A rating on our Security Scorecard,
targeting areas of improvement identified. This score is
computed using industry leading security software to
scan, gather and report on holistic security measures.
Boardwalk continued its Protection of Personal
Information Program initiated in 2020, to assess the
sufficiency of applications, process and controls as it
related to PII, or Personal Identifiable Information. Under
the helm of our Chief Privacy Officer, the intent is to
ensure solid governance, policies and training to prevent
data breaches, loss or theft of resident or associate
information and reduce risks or business interruption.
Remaining compliant and aligned to Canadian privacy
legislation is imperative for Boardwalk.
80
LOOKING AHEAD
Looking into 2022, Boardwalk is committed to maintaining and improving its focus on ESG.
Specifically, we aim to achieve the following:
Environment
Social
• Boardwalk committed to benchmarking 100% of its
assets in Energy Star’s Portfolio Manager platform.
To date, we have approximately 85% of our buildings
energy and water consumption data entered in the
platform and as such will strive to reach 100% in 2022.
• Boardwalk will evaluate green leases and determine
how leases can be modified to consider green
initiatives.
• Boardwalk will strive to better understand its waste mix
and how to decrease its overall waste disposal through
partnerships and education.
• Boardwalk will broaden the reach of its Diversity,
Equity and Inclusion committee striving for increased
understanding of our Associates.
• Boardwalk will explore certification programs available
for health, well-being and safety to determine if it is
eligible for any other certification programs.
• Boardwalk will continue to understand the wants and
needs of its Resident Members to provide targeted and
focused programming to its Communities.
Governance
• Boardwalk will continue focused capital deployment
• Continue to improve upon GRESB assessment score
towards energy efficiency projects, including increasing
its dedicated budget for green initiatives.
from the 69 obtained in 2021.
• Begin the process to formally align with the United
• Boardwalk will evaluate building certification programs
Nations’ Sustainable Development Goals.
on its development projects.
• Continue to involve the Board of Trustees on risk
assessments, strategies, metrics and targets.
Southpointe Plaza
Regina, SK
81
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 BOARDWALK REIT'S ESG DATA
AND PERFORMANCE
Asset Information (as at December 31)
Number of apartment units
Total square feet
Leaseable square feet
Average occupancy rate
Organization
Total number of Associates
Rental revenue (in CDN $ thousands)
Total Assets (in CDN $ thousands)
Total Liabilities (in CDN $ thousands)
Environmental Metrics
Energy
2021
33,264
2020
33,396
37,712,375
37,852,393
28,805,670
28,879,182
95.67%
96.29%
2021
1,560
470,531
6,660,653
3,407,475
2020
1,582
465,572
6,107,744
3,231,295
Reference
IF-RE-000.A
IF-RE-000.B
IF-RE-000.B
IF-RE-000.D
Reference
GRI 102-7
GRI 102-7
GRI 102-7
GRI 102-7
2021
2020
Reference
Energy consumption data coverage as a percentage of total floor area
97.08%
95.16%
IF-RE-130a.1
Energy consumption from non-renewable sources:
Electricity consumption (MWh)
Natural Gas consumption (GJ)
104,801
108,707
GRI 302-1 and IF-RE-130a.2
2,248,751
2,127,801
GRI 302-1 and IF-RE-130a.2
Energy consumption from renewable sources
-
-
GRI 302-1 and IF-RE-130a.2
Total energy consumed (GJ)
Energy intensity (GJ divided by square feet)
Percentage grid electricity
Percentage renewable
Like-for-like percentage change in energy consumption
Percentage of portfolio that:
(1) has an energy rating
(2) is certified to ENERGY STAR
Percentage of tenants that are separately metered or submetered
for grid electricity consumption
Greenhouse Gas Emissions
Gross direct (Scope 1) GHG emissions (tCO2e)
Gross indirect energy (Scope 2) GHG emissions (tCO2e)
GHG intensity ratio (scope 1 and scope 2) (kgCO2e/square feet)
2,626,033
2,519,146
GRI 302-1 and IF-RE-130a.2
0.07
100%
-
4.24%
46.75%
0%
0.07
100%
-
(7.52)%
N/A
0%
GRI 302-3
IF-RE-130a.2
IF-RE-130a.2
IF-RE-130a.3
IF-RE-130a.4
IF-RE-130a.4
89.08%
85.31%
IF-RE-410a.2
112,972
38,247
4.45
107,030
41,727
4.42
GRI 305-1
GRI 305-2
GRI 305-4
82
Environmental Metrics (continued)
2021
2020
Reference
Water
Water withdrawal data coverage as a percentage of total floor area
78.41%
74.11%
IF-RE-140a.1
Water withdrawal data coverage as a percentage of floor area in High or
Extremely High Baseline Water Stress
Total water withdrawn (m3)
Percentage of total water withdrawn in regions with High or Extremely
High Baseline Water Stress
Like-for-like percentage change in water withdrawn for portfolio area
with data coverage
Percentage of tenants that are separately metered or submetered for
water withdrawals
Waste
Total weight of waste generated in metric tons
Total weight of waste diverted from disposal in metric tons
Total weight of waste directed to disposal in metric tons
Social Metrics
Gender
Board of Directors
Female
Male
Senior Management
Female
Male
All Associates
Female
Male
Permanent Associates
Female
Male
Temporary Associates
Female
Male
Full-time Associates
Female
Male
Part-time Associates
Female
Male
Total Number of Associates
100%
100%
IF-RE-140a.1
4,576,938
4,629,650
GRI 303-5 and IF-RE-140a.2
0%
0%
IF-RE-140a.2
(1.14)%
(0.38)%
IF-RE-140a.3
16.95%
16.95%
IF-RE-410a.2
264,967
70,959
194,008
287,277
76,064
211,213
GRI 306-3
GRI 306-4
GRI 306-5
2021
2020
Reference
GRI 102-8 & GRI 405-1
2
5
3
6
28.6%
71.4%
33.3%
66.7%
2
5
4
6
28.6%
71.4%
40.0%
60.0%
573
36.7%
637
37.9%
987
63.3% 1,043
62.1%
551
35.3%
596
35.5%
919
58.9%
945
56.3%
22
68
1.4%
4.4%
41
98
2.4%
5.8%
566
36.3%
621
37.0%
980
62.8% 1,038
61.8%
7
7
0.4%
0.4%
16
5
1.0%
0.3%
1,560
1,680
83
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 Social Metrics (continued)
2021
2020
Reference
Regions
Full-time Associates
British Columbia
Northern Alberta
Southern Alberta
Saskatchewan
Ontario
Quebec
Part-time Associates
British Columbia
Northern Alberta
Southern Alberta
Saskatchewan
Ontario
Quebec
Percentage of Associates covered by collective bargaining agreement
New Hires
New hires by age group
Under 30 years old
30-50 years old
Over 50 years old
New hires by gender
Female
Male
Employee Turnover
Employee turnover by age group
Under 30 years old
30-50 years old
Over 50 years old
Employee turnover by gender
Female
Male
Diversity
2
0.1%
-
0.0%
669
42.9%
715
42.6%
471
30.2%
495
29.5%
181
11.6%
193
11.5%
81
142
5.2%
9.1%
88
5.2%
168
10.0%
-
1
6
-
-
7
0.0%
0.1%
0.4%
0.0%
0.0%
0.4%
4.4%
-
1
4
1
-
15
0.0%
0.1%
0.2%
0.1%
0.0%
0.9%
4.9%
66
20.6%
74
29.8%
189
59.1%
121
48.8%
65
20.3%
53
21.4%
117
36.6%
92
37.1%
203
63.4%
156
62.9%
80
19.5%
86
25.8%
234
57.1%
166
49.8%
96
23.4%
81
24.3%
136
33.2%
123
36.9%
274
66.8%
210
63.1%
GRI 102-8
GRI 102-41
GRI 401-1
GRI 401-1
Self-identified minority*
46%
N/A
GRI 405-1
Age Representation
Senior Management
Under 30 years old
30-50 years old
Over 50 years old
All Employees
Under 30 years old
30-50 years old
Over 50 years old
GRI 405-1
-
5
4
0.0%
55.6%
44.4%
-
5
5
0.0%
50.0%
50.0%
139
8.9%
170
10.1%
859
55.1%
929
55.3%
562
36.0%
581
34.6%
* Data ascertained through completion of voluntary survey and may not reflect full organization.
84
GLOBAL REPORTING INITIATIVE
CONTENT INDEX
GRI 102: General Disclosures
Disclosure Number
Disclosure Title (Description)
Explanation/Reference
Organizational Profile
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
102-9
102-10
102-11
102-12
102-13
Strategy
102-14
Ethics and Integrity
102-16
Governance
Name of the organization
Boardwalk Real Estate Investment Trust (Boardwalk REIT)
Activities, brands, products and services
Boardwalk REIT is a leading owner/operator of multi-family
rental communities, providing homes in more than 200
communities with over 33,000 residential units. Boardwalk has a
proven long-term track record of building better communities,
where love always lives. Our three tiered and distinct brands:
Boardwalk Living, Boardwalk Communities, and Boardwalk
Lifestyle cater to a large diverse demographic and has evolved to
capture the life cycle of all Resident Members.
Location of headquarters
Suite 200-1501 1 St. SW, Calgary, Alberta T2R 0W1
Location of operations
Canada
Ownership and legal form
Markets served
Boardwalk REIT, widely held publicly traded trust on the
Toronto Stock Exchange (TSX: BEI.un)
Multifamily housing owner and operator in the Canadian
provinces of British Columbia, Alberta, Saskatchewan, Ontario
and Quebec
Scale of the organization
Information on employees and
other workers
Page 82 of this report
Page 83 of this report
Supply Chain
Page 72 of this report
Significant changes to the organization
and its supply chain
No significant changes to the organization and its supply chain
in 2021
Precautionary Principle or approach
External initiatives
Membership of associations
Boardwalk REIT does not currently use the Precautionary
Principle, however does consider environmental degradation.
In addition to considering global frameworks, Boardwalk REIT
has many partnerships (see pages 54, 59).
Boardwalk REIT is a member of many associations, including,
but not limited to, NAREIT, REALPAC, CRRA, etc.
Statement from senior decision-maker
Letter from the CEO, Page 25
Values, principles, standards and norms
of behavior
Boardwalk REIT's code of business conduct highlights the
Trust's responsibility to our Associates, our Customers, our
Unitholders, our Communities as well as summarizing our
communications and investigations. This Code of Conduct and
other relevant corporate governance documents can be found
at the following website: https://www.bwalk.com/en-ca/
investors/corporate-governance.
102-18
Governance structure
Please refer to Boardwalk REIT's Management
Information Circular.
85
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 GRI 102: General Disclosures (continued)
Disclosure Number
Disclosure Title (Description)
Explanation/Reference
Stakeholder Engagement
102-40
102-41
102-42
102-43
102-44
Reporting Practice
List of stakeholder groups
Page 28
Collective bargaining agreements
ESG Data and Performance, page 84
Identifying and selecting stakeholders
Approach to stakeholder engagement
Key topics and concerns raised
Page 28
Page 28
Page 29
102-45
102-46
102-47
102-48
102-49
102-50
102-51
102-52
102-53
102-54
102-55
102-56
Entities included in the consolidated
financial statements
Page 14 of Boardwalk REIT's Annual Information Form dated
February 24, 2022
Defining report content and
topic boundaries
List of material topics
Restatements of information
Materiality Assessment, page 29
Material topics include energy, water and effluents, emissions,
waste, employment, occupational health and safety, training
and education, and diversity and equal opportunity.
In previous reports, energy data was presented on a fiscal year
beginning October 1 to September 30. In this report it is based
on calendar year.
Changes in reporting
Reporting period
No significant changes
January 1, 2021 to December 31, 2021
Date of most recent report
Previous ESG report was published on April 1, 2021
Reporting cycle
Annual
Contact point for questions regarding
the report
For questions contact investor@bwalk.com
Claims of reporting in accordance with the
GRI Standards
Core
GRI content index
External assurance
Pages 85-88 of this report
This report has not been externally assured
GRI 300 – 400 – Topic Specific Disclosures
Disclosure Number
Disclosure Title (Description)
Explanation/Reference
Explanation of material topic and its
boundary
The management approach and its
component
Environment and Energy Management, pages 34 through 51
Environment and Energy Management, pages 34 through 51
Evaluation of the management approach
Environment and Energy Management, pages 34 through 51
Energy Consumption within the
organization
ESG Data and Performance, page 82
Energy Intensity
ESG Data and Performance, page 82
Reduction of energy consumption
The Trust intends to use fiscal 2019 as its baseline for reduction
comparison. Percentage change to 2019 included on page 37.
Energy
103-1
103-2
103-3
302-1
302-3
302-4
86
GRI 300 – 400 – Topic Specific Disclosures (continued)
Disclosure Number
Disclosure Title (Description)
Explanation/Reference
Water and Effluents
103-1
103-2
103-3
303-5
Emissions
103-1
103-2
103-3
305-1
305-2
305-4
305-5
Waste
103-1
103-2
103-3
306-3
306-4
306-5
Employment
103-1
103-2
103-3
401-1
Explanation of material topic and its
boundary
The management approach and its
component
Water Management, page 38 of this report
Water Management, page 38 of this report
Evaluation of the management approach
Water Management, page 38 of this report
Water Consumption
ESG Data and Performance, page 82
Explanation of material topic and its
boundary
Greenhouse Gas ("GHG") Emissions, Energy, Water and Waste
Management, page 36 of this report
The management approach and its
component
Greenhouse Gas ("GHG") Emissions, Energy, Water and Waste
Management, page 36 of this report
Evaluation of the management approach
Greenhouse Gas ("GHG") Emissions, Energy, Water and Waste
Management, page 36 of this report
Direct (Scope 1) GHG Emissions
ESG Data and Performance, page 82
Energy indirect (Scope 2) GHG Emissions
ESG Data and Performance, page 82
GHG emissions intensity
ESG Data and Performance, page 82
Reduction of GHG emissions
The Trust intends to use fiscal 2019 as its baseline for reduction
comparison. Percentage change to 2019 included on page 37.
Explanation of material topic and its
boundary
The management approach and its
component
Waste Management, page 38 of this report
Waste Management, page 38 of this report
Evaluation of the management approach
Waste Management, page 38 of this report
Waste generated
ESG Data and Performance, page 82
Waste diverted from disposal
ESG Data and Performance, page 82
Waste directed to disposal
ESG Data and Performance, page 82
Explanation of material topic and its
boundary
The management approach and its
component
Social – Our People, pages 64 through 71 of this report
Social – Our People, pages 64 through 71 of this report
Evaluation of the management approach
Social – Our People, pages 64 through 71 of this report
New employee hires and employee
turnover
ESG Data and Performance, page 84
87
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 GRI 300 – 400 – Topic Specific Disclosures (continued)
Disclosure Number
Disclosure Title (Description)
Explanation/Reference
Occupational Health and Safety
Explanation of material topic and
its boundary
The management approach and
its component
Workplace Health & Safety, page 70 of this report
Workplace Health & Safety, page 70 of this report
Evaluation of the management approach
Workplace Health & Safety, page 70 of this report
Occupational health and safety
management system
Hazard identification, risk assessment,
and incident investigation
Occupational health services
Worker participation, consultation, and
communication on occupational health
and safety
403-5
Working training on occupational health
and safety
403-6
Promotion of worker health
Prevention and mitigation of occupational
health and safety impacts directly linked
by business relationships
Workers covered by an occupational
health and safety management system
Boardwalk has a comprehensive health and safety program to
ensure Boardwalk is compliant with all applicable health and
safety legislation. We are committed to providing a safe
environment that addresses all physical and psychological
hazards as well as the social well-being for all Associates,
Resident Members, Contractors, Visitors and other persons.
It is the goal of Boardwalk to eliminate hazards at the work site.
This can be achieved by Hazard Assessment using the
Site-Specific Hazard Assessment, and by Hazard Reporting
using the Hazard Detection form.
Boardwalk maintains confidentiality of workers’ personal
health related information through its Human Capital
Management software. All of the files are maintained
electronically and only viewable by Health & Safety and
Human Resources Team.
Boardwalk believes that our single most important resource is
our Associates and it is our goal to minimize our Associates
exposure to the risks and hazards associated with our
operation. Boardwalk is required to protect the health and
safety of all parties at their work sites. All Associates have
health and safety rights and obligations. To protect Associates
from illnesses, injuries and diseases, Associates are afforded
three fundamental rights. Those rights are right to know, right
to participate and right to refuse work. In addition, in every
region Boardwalk has a joint health and safety committee.
Boardwalk provides in-house training such as Mentoring,
orientation and online training. Formal 3rd party training such
as workshops, seminars, and in class courses regarding Health
& Safety such as First Aid, Confined Spaces, Fall Protection,
Certified Asbestos Worker are available to all Associates.
Associates have access to flexible extended health and dental
benefits, accidental death & dismemberment, long term
disability, life insurance and critical illness insurance.
Boardwalk offers an employee and family assistance program
which provides counseling for a number of personal difficulties.
Boardwalk performs Preventative Maintenance procedures
such as Daily / Weekly / Monthly / Quarterly / Annually
Inspection Logs to ensure all the equipment as well as our
buildings are operating smoothly prior to them breaking down.
All employees, as well as contractors, suppliers, service
providers, and visitors to the work sites are covered by
Boardwalk's health and safety management system and must
comply with all legislation.
Work-related injuries
As of 2021, Boardwalk has zero fatalities and 98
reportable injuries.
103-1
103-2
103-3
403-1
403-2
403-3
403-4
403-7
403-8
403-9
88
GRI 300 – 400 – Topic Specific Disclosures (continued)
Disclosure Number
Disclosure Title (Description)
Explanation/Reference
Training and Education
103-1
103-2
103-3
404-1
Explanation of material topic and
its boundary
The management approach and its
component
Learning and Growth, page 66 of this report
Learning and Growth, page 66 of this report
Evaluation of the management approach
Learning and Growth, page 66 of this report
Average hours of training per year
per employee
Currently the Trust does not track hours spent on training,
however uses costs as its key training metric. Employee
training and education is important to Boardwalk as
highlighted on page 66 of this report and will continue to be so.
Examples of current training include each new site hire being
given 2 weeks (approximately 80 hours) of mentor led training,
Associates being offered a 15 hour first aid course, a home
study course, etc. Moving forward the Trust will track hours of
training completed by employee.
Diversity and Equal Opportunity
103-1
103-2
103-3
405-1
Explanation of material topic and
its boundary
The management approach and
its component
Diversity, Equity & Inclusion, page 67 of this report
Diversity, Equity & Inclusion, page 67 of this report
Evaluation of the management approach
Diversity, Equity & Inclusion, page 67 of this report
Diversity of governance bodies
and employees
ESG Data and Performance, page 83
89
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 SASB INDEX
Code
Description
Explanation/Reference
Energy Management
IF-RE-130a.1
IF-RE-130a.2
IF-RE-130a.3
IF-RE-130a.4
IF-RE-130a.5
Water Management
IF-RE-140a.1
IF-RE-140a.2
IF-RE-140a.3
IF-RE-140a.4
Energy consumption data coverage as a
percentage of total floor area, by property
subsector
(1) Total energy consumed by portfolio
area with data coverage, (2) percentage
grid electricity, and (3) percentage
renewable, by property subsector
Like-for-like percentage change in energy
consumption for the portfolio area with
data coverage, by property subsector
Percentage of eligible portfolio that (1)
has an energy rating, and (2) is certified to
ENERGY STAR, by property subsector
Description of how building energy
management considerations are
integrated into property investment
analysis and operational strategy
Water withdrawal data coverage as a
percentage of (1) total floor area and
(2) floor area in regions with High or
Extremely High Baseline Water Stress, by
property subsector
(1) Total water withdrawn by portfolio
area with data coverage, and
(2) percentage in regions with High or
Extremely High Baseline Water Stress,
by property subsector
Like-for-like percentage change in water
withdrawn for portfolio area with data
coverage, by property subsector
ESG Data and Performance, page 82
ESG Data and Performance, page 82
ESG Data and Performance, page 82
ESG Data and Performance, page 82
Energy management, page 38 of this report, GHG Emissions
Reduction Pathways, page 40 of this report, Showcase
Property, page 48 of this report
ESG Data and Performance, page 83
ESG Data and Performance, page 83
ESG Data and Performance, page 83
Description of water management risks
and discussion of strategies and practices
to mitigate those risks
Water management, page 38 of this report, GHG Emissions
Reduction Pathways, page 40 of this report, Showcase
Property, page 48 of this report
90
Code
Description
Explanation/Reference
Management of Tenant Sustainability Impacts
IF-RE-410a.1
IF-RE-410a.2
IF-RE-410a.3
(1) Percentage of new leases that contain
a cost recovery clause for resource
efficiency-related capital improvements
and (2) associated leased floor area, by
property subsector
Percentage of tenants that are separately
metered or submetered for (1) grid
electricity consumption and (2) water
withdrawals, by property subsector
Discussion of approach to measuring,
incentivizing, and improving
sustainability impacts of tenants
Currently Boardwalk does not have any leases incorporating
a cost recovery clause for resource efficiency-related
capital improvements.
ESG Data and Performance, page 82 and 83
GHG Emissions Reduction Pathways, page 40 of this report
Climate Change Adaption
IF-RE-450a.1
Area of properties located in 100-year
flood zones, by property subsector
Boardwalk completed an actuarial study to better understand
its property exposure. This report revealed that Boardwalk's
assets are located in areas where the flood zone is 100 years or
higher. Please see page 38 of this report.
IF-RE-450a.2
Activity Metrics
IF-RE-000.A
IF-RE-000.B
IF-RE-000.C
IF-RE-000.D
Description of climate change exposure
analysis, degree of systematic portfolio
exposure, and strategies for mitigating risk
Pages 34-36 of this report
Number of assets, by property sector
ESG Data and Performance, page 82, all residential properties
Leaseable floor area
ESG Data and Performance, page 82, in square feet
Percentage of indirectly managed assets
"Disclosure is based on Boardwalk's 100% interest.
One project, is 50% owned with a joint venture partner."
Average occupancy rate
ESG Data and Performance, page 82
91
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES INDEX
Recommendations and Supporting Recommended Disclosures
Reference
Governance
Describe the board's oversight of climate-related risks and opportunities
Page 27, Role of the Board with ESG, and page 34,
Climate Change-related Risks and Opportunities.
In addition, the Board oversees the Trust's policies,
standards, procedures and strategies related to climate
change-related issues, environmental protection, health
and safety, sustainability, and related governance
matters to ensure due assessment, consideration and
management of risks, opportunities, and potential
performance improvement related thereto.
Describe management's role in assessing and managing climate-related risks
and opportunities
Page 34, Climate Change-related Risk and
Opportunities.
In addition, as highlighted on page 36 (under GHG
Emissions, Energy, Water and Waste Management),
management has completed its GHG inventory of the
entire portfolio to better understand its Scope 1 and
Scope 2 emissions. With this knowledge, the Trust can
focuses its efforts on projects with an increased risk
while also seeking opportunities to continue to improve.
Strategy
Describe the climate-related risks and opportunities the organization has
identified over the short, medium, and long term
Page 34, Climate Change-related Risk and
Opportunities.
More specifically, climate-related risks identified by
Boardwalk include current and emerging regulation,
technology, legal, market, reputation as well as the
acute physical risk and chronic physical risk.
Describe the impact of climate-related risks and opportunities on the
organization's businesses, strategy, and financial planning
Page 34, Climate Change-related Risk and
Opportunities.
Boardwalk believes focusing on sustainability
contributes to community and environmental
wellbeing as such is a key consideration with each
decision made. Capital deployment is influenced by
potential energy savings and the ability to decrease our
GHG emissions.
Describe the resilience of the organization's strategy, taking into consideration
different climate-related scenarios, including a 2 degree C or lower scenario
Page 34, Climate Change-related Risk and
Opportunities.
To date the Trust has not completed different climate-
related scenarios, however has completed an actuarial
study to better understand its property exposure.
92
Recommendations and Supporting Recommended Disclosures
(continued)
Reference
Risk
Describe the organization's processes for identifying and assessing climate-
related risks
Page 34, Climate Change-related Risk and
Opportunities.
Describe the organization's processes for managing climate-related risks
Risks are mostly identified through continued
engagement with all stakeholders, and taking time to
understand our assets and regulations.
More specifically, climate-related risks identified by
Boardwalk include current and emerging regulation,
technology, legal, market, reputation as well as the
acute physical risk and chronic physical risk.
Page 34, Climate Change-related Risk and
Opportunities.
Once identified, the Trust evaluates each risk
individually on how to best managing taking into
consideration all consequences, such as financial,
environmental, operations, etc.
Describe how processes for identifying, assessing and managing climate-related
risks are integrated into the organization's overall risk management
Page 34, Climate Change-related Risk and
Opportunities.
Metrics and Targets
Disclose the metrics used by the organization to assess climate-related risks and
opportunities in line with its strategy and risk management process
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks
Describe the targets used by the organization to manage climate-related risks and
opportunities and performance against targets
Risk assessments are completed on an annual basis
and included amongst the risk assessment are climate
change-related risks.
ESG Data and Performance, page 82
2021 Environmental Scorecard, page 37
ESG Data and Performance, page 82
Boardwalk's GHG emissions reduction target and
water consumption reduction target are introduced
on page 25 of this report.
Page 37 summarizes the 2021 Environmental
Scorecard.
93
BOARDWALK REIT | ANNUAL AND ESG REPORT | 2021 FINANCIAL REVIEW CONTENTS
Management’s Discussion and Analysis
RISKS AND RISK MANAGEMENT
General and Forward-looking Statements Advisory
EXECUTIVE SUMMARY
Business Overview
Environmental, Social and Governance Overview
MD&A Overview
COVID-19 Pandemic
Outlook
Declaration of Trust
Values, Vision and Objectives
Presentation of Financial Information
and Non-GAAP Measures
Investment Philosophy
Performance Review of 2021
Financial Performance Summary
CONSOLIDATED OPERATIONS AND EARNINGS REVIEW
Overall Review
Segmented Operational Reviews
Operational Sensitivities
Stabilized Property Results
Financing Costs
Administration
Depreciation
Other Income and Expenses
FINANCIAL CONDITION
Review of Cash Flows
Capital Structure and Liquidity
95
96
96
97
97
97
98
101
102
104
106
107
110
111
111
112
116
118
121
122
122
123
124
124
132
General Risks
Specific Risks
Certain Tax Risks
Risks Associated with a Global Health Pandemic
Risks Associated with Disclosure Controls and
Procedures & Internal Control over
Financial Reporting
ACCOUNTING AND CONTROL MATTERS
Critical Accounting Policies
Application of Future Accounting Policies
International Financial Reporting Standards
Disclosure Controls and Procedures & Internal
Control Over Financial Reporting
2022 FINANCIAL OUTLOOK AND MARKET GUIDANCE
Selected Consolidated Financial Information
Financial Statements
MANAGEMENT’S REPORT
INDEPENDENT AUDITOR’S REPORT
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Supplemental Information
FIVE YEAR SUMMARY
2021 QUARTERLY RESULTS
2020 QUARTERLY RESULTS
MARKET AND UNITHOLDER INFORMATION
CORPORATE INFORMATION
136
136
119
143
144
145
145
145
156
157
157
158
159
159
160
163
167
215
217
218
219
221
94
MANAGEMENT’S DISCUSSION
AND ANALYSIS
For the Years Ended, December 31, 2021 and 2020
General and Forward-looking Statements Advisory
GENERAL
The terms “Boardwalk”, “Boardwalk REIT”, the “REIT”, the “Trust”, “we”, “us”, and “our” in the following Management’s Discussion and Analysis (“MD&A”)
refer to Boardwalk Real Estate Investment Trust. Financial data, including related historical comparatives, provided in this MD&A has been prepared in
accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). This MD&A is
current as of February 24, 2022, unless otherwise stated, and should be read in conjunction with Boardwalk’s audited annual consolidated financial
statements for the years ended December 31, 2021 and 2020, which have been prepared in accordance with IFRS, 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 website at www.sedar.com. Historical results and percentage relationships contained in the audited annual consolidated financial
statements for the years ended December 31, 2021 and 2020 and this MD&A, including trends, should not be read as indicative of future operations.
The Income Tax Act (Canada) (the “Tax 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”)
provided all 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 that all its taxable income continues to be distributed to its Unitholders (as defined below). Further
discussion of this is contained in this MD&A.
Certain information contained in this MD&A concerning the economy generally and relating to the industry in which the Trust operates has been obtained
from publicly and/or industry available information from third party sources, including both the Bank of Canada’s January 2022 Monetary Policy Report
and the Royal Bank of Canada’s December 2021 Provincial Report, which are believed to be generally reliable. The Trust has not verified the accuracy or
completeness of any information contained in such publicly available information. In addition, the Trust has not determined if there has been any
omission by any such third party to disclose any facts, information, or events which may have occurred prior to or subsequent to the date as of which any
such information contained in such publicly available information has been furnished or which may affect the significance or accuracy of any information
contained in any such information and summarized herein.
Unless otherwise indicated, all amounts are expressed in Canadian dollars.
FORWARD-LOOKING STATEMENTS ADVISORY
Certain information included in this MD&A contains forward-looking statements and information (collectively “forward-looking statements”) within the
meaning of applicable securities laws. These forward-looking statements include, but are not limited to, statements made concerning Boardwalk’s
objectives, including, but not limited to, the REIT’s 2022 financial outlook and market guidance, increasing its occupancy rates, joint venture
developments, and future acquisition and development opportunities, including its plans for its land in Victoria, British Columbia and its long-term
strategic plan of opportunistic acquisitions and investments, its strategies to achieve those objectives, expected increases in property taxes, utilities,
and insurance costs, the ongoing impact of the novel strain coronavirus (COVID-19) pandemic, as well as statements with respect to management of the
Trust’s beliefs, plans, estimates, assumptions, intentions, and similar statements concerning anticipated future events, results, circumstances,
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 of the Trust’s current beliefs and are
based on information currently available to management of the Trust at the time such statements are made. Management of the Trust’s estimates,
beliefs, and assumptions are inherently subject to significant business, economic, competitive, and other uncertainties and contingencies regarding
future events and as such, are subject to change. All forward-looking statements in this MD&A are qualified by these cautionary statements.
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 Annual Information Form for the year ended
December 31, 2021 (“AIF”) dated February 24, 2022 under the heading “Challenges and Risks”, which could cause actual events or results to differ
materially from the forward-looking statements contained 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
95
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 equity capital, changes to Canada Mortgage and Housing Corporation (“CMHC”) rules 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 liability, income taxes, and changes to income tax rules that impair the ability of
Boardwalk to qualify for the REIT Exemption. Of particular note, during 2020, 2021 and continuing into 2022, the world and Canada have been impacted
by, and continue to be impacted by, the COVID-19 pandemic. In an attempt to slow down the spread of this virus, the various levels of government in
Canada and throughout the world have enacted various forms of emergency measures. These measures, which include the implementation of travel
bans, self-imposed and government-imposed quarantine periods and social distancing measures, including curfews and stay-at-home orders, have
caused and continue to cause material disruption to businesses globally resulting in an economic slowdown and unprecedented unemployment levels.
As of February 24, 2022, the full impact of the COVID-19 pandemic on the results of the Trust remains uncertain. This is not an exhaustive list of the factors
that may affect Boardwalk’s forward-looking statements. Other risks and uncertainties not presently known to Boardwalk could also cause actual
results or events to differ materially from those expressed in its forward-looking statements. Material factors or assumptions that were applied in
drawing a conclusion or making an estimate set out in the forward-looking statements may include, but are not limited to, the impact of economic
conditions in Canada and globally including as a result of the COVID-19 pandemic, the ability of the Trust to re-open and continue to leave open its
communal spaces as the COVID-19 pandemic continues to impact the jurisdictions in which the Trust operates, the REIT’s future growth potential,
prospects and opportunities, 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, the impact of accounting principles under IFRS, general industry conditions and trends, changes in laws and
regulations including, without limitation, changes in tax laws, mortgage rules and other temporary legislative changes in light of the COVID-19
pandemic, increased competition, the availability of qualified personnel, fluctuations in foreign exchange or interest rates, and stock market volatility.
Although the forward-looking statements contained in this MD&A are based upon what management of the Trust believes are reasonable assumptions,
there can be no assurance actual results will be consistent with these forward-looking statements and no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or occur at all, or if any of them do so, what benefits that Boardwalk will derive from them.
As such, undue reliance should not be placed on forward-looking statements. Certain statements included in this MD&A may be considered “financial
outlook” or “future oriented financial information (FOFI)” for purposes of applicable securities laws, all of which are subject to the same assumptions, risk
factors, limitations and qualifications as set forth above. The actual results of operations of the Trust and the resulting financial results will likely vary
from the amounts set forth in this MD&A and such variation may be material. Boardwalk REIT and its management believes that the FOFI has been
prepared on a reasonable basis, reflecting management’s best estimates and judgements. However, because this information is subjective and subject
to numerous risks, it should not be relied on as necessarily indicative of future results. FOFI contained in this MD&A was made as of the date of this MD&A
and was provided for the purpose of providing further information about the Trust’s anticipated future business operations. Readers are cautioned that
the FOFI contained in this MD&A should not be used for purposes other than for which it is disclosed herein.
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.
EXECUTIVE SUMMARY
Business Overview
Boardwalk REIT 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 15, 2018 (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”).
Boardwalk REIT Trust Units (“Trust Units”) trade on the Toronto Stock Exchange (“TSX”) under the trading symbol ‘BEI.UN’.
Boardwalk REIT’s principal objectives are to provide Resident Members with superior quality rental communities and the best
tenant/customer service, provide its holders (“Unitholders”) of Trust Units with stable monthly cash distributions, and to increase
the value of the Trust Units through the effective management of its residential multi-family revenue producing properties,
renovations and upgrades to its current portfolio, and the acquisition and/or development of additional, accretive properties or
interests therein. As at December 31, 2021, Boardwalk REIT owned and operated in excess of 200 properties, comprised of over
33,000 residential suites, and totaling over 28 million net rentable square feet. At the end of 2021, Boardwalk REIT’s property
portfolio was concentrated in the provinces of Alberta, British Columbia, Saskatchewan, Ontario, and Quebec.
96
Environmental, Social and Governance Overview
The Trust is, and continues to be, committed to environmental, social and governance (“ESG”) objectives and initiatives,
including working towards reducing greenhouse gas emissions as well as electricity and natural gas consumption, water
conservation, waste minimization, and a continued focus on governance and oversight. As part of its 2021 Annual Report, the
Trust will include its ESG Report, which will be available under the Trust’s profile at www.sedar.com or on the Trust’s website at
www.bwalk.com/en-ca/investors/esg.
MD&A Overview
This MD&A focuses on key areas from the audited annual consolidated financial statements for the years ended December 31, 2021
and 2020, and pertains to major known risks and uncertainties 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, including the COVID-19 pandemic discussed below. Additionally, other elements
may or may not occur, which could affect the organization in the future. Please refer to the section titled “General and Forward-
looking Statements Advisory – Forward-Looking Statements Advisory” in this MD&A. 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 2021
Annual Report, the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020, and the AIF,
each of which are available under the REIT’s profile on www.sedar.com, along with all other publicly posted information on the
Corporation and Boardwalk REIT. It is not our intent to reproduce information that is in these other reported documents, but rather
to highlight some of the key points and refer you to these documents for more detailed information.
COVID-19 Pandemic
Since its emergence in late 2019 and the declaration by the World Health Organization on March 11, 2020 as a global pandemic, the
COVID-19 pandemic has had, and continues to have, a substantial impact on the Canadian and global economy. The various levels of
government in Canada and throughout the world enacted various emergency measures including travel bans, self-imposed and
government-imposed quarantine periods, social-distancing measures, and restrictions on businesses, gatherings and events, which
have severely impacted individuals and businesses around the world. With the emergence of a third wave of the COVID-19 pandemic
during the first quarter of 2021, and the emergence of various COVID-19 variant strains throughout 2021, the provincial governments
had re-imposed restrictions on gatherings and social distancing measures in an attempt to curb the rising number of COVID-19 cases.
Around the world, governments had once again implemented self-isolation measures, closed down non-essential businesses, and
continued to enforce travel bans. During the second quarter of 2021, the available supply of vaccines increased considerably and
countries around the world, including Canada, began to increase efforts to immunize as many people as possible in an attempt to safely
limit the spread of COVID-19. In Canada, the immunization campaign has been positive with Canada quickly becoming one of the world
leaders to secure a steady supply of vaccines and fully immunizing a large proportion of the population, including the majority of the
population with at least one vaccine dose. These efforts resulted in a steady decrease in the number of COVID-19 cases prompting
the various levels of government to gradually ease restrictions on travel, large gatherings and social distancing measures, and the
re-opening of non-essential business to stimulate the economy. The end of the third wave came with the end of the second quarter of
2021, and coupled with the roll-out of the vaccines to many of the larger urban areas, various governments around the world began to
lift some of the more rigorous restrictions to help re-open and stimulate the economy both locally and internationally; however, a
fourth wave of the COVID-19 pandemic emerged during the third quarter of 2021 resulting in governments once again enacting various
emergency measures in an effort to contain the number of cases that have significantly increased since easing restrictions during the
summer months. The majority of new cases were attributable to individuals who have not yet been fully vaccinated. As a result, some
provincial governments implemented proof of immunization programs to limit only fully vaccinated individuals the right to access
higher-risk activities such as attending large group events or dining in public restaurants. This strategy was also intended to promote
individuals to get fully immunized in order to engage in these normal everyday activities that people enjoy. The economy as a whole has
rebounded from the lows experienced during the initial shutdowns in the first half of 2020, but some of this progress toward a return to
normal has been offset by the recent emergence of the Omicron variant of COVID-19 with governments responding to the resulting
resurgence in COVID-19 cases with renewed restrictions and partial economic lockdowns. Certain provincial governments have
commenced phased reopening in February 2022; however, there remains the potential for the emergence of further COVID-19 variants
and for subsequent waves of new infections that further delay a return to normalcy.
97
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 RENTAL COLLECTIONS
The majority of Resident Members have continued to maintain timely payments throughout this COVID-19 pandemic. During
Q4 2021, the Trust experienced rent collections from its Resident Members consistent with its historical collection rate.
Boardwalk continues to offer payment flexibility on a case-by-case basis with Resident Members experiencing financial hardship and
is committed to working on a mutually beneficial resolution. The Canadian government provided support by increasing the flexibility
of Employment Insurance benefits as well as extended the Canada Emergency Wage Subsidy through a proposed targeted support
program for eligible hard-hit employers until May, 2022. This program has enabled those employers who experienced a considerable
decline in revenue to continue paying wages to their employees, and in turn, this also supported our Resident Members. Additionally,
the Canada Recovery Hiring Program, which provides eligible employers with a subsidy when hiring new employees in efforts to help
lower current unemployment rates, was extended to May, 2022.
FUTURE IMPACTS AND POTENTIAL RISKS
With the increasing percentage of the population being vaccinated, provincial governments have lessened restrictions for those who
are fully vaccinated, which has led to a more positive outlook for future economic growth. However, even with these lessened
restrictions, a number of uncertainties still exist as the resurgence of COVID-19 cases and/or the emergence of new variants could cause
businesses to close down again and other restrictions to be re-imposed. It remains unclear how quickly unemployment rates may
improve with the anticipated phased reopening plans and the extent of the impact of the government programs implemented during
the course of the COVID-19 pandemic on businesses and individuals is also unknown. As a result, the impact of the COVID-19 pandemic
on the Trust’s cash flows from operating activities remains uncertain. The Trust’s investment properties are measured at fair value
based on assumptions influenced by market conditions. Given the uncertainty of the longer-term impact of the COVID-19 pandemic and
its impact on the Trust’s valuation assumptions, measurement uncertainty exists with respect to the Trust’s investment properties.
As a result of global economic uncertainty and the government measures put in place to slow the spread of COVID-19, there may be
temporary or long-term stoppage of development projects, temporary or long-term labour shortages or disruptions, temporary or
long-term impacts on domestic and global supply chains, increased risks to information technology systems and networks, and risks
related to the Trust’s ability to access capital on acceptable terms or at all. Uncertain economic conditions resulting from the COVID-19
pandemic may, in the short or long-term, materially adversely impact operations and the financial performance of the Trust.
Please refer to the section titled “Risks and Risk Management” in this MD&A and “Challenges and Risks” in the AIF.
Outlook
In its January 2022 Monetary Policy Report, the Bank of Canada noted an improvement of the economy in the last half of 2021, as
well as some growth in the labour markets and an increase in wages. However, with the emergence of the Omicron variant of
COVID-19 in late 2021, the COVID-19 pandemic has once again put pressure on the economy and caused certain governments to
temporarily reinstate restrictions on businesses, gatherings, and events. The Bank of Canada believes that the latest variant will
have a less severe impact on the economy than the first waves of COVID-19 and anticipates that the economy should pick-up again
over the next several months with increased consumer spending and business investments expected. The previous bottlenecks in
supply are still an issue causing prices for many goods to go up and continued higher inflation rates are expected to continue for the
short term, but are expected to subside during the course of the year. Current high inflation rates are expected to decrease to 3% by
the end of 2022 and gradually hit close to the targeted 2% through 2023 and 2024. Though the Bank of Canada continues to believe
the upside and downside risks to this inflation projection are roughly balanced, the upside risks, such as more persistent supply
bottleneck and cost pressures and stronger household spending, are of greater concern as it is out of their inflation-control range.
Until inflation moves significantly lower, the Bank of Canada notes that there is an elevated risk that Canadians will start to believe
that inflation will stay high over the long term and higher inflation expectations could in turn lead to more pervasive labour costs
and inflationary pressures and could become embedded in ongoing inflation.
In the Royal Bank of Canada’s (“RBC”) December 2021 Provincial Report, provincial economic outlooks were generally positive with
most provinces showing strong economic momentum to reverse the contractions experienced in 2020. RBC expects Saskatchewan,
Alberta, and Ontario to see the highest growth in 2022 due to expected increases in the energy sector and an increase in the supply
chain. The RBC report also projects all provinces to see increases in consumer growth, with the resumption of immigration leading to
higher population, especially in Atlantic Canada and British Columbia, which is expected to further increase consumer spending.
98
RBC expects that this new immigration will also help to alleviate some of the previous stresses from employers where there are
labour shortages, most severely in British Columbia and Quebec. Though there has been an increase to date, RBC expects continued
labour challenges throughout 2022 resulting in potentially widespread wage increases, further increasing input costs to businesses
in addition to existing supply chain issues. Higher inflation for 2022 has also been projected by RBC across all provinces and the
housing market is expected to slow with rising interest rates bringing down affordability. In addition, the Omicron variant of
COVID-19 presents new challenges and may negatively impact the outlooks provided by RBC.
According to RBC’s report, British Columbia is rebounding despite being hit by the massive flooding in November 2021, which posed
further challenges to their economy. The recovery from the flood has been fairly quick, with repair work adding to the province’s
economic growth. Currently, British Columbia’s largest challenge is labour shortage, as it has the highest job vacancy among all
provinces. However, the noted increases in immigration across the border and from other provinces, notably from Alberta and
Ontario, may provide some relief. RBC expects that non-residential investment will continue to be the main contributing factor to
British Columbia’s economic growth with work on major capital projects including the Trans Mountain pipeline, Site C hydroelectric
project, LNG Canada liquid natural gas terminal, and the Coastal Gaslink pipeline, continuing to be major economic catalysts in
several regions of British Columbia.
The rebound in the global oil and gas market has caused a significant boost to Alberta’s economy, but RBC noted that it still has a
way to go before reaching pre-pandemic levels. RBC has projected economic growth of 4.7% for 2022 for Alberta, with the oil and gas
industry’s current upcycle continuing and capital expenditures in the energy sector trending higher than in recent years, as well as
investment in Alberta’s renewable energy sector expected to grow rapidly. RBC also sees substantial scope for the agriculture sector
to improve and expects that Alberta will see improved labour market conditions, rising consumer confidence, high household
savings and stronger immigration to boost consumer spending and residential investment. According to RBC’s report, Alberta is one
of only two provinces for which housing is projected to pick up in 2022, with Ontario being the other.
RBC projects that Saskatchewan will lead the way with economic growth projected at 5.6% for 2022 as long as the provincial
government is able to minimize COVID-19 pandemic restrictions and crop conditions improve as the province experienced severe
droughts in 2021. If conditions are positive, there is potential for a significant increase in exports in fertilizers, pulse, and potash.
Investments in potash due to the higher demand and tight supply are expected to contribute materially to Saskatchewan’s economy
for years to come. In addition, the improvements in the oil and gas markets will also contribute to the boost.
The RBC report provides that signs of recovery are noted in Ontario with the reopening of the economy, shown by increased attendance
in entertainment venues and restaurants due to high vaccination rates and Ontario’s strong spending power. These signs of recovery will
have been negatively affected by the return to various restrictions on businesses, gatherings, and events in early 2022, which occurred
after the release of the RBC report. Current supply chain issues have hindered Ontario’s recovery, but with these challenges potentially
easing and higher consumer spending, RBC projects economic growth of 4.4%. Housing continues to be a major economic boost for
Ontario’s economy with home resales and housing construction starting the trend in 2021. These trends are expected to continue in 2022
with focus in both the urban areas and smaller communities where the influx of big-city migrants will sustain demand. RBC expects that
non-residential investment will continue to be a part of Ontario’s growth and the resumption of the motor vehicle plant at the GM Oshawa
plant will bring a positive increase to the manufacturing sector that was otherwise hindered by the supply chain challenges. In addition,
Ontario’s tech sector has hired nearly 100,000 new workers, and further expansion is expected in the coming year.
RBC noted that the Quebec economy had a significant rebound in 2021 when COVID-19 pandemic restrictions were eased and growth
at 5.9% in 2021. However, with labour shortages and other capacity limitations, the growth is projected to slow down significantly to
3.5% for 2022. With 280,000 jobs vacant, labour market conditions are expected to continue with an aging workforce opting to retire
adding pressure to these significantly low employment rates. As interest rates increase, RBC expects that housing affordability will
become too much of a burden for a rising number of home buyers in the province. Consumer spending is likely to drop vastly
compared to 2021 as a result of these economic strains. RBC projects 55,000 housing starts in 2022, a significant drop from the
34 year high of 71,500 units in 2021.
Boardwalk continues to move forward with several development opportunities, including a joint venture, and acquisitions and
dispositions referred to in the “Review of Cash Flows – Investing Activities – Investment Properties” section in this MD&A. It is our
intention to continue to investigate further development opportunities; 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. Currently, in the Trust’s core markets, total housing supply
under construction remains low relative to historical levels.
99
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 During 2021, the Trust renewed approximately $354.8 million of 2021 mortgage maturities, with an average term of five years at a
weighted average interest rate of 1.75%, which was a decrease from the average maturing rate on these completed mortgages. In
addition, the Trust secured approximately $152.6 million of additional mortgage funds. For the year ended December 31, 2021,
principal repayment totaled $72.5 million (year ended December 31, 2020 – $69.7 million). As of February 2022, CMHC-insured five
and 10-year mortgage rates were estimated to be 2.50% and 2.80%, respectively. In 2022, the Trust has a total of $445.2 million of
mortgages maturing. To date, the Trust has renewed or forward locked the interest rate on $41.6 million, or 9% of these mortgage
maturities at an average interest rate of 2.44%, while extending the term of these mortgages by an average of five years.
The Trust takes a balanced approach with its mortgage program with a priority to: first, stagger its maturities to limit future interest
rate risk, second, capitalize on the current low rate environment by renewing maturities at low interest rates, and third, ensure
sufficient liquidity for the Trust’s strategic initiatives. Please refer to the section titled “Financing Costs” in this MD&A.
BOARDWALK’S STRATEGIC PLAN
Boardwalk provides inclusive communities to work and live through its strategy of operational excellence, innovation, and
opportunistic growth focused capital allocation, to create leading earnings performance resulting in strong total Unitholder return.
Underpinned by its dynamic culture and performance focused team, Boardwalk strives to create the best multi-family communities
across diverse, affordable, unregulated, and supply-constrained housing markets. This is our mission: to build better communities,
where love always lives.
Current housing fundamentals in Boardwalk’s core markets have improved which, paired together with the Trust’s proven platform,
management of the Trust believes positions the Trust for optimized cash flow growth. Management of the Trust believes that
Boardwalk’s distribution policy of maximum cash flow reinvestment coupled with its strong balance sheet provides the ability for
the Trust to allocate capital towards opportunistic acquisitions, development of communities in under-supplied markets, yield
enhancing value-add capital, and when appropriate, investment in our own existing portfolio through the purchase and cancellation
of Trust Units through the normal course issuer bid implemented in 2021.
Boardwalk’s investment approach provides significant growth and enhanced performance in the Trust’s key metrics of Funds From
Operations (“FFO”) and Net Asset Value (“NAV”), each measured on a fully diluted per Unit basis.
BRAND DIVERSIFICATION
It is the goal of the Trust to not only diversify geographically, but also to diversify through its brand.
The spectrum of rental housing in Canada has expanded over the last few years, with rental demand seen across the price spectrum
from affordability to affordable high-end luxury. As a result, the ability to offer a more diverse product offering will allow Boardwalk
to attract a larger demographic to the Boardwalk brand. Currently, Boardwalk offers three brands as highlighted below:
Boardwalk Living – Affordable Value
Boardwalk Living features classic suites for our Resident Members
who appreciate flexibility, reliability, and value that comes with a
quality home.
Boardwalk Communities – Enhanced Value
Boardwalk Communities feature modernized suites and choice
amenities for those who value flexibility with all the comforts that
come with the perfect place to call home.
Boardwalk Lifestyle – Affordable Luxury
Boardwalk Lifestyle features luxury living with modern amenities,
designer suites, and a contemporary style for those who value life
experiences and prefer the freedom to enjoy them.
49%
45%
6%
Living
Communities
Lifestyle
100
BOARDWALK’S BRANDING INITIATIVE AND SUITE RENOVATION PROGRAM
In 2021, Boardwalk invested $127.0 million in capital assets (for the year ended December 31, 2021, $113.6 million), including
$96.6 million in value-add capital ($83.7 million in 2020, $87.2 million in 2019), focusing on upgrading common areas, building
improvements, energy efficiency projects, and suite renovations. Please refer to the section titled “Review of Cash Flows – Investing
Activities – Maintenance of Productive Capacity” in this MD&A for further discussion on value-add capital. Each of the three brands
have different renovation specifications depending on needs and anticipated returns. Reported market rents are adjusted upward
based on an expected rate of return on the strategic investment. Management of the Trust believes these renovations and upgrades
will continue to achieve future upward excess market rent adjustments, increased occupancy, as well as cost savings on turnovers.
Historic investment in our assets and brands has resulted in a diversified product mix to match varying demand while allowing us to
gain market share with increasing choice for existing and new Resident Members.
Boardwalk’s most affordable brand, ‘Boardwalk Living’, receives suite enhancements on an as needed basis, with the focus being on
providing affordable suites to this demographic segment. ‘Boardwalk Communities’, the Trust’s core brand, conveys enhanced value
and receives major suite upgrades based on need as well as upgrades to existing common areas. ‘Boardwalk Lifestyle’, which
exemplifies upgraded, luxury suites, receives the highest level of overall renovations, including significant upgrades to suites and
common areas. Additional amenities such as upgraded fitness facilities, wi-fi bars and concierge services may be added when
appropriate. In determining a brand that a particular rental community will represent, the Trust looks at a number of criteria,
including the building’s location, proximity to existing amenities, suite size, and suite layout. Once renovations are completed,
Boardwalk adjusts the rents on these individual suites with the goal of achieving an 8% return on investment. Boardwalk is achieving
its targeted rate of return on an overall basis.
Management of the Trust believes these investments will enhance long-term value, however, recognizes the short-term effects of this
program, with higher vacancies and incentives. Rebranding and repositioning communities will take time and, as such, construction
causes disruption to existing Resident Members and, depending on the level of investment, may result in higher turnover. Boardwalk
continues to reduce the vacancy loss associated with suites being renovated by reducing the time to completion while still lowering
the cost of the renovations.
Declaration of Trust
The investment guidelines and operating policies of the Trust are outlined in the DOT, a copy of which is available on request to all
Unitholders and is also available under the REIT’s profile on www.sedar.com. A more detailed summary of the DOT can also be
located in the AIF. Some of the main financial guidelines and operating policies set out in the DOT are as follows:
INVESTMENT GUIDELINES
1.
Acquire, hold, develop, maintain, improve, lease, and manage multi-family residential properties and ancillary real estate
ventures; 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 Tax Act.
OPERATING POLICIES
1.
Interest Coverage Ratio of at least 1.5 to 1;
2.
No guaranteeing of third-party debt unless related to direct or indirect ownership or acquisition of real property, including
potential joint venture partner structures;
3. Third-party surveys of structural and environmental conditions are required prior to the acquisition of a multi-family asset; and
4.
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.
101
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 DISTRIBUTION POLICY
Boardwalk REIT may distribute to holders of Trust Units and LP Class B Units on or about each distribution date such percentage of
FFO for the calendar month then ended as the Board of Trustees determines in its discretion. Distributions will not be less than
Boardwalk REIT’s taxable income, unless the Board of Trustees, in its absolute discretion, determines another amount. The Board of
Trustees reviews the distributions on a quarterly basis and takes into consideration distribution sustainability and whether there are
more attractive alternatives to the Trust’s current capital allocation strategy, such as its value-add capital renovation program,
brand diversification initiative, acquisitions, and new construction of multi-family communities in supply-constrained markets.
COMPLIANCE WITH DOT
As at December 31, 2021, the Trust was in material compliance with all investment guidelines and operating policies as stipulated in
the DOT. More details will be provided later in this MD&A with respect to certain detailed calculations.
As at December 31, 2021, Boardwalk REIT’s interest coverage ratio of consolidated EBITDA (i.e. Earnings Before Interest, Taxes,
Depreciation and Amortization) to consolidated interest expense was 2.97 (December 31, 2020 – 2.79). Further details of the Trust’s
interest coverage ratio can be found in NOTE 27 to the audited annual consolidated financial statements for the years ended
December 31, 2021 and 2020 which is available under the Trust’s profile at www.sedar.com.
Values, Vision and Objectives
Boardwalk REIT is a fully integrated, customer-oriented, multi-family residential real estate owner and property management
organization. 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
(as defined herein). 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.
OUR VISION
Boardwalk REIT’s Vision is to continue to be Canada’s leading provider of multi-family residential housing. Management of
Boardwalk expects 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;
102
• 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 and utilize the latest tools and technology 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 Foundation.
We will all practice the Golden Rule of ‘treating others in a way we would wish to be treated’, and balance our needs with those
of others; we will all also model our Golden Goal which is to ‘be good’, our Golden Mission which shows us how to ‘have fun’, and
our Golden Vision which asks each of us to ‘love community’.
• Our Associates
We will provide a safe and respectful work environment that attracts, supports, develops, and recognizes high-performing and
innovative team members.
Management of 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 above-average service and accommodation;
• Acquiring select multi-family residential properties in strategic locations, providing NAV growth and diversification;
• High grading the Trust’s portfolio through selling properties (“Non-Core”) with lower future growth prospects and reinvesting
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 risk adjusted return warrants such projects;
• Managing capital prudently while maintaining a conservative financial structure;
• Pursuing long-term, organic growth by maintaining high occupancy and through brand diversification;
• Pursuing opportunities to form selective partnerships, 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-add opportunities.
103
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 To support our overall operating strategy, it is necessary to:
• Ensure ample capital is available at all times for acquisitions and value-add 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;
• Maintain a solid balance sheet;
• Actively manage our exposure to interest rate and debt renewal risks; and
• Optimize the use of National Housing Act (“NHA”) insurance, which is administered by CMHC, to access more cost-effective
debt capital.
Presentation of Financial Information and Non-GAAP Measures
PRESENTATION OF FINANCIAL INFORMATION
Financial results, including related historical comparatives, contained in this MD&A are based on the Trust’s audited annual
consolidated financial statements for the years ended December 31, 2021 and 2020, unless otherwise specified.
NON-GAAP FINANCIAL MEASURES
Boardwalk REIT prepares its consolidated financial statements in accordance with IFRS and with the recommendations of REALPAC,
Canada’s senior national industry association for owners and managers of investment real estate. REALPAC has adopted non-GAAP
financial measures called FFO and Adjusted Funds From Operations (“AFFO”) to supplement operating income and profits as measures
of operating performance, as well as a cash flow metric called Adjusted Cashflow From Operations (“ACFO”). These non-GAAP financial
measures are considered to be meaningful and useful measures of real estate operating performance, however, are not measures
defined by IFRS. The discussion below outlines these measurements and the other non-GAAP financial measures used by the Trust.
Non-GAAP financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial
measures disclosed by other entities. Non-GAAP financial measures should not be construed as alternatives to IFRS defined measures.
Funds From Operations
The IFRS measurement most comparable to FFO is profit (loss). Boardwalk REIT considers FFO to be an appropriate measurement of
the performance of a publicly listed multi-family residential entity as it is the most widely used and reported measure of real estate
investment trust performance. Profit (loss) includes items such as fair value changes of investment property that are subject to
market conditions and capitalization rate fluctuations which are not representative of recurring operating performance. We define
FFO as adjustments to profit (loss) for fair value gains or losses, distributions on the LP Class B Units, gains or losses on the sale of
the Trust’s investment properties, depreciation, deferred income tax, and certain other non-cash adjustments, if any, but after
deducting the principal repayment on lease liabilities and adding the principal repayment on lease receivable. Boardwalk REIT does
not include any gains or losses reported on the sale of its properties in its calculation of FFO. Management of the Trust believes that
such income is volatile and unpredictable and would significantly dilute the relevance of FFO as a measure of performance.
Excluding gains or losses in the calculation of FFO is consistent with the REALPAC definition of FFO. Under IFRS, the LP Class B Units
are considered financial instruments in accordance with IFRS 9 – Financial Instruments (“IFRS 9”). As a result of this classification,
their corresponding distribution amounts are considered “financing costs” under IFRS. Management of the Trust believes these
distribution payments do not truly represent “financing costs”, 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 reconciliation from profit (loss) under IFRS to FFO can be found under the section titled “Performance
Review of 2021 – FFO and AFFO Reconciliations” in this MD&A. The Trust uses FFO to assess operating performance and its
distribution paying capacity, determine the level of Associate incentive-based compensation, and decisions related to investment in
capital assets. To facilitate a clear understanding of the combined historical operating results of Boardwalk REIT, management of the
Trust believes FFO should be considered in conjunction with profit (loss) as presented in the audited annual consolidated financial
statements for the years ended December 31, 2021 and 2020.
104
Adjusted Funds From Operations
Similar to FFO, the IFRS measurement most comparable to AFFO is profit (loss). Boardwalk REIT considers AFFO to be an appropriate
measurement of a publicly listed multi-family residential entity as it measures the economic performance after deducting for
maintenance capital expenditures to the existing portfolio of investment properties. 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 definition, are accounted for as capital in that
the expenditure itself has a useful life in excess of the current financial year and maintains the value of the related assets.
The reconciliation of AFFO can be found under the section titled “Performance Review of 2021 – FFO and AFFO Reconciliations”
in this MD&A. The Trust uses AFFO to assess operating performance and its distribution paying capacity, and decisions related
to investment in capital assets. A more detailed discussion is provided under the section titled “Review of Cash Flows – Investing
Activities – Maintenance of Productive Capacity” in this MD&A.
Adjusted Cashflow From Operations
The IFRS measurement most comparable to ACFO is cash flow from operating activities. ACFO is a non-GAAP financial measure of
sustainable economic cash flow available for distributions. ACFO should not be construed as an alternative to cash flow from
operating activities as determined under IFRS. A reconciliation of ACFO to cash flow from operating activities as shown in the Trust’s
Consolidated Statements of Cash Flows is also provided under the section titled “Review of Cash Flows – Operating Activities” in this
MD&A, along with added commentary on the sustainability of Trust Unit distributions. The Trust uses ACFO to assess its distribution
paying capacity.
Boardwalk REIT’s presentation of FFO, AFFO, and ACFO 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, AFFO, and ACFO do not represent earnings or cash flow from operating
activities as defined by IFRS. FFO and AFFO should not be construed as an alternative to profit (loss) determined in accordance with
IFRS as indicators of Boardwalk REIT’s performance. In addition, Boardwalk REIT’s calculation methodology for FFO, AFFO, and ACFO
may differ from that of other real estate companies and trusts.
Adjusted Real Estate Assets
The IFRS measurement most comparable to Adjusted Real Estate Assets is investment properties. Adjusted Real Estate Assets is
comprised of investment properties, equity accounted investment, and cash and cash equivalents. Adjusted Real Estate Assets is
useful in summarizing the real estate assets owned by the Trust and it is used in the calculation of NAV (as defined below), which
management of the Trust believes is a useful measure in estimating the entity’s value. The reconciliation from Investment Properties
under IFRS to Adjusted Real Estate Assets can be found under the section titled “Capital Structure and Liquidity – Net Asset Value per
Unit” in this MD&A.
Adjusted Real Estate Debt
The IFRS measurement most comparable to Adjusted Real Estate Debt is total mortgage principal outstanding. Adjusted Real Estate
Debt is comprised of total mortgage principal outstanding, total lease liabilities attributable to land leases, and construction loan
payable. It is useful in summarizing the Trust’s debt which is attributable to its real estate assets and is used in the calculation of
NAV (as defined below), which management of the Trust believes is a useful measure in estimating the entity’s value. The
reconciliation from Mortgages Payable under IFRS to Adjusted Real Estate Debt can be found under the section titled “Capital
Structure and Liquidity - Net Asset Value per Unit” in this MD&A.
Net Asset Value
The IFRS measurement most comparable to NAV is Unitholders’ equity. With real estate entities, NAV is the total value of the entity’s
investment properties and cash minus the total value of the entity’s debt. The Trust determines NAV by taking Adjusted Real Estate
Assets and subtracting Adjusted Real Estate Debt, which management of the Trust believes is a useful measure in estimating the
entity’s value. The reconciliation from Unitholders’ Equity under IFRS to Net Asset Value can be found under the section titled
“Capital Structure and Liquidity – Net Asset Value per Unit” in this MD&A.
105
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 NON-GAAP RATIOS
The discussion below outlines the non-GAAP ratios used by the Trust. Each non-GAAP ratio has a non-GAAP financial measure as one
or more of its components, and, as a result, do not have standardized meanings prescribed by IFRS and therefore may not be
comparable to similar financial measurements presented by other entities. Non-GAAP financial measures should not be construed
as alternatives to IFRS defined measures.
FFO per Unit, AFFO per Unit, ACFO per Unit, and NAV per Unit
FFO per Unit includes the non-GAAP financial measure FFO as a component in the calculation. The Trust uses FFO per Unit to assess
operating performance on a per Unit basis, as well as determining the level of Associate incentive-based compensation.
AFFO per Unit includes the non-GAAP financial measure AFFO as a component in the calculation. The Trust uses AFFO per Unit to
assess operating performance on a per Unit basis and its distribution paying capacity.
ACFO per Unit includes the non-GAAP financial measure ACFO as a component in the calculation. The Trust uses ACFO per Unit to
assess its distribution paying capacity.
NAV per Unit includes the non-GAAP financial measure NAV in its composition. Management of the Trust believes it is a useful
measure in estimating the entity’s value on a per Unit basis, which an investor can compare to the entity’s Trust Unit price which is
publicly traded to help with investment decisions.
FFO per Unit, AFFO per Unit, ACFO per Unit, and NAV per Unit are calculated by taking the non-GAAP ratio’s corresponding non-GAAP
financial measure and dividing by the weighted average Trust Units outstanding on a fully diluted basis, which assumes conversion
of the LP Class B Units and deferred units determined in the calculation of diluted per Unit amounts in accordance with IFRS.
FFO per Unit Future Financial Guidance
FFO per Unit Future Financial Guidance is calculated as FFO Future Financial Guidance divided by the Trust Units and LP Class B Units
outstanding as at the end of the fiscal year. Boardwalk REIT considers FFO per Unit Future Financial Guidance to be an appropriate
measurement of the estimated future financial performance based on information currently available to management of the Trust at
the date of this MD&A.
AFFO per Unit Future Financial Guidance
AFFO per Unit Future Financial Guidance is calculated as AFFO Future Financial Guidance divided by the Trust Units and LP Class B
Units outstanding as at the end of the fiscal year. Boardwalk REIT considers AFFO per Unit Future Financial Guidance to be an
appropriate measurement of the estimated future profitability based on information currently available to management of the Trust
at the date of this MD&A.
FFO Payout Ratio, AFFO Payout Ratio, and ACFO Payout Ratio
FFO Payout Ratio, AFFO Payout Ratio, and ACFO Payout Ratio represent the REIT’s ability to pay distributions. These non-GAAP ratios
are computed by dividing regular distributions paid on the Trust Units and LP Class B Units by the non-GAAP financial measure of FFO,
AFFO, and ACFO, respectively. Management of the Trust use these non-GAAP ratios to assess its distribution paying capacity.
Investment Philosophy
Throughout Boardwalk REIT’s history, the Trust is always looking for opportunities to create value for its Unitholders. This is
achieved by investing managerial resources and capital in activities that increase FFO per Unit, AFFO per Unit, and ACFO per Unit,
on a sustaining basis and NAV per Unit. The Trust has adopted a long-term strategic plan, which includes expanding its investments
outside of Alberta and Saskatchewan and into high-growth markets, to allow the Trust to geographically diversify its brand of
housing into new, undersupplied markets. Boardwalk includes the development of new apartments on existing land as well as the
potential acquisition of new land for future development projects as initiatives to create additional value. Built into this strategic
plan is Boardwalk’s brand diversification initiative, which includes common area upgrades, building improvements, and suite
renovations, to create the best long-term value for Unitholders.
106
The Trust sells non-core properties in its portfolio and re-deploying the released capital to acquiring or developing additional
properties, distributing its taxable income (and any capital gain) to Unitholders, reinvesting in its existing properties to achieve
superior returns, developing new multi-family properties, and/or purchasing Trust Units for cancellation. Management of the Trust
continues to review all available options that it believes will provide the optimal return to Unitholders.
COST OF CAPITAL
The Trust’s cost of capital is generally defined as its weighted average cost of raising incremental capital. Investment opportunities
are evaluated by, amongst other considerations, comparing their internal rates of return against the Trust’s cost of capital. As with
most real estate entities, the cost of capital calculation is the combination of leverage target, the marginal cost of debt, and the
marginal cost of equity. As discussed later, 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. As of February 2022, estimated CMHC-insured five and ten-year mortgage rates were estimated to be 2.50% and 2.80%,
respectively. The other major component in the cost of capital relates to the marginal 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 2021, the
Trust reported AFFO per Unit of $2.31 (year ended December 31, 2020 – $2.06 per Unit). When compared to the Trust Unit’s market
price of $54.83 as at December 31, 2021, this equates to approximately 4.21% as its cost of equity. In addition, for the year ended
December 31, 2021 the Trust reported profit of $446.3 million (year ended December 31, 2020 – loss of $197.3 million). AFFO per Unit
is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures –
Non-GAAP Ratios” in this MD&A for more information on AFFO per Unit. Further details of the Trust’s cost of capital can be found in
NOTE 27 to the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020 which are
available under the Trust’s profile at www.sedar.com.
Performance Review of 2021
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 suites to customers (referred to as “Resident Members”) who have varying lease terms ranging from month-
to-month to twelve-month leases.
Periodically, 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 capital 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-add capital enhancement
program, or for the acquisition of 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.
In 2021, Boardwalk continued to offer short-term incentives to its new and existing Resident Members to increase and maintain overall
occupancy. Maintaining higher occupancy levels by offering select incentives and focusing on customer retention through excellence in
customer service remains Boardwalk’s key performance strategy. With the COVID-19 pandemic, provincial governments had applied rental
rate freezes and evictions for non-payment of rent were temporarily disallowed. During Q3 2020 these restrictions were lifted, however for
2021 many provincial governments have applied a zero percent rent increase on renewal. The Trust worked, and is continuing to work, with
each Resident Member, on an as needed and case-by-case basis, as it relates to the payment of monthly rent. The federal government
has provided financial supports helping decrease the financial burden for our Resident Members as it relates to the payment of rent.
107
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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
distributions, unless the Board of Trustees, in its absolute discretion, determines a different amount. For 2021, the Board of Trustees
decided to maintain a distribution of $0.0834 per Trust Unit on a monthly basis (or $1.00 on an annualized basis) and continue
redeploying its capital towards long-term value creation, including its suite renovation program, brand diversification initiative,
acquisition, and development of new multi-family suites in supply-constrained markets.
The Trust declared regular distributions of $51.0 million for the year ended December 31, 2021. On a quarterly basis, the Board of
Trustees reviews the current level of distributions and determines if any adjustments to the distributed amount is warranted. On an
overall basis, the Trust aims to maintain a consistent and sustainable payout ratio while optimizing its capital allocation strategy,
and reviews this with its Board of Trustees.
For the three months ended December 31, 2021, the Trust declared regular distributions of $12.7 million and recorded profit of
$131.1 million (three months ended December 31, 2020 – declared regular distributions of $12.8 million and recorded a loss of
$188.4 million). FFO Payout Ratio for the three months ended December 31, 2021 was 33.2% (three months ended December 31, 2020 –
37.3%). FFO Payout Ratio is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP
Measures – Non-GAAP Ratios” in this MD&A for more information on FFO Payout Ratio. The reader should note the overall operating
performance of the first and fourth quarters tends to generate the highest payout ratio, mainly due to the high seasonality in total
rental 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, therefore, simply annualize the reported results of a particular quarter.
FFO PER UNIT RECONCILIATIONS FROM 2020 TO 2021
The following tables show reconciliations of changes in FFO per Unit from December 31, 2020 to December 31, 2021. As previously
noted, we define the calculation of FFO as net income before fair value adjustments, distributions on the LP Class B Units, gains
or losses on the sale of the Trust’s investment properties, depreciation, deferred income taxes, and certain other non-cash items.
A more detailed disclosure of the calculation of FFO is included later in this MD&A.
FFO per Unit Reconciliation
FFO per Unit (1) – Dec. 31, 2020
NOI from Stabilized Properties (2)
NOI from Unstabilized Properties (2)
NOI attributable to Sold Properties
Administration
Financing costs
Principal repayment on lease liabilities
Other Adjustments
Retirement costs
FFO per Unit – Dec. 31, 2021
3 Months
12 Months
$
0.67
$
2.74
0.04
0.02
-
0.01
0.02
(0.01)
0.08
0.75
-
0.75
$
$
$
$
0.01
0.10
(0.01)
0.02
0.04
(0.01)
0.15
2.89
0.05
2.94
$
$
$
$
(1)
(2)
This is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Ratios” in this MD&A for more
information on FFO per Unit.
The definition of Stabilized and Unstabilized Properties can be found in the section titled “Consolidated Operations and Earnings Review – Stabilized Property Results”
in this MD&A.
During the three and twelve months ended December 31, 2021, $nil and $0.05 per Unit, respectively, was recognized as savings for
executive retirements.
108
FFO AND AFFO RECONCILIATIONS
In the following table, Boardwalk REIT provides a reconciliation of FFO to profit (loss), its closely related financial statement
measurement, for the three and twelve months ended December 31, 2021 and 2020. Adjustments are explained in the notes below,
as appropriate.
FFO Reconciliation
(In $000’s, except per Unit amounts)
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
% Change
Profit (loss)
Adjustments
Adjustment to right-of-use asset related to
lease receivable
Loss on sale of assets
Fair value (gains) losses
LP Class B Unit distributions
Income tax (recovery) expense
Depreciation
Principal repayments on lease liabilities
Principal repayments on lease receivable
FFO (1)
FFO per Unit
$ 131,140 $
(188,435)
$ 446,267 $
(197,279)
-
1,116
-
532
-
1,953
159
1,136
(96,406)
219,111
(307,002)
326,134
1,119
(32)
2,189
(977)
167
1,120
258
2,259
(732)
155
4,479
(110)
7,809
(3,841)
652
4,479
(72)
8,195
(3,465)
449
$
$
38,316 $
34,268
11.8% $ 150,207 $
139,736
0.75 $
0.67
11.9% $
2.94 $
2.74
7.5%
7.3%
(1)
This is a non-GAAP financial measure. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures - Non-GAAP Financial Measures”
in this MD&A for more information on FFO.
Overall, Boardwalk REIT earned FFO of $38.3 million for the fourth quarter of 2021 compared to $34.3 million for the same period
in 2020. FFO, on a per Unit basis, for the quarter ended December 31, 2021, increased approximately 11.9% compared to the same
quarter in the prior year from $0.67 to $0.75. Additionally, the Trust earned FFO of $150.2 million for fiscal 2021 compared to
$139.7 million for fiscal 2020. After adjusting for retirement costs, FFO totaled $151.3 million representing an increase of 4.9% from
the year ended December 31, 2020. FFO per Unit for the year ended December 31, 2021, increased approximately 7.3% compared to
the prior year from $2.74 to $2.94. The increase was primarily driven by higher rental revenues combined with lower advertising
costs, bad debts, property taxes, financing costs, and administration due to savings on executive retirements, offset by increases in
non-controllable insurance and utilities.
Profit for the fourth quarter of 2021 was $131.1 million in 2021 compared to a loss of $188.4 million in 2020. Profit for the twelve
months ended December 31, 2021 was $446.3, compared to a loss of $197.3 million in the prior year. The increase in profit is
attributable to the same factors as the increase in FFO as well as an increase in fair value gains on investment properties. The
increase in fair values is due to the increase in market rents and lower capitalization rates due to the continued improvement and
strengthening of the multi-family asset class as supported by recent transactions seen with our market segments. The weighted
average capitalization rates for the Trust were 4.94% and 5.27% as at December 31, 2021 and 2020, respectively. For more
information on the Trust’s capitalization rates, please refer to the section titled “Review of Cash Flows – Investing Activities –
Investment Properties” in this MD&A.
109
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
The following table provides a reconciliation of FFO to AFFO:
(000’s)
FFO
Maintenance Capital Expenditures (1)
AFFO (2)
FFO per Unit
AFFO per Unit
Regular Distributions
FFO Payout Ratio
AFFO Payout Ratio (3)
Profit (loss)
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$
38,316 $
34,268 $ 150,207 $
139,736
$
$
$
$
7,091
8,781
32,287
34,799
31,225 $
25,487 $ 117,920 $
104,937
0.75 $
0.67 $
2.94 $
0.61 $
0.50 $
2.31 $
2.74
2.06
12,724 $
12,766 $
51,032 $
51,049
33.2%
40.8%
37.3%
50.1%
34.0%
43.3%
36.5%
48.6%
$ 131,140 $
(188,435) $ 446,267 $
(197,279)
(1)
(2)
(3)
Details of the calculation of Maintenance Capital Expenditures can be found in the section titled “Review of Cash Flows – Investing Activities – Value-add Capital and
Maintenance Capital Expenditures” in this MD&A.
This is a non-GAAP financial measure. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Financial Measures”
in this MD&A for more information on AFFO.
This is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Ratios” in this MD&A for more
information on AFFO Payout Ratio.
Financial Performance Summary
At a Glance
(In $000’s, except per Unit amounts)
Total assets
Rental revenue
Profit (loss)
FFO
FFO per Unit
2021
6,660,653
470,531
446,267
150,207
2.94
$
$
$
$
$
$
$
$
$
$
2020
6,107,744
465,572
(197,279)
139,736
2.74
% Change
9.1%
1.1%
326.2%
7.5%
7.3%
Total assets increased from the amounts reported in the prior year, mainly as a result of fair value gains on the Trust’s investment
properties in 2021. Rental revenue increased by 1.1%, due to higher in-place occupied rents in Ontario, Saskatchewan, and Quebec,
and lower incentives in Saskatchewan, as well as new acquisitions completed near the end of the third quarter in 2020, partially
offset by Alberta, particularly in our Edmonton segment due to increasingly competitive market conditions, given new supply of
multi-family suites entering the market, as well as continued challenging economic conditions. The increase in profit compared to
the prior year was due primarily to a significant fair value gain of $403.9 million recognized on its investment properties in 2021
compared to a $383.0 million loss in 2020. The change in fair value of the Trust’s investment properties was largely driven by an
increase in market rents and lower capitalization rates, as previously mentioned.
110
CONSOLIDATED OPERATIONS AND
EARNINGS REVIEW
Overall Review
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Rental Operations
Boardwalk REIT’s NOI strategy includes a rental revenue strategy that focuses on enhancing overall rental revenues through the
balance between market rents, rental incentives, turnovers, and occupancy gains. The application of this rental revenue strategy is
ongoing, on a market-by-market basis, again with the focus on obtaining the optimal balance of these variables given existing
market conditions.
(In $000’s, except number of suites)
Rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margins (1)
Number of suites at December 31
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$ 118,728 $
116,543
1.9% $ 470,531 $
465,572
% Change
1.1%
24,480
13,240
11,970
24,320
12,820
13,630
0.7%
3.3%
(12.2)%
96,845
49,751
49,595
96,338
48,938
51,152
$
$
49,690 $
50,770
(2.1)% $ 196,191 $
196,428
69,038 $
65,773
5.0% $ 274,340 $
269,144
58.1%
33,264
56.4%
33,396
58.3%
33,264
57.8%
33,396
0.5%
1.7%
(3.0)%
(0.1)%
1.9%
(1) Operating margin is calculated by dividing NOI by rental revenue allowing management to assess the percentage of rental revenue which generated profit.
(In $000’s, except number of suites)
Gross rental revenue (1)
Vacancy loss (2)
Incentives (3)
Rental revenue
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
% Change
$ 132,759 $
132,070
0.5% $ 529,753 $
524,513
(5,004)
(9,027)
(5,740)
(9,787)
(12.8)%
(7.8)%
(21,484)
(37,738)
(20,174)
(38,767)
$ 118,728 $
116,543
1.9% $ 470,531 $
465,572
1.0%
6.5%
(2.7)%
1.1%
(1)
(2)
(3)
Gross rental revenue is a component of rental revenue as calculated in accordance with IFRS and represents rental revenue before adjustments for vacancy loss
and incentives.
Vacancy loss is a component of rental revenue as calculated in accordance with IFRS and represents the estimated loss of gross rental revenue from unoccupied suites
during the period.
Incentives is a component of rental revenue as calculated in accordance with IFRS and represents any suite specific rental discount offered or initial direct costs incurred
in negotiating and arranging an operating lease amortized over the term of the operating lease.
Overall, Boardwalk REIT’s rental operations for the three months and year ended December 31, 2021 reported higher results
compared to the same periods in the prior year, with rental revenue increasing 1.9% and 1.1%, respectively. For the three months
ended December 31, 2021, the increase in rental revenue was driven mainly by lower vacancy loss and incentives offered. For the
year ended December 31, 2021, the increase in rental revenue was due to a combination of higher rental revenues and lower
incentives offered, partially offset by higher vacancy loss. As outlined in the second table above, the Trust continued to offer
selective incentives in certain communities to maintain occupancy levels while aiming to limit incentives on lease renewals. The
Trust was able to reduce incentives by 2.7% year-over-year. However, increasingly competitive market conditions, particularly from new
supply in the Edmonton, Alberta market, has contributed to an increase in vacancy losses of 6.5% for the year ended December 31,
2021. The Trust will continue to offer selective incentives in certain communities to maintain occupancy levels, but the overall goal is
to continue to decrease incentives.
111
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Overall, total rental expenses for the twelve months ended December 31, 2021, was consistent with 2020. The Trust realized cost
savings from lower advertising costs, property taxes, and bad debts. Bad debts were lower due to improvements in the economy
since the beginning of the COVID-19 pandemic. These positive factors were offset by increases in non-controllable insurance and
utilities costs.
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 improvement projects, compared to contracting these same projects out to third parties. This availability of staff has been a
benefit to the Trust during this time of quarantine and social distancing where contractors may not be so readily available. The Trust
has been able to utilize our Associates to maintain quality customer services as well as to continue normal operations for both our
repairs and maintenance as well as capital improvement projects. 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 of the Trust will adjust the amount allocated to more accurately reflect how many internal resources were directed
towards specific capital improvements.
For the three months and year ended December 31, 2021, operating expenses were relatively flat compared to the same periods in
the prior year.
Utility costs increased by 3.3% and 1.7% for the three and twelve months ended December 31, 2021, respectively, compared to the
same periods in 2020. The increase for the three and twelve months ended December 31, 2021 is mainly due to higher gas
consumption and resulting carbon levies, offset by a slight decrease in electricity consumption. Fixed price physical commodity
contracts have helped to partially or fully hedge the Trust’s exposure to fluctuating natural gas prices. Further details regarding the
hedges on natural gas, as well as electricity prices in Alberta, can be found in NOTE 26 to the audited annual consolidated financial
statements for the years ended December 31, 2021 and 2020.
The reported decrease in property taxes for the year ended December 31, 2021 compared to the prior year is mainly attributed to
lower Alberta property tax assessments impacted by the COVID-19 pandemic as well as lower assessments noted in Saskatchewan.
The Trust is constantly reviewing property tax assessments and related charges and, where management of the Trust believes
appropriate, will appeal all, or a portion, 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, operating margins increased for the three months ended December 31, 2021, compared to the same period in 2020, from 56.4%
to 58.1%. Similarly, operating margin increased from 57.8% in fiscal 2020 to 58.3% for the twelve months ended December 31, 2021.
Boardwalk REIT closely monitors and individually manages the performance of each of its rental properties. For the reader’s
convenience, we have provided the following summary of our operations on a province-by-province basis.
Segmented Operational Reviews
ALBERTA RENTAL OPERATIONS
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$
74,077 $
73,740
0.5% $ 294,914 $
300,031
% Change
(1.7)%
15,265
8,540
7,750
15,454
8,093
9,393
(1.2)%
5.5%
(17.5)%
60,999
31,527
32,921
62,101
30,825
34,415
31,555 $
32,940
(4.2)% $ 125,447 $
127,341
42,522 $
40,800
4.2% $ 169,467 $
172,690
$
$
57.4%
20,778
55.3%
20,845
57.5%
20,778
57.6%
20,845
(1.8)%
2.3%
(4.3)%
(1.5)%
(1.9)%
(In $000’s, except number of suites)
Rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margin
Number of suites at December 31
112
Alberta is Boardwalk’s largest operating segment, representing 61.6% of total reported net operating income for the year ended
December 31, 2021. In addition, Alberta represents 62.5% of total suites. Boardwalk REIT’s Alberta operations for three months
ended December 31, 2021, reported rental revenue consistent with the same period in the prior year. For the year ended December 31,
2021, rental revenue decreased by 1.7% compared to fiscal 2020 mainly due to higher vacancy and lower fees from administering
internet services provided by a third party (offset by a decrease in advertising costs described below). For the three and twelve
months ended December 31, 2021, total rental expenses have decreased by 4.2% and 1.5%, respectively, compared to the same
periods in the prior year mainly due to decreases in operating expenses and property taxes.
Operating expenses decreased by 1.2% for the fourth quarter and decreased by 1.8% for the year ended December 31, 2021,
when compared to the same periods in the prior year. The decrease for the quarter from the same period in the prior year is due
to lower advertising costs and bad debts, offset by an increase in insurance costs. The decrease year to date is due to decreased
building maintenance costs, bad debts, and advertising costs as a result of favourable restructuring of our promotional campaigns
year-to-date, partially offset by an increase in wages and salaries. Building repairs and maintenance costs remain lower than the
prior year as a continued result of increased suite renovations being performed due to the higher vacancy in the first half of 2021
as well as a slow down in suite turnovers at the end of the year. Partially offsetting the decrease in operating expenses were higher
insurance costs attributable to the increased premiums received upon renewal in July 2020 and 2021.
Utilities for the fourth quarter of 2021 and for the year ended December 31, 2021, increased by 5.5% and 2.3% compared to the same
periods in the prior year due to significant increases in natural gas consumption and increased carbon levies, partially offset by
decreases in electricity costs. The increase in natural gas consumption is a result of the colder weather experienced this past year.
Currently, the Trust has three outstanding natural gas contracts to hedge the price of its natural gas usage. The Trust also has two
outstanding electricity contracts with two utility companies to supply the Trust with its electrical power needs. More details can be
found in NOTE 26 to the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020.
Property taxes for the three and twelve months ended December 31, 2021 decreased 17.5% and 4.3%, respectively, compared to the
same periods in the prior year as a result of lower property tax assessments impacted by the COVID-19 pandemic.
NOI for Alberta decreased $3.2 million, or 1.9% for the twelve months ended December 31, 2021, compared to the same period in
2020. Alberta’s operating margin for the year ended December 31, 2021 was 57.5% compared to 57.6% for the same period in the
prior year.
BRITISH COLUMBIA RENTAL OPERATIONS
One rental building consisting of 114 suites was acquired in Victoria, British Columbia on April 19, 2021, leading to the re-addition of
this segment into Boardwalk’s portfolio. Further details on this acquisition can be found in the section titled “Review of Cash Flows –
Investing Activities – New Property Acquisitions and Dispositions” in this MD&A. In addition, please refer to NOTE 33 of the audited
annual consolidated financial statements for the years ended December 31, 2021 and 2020 for further details regarding rental
operations for British Columbia.
SASKATCHEWAN RENTAL OPERATIONS
(In $000’s, except number of suites)
Rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margin
Number of suites at December 31
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$
13,204 $
12,847
2.8% $
52,125 $
50,956
2,196
1,817
1,010
$
$
5,023 $
8,181 $
62.0%
3,505
2,451
1,953
1,237
5,641
7,206
56.1%
3,684
(10.4)%
(7.0)%
(18.4)%
9,244
7,448
4,284
9,581
7,722
4,830
(11.0)% $
20,976 $
22,133
13.5% $
31,149 $
28,823
59.8%
3,505
56.6%
3,684
% Change
2.3%
(3.5)%
(3.5)%
(11.3)%
(5.2)%
8.1%
113
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
For the three months and year ended December 31, 2021, Saskatchewan rental revenue increased by 2.8% and 2.3%, respectively,
compared to the same periods in the prior year. The revenue increase is mainly due to higher occupied rents, lower incentives, and
lower vacancy. The increase in rents and lower vacancy can be partially attributed to the increased advertising efforts made in 2021.
Total rental expenses decreased by 11.0% and 5.2%, respectively, for the three and twelve months ended December 31, 2021,
compared to the same periods in the prior year, due to lower operating expenses, utilities, and property taxes.
Operating expenses for the three months and year ended December 31, 2021 decreased 10.4% and 3.5%, respectively, compared to
the same periods in the prior year mainly due to lower building repairs and maintenance, debts, and the disposition of Boardwalk
Manor in the fourth quarter of 2020, partially offset by slightly higher insurance.
Utilities for the three months and year ended December 31, 2021 decreased 7.0% and 3.5%, respectively, compared to the same
periods in the prior year mainly due to the sale of Boardwalk Manor as well as lower water and sewer and natural gas costs. The Trust
has two outstanding contracts to hedge its natural gas price for its Saskatchewan natural gas usage. Details of the hedging contracts
can be found in NOTE 26 to the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020.
Property taxes decreased by 18.4% and 11.3% for the three months and year ended December 31, 2021, respectively, compared to
the same periods in the prior year mainly due to lower property tax assessments and the disposition of Boardwalk Manor.
Reported operating margin for the year ended December 31, 2021 was 59.8% compared to 56.6% for the same period in 2020.
ONTARIO RENTAL OPERATIONS
(In $000’s, except number of suites)
Rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margin
Number of suites at December 31
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$
9,790 $
9,344
4.8% $
38,473 $
33,200
% Change
15.9%
1,810
868
1,005
$
$
3,683 $
6,107 $
62.4%
2,867
1,467
1,011
972
3,450
5,894
63.1%
2,867
23.4%
(14.1)%
3.4%
6,609
4,045
4,001
5,451
4,031
3,491
6.8% $
14,655 $
12,973
3.6% $
23,818 $
20,227
61.9%
2,867
60.9%
2,867
21.2%
0.3%
14.6%
13.0%
17.8%
ONTARIO RENTAL OPERATIONS, EXCLUDING NEW ACQUISITIONS
(In $000’s, except number of suites)
Rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margin
Number of suites at December 31
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$
8,560 $
8,190
4.5% $
33,657 $
31,925
% Change
5.4%
1,604
807
859
$
$
3,270 $
5,290 $
61.8%
2,585
1,315
917
841
3,073
5,117
62.5%
2,585
22.0%
(12.0)%
2.1%
5,942
3,767
3,412
5,291
3,923
3,347
6.4% $
13,121 $
12,561
3.4% $
20,536 $
19,364
61.0%
2,585
60.7%
2,585
12.3%
(4.0)%
1.9%
4.5%
6.1%
Boardwalk REIT’s Ontario operations reported higher rental revenue and total rental expenses for the year ended December 31,
2021, compared to 2020, mainly attributable to new acquisitions that occurred near the end of the third quarter in 2020. For the three
months ended December 31, 2021, rental revenue increased 4.8% due to higher occupied rents. Total rental expenses increased by
6.8% for the quarter due to higher operating expenses and property taxes, partially offset by lower utilities, compared to the same
period in the prior year. Excluding the new acquisitions, for the three and twelve months ended December 31, 2021, rental revenue
increased by 4.5% and 5.4%, respectively, due to higher occupied rents and total rental expenses increased 6.4% and 4.5%,
respectively, compared to the same periods in the prior year.
114
Excluding the new acquisitions, operating expenses for the three and twelve months ended December 31, 2021, increased by 22.0%
and 12.3%, respectively, compared to the same periods in the prior year due to higher building repairs and maintenance, wages and
salaries, bad debts, and insurance.
Excluding the new acquisitions, utility costs were lower by 12.0% and by 4.0% for the three and twelve months ended December 31,
2021, respectively, compared to the same periods in the prior year. For the three months ended December 31, 2021, the decrease in
utility costs was due to lower natural gas consumption and carbon levies. For the year ended December 31, 2021, the decrease in
utility costs was mainly attributable to lower electricity and water and sewer costs. The Trust has one outstanding fixed price natural
gas contract hedging 69% of its London natural gas usage. Details of the contract can be found in NOTE 26 to the audited annual
consolidated financial statements years ended December 31, 2021 and 2020.
Property taxes, when excluding the new acquisitions, increased 2.1% and 1.9% for the three months and year ended December 31,
2021, respectively, compared to the same periods in the prior year, due to higher property tax assessments.
Excluding the new acquisitions, net operating income increased by 6.1% for the year ended December 31, 2021, compared to the
prior year. Reported operating margin for the year ended December 31, 2021 was 61.0% compared to 60.7% for the prior year.
QUEBEC RENTAL OPERATIONS
(In $000’s, except number of suites)
Rental revenue
Expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margin
Number of suites at December 31
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
$
20,676 $
20,508
0.8% $
82,094 $
80,988
% Change
1.4%
3,740
1,871
2,109
7,720 $
3,528
1,678
1,970
7,176
6.0%
11.5%
7.1%
13,921
6,302
8,052
13,443
6,009
8,252
7.6% $
28,275 $
27,704
12,956 $
13,332
(2.8)% $
53,819 $
53,284
$
$
62.7%
6,000
65.0%
6,000
65.6%
6,000
65.8%
6,000
3.6%
4.9%
(2.4)%
2.1%
1.0%
Boardwalk REIT’s Quebec rental revenues were relatively flat for the quarter, but reported an increase of 1.4% for the year ended
December 31, 2021, respectively, compared to the same periods in the prior year, due to an increase in occupied rents, partially
offset by higher vacancy loss.
Total rental expenses for the three months ended December 31, 2021, increased by 7.6% compared to the same period in 2020 due to
higher operating expenses, utilities, and property taxes. Overall, for the year ended December 31, 2021, total rental expenses
increased by 2.1% compared to the prior year with higher operating expenses and utilities, partially offset by lower property taxes.
For the three and twelve months ended December 31, 2021, operating expenses increased by 6.0% and 3.6%, respectively, compared
to the same periods in 2020, due to higher building maintenance and insurance, partially offset by lower wages and salaries due to
staffing optimizations in the year.
Utilities for the fourth quarter of 2021 increased 11.5% compared to the same period in 2020 due to higher natural gas consumption.
The reported increase of 4.9% in utilities for the twelve months ended December 31, 2021, compared to the same period in 2020, was
due to the combined effect of higher natural gas and electricity costs. Electricity costs for the prior year was lower than the current year
as a result of a large electricity refund received in the first quarter of 2020 due to the adoption of Bill 34 in Quebec. Bill 34 allows Quebec
to take control of the rates charged for electricity in the province and, as a result of these changes, rebates would also be provided back
to consumers based on their consumption from January 1, 2018, to December 31, 2019, which was paid in January of 2020. This rebate
was a one-time payment and therefore no such rebate was received in the current year. In addition, the Trust has one outstanding fixed
price natural gas contract to hedge 74% of its Nun’s Island natural gas usage. The details of the natural gas contract is reported in
NOTE 26 to the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020.
Property taxes decreased 2.4% for the year ended December 31, 2021, compared to the prior year due to successful property tax
appeals in the first quarter of 2021 and the Government of Quebec reducing the school tax rate with the objective to give financial
flexibility to individuals and businesses in the context of the COVID-19 pandemic.
Reported operating margins for the twelve months ended December 31, 2021 decreased slightly from 65.8% to 65.6%.
115
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Operational Sensitivities
NET OPERATING INCOME OPTIMIZATION
Boardwalk continues to focus on optimizing its NOI. This focus requires the Trust to manage not only revenues but also related
operating costs and takes both into consideration when determining a service and pricing model. Lowering overall turnover while
maintaining competitive lease rental rates and a focus on a high-quality level of service continue to be the model that has delivered
the most stable and long-term income source to date. This strategy is region specific and these variables are in constant flux,
especially during the ongoing COVID-19 pandemic.
In a more competitive market, the Trust takes a more preventive approach of increasing its offering of suite-specific rental incentives
as well as, where warranted, adjusting reported market rents. The increase of these incentives, particularly in Alberta, is an attempt
by the Trust to keep occupancy levels higher than the overall market. When the market returns to balance, management believes the
Trust will be well-positioned to unwind these incentives and increase market rents. It has been our experience that this proactive
approach has resulted in optimizing NOI.
In addition, in these competitive, un-regulated markets, the Trust approaches future upcoming maturing leases prior to lease
maturity with the intent of renewing the lease prior to term maturity. In select markets, the Trust may also forward-lock future
rentals while not collecting revenues for certain months in the immediate future. This means the Trust may decide to rent a suite in
December with the Resident Member not moving in until the following year. Although the suite is rented, it will not generate revenue
until the Resident Member 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 suites generating revenue for the period noted. The Trust
closely monitors ‘apartment availability’, which represents unoccupied suites 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. As a result of recent acquisitions or newer developments,
portfolio occupancy is on a same-property basis.
Management of the Trust believes that when the NOI optimization strategy is combined with our new strategic investment program,
the outcome will be a more diverse product offering for our Resident Members and greater overall value creation for the Trust.
The Trust also understands that the implementation and completion of these strategies will have some short-term consequences,
as the timing of these enhancements and extensive renovations are resulting in longer periods of time that suites are not available
to be rented, including short-term increases in vacancy losses. It is the Trust’s belief, however, that a focus on the longer-term value
creation is in the best interest of all stakeholders.
Boardwalk constantly reviews its existing programs, measuring them against resident demand, viability and expected return.
Where appropriate, the Trust will make any necessary changes to optimally fine tune them.
BOARDWALK REIT’S PORTFOLIO OCCUPANCY (SAME-PROPERTY):
City
Calgary
Edmonton
Fort McMurray
Grande Prairie
Kitchener
London
Montreal
Quebec City
Red Deer
Regina
Saskatoon
Verdun
Portfolio
116
2021
96.75%
93.78%
95.30%
94.52%
98.02%
98.17%
97.40%
91.06%
95.81%
96.26%
97.92%
99.19%
95.67%
2020
96.56%
94.84%
95.42%
94.94%
98.73%
98.39%
98.45%
97.01%
95.01%
95.61%
97.10%
99.35%
96.29%
Q4 2021
Q4 2020
97.17%
94.23%
94.78%
95.07%
98.18%
97.89%
97.25%
88.78%
96.33%
96.35%
98.36%
99.19%
95.85%
96.50%
93.58%
96.87%
93.33%
97.87%
98.29%
97.94%
95.81%
94.23%
95.85%
97.90%
99.39%
95.71%
In fiscal 2021, the Trust reported a year-over-year decrease of 62 basis points (bps) in its overall same-property occupancy rate, a
decline from 96.29% to 95.67%.
In Alberta, 2021 occupancy decreased compared to 2020, as markets in Northern Alberta experienced declines year-over-year,
particularly in Edmonton where the decrease in occupancy noted above is attributable to the increasingly competitive market
conditions, given the new supply of multi-family suites entering the market, as well as continued challenging economic conditions.
In Fort McMurray and Grande Prairie, the Trust implemented new rental initiatives in the fourth quarter of 2021 to focus on increasing
occupancy, with the Trust realizing favourable results with improvements in occupancy increasing 38 bps and 99 bps, respectively,
from the third quarter of 2021. In Southern Alberta, occupancy levels have increased year-over-year in Red Deer and Calgary by
80 bps and 19 bps, respectively. Occupancy in Calgary of 96.75% does not include the BRIO property, which was brought on-line in
February 2020.
In Saskatchewan, occupancy continued to grow in the Regina and Saskatoon markets compared to the prior year, in part to the
successful advertising efforts made during the year. Regina occupancy levels increased to 96.26% in 2021 compared to 95.61% for
2020. Saskatoon occupancy levels increased to 97.92% in 2021 compared to 97.10% in 2020. As a strategy, the Trust is constantly
adjusting market rents and incentives based on property-specific demand and supply.
Occupancy continued to remain strong in Ontario and Quebec. In Quebec City, occupancy decreased from 97.01% in 2020 to 91.06%
in 2021. This decrease from 2020 is attributed to the seniors’ community building within Quebec City that is being repositioned to a
conventional multi-family asset. Excluding the seniors’ community asset, 2021 occupancy for Quebec City would be 96.60%.
As overall markets stabilize, we expect some up and down movements in occupancy as the Trust aims to maintain occupancy at
approximately 97%.
RENTALS, MOVE-OUTS AND IMPACT ON REPORTED OCCUPANCY (SAME-PROPERTY):
Supply & Demand
Move Outs
Rentals
Occupancy
1,400
1,200
1,000
800
600
400
200
0
98%
97%
96%
95%
94%
93%
92%
91%
90%
9
1
-
n
a
J
9
1
-
b
e
F
9
1
-
r
a
M
9
1
-
r
p
A
9
1
-
y
a
M
9
1
-
n
u
J
9
1
-
l
u
J
9
1
-
g
u
A
9
1
-
p
e
S
9
1
-
t
c
O
9
1
-
v
o
N
9
1
-
c
e
D
0
2
-
n
a
J
0
2
-
b
e
F
0
2
-
r
a
M
0
2
-
r
p
A
0
2
-
y
a
M
0
2
-
n
u
J
0
2
-
l
u
J
0
2
-
g
u
A
0
2
-
p
e
S
0
2
-
t
c
O
0
2
-
v
o
N
0
2
-
c
e
D
1
2
-
n
a
J
1
2
-
b
e
F
1
2
-
r
a
M
1
2
-
r
p
A
1
2
-
y
a
M
1
2
-
n
u
J
1
2
-
l
u
J
1
2
-
g
u
A
1
2
-
p
e
S
1
2
-
t
c
O
1
2
-
v
o
N
1
2
-
c
e
D
2
2
-
n
a
J
Demand and supply, as with any industry, is an essential performance indicator for multi-family real estate. The above chart
attempts to show the total move-outs (supply) compared to total rentals (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 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 NOI; consequently, it will adjust rents upward or downward when it is deemed necessary.
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 $4.7 million, or $0.09 per Trust Unit on a fully diluted basis.
117
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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 98.3% of its total rental unit portfolio as at December 31,
2021, or a total of 32,706 suites. The tables below provide a regional breakdown on these properties for the fourth quarter of 2021,
compared to the fourth quarter of 2020 and fiscal 2021, compared to fiscal 2020.
Dec 31 2021 – 3 M
Edmonton
Calgary
Red Deer
Grande Prairie
Fort McMurray
Alberta
Quebec
Saskatchewan
Ontario
Dec 31 2021 – 12 M
Edmonton
Calgary
Red Deer
Grande Prairie
Fort McMurray
Alberta
Quebec
Saskatchewan
Ontario
# of Suites
12,882
5,798
939
645
352
20,616
6,000
3,505
2,585
32,706
# of Suites
12,882
5,798
939
645
352
20,616
6,000
3,505
2,585
32,706
% Rental
Revenue Growth
% Total Rental
Expenses Growth
% Net Operating
Income Growth
(0.5)%
1.5%
1.0%
(2.5)%
0.9%
0.2%
0.8%
4.3%
4.5%
1.1%
(3.0)%
(6.7)%
(6.5)%
(2.5)%
7.3%
(4.1)%
7.6%
(8.9)%
6.4%
(2.1)%
1.8%
6.6%
7.9%
(2.6)%
(3.5)%
3.5%
(2.8)%
14.6%
3.4%
3.4%
% Rental
Revenue Growth
% Total Rental
Expenses Growth
% Net Operating
Income Growth
(2.7)%
(0.1)%
(1.3)%
(3.4)%
(1.0)%
(1.8)%
1.4%
3.9%
5.4%
(0.2)%
(1.0)%
(1.7)%
(3.5)%
(4.2)%
3.6%
(1.3)%
2.1%
(2.9)%
4.5%
(0.6)%
(4.0)%
0.7%
0.7%
(2.7)%
(4.4)%
(2.2)%
1.0%
9.0%
6.1%
0.1%
% of NOI
34.8%
22.0%
2.4%
1.4%
1.0%
61.6%
19.0%
11.6%
7.8%
100.0%
% of NOI
35.3%
21.5%
2.3%
1.5%
1.0%
61.6%
19.8%
11.0%
7.6%
100.0%
Stabilized rental revenue decreased by 0.2% for the year ended December 31, 2021, compared to the same period in the prior
year. Total rental expenses reported for the year decreased by 0.6% from 2020, resulting in a NOI increase of 0.1% compared to
the prior year. The decrease in reported stabilized rental revenue was driven by lower in-place occupied rents and higher vacancy
loss in Alberta, which accounts for approximately 61.6% of the Trust’s reported stabilized NOI. These were offset by the growth
recognized in Saskatchewan, Ontario, and Quebec due to higher in-place occupied rents in those markets, as well as lower vacancy
and incentives in Saskatchewan. Overall, stabilized total rental expenses decreased due to lower wages and salaries, bad debts
and advertising.
118
Stabilized Rental Revenue Growth
Edmonton
Calgary
Red Deer
Grande Prairie
Fort McMurray
Quebec
Saskatchewan
Ontario
# of Suites
12,882
5,798
939
645
352
6,000
3,505
2,585
32,706
Q4 2021 vs
Q3 2021
Q4 2021 vs
Q2 2021
Q4 2021 vs
Q1 2021
Q4 2021 vs
Q4 2020
(0.5)%
0.2%
(0.5)%
0.8%
3.0%
1.1%
1.4%
1.4%
0.3%
0.2%
1.6%
0.8%
(2.1)%
0.8%
1.6%
2.4%
2.2%
1.1%
1.4%
3.2%
1.8%
(2.6)%
1.7%
0.3%
4.0%
3.4%
1.9%
(0.5)%
1.5%
1.0%
(2.5)%
0.9%
0.8%
4.3%
4.5%
1.1%
On a sequential basis, stabilized rental revenue reported in the fourth quarter of 2021 increased by 0.3% over Q3 2021, increased by
1.1% compared to Q2 2021, increased by 1.9% compared to Q1 2021, and increased by 1.1% compared to Q4 2020. The change over
each quarter is a reflection of Boardwalk’s strategy, striving toward balancing the optimum level of market rents, rental incentives,
and occupancy rates in order to achieve its net operating income optimization strategy. The lower growth noted in some of the
Alberta markets is a result of higher vacancy and slightly lower in-place occupied rents in the previous periods as a result of a slower
recovery. These were offset by positive growth in the fourth quarter in Grande Prairie and Fort McMurray due to some traction
gained from a focused rental initiative to increase occupancy and occupied rent. As rental restrictions have since been lifted, the
Trust’s focus is on sustainable rental rate increases with a focus on retention. The Trust continues to closely monitor this latest trend
and is well positioned to strive towards balancing during these challenging times.
ESTIMATED LOSS-TO-LEASE CALCULATION
Boardwalk REIT’s projected loss-to-lease, representing the difference between estimated market rents and actual occupied rents in
December 2021, and adjusted for current occupancy levels, totaled approximately $21.5 million on an annualized basis, representing
$0.42 per Unit (Trust Units and LP Class B Units). For the most part, Boardwalk REIT’s rental lease agreements last no longer than
twelve months. By managing market rents and providing suite-specific incentives to our Resident Members, the Trust and all its
stakeholders continue to benefit from lower turnover, reduced expenses, and high occupancy. The reader should note estimated
loss-to-lease is measured at a point in time and is not intended to depict expected future financial performance. 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.
119
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Dec. 2021
Market
Rent (1)
Dec. 2021
Occupied
Rent (2)
Mark-to-
Market
Per
Month (3)
Same-property
Annualized
Mark-to-
Market
Adjusted
for Current
Occupancy
levels
($000’s)
Dec. 2021
Market
Rent,
including
incentives (4)
Dec. 2021
Occupied
Rent (2)
Mark-to-
Market
Per
Month (3)
Annualized
Mark-to-
Market
Adjusted
for Current
Occupancy
levels
($000’s)
Edmonton
$ 1,305 $
1,181 $
124 $ 18,046 $
1,184 $
1,181 $
3 $
(172)
Calgary
Red Deer
Grande Prairie
Fort McMurray
1,490
1,195
1,111
1,487
1,338
1,051
1,008
1,230
152
144
103
257
10,294
1,556
766
1,027
1,372
1,071
1,008
1,261
1,338
1,051
1,008
1,230
34
20
0
31
2,261
195
(17)
117
Weighted
Average
Apartment
Suites
% of
Portfolio
12,882
5,798
939
645
352
39%
18%
3%
2%
1%
Alberta Portfolio $ 1,349 $
1,215 $
134 $ 31,689 $
1,228 $
1,215 $
13 $
2,384
20,616
63%
Quebec
$ 1,299 $
1,182 $
117 $
8,143 $
1,297 $
1,182 $
115 $
8,123
Saskatchewan (5)
Ontario
1,355
1,470
1,236
1,116
119
354
4,874
10,870
1,239
1,469
1,236
1,116
3
353
66
10,920
6,000
3,505
2,585
18%
11%
8%
Total Portfolio
$ 1,350 $
1,203 $
147 $ 55,576 $
1,260 $
1,203 $
57 $ 21,493
32,706
100%
(1)
(2)
Market rent is a component of rental revenue as calculated in accordance with IFRS and represents stabilized properties only. It is calculated as of the first day of each
month as the average rental revenue amount a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay, for a tenancy,
before adjustments for other rental revenue items such as, incentives, vacancy loss, fees, specific recoveries, and revenue from commercial tenants.
Occupied rent is a component of rental revenue as calculated in accordance with IFRS and represents stabilized properties only. It is calculated for occupied suites as of the
first day of each month as the average rental revenue, adjusted for other rental revenue items such as fees, specific recoveries, and revenue from commercial tenants.
(3) Mark-to-market represents the difference between market rent and occupied rent, or market rent including incentives and occupied rent, where indicated.
(4) Market rent, including incentives is market rent, as described, adjusted for incentives.
(5) Saskatchewan market rent includes an increase for cable and internet service.
The increase in the loss-to-lease for our portfolio, from $18.7 million at September 2021 to $21.5 million at December 2021, was due
primarily to an increase in market rents in many of Boardwalk’s Alberta rental markets for the month of December, using a weighted
average mark-to-market of $57 per suite per month. Excluded from the loss-to-lease calculation of $21.5 million is approximately
$90 per suite per month of incentives, representing the difference of the mark-to-market calculated excluding incentives and the
mark-to-market calculated including incentives, resulting in potential additional revenue of over $35 million per annum.
In fiscal 2021, as with prior periods, Boardwalk REIT continued 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.
VACANCY LOSS AND INCENTIVES
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
important. On a quarterly basis, the chart below details rental incentives offered versus vacancy loss. Select incentives are
continuing in the Alberta and Saskatchewan markets to maintain occupancy levels. Boardwalk REIT will continue to manage its
overall revenues through three key revenue variables, notably, market rents, occupancy levels, and suite-selective incentives.
The Trust continues to focus on maximizing overall revenues through the management of these key revenue variables.
120
Revenue, Incentives, Vacancy Loss ($000s)
Net Rental Revenue (1)
Incentives
Vacancy Loss
$135,000
$125,000
$115,000
$105,000
$95,000
$85,000
$75,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016
2017
2018
2019
2020
2021
(1)
Net rental revenue is a component of rental revenue as calculated in accordance with IFRS and represents rental revenue after
adjustments for vacancy loss and incentives.
Despite the continuation of the COVID-19 pandemic, the economy and unemployment rates are improving, and as such, Boardwalk’s
continued focus is on maintaining and increasing, in certain regions, occupancy by offering various suite-specific incentives in
exchange for longer-term leases.
Financing Costs
Financing costs, including interest expense on the Trust’s secured mortgages and lease obligations for the year ended December 31,
2021, decreased from the same period in the prior year, from $91.6 million to $89.7 million. At December 31, 2021, the reported
weighted average interest rate of 2.46% was down from the weighted average interest rate of 2.58% at December 31, 2020.
Boardwalk REIT has continued to take advantage of low interest rates to refinance and renew certain mortgages. The average term
to maturity of the Trust’s mortgage portfolio is approximately 3.8 years.
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 obtain mortgages with lower interest rate spreads on its property
financing 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.
The importance of this government-backed mortgage insurance program administered by CMHC has proven even more essential
during the COVID-19 pandemic. Despite past volatility in the overall credit markets, the Trust has been able to maintain a number of
mortgage lenders willing to assume, or underwrite, additional mortgages under this program.
At December 31, 2021, approximately 98% of Boardwalk REIT’s mortgages were backed by this NHA insurance, with a weighted
average amortization period of approximately 30 years.
The adoption of IFRS has also had an impact on the amount of financing costs reported on the Trust’s Consolidated Statements of
Comprehensive Income (Loss). As a result of the LP Class B Units being classified as financial liabilities in accordance with IFRS, the
corresponding distributions paid to the Unitholders are classified as financing costs under IFRS. Management of the Trust believes
these distribution payments do not truly represent “financing costs” 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 holders of LP Class B Units for the year ended December 31, 2021,
which have been recorded as financing costs, was $4.5 million (year ended December 31, 2020 – $4.5 million). Based on this
rationale, these amounts have been added back in the calculation of FFO.
121
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
The reader should also note that, under IFRS, financing costs are recorded net of interest income the Trust has earned for the period.
The total amount of interest income earned for the year ended December 31, 2021 was $0.3 million, compared to $0.8 million for the
prior year. Interest income will fluctuate depending on the cash on hand in the period. Further details on the Trust’s investment of
cash on hand using term deposits of 90 days or less can be found in NOTE 12 to the audited annual consolidated financial statements
for the years ended December 31, 2021 and 2020.
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
mortgage 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.
Boardwalk reviews its amortization estimates on an ongoing basis and, if warranted, will adjust these estimates on a prospective basis.
The total amortization of deferred financing costs for the year ended December 31, 2021, was $6.9 million compared to $6.2 million
recorded for the prior year. Amortization of deferred financing costs is included in financing costs.
INTEREST RATE SENSITIVITY
Although Boardwalk REIT manages its financing risk in a variety of ways, 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 2022, the Trust anticipates having
approximately $445.2 million of secured mortgages maturing with a weighted average rate of 2.67%. If we were to renew these
mortgages today with a five-year term, the Trust estimates, based upon interactions with possible lenders, the new rate would be
approximately 2.50% (as of February 2022).
To date, the Trust has renewed, or forward locked the interest rate on $41.6 million or 9% of its total 2022 mortgage maturities at an
average interest rate of 2.44%, while extending the term of these mortgages by an average of five years.
Administration
Included in administration expenses are costs associated with Boardwalk REIT’s centralized administrative functions. The
amount reported for the year ended December 31, 2021, which relates to corporate administration from continuing operations,
was $33.3 million compared to $36.1 million in the prior year, a decrease of approximately 7.8% for the year. The decrease was
attributable to savings in administrative wages and higher executive retirement costs incurred in the prior year.
Depreciation
Depreciation recorded on the Consolidated Statements of Comprehensive Income (Loss) is made up of the 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
depreciation that has occurred to these assets as a result of their use during the reporting period in question.
Boardwalk reviews its key depreciation estimates on an ongoing basis and, if warranted, will adjust these estimates on a
prospective basis.
The total amount reported as depreciation for the year ended December 31, 2021, was $7.8 million compared to $8.2 million
recorded for the same period in the prior year.
122
Other Income and Expenses
INCOME TAX EXPENSE
Boardwalk REIT qualifies as a “mutual fund trust” as defined in the Tax Act. The Tax Act also contains legislation affecting the tax
treatment of publicly traded trusts and the criteria for qualifying for the REIT Exemption, which would exempt Boardwalk REIT from
income tax under the SIFT Legislation. For 2020 and 2021 to date, 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
Trust 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, 2021, the Trust used a price of $54.83 based on the closing price of the Trust Units on the TSX to determine the
fair value of these financial liabilities at that date. The total fair value of the LP Class B Units recorded on the Consolidated Statement
of Financial Position at December 31, 2021, was $245.4 million (December 31, 2020 – $151.0 million), and a corresponding fair value
loss of $94.4 million (year ended December 31, 2020 – fair value gain of $54.6 million) was recorded on the Consolidated Statement
of Comprehensive Income (Loss) for the year ended December 31, 2021.
The deferred unit-based compensation plan had a fair value of $7.0 million (December 31, 2020 – $3.2 million), and a corresponding
fair value loss of $2.4 million (year ended December 31, 2020 – fair value gain of $2.2 million) was recorded on the Consolidated
Statement of Comprehensive Income (Loss) for the year ended December 31, 2021.
123
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 FINANCIAL CONDITION
Review of Cash Flows
OPERATING ACTIVITIES
Cash flow from operating activities increased by 14.7% from $141.1 million for the year ended December 31, 2020 to $161.9 million for
the year ended December 31, 2021. For the year ended December 31, 2021, Boardwalk REIT reported ACFO of $117.9 million, or $2.31
per Unit. This represented an increase of approximately 12.4%, compared to $104.9 million, or $2.06 per Unit, reported for the same
twelve months in 2020. The increases for 2021 regarding the cash flow from operating activities and ACFO is primarily due to higher
rental revenue resulting from higher occupied rent and lower incentives. Additionally, the Trust is benefiting from lower property tax
assessments as well as recoveries from bad debts.
A reconciliation of ACFO to cash flow from operating activities as shown in the Consolidated Statements of Cash Flows prepared in
accordance with IFRS is highlighted below:
ACFO Reconciliation
(In $000’s, except per Unit amounts)
3 Months
Dec. 31, 2021
3 Months
Dec. 31, 2020
% Change
12 Months
Dec. 31, 2021
12 Months
Dec. 31, 2020
% Change
Cash flow from operating activities
$
43,358 $
36,730
$ 161,860 $
141,081
Adjustments
Net change in operating working capital
Deferred unit-based compensation
Government grant amortization
LP Class B Unit distributions
Interest paid
Financing costs
Principal repayments on lease liabilities
Principal repayments on lease receivable
Maintenance Capital Expenditures (1)
ACFO (2)
ACFO per Unit (3)
(3,145)
(558)
94
1,119
20,621
(22,363)
(977)
167
(7,091)
(1,160)
(507)
94
1,120
21,532
(22,964)
(732)
155
(8,781)
(4,131)
(2,392)
378
4,479
82,951
(89,749)
(3,841)
652
(32,287)
6,243
(3,255)
378
4,479
85,448
(91,622)
(3,465)
449
(34,799)
$
$
31,225 $
25,487
22.5% $ 117,920 $
104,937
0.61 $
0.50
22.0% $
2.31 $
2.06
12.4%
12.1%
(1)
(2)
(3)
Details of the calculation of Maintenance Capital Expenditures can be found in the section titled, “Review of Cash Flows - Investing Activities – Value-add Capital and
Maintenance Capital Expenditures” in this MD&A.
This is a non-GAAP financial measure. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Financial Measures”
in this MD&A for more information on ACFO.
This is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Ratios” in this MD&A for more
information on ACFO per Unit.
For the current quarter, FFO Payout Ratio and ACFO Payout Ratio were 33.2% and 40.8%, respectively, compared to 37.3% and
50.1%, respectively, for the same period in the prior year.
For the year ended December 31, 2021, FFO Payout Ratio and ACFO Payout Ratio were 34.0% and 43.3%, respectively, compared to
36.5% and 48.6%, respectively, in the prior year.
ACFO, in the longer term, is indicative of the Trust’s ability to pay distributions to its Unitholders. ACFO Payout Ratio is a non-GAAP
ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Ratios” for more
information on ACFO Payout Ratio. As regular distributions are funded by the Trust’s liquidity, cash flow from operating activities,
and mortgage upfinancings tied to investment property capital appreciation, these distributions are reviewed on a quarterly basis
by the Board of Trustees to assess whether they are sustainable. As a result of the review, the Board of Trustees has approved
distributions of $1.00 per Trust Unit on an annualized basis.
124
INVESTING ACTIVITIES
Capital Improvements
Boardwalk has a continuous capital improvement program with respect to its investment properties and brand diversification
strategy. The program is designed to extend the properties’ useful lives, improve operating efficiency, enhance appeal, enhance as
well as maintain earnings capacity, and meet Resident Members’ expectations, as well as meet health and safety regulations.
A select few of the Trust’s communities will be selected to fall under the ‘Boardwalk Lifestyle’ brand; although there are a number of
criteria used to select these properties. In general, these communities are located in extremely attractive locations and desirable
neighborhoods. Rebranding is the highest level of investment the Trust will place in this community. Investment here will be holistic
in nature and include significant enhancement to the exterior. Common areas may not only be refreshed but may also be
modernized to include community areas with Wi-Fi bars, barbeque areas and other in demand amenities. The suites in these
buildings will be significantly modernized and may include the removal of existing walls and substantial upgrades including all new
appliances, upgraded kitchens and extensive flooring, electrical and plumbing upgrades. These communities will be targeted to the
more discriminating renter and commonly referred to as a ‘renter by choice’.
A number of the Trust’s communities will be selected to be repositioned to the ‘Boardwalk Communities’ category. These
communities will also be targeted based on location and will focus in on a modernization program. These communities tend to be
located in mature areas near schools, parks, downtown core, shopping and other desirable amenities. Investment in these
communities will enhance the already large suite size and will significantly upgrade most aspects of the suite, including new
upgraded flooring, all new appliances with modernized kitchens, modern electrical, plumbing and hardware fixtures. Modernization
of existing common areas such as hallways and lobbies will also be considered.
The majority of Boardwalk’s existing portfolio falls into the ‘Boardwalk Living’ category. Resident Members in this area are looking
for value but tend to be more price sensitive. Again, many of these Boardwalk communities are located in established communities
with extensive local amenities. Although Boardwalk’s investment in this area will be less significant than in its re-positioned and
rebranded communities, it is value-focused and thoughtfully targeted with those items that these price sensitive renters appreciate
most, such as upgraded flooring, and more modern electrical, plumbing and hardware fixtures.
In 2021, Boardwalk REIT invested approximately $127.0 million in capital assets (comprised of $121.5 million on its investment
properties and $5.5 million on property, plant and equipment) back into its properties in the form of equipment and project
enhancements to upgrade existing suites, common areas, and building exteriors and systems, compared to the $113.6 million
($108.7 million on its investment properties and $5.0 million on property, plant and equipment) invested in 2020.
2021 12 M Capital Investment
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,
particularly during the COVID-19 pandemic. Included
in investment in capital assets is approximately
$34.2 million of on-site wages and salaries that have
been incurred towards these projects for 2021,
compared to $33.7 million for 2020.
27%
Internal Capital Program
20%
Building Improvements
8%
Elevators/Boilers/Mech
29%
Suite Improvements
Other (incl. Equipment)
4%
Appliances
6%
Hallway Improvements
6%
125
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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 or “Maintenance CAPEX” and value-add capital investments.
Maintenance CAPEX over the longer term is funded from cash flow from operating activities. These expenditures are deducted from
FFO in order to estimate a sustainable amount, AFFO, which can be distributed to Unitholders. Maintenance CAPEX include those
expenditures that, although capital in nature, are not considered betterments and relate more to maintaining the existing earnings
capacity of our property portfolio, however do extend the useful life of the asset. In contrast, value-add capital investments are
more discretionary in nature and focus on increasing the productivity of the property, with the goal of increasing NOI through
revenue growth and/or decreased operating expenses. Management of the Trust believes that significant judgement is required to
determine whether a capital expenditure is needed to maintain the earning capacity of an asset or to increase the earning capacity
of an asset. Lastly, 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.
VALUE-ADD CAPITAL AND MAINTENANCE CAPITAL EXPENDITURES
As discussed above, value-add capital investments include building improvements, suite upgrades, technology initiatives, and other
investments which support NOI growth. Building improvements include investments which improve energy efficiency, enhance
building envelopes, increase curb appeal of the property, as well as renovations of common areas and amenity spaces. Suite
upgrades included in value-add capital result in revenue growth above market growth. In addition, internal capital required to
complete building improvements and suite upgrades is considered value-add capital.
Alternatively, Maintenance CAPEX are expenditures which relate to sustaining and maintaining the existing asset. Boardwalk’s
determination of Maintenance CAPEX is based on an estimated reserve amount per suite based on a three-year average of the
capital invested to maintain and sustain the existing properties. The allocations below were the result of a detailed review of the
Trust’s historical capital investment. As previously discussed, significant judgement was required to allocate capital between
value-add and Maintenance CAPEX. Capital budget amounts for 2021, revised, if necessary, based on actual expenditures for the
year, are initially used to calculate Maintenance CAPEX for the three-year rolling average. For 2020, the three-year rolling average is
based on actual expenditures invested from 2018 to 2020.
Prior to 2021, the Trust computed Maintenance CAPEX based on the first-year amortization. The first-year amortization of each major
capital expenditure category was taken as a reliable metric of Maintenance CAPEX since such an amount would have been expended
in the first year in any event in lieu of repair and maintenance expenses. This methodology resulted in less subjectivity and was an
appropriate estimation of Maintenance CAPEX.
In 2021, the Trust has undertaken a more thorough analysis of its capital program and though it involves more judgment,
management of the Trust believes this methodology provides a more reliable estimation of both its value-add capital and
Maintenance CAPEX figures. This analysis involved a detailed review of a large sample of the Trust’s capital investments to determine
whether expenditures were value-add capital or maintenance CAPEX.
The Trust’s calculation of standardized Maintenance CAPEX per suite is outlined on the following page:
126
Category
2021 Capital
Expenditures ($000’s)
2020 Capital
Expenditures ($000’s)
2019 Capital
Expenditures ($000’s)
2018 Capital
Expenditures ($000’s)
Building Exterior, Grounds & Parking
$
26,151
$
20,990
$
23,943
$
25,390
Hallways & Lobbies
Elevators
Mechanical & Electrical
Other – Information Technology
Site Equipment & Vehicles
Total Common Area
Paint & General
Flooring
Cabinets & Counters
Appliances
Suite Mechanical
Furniture, Fixtures & Equipment
Total Suites
Internal Capital Program
Subtotal
Corporate Capital Expenditures
Investment in capital assets
Cash Flow from Investing Activities
Improvements to Investment Properties
Additions to Property, Plant & Equipment
Investment in capital assets
8,093
2,826
6,901
4,428
1,636
50,035
13,072
12,824
7,957
5,145
1,659
1,198
41,855
34,237
126,127
876
127,003
121,492
5,511
127,003
$
$
$
$
$
$
$
$
6,816
2,653
5,134
4,422
1,412
41,427
10,446
11,959
7,348
5,523
1,738
971
37,985
33,658
113,070
546
113,616
108,653
4,963
113,616
$
$
$
$
$
$
$
$
6,964
1,951
6,564
6,483
1,553
47,458
13,037
12,394
8,850
5,596
1,718
784
42,379
32,476
122,313
961
123,274
117,644
5,630
123,274
$
$
$
$
$
$
$
$
3,213
1,262
5,331
6,509
2,103
43,808
16,159
15,917
9,886
6,305
2,909
961
52,137
28,841
124,786
1,136
125,922
117,914
8,008
125,922
$
$
$
$
$
$
$
$
Number of Suites
33,264
33,396
33,263
33,424
Value-add Capital Investment
Building Improvements
Common Area Renovations
Suite Upgrades
Internal Capital
Other – Information Technology
Maintenance CAPEX
Investment in capital assets
Maintenance CAPEX per Suite
Three-Year Rolling Average Reserve
2019
2020
2021
2021 Maintenance CAPEX Per Suite
Three-Year Rolling Average Reserve
2018
2019
2020
2020 Maintenance CAPEX Per Suite
$
25,194
$
19,474
$
24,308
$
6,964
29,304
24,976
1,621
87,173
36,101
123,274
1,085
$
$
$
8,093
33,493
28,664
1,107
96,551
30,452
127,003
915
$
$
$
6,816
29,104
27,195
1,106
83,695
29,921
113,616
896
1,085
896
915
965
$
$
$
$
$
$
$
$
$
$
$
$
$
$
25,091
3,213
35,962
21,739
1,627
87,632
38,289
125,921
1,146
1,146
1,085
896
1,042
127
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Using the three-year rolling average reserve, for 2021, Boardwalk’s estimate of Maintenance CAPEX is $32.3 million, or $965 per suite,
for the year. For 2020, Boardwalk’s estimate of Maintenance CAPEX, using the three-year average reserve, was $34.8 million or
$1,042 per suite, for the year.
Based on the above, the following table provides management’s estimate of these expenditure categories for the three and twelve
months ended December 31, 2021 and 2020.
(In $000’s, except for per suite amounts)
3 Months
Dec. 31,
2021
Per Suite
3 Months
Dec. 31,
2020
12 Months
Dec. 31,
2021
Per Suite
12 Months
Dec. 31,
2020
Per Suite
Per Suite
Maintenance Capital Expenditures
$
7,091 $
212 $
8,781 $
261 $ 32,287 $
965 $ 34,799 $
1,042
Value-add Capital
30,052
901
25,041
751
94,716
2,831
78,817
2,367
Investment in capital assets
$ 37,143 $ 1,113 $ 33,822 $
1,012 $ 127,003 $ 3,796 $ 113,616 $
3,409
Management of the Trust has estimated that for the fourth quarter of fiscals 2021 and 2020, the amount allocated to maintenance
capital was approximately $7.1 million, or $212 per suite, and $8.8 million, or $261 per suite, respectively, with investment in
value-add capital expenditures to its investment properties totaling $30.1 million and $25.0 million, respectively, or $901 and
$751 per suite, respectively.
For the years ended December 31, 2021 and 2020, the amount allocated to maintenance capital was approximately $32.3 million, or
$965 per suite, and $34.8 million, or $1,042 per suite, respectively, with investment in value-add capital expenditures to its investment
properties totaling $94.7 million and $78.8 million, respectively, or $2,831 and $2,367 per suite, respectively.
INVESTMENT PROPERTIES
The Trust has elected to use the fair value model in accordance with IAS 40 – Investment Properties (“IAS 40”) 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 internal fair value calculation for its entire investment property portfolio. Appraisals were obtained as follows:
Date
December 31, 2021
September 30, 2021
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Number
of Properties
4
4
4
4
4
4
4
4
$
$
$
$
$
$
$
$
Aggregate
Fair Value
781,480
155,616
146,358
223,698
615,599
158,394
157,212
130,597
Percentage of Portfolio
as of that Date
12.0%
2.4%
2.4%
3.7%
10.3%
2.6%
2.6%
2.2%
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 Appraisers. In addition to performing a valuation on a selection of the 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.
128
The key valuation metrics for the Trust’s investment properties using the stabilized approach are set out in the following table:
As at
Dec. 31, 2021
Dec. 31, 2020
Capitalization Rate
Weighted Average
Forecasted Total
Stabilized Net
Operating Income
Capitalization Rate
Weighted Average
Forecasted Total
Stabilized Net
Operating Income
Calgary
Edmonton
Other Alberta
Cambridge
Kitchener
London
Waterloo
Montreal
Quebec City
Regina
Saskatoon
Land Leases
4.74%
$
68,154
5.00%
$
5.04%
6.44%
4.00%
4.00%
4.01%
4.00%
4.73%
5.00%
5.68%
5.69%
4.97%
4.66%
$
$
112,968
18,178
1,317
4,798
19,176
755
6,571
11,706
18,279
15,818
277,720
33,724
5.29%
6.47%
-%
4.50%
4.51%
-%
5.04%
5.44%
5.93%
5.94%
5.28%
5.18%
$
$
65,745
114,552
17,981
-
3,088
18,385
-
6,093
11,390
17,471
15,687
270,392
32,258
Overall portfolio weighted average stabilized capitalization rate (“Cap Rate”) was 4.94% as at December 31, 2021 and 5.27% as at
December 31, 2020, using a forecasted stabilized NOI.
The “Overall Capitalization Rate” method requires a forecasted stabilized NOI be divided by a Cap Rate to determine a fair value.
As such, fluctuations in both NOI and Cap Rates cold significantly alter the fair value. Generally, an increase in NOI will result in an
increase to the fair value of an investment property. An increase in Cap Rate will result in a decrease to the fair value of an investment
property. When the Cap Rate is applied to NOI to calculate fair value, there is a significant impact whereby the lower the Cap Rate,
the larger the impact. The tables below summarize the sensitivity impact of changes in both Cap Rates and forecasted stabilized NOI
on the Trust’s fair value of its investment properties (excluding building acquisitions valued at Level 2 inputs, developments, and the
right-of-use assets related to lease liabilities) as at December 31, 2021 and December 31, 2020:
As at December 31, 2021
Stabilized Net Operating Income
Cap Rate
-0.25%
Cap Rate As Reported
+0.25%
-3%
-1% As Forecasted
+1%
+3%
$ 302,101
$ 308,330
$ 311,444
$ 314,558
$
320,787
4.69%
$
137,191
$ 270,104
$ 336,560
$
403,017
$ 535,929
4.94%
5.19%
(189,272)
(484,263)
(63,091)
6,309,079
63,091
(364,164)
(304,114)
(244,064)
189,272
(123,965)
As at December 31, 2020
Stabilized Net Operating Income
Cap Rate
-0.25%
Cap Rate As Reported
+0.25%
-3%
-1%
As Forecasted
+1%
$
$
293,571
105,381
$
$
299,624
226,038
$
$
302,650
286,366
$
$
305,677
346,695
$
$
(172,394)
(424,994)
(57,465)
(315,273)
5,746,471
(266,484)
57,465
(205,551)
+3%
311,730
467,352
172,394
(95,830)
5.02%
5.27%
5.52%
Investment properties with a fair value of $724.4 million as at December 31, 2021 (December 31, 2020 – $622.2 million), are situated
on land held under ground (or land) leases.
Investment properties with a fair value of $813.7 million as at December 31, 2021 (December 31, 2020 – $762.5 million), are pledged as
security against the Trust’s committed revolving credit facility. In addition, investment properties with a fair value of $6.1 billion as
at December 31, 2021 (December 31, 2020 – $5.7 billion), are pledged as security against the Trust’s mortgages payable.
129
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
For the year ended December 31, 2021, the Trust capitalized $121.5 million in improvements to investment properties
(and $10.5 million in development of investment properties) and recorded a fair value gain of $403.9 million on its financial
statements as a result of changes in the fair value of investment properties. For the year ended December 31, 2020, the Trust
capitalized $108.7 million in improvements to investment properties (and $32.9 million in development of investment properties)
and recorded a fair value loss of $383.0 million. 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.
JOINT VENTURE AGREEMENTS
Over the last number of years, there has been a shift in the multi-family apartment environment in Canada. Over this period, Boardwalk
has witnessed a significant increase in the market value of rental apartments. This increase 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.
Boardwalk continues to move forward with its development opportunities and previously announced the completion of its first joint
venture development project with RioCan Real Estate Investment Trust (“RioCan”) known as BRIO, located in Calgary, Alberta. BRIO is
an amenity-rich affordable luxury twelve-storey tower with approximately 130,000 square feet of residential, consisting of 162 suites,
and 10,000 square feet of retail space. The development provides premium rental housing at a desirable location that is along the
Calgary Light Rail Transit Line, and in close proximity to the University of Calgary, Foothills Hospital, and McMahon Stadium. The joint
venture involves an equal 50% interest in which both RioCan and Boardwalk provide best-in-class retail and residential expertise,
respectively, to co-develop the asset. To maximize the value of the development, RioCan manages the retail component and Boardwalk
manages the residential component, each on a cost basis. The Trust and RioCan are proud of the newest addition to the Lifestyle
portfolio. The project was substantially completed in February 2020 and on budget. As of February 2022, the project was 97% leased.
In 2020, Boardwalk continued with its 50:50 joint venture partnership to develop a 365-unit multi-residential, purpose-built rental
complex, located near downtown Brampton, Ontario. It is estimated that total development costs for the project is approximately
$200 to $215 million. The proposed project is a rental complex with approximately 10,700 square feet of retail space, above and
underground parking and 380,000 square feet of residential space over two concrete high-rise towers. For the year ended December 31,
2021, the Trust invested $6.2 million in capital contributions in equity accounted investment to this limited partnership (year ended
December 31, 2020 – $9.2 million). Despite necessary slowdowns resulting from the impact of the COVID-19 pandemic, tradesmen are
still on site and working to progress the project, although at reduced staffing levels. Extra precautions for hygiene, cleaning, and
physical distancing are in place to ensure our worksite is in full compliance with best practices and requirements. The project is
substantially tracking on time and on budget. The partnership has committed to a construction facility loan for 60% of the budgeted
costs to construct. As at December 31, 2021, $36.4 million has been drawn on this loan, of which Boardwalk’s portion is $18.2 million.
On November 26, 2021, the Trust sold its 50% partnership interest in the Sandalwood project located in Mississauga, Ontario, for
proceeds of $18.2 million. The Trust’s development strategy continues to focus on creating value through the long-term ownership
and operation of multi-family communities. Both Boardwalk and its partner RioCan determined that the site’s highest and best use
for the Sandalwood project is a condominium development. The original concept featured a joint venture mixed-use project with
RioCan consisting of 470 residential suites and 12,000 square feet of retail space in which the Trust had invested $18.4 million
(including transaction and carrying costs).
DEVELOPMENT
Boardwalk’s development opportunities include additional projects to be built on the Trust’s excess land density, as well as new
land that has been acquired in Victoria, British Columbia. These developments are in various stages of market analysis, planning and
approval, and will further add newly constructed assets to the Trust’s portfolio.
On September 1, 2020, the Trust acquired the first parcel of a development site in Victoria, British Columbia, in the community of
Esquimalt, for a purchase price of $3.1 million (including transaction costs). On November 2, 2020, the Trust acquired the second parcel
of adjacent land for a purchase price of $10.1 million (including transaction costs). The purchases are part of Boardwalk’s long-term
strategic plan of high-grading and geographic expansion, with the land planned for the development of new rental suites. On
February 1, 2021, the Trust acquired a third parcel of adjacent land for a purchase price of $2.0 million (including transaction costs).
130
On November 23, 2020, the Trust purchased a development site in Victoria, British Columbia, in the community of View Royal, for a
purchase price of $14.5 million (including transaction costs). The Trust plans to redevelop the land which has the potential for up to
247 new rental suites.
For the year ended December 31, 2021, the Trust expended $10.5 million on development of investment properties compared to
$32.9 million for the prior year. Interest costs of $1.9 million were capitalized to properties under development for the year ended
December 31, 2021 (year ended December 31, 2020 – $1.4 million).
NEW PROPERTY ACQUISITIONS AND DISPOSITIONS
On April 19, 2021, the Trust acquired a property in Victoria, British Columbia. The property is comprised of 114 suites and had a
purchase price of $48.2 million (including transaction costs).
On April 16, 2021, the Trust acquired a property in Banff, Alberta. The property is comprised of 81 suites and had a purchase price of
$24.1 million (including transaction costs).
On September 28, 2020, the Trust acquired a portfolio of four properties in Southwestern Ontario, located in the markets of
Kitchener, Waterloo, and Cambridge. The portfolio is comprised of 226 suites and had a purchase price $64.6 million (including
transaction costs).
On August 27, 2020, the Trust purchased a property in Cambridge, Ontario. The property is comprised of 56 suites and had a
purchase price $16.8 million (including transaction costs).
On December 15, 2021, the Trust sold a non-core asset, Reid Park Estates (comprised of 179 suites), in Saskatoon, Saskatchewan for
total proceeds (excluding selling costs) of $25.0 million.
On September 15, 2021, the Trust sold a non-core asset, Oak Tower (comprised of 70 suites), in Edmonton, Alberta for total proceeds
(excluding selling costs) of $11.8 million.
On June 30, 2021, the Trust sold non-core assets, Boardwalk Arms A and B (comprised in total of 78 suites), in Edmonton, Alberta for
total proceeds (excluding selling costs) of $9.3 million.
On November 17, 2020, the Trust sold a non-core asset, Boardwalk Manor (comprised of 72 suites), in Regina, Saskatchewan for total
proceeds (excluding selling costs) of $7.5 million.
On June 25, 2020, the Trust sold a non-core, land leased asset, Elbow Tower (comprised of 158 suites), in Calgary, Alberta for total
proceeds (excluding selling costs) of $3.0 million.
FINANCING ACTIVITIES
Distributions
Boardwalk distributes payments on a monthly basis to its Unitholders and holders of LP Class B Units. 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 the year ended December 31, 2021, the Trust declared regular distributions
of $51.0 million consistent with the $51.0 million declared in 2020. Regular distributions declared for the twelve months ended
December 31, 2021 represented a FFO payout ratio of 34.0%, compared to 36.5% for the prior year. For the three months and year
ended December 31, 2021, the Trust recorded profit of $131.1 million and $446.3 million, respectively (three months and year ended
December 31, 2020 – loss of $188.4 million and $197.3 million, respectively).
Financing of Revenue Producing Properties
During the twelve months ended December 31, 2021, proceeds from mortgage financings totaled $210.2 million (year ended
December 31, 2020 – $284.4 million). During the financing and refinancing process, Boardwalk REIT decreased the weighted average
interest rate on its mortgage portfolio from 2.58% at December 31, 2020 to 2.46% at December 31, 2021.
Due to the nature of multi-family residential real estate, the amount paid for apartments may vary dramatically based on a number
of parameters, including location, type of ownership (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
131
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 cost of the recorded asset. During the third quarter of 2020, $16.1 million of mortgage financing were assumed on acquisitions. These
mortgages had in-place rates above market rates, resulting in market debt adjustments totaling $459 thousand that was made to
the book cost of the corresponding assets.
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
commitments as well as its distributions to Unitholders. Generally, distributions are funded from ACFO, a non-GAAP financial measure
cash flow metric as previously defined. In addition to ACFO, the Trust relies on a combination of debt capital, and equity to fund a
portion of its capital expenditures, acquisitions, development, and other uses of capital. 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
are discussed in detail in this MD&A. Approximately 98% of Boardwalk REIT’s secured mortgages carry NHA insurance. In volatile times,
including during the ongoing COVID-19 pandemic, the ability to access this product is very beneficial to the Trust as a whole.
The access to liquidity is an important element of the Trust as it allows the Trust to implement its overall strategy. With the COVID-19
pandemic, the importance of liquidity has been magnified even more due to the uncertainty of when the pandemic will abate. The
low interest rate environment has allowed Boardwalk to renew its existing maturing mortgages at favourable 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 provides mortgage financing at attractive rates. With the COVID-19 pandemic, we have seen declining
interest rates which may result in lower interest rates upon renewal as compared to the existing interest rate, however, potential
interest savings may be tempered by an increase in upfinancings to ensure appropriate liquidity.
Boardwalk defines total available liquidity to include cash and cash equivalents on hand and any unused committed revolving credit
facility, plus any subsequent committed/funded financing. The Trust’s cash and cash equivalents was $64.3 million at December 31,
2021, compared to $53.0 million reported on December 31, 2020. As at December 31, 2021, the Trust also had $199.7 million of unused
committed revolving credit facility (December 31, 2020 – $199.7 million) and subsequent committed/funded financing of $42.2 million
(December 31, 2020 – $16.5 million), bringing total available liquidity to $306.3 million (December 31, 2020 – $269.2 million).
The Trust’s liquidity position as at December 31, 2021 remains stable as the following table highlights:
($000)
Cash and cash equivalents
Subsequent committed/funded financing
Unused committed revolving credit facility available
Total available liquidity
$
64,300
42,200
199,750
$
306,250
In addition to this, the Trust currently has 866 rental suites of unencumbered assets. It is estimated that, under current CMHC
underwriting criteria, the Trust could obtain an additional $94.3 million of new proceeds from the financing of its current
unencumbered assets.
The reader should also be aware that of the $445.2 million of secured mortgages coming due in 2022 (as shown in the table below),
all have NHA insurance, and represent in aggregate approximately 43% of current estimated “underwriting” values on those
individual secured assets. Interest rates on five and ten-year NHA-insured mortgages as of February 2022 were 2.50% and 2.80%,
respectively. 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 a portion of this risk,
the Trust has forward locked or renewed $41.6 million, or 9%, of its $445.2 million of 2022 mortgage maturities. The weighted
average contracted interest rate on these renewals is 2.44%, for an average term of five years.
MORTGAGE SCHEDULE
Boardwalk REIT’s long-term debt consists entirely of low-rate, fixed-term secured mortgage financing. The maturity dates on the
secured mortgages have been staggered to lower the overall interest rate risk on renewal.
Mortgages payable as at December 31, 2021, were $3.0 billion, compared to $2.9 billion as at December 31, 2020.
132
Boardwalk REIT’s overall weighted average interest rate on its long-term debt has increased from the prior year. The weighted
average interest rate as at December 31, 2021, was 2.46% compared to 2.58% as at December 31, 2020. 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
2022
2023
2024
2025
2026
2027
2028
2029
2030
Total mortgage principal outstanding
Unamortized deferred financing costs
Unamortized market debt adjustments
Mortgages payable
Principal Outstanding
as at Dec. 31, 2021
Weighted Average
Interest Rate
By Maturity
$
445,221
371,623
352,640
547,996
553,420
374,148
129,955
197,871
116,104
3,088,978
(110,855)
314
$
2,978,437
2.67%
2.81%
2.45%
2.15%
1.98%
3.03%
2.98%
2.45%
1.99%
2.46%
% of Total
14.4%
12.0%
11.4%
17.7%
17.9%
12.1%
4.2%
6.4%
3.9%
100.0%
CONSTRUCTION LOAN PAYABLE
During 2019, the Trust entered into a $50 million revolving construction facility loan along with one of its joint venture partners. To
date, $42.4 million has been drawn on this loan, of which Boardwalk’s 50% portion is $21.2 million. The facility is interest payable
only and the maturity date was extended from July 31, 2021 to January 31, 2022. The facility bore interest at prime plus 0.05%, a
Bankers’ Acceptance interest rate of 1.97%, or a Bankers’ Acceptance stamping fee of 1.05% and a standby fee of 0.21%. This loan
was converted to a CMHC-insured mortgage in January of 2022.
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, 2021, and December 31, 2020, based on
the most recently completed four fiscal quarters.
Net operating income
Administration
Deferred unit-based compensation
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, 2021
Dec. 31, 2020
$
274,340
$
269,144
(33,282)
(2,392)
238,666
80,291
2.97
1.50
(36,069)
(3,255)
229,820
82,345
2.79
1.50
133
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
For the year ended December 31, 2021, Boardwalk REIT’s overall interest coverage ratio of consolidated EBITDA to consolidated
interest expense, excluding distributions on LP Class B Units and fair value adjustments, was 2.97, compared to 2.79 for the year
ended December 31, 2020. The reader should note that under IFRS, the distributions made to the holders of LP Class B Units are
considered financing costs and is the result of the reclassification of the LP Class B Units as financial liabilities. The calculation of the
interest coverage ratio above does not include these distribution payments in the calculation of consolidated interest expense.
UNITHOLDERS’ EQUITY
The following table discloses the changes in Trust Units issued and outstanding:
Summary of Unitholders’ Capital Contributions
December 31, 2019
Units issued for vested deferred units
December 31, 2020
Units issued for vested deferred units
Units purchased and cancelled
Distribution in Units
Consolidation of Units
December 31, 2021
Trust Units
46,461,293
87,655
46,548,948
26,564
(438,400)
273,474
(273,474)
46,137,112
Boardwalk REIT has one class of publicly traded voting securities, being the Trust Units. As at December 31, 2021, there were
46,137,112 Trust 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 Class B Units”), each of which also has a special voting unit in the REIT. Each LP
Class B Unit is exchangeable for a Trust Unit on a one-for-one basis at the option of the holder. Each LP Class B Unit, through the
special voting unit, entitles the holder to one vote at any meeting of Unitholders. Accordingly, if all of the LP Class B Units were
exchanged for Trust Units, the total issued and outstanding Trust Units would be 50,612,112. 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 as at December 31, 2021 and 2020.
On November 18, 2021, the Trust received regulatory approval for a Normal Course Issuer Bid (the “NCIB”) to purchase and cancel up
to 3,780,351 Trust Units, representing 10% of the public float at the time of the TSX approval. The NCIB commenced on November 22,
2021 and terminates on November 21, 2022. The Trust’s daily purchases under the NCIB are limited to 32,046 Trust Units.
During 2021, the Trust purchased and cancelled 438,400 Trust Units at an average purchase cost of $54.85 per Trust Unit under the
NCIB. During 2020, the Trust did not have a normal course issuer bid in place and did not purchase and cancel any Trust Units.
EQUITY
Boardwalk has an equity market capitalization of $2.8 billion based on the Trust Unit closing price of $54.83 on the TSX on
December 31, 2021.
With an enterprise value of approximately $5.9 billion (comprised of total mortgage principal outstanding of $3.1 billion,
construction loan payable of $21.2 million, and equity market capitalization of $2.8 billion) as at December 31, 2021, Boardwalk’s
total mortgage principal outstanding and construction loan payable is approximately 53% of enterprise value.
134
NET ASSET VALUE PER UNIT
The Trust’s NAV per Unit is calculated below:
Investment properties
Equity accounted investment
Cash and cash equivalents
Adjusted Real Estate Assets (1)
Total mortgage principal outstanding
Total lease liabilities attributable to land leases (2)
Construction loan payable
Adjusted Real Estate Debt (1)
Net Asset Value (1)
Net Asset Value per Unit (3)
Dec. 31, 2021
Dec. 31, 2020
$
6,492,969
$
5,948,955
41,118
64,300
34,967
52,960
$
6,598,387
$
6,036,882
$
(3,088,978)
$
(3,004,086)
(76,092)
(21,187)
(77,635)
(21,187)
$
(3,186,257)
$
(3,102,908)
$
$
3,412,130
66.87
$
$
2,933,974
57.49
(1)
This is a non-GAAP financial measure. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Financial Measures”
in this MD&A for more information on Adjusted Real Estate Assets, Adjusted Real Estate Debt, and Net Asset Value.
(2) Total lease liabilities attributable to land leases is a component of lease liabilities as calculated in accordance with IFRS.
(3)
This is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Ratios” in this MD&A for more
information on Net Asset Value per Unit.
Reconciliation of Unitholders’ Equity to Net Asset Value
Unitholders’ equity
Total assets
Investment properties
Equity accounted investment
Cash and cash equivalents
Total liabilities
Total mortgage principal outstanding
Total lease liabilities attributable to land leases
Construction loan payable
Net Asset Value
Dec. 31, 2021
Dec. 31, 2020
$
3,253,178
$
2,876,449
(6,660,653)
6,492,969
41,118
64,300
3,407,475
(3,088,978)
(76,092)
(21,187)
(6,107,744)
5,948,955
34,967
52,960
3,231,295
(3,004,086)
(77,635)
(21,187)
$
3,412,130
$
2,933,974
Overall NAV per Unit has increased 16.3% to $66.87 as at December 31, 2021, compared to $57.49 as at December 31, 2020, due to an
increase in investment properties. NAV is a key metric used by real estate entities to measure the value of an organization.
135
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
RISKS AND RISK MANAGEMENT
Boardwalk REIT, like most other 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 commonly 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 AIF, which is available under the Trust’s profile at www.sedar.com, where additional risks and the
Trust’s management related thereto are also noted.
General 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. Because real estate, like many other types
of long-term investment, experiences significant fluctuations and cycles in value, specific market conditions may result in occasional
or permanent reductions in value of Boardwalk REIT’s portfolio. Furthermore, the Trust may buy and/or sell properties at less than
optimal times. As interest rates fluctuate in the lending market, in general, so do capitalization rates, which affect the underlying
value of real estate. As such, when interest rates rise, generally capitalization rates should be expected to rise. Over the period of
investment, capital gains and losses at the time of disposition can occur due to the increase or decrease of these capitalization rates.
Currently, we operate in Canada, in the provinces of Alberta, British Columbia, Saskatchewan, Ontario, and Quebec. Neither of
Alberta nor 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. Boardwalk REIT is
not widely diversified either by asset class or geographic location. By focusing on the multi-residential sector and having a majority
of its apartments concentrated in Western Canada, Boardwalk is exposed to adverse effects on that segment of the real estate
market and/or for that geographic region and does not benefit from a diversification of its portfolio by property type and/or
geographic location. The marketability and value of the Trust’s portfolio as well as the REIT’s revenues will depend on many factors
beyond the control of Boardwalk REIT.
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. The majority of operating leases signed are 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 volatility in oil prices experienced in recent years, as well as the ongoing COVID-19 pandemic, the risk of a
prolonged 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.
Regulation and Changes in Applicable Laws: Boardwalk REIT is subject to laws and regulations governing the ownership and leasing
of real property, zoning, building standards, landlord/tenant relationships, employment standards, environmental matters, taxes
and other matters. It is possible that future changes in applicable federal, provincial, municipal or common laws or regulations or
changes in their enforcement or regulatory interpretation could result in changes in the legal requirements affecting Boardwalk
136
(including with retroactive effect). Any changes in the laws to which Boardwalk REIT is subject could materially affect the Trust’s
rights and title to its assets. It is not possible to predict whether there will be any further changes in the regulatory regimes to which
Boardwalk REIT is subject or the effect of any such changes on its investments. Lower revenue growth or significant unanticipated
expenditures may result from Boardwalk’s need to comply with changes in applicable laws or the enactment of new laws, including:
(i) laws imposing environmental remedial requirements and the potential liability for environmental conditions existing on
properties or the restrictions on discharges or other conditions; (ii) rent control or rent stabilization laws or other residential
landlord/tenant laws; or (iii) other governmental rules and regulations or enforcement policies affecting the development, use and
operation of the REIT’s properties, including changes to building codes and fire and life-safety codes. Further, residential landlord/
tenant laws in certain provinces may provide tenants with the right to bring certain claims to the applicable judicial or administrative
body seeking an order to, among other things, compel landlords to comply with health, safety, housing and maintenance standards.
As a result, Boardwalk may, in the future, incur capital expenditures, which may not be fully recoverable from tenants, which could
further have a material adverse effect on our business, financial condition, or results of operation.
Development Risk: Development risk arises from the possibility that completed developments will not be leased on a timely basis or
that costs of development will exceed original estimates, resulting in an uneconomic return from the leasing of such space.
Boardwalk’s construction commitments are subject to those risks usually attributable to construction projects, which include:
(i) construction or other unforeseen delays including municipal approvals; (ii) cost overruns; and (iii) the failure of tenants to occupy
and pay rent in accordance with existing lease agreements. Construction risks are minimized by utilizing established developers and
knowledgeable third-party consultants.
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
remediation 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 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.
Climate-related Risks: As outlined by the Task Force on Climate-related Financial Disclosures, climate related risks can be divided
into two major categories: (i) risks related to the transition to a lower-carbon economy; and (ii) risks related to the physical impacts
of climate change. As it relates to the Trust and transition risks, the Trust focuses on implementing policies which promote the
adaptation to climate-change and includes elements such as implementing ways to reduce greenhouse gas emissions, adopting
energy efficient solutions, encouraging greater water efficiency, etc., however each of these policies have a financial impact. As it
relates to physical risks resulting from climate change it can be event driven (acute) or longer-term shifts (chronic) in climate
patterns. Physical risks may have financial implications such as direct damage to assets or indirect impacts. The Trust is aware of
these risks and working towards safeguarding its assets from these risks.
Ground Lease Risk: Four of our properties, located in Banff and Edmonton, Alberta, and two in Montreal, Quebec, 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 replacements. 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 2024 and 2095.
Approximately 10% of the Trust’s FFO derives from these properties in its portfolio that 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, was also
137
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 subject to a rent revision clause which commenced on December 1, 2008 (based on a valuation date of March 16, 2008). The rent
increases were phased in on a property-by-property basis through to 2018 and was 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, which could further
have a material adverse effect on our business, financial condition, or results of operation.
General Uninsured Losses: Boardwalk REIT carries comprehensive general liability, fire, flood, extended coverage and rental loss
insurance 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 on the Trust Units, the actual
amount of distributions in respect of the Trust Units will depend upon numerous factors, including, but not limited to, the amount of
principal repayments, tenant allowances, leasing commissions, capital expenditures and Trust Unit redemptions and other factors
that may be beyond the control of Boardwalk REIT. The distribution policy of Boardwalk REIT is established by the Board of Trustees
and is subject to change at the discretion of the Board of Trustees. The recourse of Unitholders who disagree with any change in
policy is limited and could require such Unitholders to seek to replace the Board of Trustees. Distributions may exceed 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 Trust 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.
Liquidity Risk: An investment in real estate is relatively illiquid, with the degree of liquidity generally fluctuating in relation to
demand for and the perceived desirability of such investments. Such illiquidity will tend to limit Boardwalk’s ability to vary its
portfolio of properties promptly in response to changing economic, investment or other conditions. If Boardwalk were required to
quickly liquidate its real property investments, the proceeds to the Trust might be significantly less than the aggregate carrying or
net asset value of its properties or less than what would be expected to be received under normal circumstances, which could have
an adverse effect on Boardwalk’s financial condition and financial performance and decrease the amount of cash available for
distribution. Illiquidity may result from the absence of an established market for real property investments, as well as from legal or
contractual restrictions on their resale. In addition, in recessionary times, it may be difficult to dispose of certain types of real estate.
The costs of holding real estate are considerable and, during an economic recession, Boardwalk REIT may be faced with ongoing
expenditures with a declining prospect of incoming receipts. In such circumstances, it may be necessary for Boardwalk REIT to
dispose of properties at lower prices in order to generate sufficient cash for operations and making distributions. There can be no
assurance that the fair market value of any properties held by the REIT will not decrease in the future.
Access to Capital Risk: The real estate industry is highly capital intensive. Boardwalk REIT will require access to capital to maintain its
properties, as well as to fund its growth strategy and certain capital expenditures from time to time. There can be no assurances that
Boardwalk REIT will have access to sufficient capital or access to capital on terms favourable to the Trust for future property
acquisitions, financing or refinancing of properties, funding operating expenses or other purposes. Furthermore, in certain
circumstances, Boardwalk REIT may not be able to borrow funds due to the limitations set forth in its Declaration of Trust and/or other
loan agreements. Market conditions and unexpected volatility or illiquidity in financial markets may inhibit Boardwalk REIT’s access to
long-term financing in the capital markets. As a result, it is possible that financing, which the Trust may require in order to grow and
expand its operations, upon the expiry of the term of financing, upon refinancing any particular property owned by Boardwalk REIT or
otherwise, may not be available or, if it is available, may not be available on favourable terms to the Trust. Failure by Boardwalk to
access required capital could have a material adverse effect on our business, financial condition, or results of operation.
138
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 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 Resident Members is somewhat dependent on the availability of well-trained
Associates and contractors to service our Resident Members 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.
Specific 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 currently
has 33,264 rental suites. 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 suites
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
suites 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 economically 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 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
139
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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.
SUPPLY RISK
The balance of housing supply relative to demand is a risk factor for operating and financial performance. The potential for reduced
rental revenue exists in the event that Boardwalk REIT is not able to competitively optimize occupancy levels or rental rates in an
increased competitive housing environment. Boardwalk REIT has minimized these risks by:
• Increasing Resident Members’ satisfaction;
• Diversifying its portfolio across Canada, thus lowering its exposure to regional economic swings;
• Acquiring properties 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 suites;
• 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).
The Trust continues to manage this risk by maintaining 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.
Currently, the Canadian government has capped the total amount of insurance that CMHC can have in force at $600 billion. This
primarily affects the amount of portfolio or bulk insurance CMHC offers to banks, and, to date, has had a minimal impact on the
renewal of Boardwalk’s mortgages, or the cost of secured debt capital. However, there is no assurance the cap on the amount of
CMHC insurance will not affect mortgages for multi-family residential properties in future periods.
If any changes are made by the Government of Canada on the NHA insurance product, such changes could have a negative impact on
the Trust. However, it is management of the Trust’s understanding that any change to the cap would not affect any pre-existing
insurance agreements. Over 98% of Boardwalk’s secured debt has this insurance on it with an average of 30 years of amortization
remaining. The larger risk to the Trust 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.
140
PROPERTY REDEVELOPMENT, RE-POSITIONING AND RENOVATIONS
Property redevelopment, re-positioning and major renovation work are subject to a number of risks, including:
(a)
the potential that Boardwalk REIT may fail to recover expenses already incurred if it abandons redevelopment/re-positioning/
renovation opportunities after commencing to explore them;
(b) the potential that Boardwalk REIT may expend funds on and devote management time to projects, which it does not complete;
(c)
(d)
(e)
construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable
than originally estimated, or unprofitable;
the time required to complete the construction, redevelopment or renovation of a project or to lease up the completed project
may be greater than originally anticipated, thereby adversely affecting Boardwalk REIT’s cash flow and liquidity;
the cost and timely completion of construction or renovations (including risks beyond Boardwalk REIT’s control, such as
weather, labour conditions or material shortages);
(f) contractor and subcontractor disputes, strikes, labour disputes or supply disruptions;
(g) the failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all;
(h)
delays with respect to obtaining, or the inability to obtain, necessary zoning, occupancy, land use and other governmental
permits, and changes in zoning and land use laws;
(i)
occupancy rates and rents of a completed project or renovation may not be sufficient to make the project or initiative profitable;
(j)
(k)
Boardwalk REIT’s ability to dispose of properties redeveloped or renovated with the intent to sell could be impacted by the
ability of prospective buyers to obtain financing given the current state of the credit markets; and
the availability and pricing of financing to fund Boardwalk REIT’s development or renovation activities on favourable terms or
at all.
The above risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent the
initiation of redevelopment or renovation activities or the completion of redevelopment or renovation activities once undertaken.
In addition, redevelopment and renovation projects entail risks that investments may not perform in accordance with expectations
and can carry an increased risk of litigation (and its attendant risks) with contractors, subcontractors, suppliers, partners, and
others. Any of these risks could have an adverse effect on Boardwalk REIT’s financial condition, financial performance, cash flow, per
unit trading price of its Trust Units, distributions to Unitholders and ability to satisfy Boardwalk REIT’s principal and interest
obligations. Also, it is anticipated that the Trust would be required to execute a guarantee in connection with construction financing
for redevelopments, which would subject Boardwalk REIT to recourse for construction completion risks and repayment of the
construction indebtedness.
JOINT VENTURES AND CO-OWNERSHIPS
Boardwalk participates in joint ventures, partnerships and similar arrangements that may involve risks and uncertainties associated
with third-party involvement, including, but not limited to, Boardwalk’s dependency on partners, co-tenants or co-venturers that
are not under our control and that might compete with Boardwalk for opportunities, become bankrupt or otherwise fail to fund their
share of required capital contributions, or suffer reputational damage that could have an adverse impact on the Trust. Additionally,
our partners might at any time have economic or other business interests or goals that are different than or inconsistent with those
of the Trust and may require Boardwalk to take actions that are in the interest of the partners collectively, but not in Boardwalk’s
sole best interests. Accordingly, Boardwalk may not be able to favourably resolve issues with respect to such decisions, or the Trust
could become engaged in a dispute with any of them that might affect its ability to operate the business or assets in question.
141
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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 have, and may in the future, provide a form of guarantee pursuant to which a trustee will, subject to
the documentation governing the guarantee, 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, have provided a guarantee, not all subsidiaries of the
Trust have, and may in the future, provide such a guarantee. In addition, there can be no assurance such a 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 existing tenants once every twelve months by no more than the “guideline amount” established by regulation. For the
calendar years 2020 and 2021, the guideline amounts have been established at 2.2% and 0.0%, respectively, and for 2022
the guideline amount has been set at 1.2%. Further details on Ontario’s Annual Rental Increase Guidelines can be found at
https://www.ontario.ca/page/residential-rent-increases. 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. In April 2017, the Ontario Government introduced
legislation that would expand rent control to all rental suites. Previously, rent control in Ontario applied only to rental suites
constructed before November 1, 1991. The new legislation will not have a material impact on Boardwalk, as all of its Ontario
properties were built prior to November 1, 1991. 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. In November 2018, the Ontario Government removed such rent control for new
residential suites that were not previously occupied before November 15, 2018.
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 2021 this return is 2.3% compared to 3.1% for
2020, compared to 2.7% for 2019 and compared to 2.4% for 2018), 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 1, 2021, and before April 2, 2022, before any
consideration for increases to municipal and school taxes as well as capital expenditures, are: 0.9% for electricity heated dwellings,
7.6% for gas heated dwellings, and 17.5% for oil heated dwellings, plus 1.6% to cover the cost of maintenance, service and management
contracts. Tools to calculate the Quebec rent increase can be found at https://www.rdl.gouv.qc.ca/en/calculation-for-the-fixing-of-rent.
Presently, rent control legislation does not exist in, and, to the knowledge of management of the Trust, is not planned for, Alberta
or Saskatchewan.
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
environments. In addition, the Trust adjusts forecast assumptions on new acquisitions to ensure they are reasonable given the rent
control environment.
142
Utility and 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. In addition, the recently introduced Alberta Carbon Tax will increase the costs associated
with natural gas usage. Beginning in 2020, Alberta began to participate in the federal carbon levy at a price of $1.05/gigajoule. Any
significant increase in these resource costs that Boardwalk REIT cannot pass on to the Resident Member 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 Resident Member; and
• 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 qualifies as a mutual fund trust for Canadian income tax purposes. It is the current policy of Boardwalk to annually
distribute all of its taxable income to Unitholders and is therefore generally not subject to tax. In order to maintain its 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 Tax Act, for fiscal 2020 and 2021, the Trust qualified as a real estate investment trust for income tax purposes
and, as such, was exempted from the specified investment flow-through rules per the SIFT Legislation.
A special tax regime applies to trusts that are considered SIFT entities as well as those individuals who invest in SIFTs. Under the
SIFT Legislation, a SIFT is subject to tax in a manner similar to corporations on income from business carried on in Canada and on
income (other than taxable dividends) or capital gains from “non-portfolio properties” (as defined in the Tax Act), at a combined
federal/provincial tax rate similar to that of a corporation.
The SIFT Legislation applies unless (among other exceptions not applicable here) the trust qualifies as a “real estate investment
trust” for the year (the “REIT Exemption”). If the REIT fails to qualify for the REIT Exemption, the REIT will be subject to the tax regime
introduced by the SIFT Legislation.
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.
143
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 EXISTING TAX FILING POSITIONS
Although Boardwalk REIT is of the view that all expenses to be claimed by Boardwalk REIT, Top Hat Operating Trust (the “Operating
Trust”), and Boardwalk REIT Limited Partnership (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, the allocation of such income or the cost amount of any assets, the
taxable income of Boardwalk REIT and the Unitholders may be adversely affected.
Risks Associated with a Global Health Pandemic
A global health pandemic, including the COVID-19 pandemic, represents a risk which has a significant impact on many of the Trust’s
previously identified risks as follows:
Identified Risk
Global Health Pandemic Impact and Risk Management Response
Multi-family Residential Sector Risk
Upon expiry of any lease, there can be no assurance that the lease will be renewed or the tenant
replaced. To date, turnover appears to have decreased as Resident Members are renewing their leases
more consistently in light of the COVID-19 pandemic. This has mitigated this risk.
Fluctuations of Cash Distributions
Distributions may exceed cash available to Boardwalk REIT from time to time. To mitigate this risk,
Boardwalk has implemented a minimum distribution policy which provides increased cash flow
certainty. As previously mentioned, for the year ended December 31, 2021, distributions represent a
FFO Payout Ratio of 34.0% or AFFO Payout Ratio of 43.3% (year ended December 31, 2020 – FFO Payout
Ratio of 36.5% or AFFO Payout Ratio of 48.6%), representing a low cash flow commitment and the
ability to maintain payments should cash flow decrease.
Access to Capital Risk
The real estate industry is highly capital intensive and accessing capital may be more difficult during
a global health pandemic, including the COVID-19 pandemic. To date, governments have responded
quickly to ensure capital remains available. Through its partnership with CMHC, Boardwalk still
remains able to access capital.
Credit Risk
Market Risk
The risk of loss due to failure of a Resident Member to fulfill its obligation of required payments. To
date, Canada has experienced unprecedented unemployment rates which could hamper a Resident
Member’s ability to pay rent. Governments have implemented support programs which should
mitigate this risk; however, the impact of the risk remains unknown.
The risk that the Trust could be adversely affected due to market changes particularly in supply,
interest rates and regional rent controls. With the COVID-19 pandemic, provincial governments had,
and have once again, applied rental rate freezes, which could adversely impact the Trust’s cash flow
from operating activities. Since the onset of the COVID-19 pandemic, we have seen a decrease in
government bond yields, resulting in a corresponding decrease in mortgage interest rates. This may
provide an opportunity for the Trust to obtain financing at lower interest rates when mortgages mature
and need to be renewed. Lastly, as social distancing practices are maintained, the expected onset of
new supply of rental housing will likely take longer as construction completion times are extended.
This decreases the supply risk to the Trust.
Supply Risk
Please see market risk.
Rent Control Risk
Please see market risk.
Reputation Risk
The risk that a pandemic impacts the reputation of the Trust for actions it did, or did not, take during a
health pandemic.
Joint Ventures and Co-ownerships
A global pandemic, including the COVID-19 pandemic, may adversely impact our joint venture partners
financially, which could have a correspondingly negative impact on the Trust’s cash flows. To mitigate
this risk, the Trust is in constant communication and engagement with our partners regarding their
financial stability.
144
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 (“DC&P”) or internal
control over financial reporting (“ICFR”).
The design and effectiveness of our DC&P and ICFR may not prevent all errors, misstatements, or misrepresentations. While
management continues to review the design and effectiveness of our DC&P and ICFR, we cannot assure you that our DC&P or ICFR
will be effective in accomplishing all control objectives all of the time. Deficiencies, particularly material weaknesses, in ICFR 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
Critical 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 to the audited annual consolidated financial statements for the years ended December 31, 2021
and 2020.
The preparation of the audited annual consolidated financial statements requires management to make estimates and judgments
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those
estimates under different assumptions and conditions. 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 audited annual consolidated financial statements and the uncertainties that could affect the reported results.
In addition, beginning in 2020, the COVID-19 pandemic has had a substantial impact on the Canadian economy. As a result of the
uncertainty associated with the unprecedented nature of the COVID-19 pandemic, certain of the Trust’s significant judgements were
impacted. Specifically, significant judgement was required when measuring the Trust’s investment properties which are carried at
fair value using assumptions based on market conditions, which currently have limited long-term visibility. The full long-term impact
of the COVID-19 pandemic on the valuation of investment properties is unknown. Furthermore, judgement was required in assessing
the collectability of any outstanding tenant receivable balances and the consideration of applying an allowance for estimated credit
losses to these balances. In response to the spread of the virus, provincial governments have limited a landlord’s ability to evict
tenants for the non-payment of rent. Additionally, social (physical) distancing actions have resulted in the temporary closure of
many businesses or limited openings and staffing for other businesses, which has had a significant impact on unemployment rates
across Canada and may adversely impact residents’ ability to pay rent, with the long-term impact unknown.
(A) INVESTMENT PROPERTIES
Investment properties consist of multi-family residential properties held to earn rental income and properties being constructed 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) 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 to a specific investment property,
which are capitalized to the extent that they upgrade or extend the economic life of the asset.
145
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Subsequent to initial recognition, 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. 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. The fair value of an investment property held by a lessee as a
right-of-use asset reflects expected cash flows (including variable lease payments that are expected to become payable).
Accordingly, if the valuation obtained for an investment property is net of all payments expected to be made, it will be necessary to
add back any recognized lease liability, to arrive at the carrying amount of the investment property using the fair value model.
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 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(i) to the audited annual consolidated financial statements for the years
ended December 31, 2021 and 2020).
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 or loss. Any remaining gain or loss arising on
de-recognition 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.
(B) PROPERTIES UNDER DEVELOPMENT
Properties under development include new development on excess land density or acquired land, re-development or
re-positioning of buildings the Trust currently owns that require substantial renovations, and incomplete apartment suites acquired
from third parties that will take 12 months or longer to complete. The cost of land, if applicable, and buildings under development or
re-development (consisting of development sites, density or intensification rights and related infrastructure) are specifically
identifiable costs incurred in the period before construction is complete. Capitalized costs include pre-construction costs essential
to the development or re-development of the property, construction costs, borrowing costs directly attributable to the
development, real estate taxes, and other costs incurred during the period of development or re-development. Additions to
investment properties consist of costs of a capital nature and, in the case of properties under development and/or redevelopment,
capitalized interest. Directly attributable borrowing costs are also capitalized on land or properties acquired specifically for
development or redevelopment when activities necessary to prepare the asset for development or redevelopment are in progress in
accordance with IAS 23 – Borrowing Costs (“IAS 23”). Where borrowings are associated with specific developments, the amount
capitalized is the total cost incurred on those borrowings.
The capitalization of borrowing costs commences when the activities necessary to prepare an asset for development or
redevelopment begins, and continues until the date that substantially all of the construction is complete and all necessary
occupancy and related permits have been received, whether or not the space is leased. If the Trust is required, as a condition of a
lease, to construct tenant improvements that enhance the value of the property, then capitalization of costs continues until such
improvements are completed. Capitalization ceases if there is a prolonged period where development activity is interrupted.
146
Properties under active development are generally valued at market land values, if applicable, plus costs invested to date. Where
significant leasing and construction is in place and the future income stream is reasonably determinable, the valuation methodology
used is similar to that of revenue-producing properties, less estimates of future capital outlays, construction and development costs, to
determine a net “as-is” market value. Development risks such as planning, zoning, licenses, and building permits are considered in the
valuation process. Properties not under active development, such as land parcels held for future development, are valued based on
comparable sales of land. Significant increases (decreases) in construction costs, cost escalation rates, and estimated time to complete
construction in isolation would result in a significantly lower (higher) fair value for properties under development.
(C) 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(f) to the audited annual consolidated financial statements) and
IFRS 5 (see NOTE 2(i) to the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020).
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(j) to the audited annual
consolidated financial statements for the years ended December 31, 2021 and 2020). 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 estimates 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
Useful Life / Depreciation Rate
Depreciation method used
Administrative building
Administrative building
Site equipment
Automobiles
Warehouse assets
Corporate assets
Site equipment and other assets
Site equipment and other assets
Site equipment and other assets
Site equipment and other assets
Computer hardware
Corporate technology assets
Computer software (1)
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
(1)
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.
147
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 (D) ASSETS 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 resell, 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 (loss).
(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 (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 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 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 (loss) 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.
(F) INVENTORIES
Inventories 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.
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.
148
(G) LEASES
The Trust as a Lessee
The Trust assesses whether a contract is, or contains, a lease at inception of the contract. The Trust recognizes a right-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Trust recognizes the
lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Trust uses its incremental
borrowing rate. The incremental borrowing rate is defined as the rate of interest that the lessee would have to pay to borrow over a
similar term and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment.
Lease payments included in the measure of the lease liability comprise:
• Fixed payments (including in-substance fixed payments), less any lease incentives;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the lease payments made (see NOTE 2(r) to the audited
annual consolidated financial statements for the years ended December 31, 2021 and 2020 for definition of effective interest method).
The Trust re-measures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
• The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease
liability is re-measured by discounting the revised lease payments using a revised discount rate;
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual
value, in which cases the lease liability is re-measured by discounting the revised lease payments using the initial discount rate; or
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is
re-measured by discounting the revised lease payments using a revised discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are subsequently measured either at fair value (in the case of right-of-use
assets which are considered part of investment properties) or at cost less accumulated depreciation and impairment losses (for
right-of-use assets which are considered property, plant and equipment). Right-of-use assets are depreciated over the shorter
period of the lease term and the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The Trust applied IAS 36 to determine whether a right-of-use asset is impaired.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use
asset. The related payments are recognized as an expense in the period in which the event or condition that triggers those payments
and are included in operating expenses in the consolidated statement of comprehensive income (loss).
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and
associated non-lease components as a single arrangement. The Trust has used this practical expedient on those contracts
(warehouse space and office space) which contain both lease and non-lease components.
149
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 The Trust as a Lessor
The Trust enters into lease agreements as a lessor with respect to its investment properties. Leases for which the Trust is a lessor are
classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. As the Trust
has retained substantially all of the risks and benefits of ownership of its investment properties, it accounts for leases with its
tenants as operating leases. As operating leases, lease payments are recognized as revenue when the tenant has a right to use the
leased asset. The leased asset is recognized in the consolidated statement of financial position according to the nature of the
underlying asset.
(H) TAXATION
For fiscal 2021 and 2020, Boardwalk REIT qualified as a “mutual fund trust” as defined under the Tax Act and as a real estate
investment trust 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 subsidiaries of Boardwalk REIT that are subject to income tax (NOTE 30 to
the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020 summarizes the Trust’s
subsidiaries, including its corporate subsidiaries). The Trust establishes provisions for taxes when, despite the belief that its tax
positions are fully supportable, it is possible that its positions may be challenged and disallowed by the relevant tax authorities. The
consolidated tax expense (recovery) and related accruals include the impact of such reasonably estimated disallowances as deemed
appropriate. To the extent that the probable tax outcome of these matters changes, such changes in estimates will impact the
income tax expense (recovery) in the period in which such determination is made.
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 statements of comprehensive (loss) 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 in the audited annual
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 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.
(I) 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.
150
(J) UNIT-BASED PAYMENTS
Equity-settled unit-based payments to employees and Board of 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 Trust Units once the
deferred units vest. Under IFRS 9, 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 (loss) income.
Fair value of the deferred units is calculated based on the observable market price of the Trust Units.
(K) 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 (“IAS 20”), 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.
(L) 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 incentives 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.
Lease revenue earned directly from leasing the asset is recognized and measured in accordance with IFRS 16. In addition to
revenue generated directly from the operating lease, rental revenue includes non-lease revenue earned from the tenant, which is
recognized and measured under IFRS 15 – Revenue from Contracts with Customers (“IFRS 15”). Non-lease revenue includes
parking revenue, other service revenue and fees, and recovery of certain operating costs, including retirement services and cable
(internet and television). These revenues are recognized when earned.
IFRS 15 requires revenue recognized from customer contracts (non-lease components) to be disclosed separately from its other
sources of revenue (NOTE 22 and NOTE 33 to the audited annual consolidated financial statements for the years ended
December 31, 2021 and 2020).
(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 (loss).
151
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 (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.
(v) Development Management Fees
Boardwalk has interests in investment properties through joint arrangements whereby the Trust provides development
management services to the co-owners. As the services are provided over a period of time, income is recognized on a
straight-line basis, unless there is evidence that some other method would better reflect the pattern of performance.
(vi) Property Management Fees
Boardwalk has an interest in an investment property through a joint arrangement whereby the Trust provides residential
property management services to the co-owners for a management fee equal to 3.5% of gross revenue generated from the
residential component of the investment property. The management fees are recorded as services are provided.
(M) FINANCIAL INSTRUMENTS AND DERIVATIVES
Financial instruments and derivatives are accounted for, presented, and disclosed in accordance with IFRS 7 – Financial Instruments:
Disclosures, IFRS 9 and IAS 32. 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 and measured on the basis of the Trust’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets. As such, after initial recognition, financial assets are classified and
measured based on three categories: (i) amortized cost, (ii) fair value through other comprehensive income (FVTOCI), or (iii) fair value
through profit and loss (FVTPL). 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
Amortized cost
FVTOCI
FVTPL
Debt instrument is held within a business model whose objective
is to hold financial assets in order to collect contractual cash flows
and the contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Measured at amortized cost using
the effective interest rate method
less any expected credit loss. (1) (2)
Debt instrument is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling the
financial assets; and the contractual terms of the financial asset
give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Stated at fair value, with gains or
losses arising on measurement
recognized in other comprehensive
(loss) income.
Financial assets that do not meet the criteria for being measured
at amortized cost or FVTOCI are measured at FVTPL. Specifically,
investments in equity instruments or debt instruments which do not
meet the amortized cost or FVTOCI definitions.
Measured at fair value, with
gains or losses recognized in
profit or loss.
(1)
(2)
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.
Financial assets, other than those at FVTPL, are required to use an expected credit loss impairment model. The expected credit loss model requires the Trust to account
for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in the credit risk since initial recognition of the financial
asset. It results in an allowance for estimated credit losses being recorded on financial assets regardless of whether there has been an actual loss event.
152
Boardwalk REIT’s financial assets are as follows:
Financial Asset
Classification and measurement
Investment in private technology venture fund
Mortgage receivable
Trade and other receivables
Segregated tenants’ security deposits
Cash and cash equivalents
FVTPL
FVTPL
Amortized cost
Amortized cost
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 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 and measured as either amortized cost or FVTPL. 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.
Amortized cost
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.
153
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Boardwalk REIT’s financial liabilities are as follows:
Financial Liability
Mortgages payable
LP Class B Units
Construction loan payable
Classification and Measurement
Amortized cost
FVTPL
Amortized cost
Deferred unit-based compensation
FVTPL
Refundable tenants’ security deposits
Trade and other payables
Amortized cost
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. 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, 2021 and 2020, the Trust had no embedded derivatives
requiring separate recognition.
(N) CASH AND CASH EQUIVALENTS
Cash is comprised of bank balances, interest-earning bank accounts, and term deposits with maturities of 90 days or less.
(O) CRITICAL JUDGMENT IN APPLYING ACCOUNTING POLICIES
The following are the critical judgments, apart from those involving estimations (see NOTE 2(u) to the audited annual consolidated
financial statements for the years ended December 31, 2021 and 2020), that have been made in applying the Trust’s accounting
policies and that have the most significant effect on the reported amounts in the audited annual 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.
154
(ii)
Investment Property and Internal Capital Program
The Trust’s accounting policy relating to investment property is described in NOTE 2(f) to the audited annual consolidated
financial statements for the years ended December 31, 2021 and 2020. 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.
(iii) Interest in Joint Operations, Associates and Joint Ventures
When determining the appropriate basis of accounting for the Trust’s investees, the Trust makes judgement about the degree of
influence that Boardwalk REIT exerts directly or through an arrangement over the investee’s relevant activities. This may include
the ability to elect investee directors, appoint management, or influence key decisions. Judgement is also required in
determining whether or not an arrangement is a joint operation or joint venture.
(P) KEY ACCOUNTING ESTIMATES AND ASSUMPTIONS
Below 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.
In addition, beginning in 2020, the COVID-19 pandemic has had a substantial impact on the Canadian economy. As a result of the
uncertainty associated with the unprecedented nature of the COVID-19 pandemic, certain of the Trust’s significant judgements were
impacted. Specifically, significant judgement was required when measuring the Trust’s investment properties which are carried at
fair value using assumptions based on market conditions, which currently have limited long-term visibility. The full long-term impact
of COVID-19 pandemic on the valuation of investment properties is unknown. Furthermore, judgement was required in assessing the
collectability of any outstanding tenant receivable balances and the consideration of applying an allowance for estimated credit
losses to these balances. In response to the spread of the virus, provincial governments initially limited landlord’s ability to evict
tenants for non-payment of rent but have since lifted this regulation. Social (physical) distancing actions resulted in the temporary
closure of many businesses, which has had a significant impact on unemployment rates across Canada and may adversely impact
resident’s ability to pay rent, with the long-term impact being unknown.
(i)
Investment Properties
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 to the audited annual consolidated financial statements for the
years ended December 31, 2021 and 2020. 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 market 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 to the audited annual consolidated financial statements for the years ended
December 31, 2021 and 2020 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 5 to the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020,
and forecasts 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 identified as
part of a specific upgrade or capital improvement. Elements included under the internal capital program are capitalized to
investment properties.
155
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 (iv) Utility Accrual
The 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 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 19 to the audited annual consolidated financial statements for the years ended December 31, 2021
and 2020.
Application of Future Accounting Policies
The following accounting standards under IFRS have been issued or revised; however, they were not yet effective for the years ended
December 31, 2021 and 2020, and, as such, have not been applied to the audited annual consolidated financial statements:
New or Amended Standards
Summary of Requirements
IFRS 3 – Business Combinations
Amendments to IFRS 10 and IAS 28 –
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
IAS 1 – Presentation of
Financial Statements
The amendment updates reference to the Conceptual
Framework. Specifically, the standard is updated to
refer to the 2018 Conceptual Framework instead of the
1989 Framework; a new requirement is added that, for
transactions and other events within the scope of IAS 37
or interpretations of the IFRS Committee (“IFRIC”) 21 –
Levies, an acquirer applies IAS 37 or IFRIC 21 (instead of
the Conceptual Framework) to identify the liabilities it has
assumed in a business combination; and the addition of
an explicit statement that an acquirer does not recognize
contingent assets acquired in a business combination.
The amendment applied prospectively and is effective
for annual periods beginning on or after January 1, 2022.
Early adoption is permitted.
The amendments deal with situations where there is a
sale or contribution of assets between an investor and its
associate or joint venture. Specifically, the amendments
state that gains or losses resulting from the loss of control
of a subsidiary that does not contain a business in a
transaction with an associate or a joint venture that is
accounted for using the equity method, are recognized in
the parent’s profit or loss only to the extent of the unrelated
investor’s interests in that associate or joint venture. The
effective date of the amendments has yet to be set, however,
earlier application is permitted.
The amendment deals with the presentation of liabilities,
not the amount or timing of recognition, or disclosure.
Specifically, the amendment clarifies the classification of
liabilities as current or non-current should be based on
rights that are in existence at the end of the reporting period
and that classification is unaffected by expectations about
whether an entity will exercise its right to defer settlement
of a liability.
The amendment is effective for annual reporting periods
beginning on or after January 1, 2023 and are to be applied
retrospectively, with earlier application permitted.
Possible Impact on Consolidated
Financial Statements
The Trust does not expect this
amendment to have any impact on its
consolidated financial statements.
The Trust is assessing the potential
impact but does not expect any
significant impact.
The Trust is assessing the potential
impact but does not expect any
significant impact.
156
Possible Impact on Consolidated
Financial Statements
The Trust does not expect this
amendment to have any impact on its
consolidated financial statements.
The Trust is assessing the potential
impact but does not expect any
significant impact.
The Trust does not expect this
amendment to have any impact on its
consolidated financial statements.
New or Amended Standards
Summary of Requirements
IAS 16 – Property, Plant
and Equipment
IAS 37 – Provisions, Contingent
Liabilities and Contingent Assets
2018-2020 Cycle
IFRS 9 – Financial Instruments
The amendment covers proceeds from selling items
produced from property, plant and equipment before its
intended use. Specifically, the amendment to the standard
prohibit deducting from the cost of an item of property,
plant and equipment any proceeds from selling items
produced while bringing that asset to the location and
condition necessary for it to be capable of operating in
the manner intended by management. Instead, an entity
recognizes the proceeds from selling such items, and the
cost of producing those items, in profit or loss.
The amendment is applied retrospectively and is effective
for annual periods beginning on or after January 1, 2022.
Early application is permitted.
The amendment clarifies what costs an entity considers
in assessing whether a contract is onerous. Specifically,
the cost of fulfilling a contract comprises the costs that
relate directly to the contract. Costs that relate directly to
a contract can either be incremental costs of fulfilling that
contract or an allocation of other costs that relate directly to
fulfilling contracts.
The amendment is applied prospectively to contracts for
which the entity has not yet fulfilled all its obligations at the
beginning of the annual reporting period in which the entity
first applies the amendments or after the first reporting
period beginning on or after January 1, 2022.
The amendment clarifies which fees an entity includes
when it applies the ’10 per cent’ test in assessing whether
to derecognize a financial liability when there is an
exchange between an existing borrower and lender of debt
instruments with substantially different terms or similarly
when a substantial modification of the terms of an existing
financial liability or a part of it occurs. Specifically, an entity
includes only fees paid or received between the entity (the
borrower) and the lender, including fees paid or received by
either the entity or the lender on the other’s behalf.
The amendment is applied prospectively and is effective
for annual reporting periods beginning on or after
January 1, 2022.
International Financial Reporting Standards
The Trust’s audited annual consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB
and IFRIC.
Disclosure Controls and Procedures & Internal Control Over
Financial Reporting
DC&P are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management,
including the Chief Executive Officer and Chief Financial Officer, as applicable, on a timely basis so appropriate decisions can be
made regarding public disclosure.
157
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 The preparation of this information is supported by a set of DC&P implemented by management. In fiscal 2021, 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 DC&P as at December 31, 2021. The evaluation was performed in accordance
with the Committee of Sponsoring Organizations of the Treadway Commission control 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 (“NI 52-109”).
There were no changes made to our DC&P during the year ended December 31, 2021. Boardwalk REIT continues to review the design
of DC&P to provide reasonable assurance that material information relating to Boardwalk REIT is properly communicated to
certifying officers responsible for establishing and maintaining DC&P, as those terms are defined in NI 52-109.
As at December 31, 2021, Boardwalk REIT can confirm the effectiveness of both the design and the operation of its 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 ICFR during the year ended December 31, 2021, that have materially affected, or are reasonably likely to
materially affect, our ICFR.
2022 FINANCIAL OUTLOOK AND
MARKET GUIDANCE
As previously noted, the Trust is providing its outlook and financial guidance for the upcoming 2022 fiscal year as part of its year end
results. The Trust’s 2022 objectives are as follows:
Description
2022 Objectives
2021 Actual
Stabilized Property NOI Growth
3% – 7%
Profit (loss)
FFO
AFFO
FFO Per Unit (1)
AFFO Per Unit (1)
N/A
N/A
N/A
$3.03 – $3.18
0.1%
$446,267
$150,207
$117,920
$2.94
$2.39 – $2.54 utilizing a Maintenance CAPEX
of $965/suite/year
$2.31 utilizing a Maintenance CAPEX of
$965/suite/year
(1)
This is a non-GAAP ratio. Please refer to the section titled “Presentation of Financial Information and Non-GAAP Measures – Non-GAAP Ratios” in this MD&A for more
information on FFO per Unit Future Financial Guidance and AFFO per Unit Future Financial Guidance.
In deriving these forecasts, the Trust has adjusted for the treatment of the LP Class B Units to be treated as equity (versus debt under
IFRS) and their related treatment of the distributions paid (which are classified as financing costs under IFRS).
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
Property NOI performance would have a material effect on the final reported amount. The Trust reviews these key assumptions
quarterly and, based on this review, may change its outlook on a going-forward basis.
158
In addition to the above financial guidance for 2022, the Board of Trustees approved the 2022 Capital Budget as follows:
Capital Budget ($000's)
Maintenance Capital Expenditures
Value-add Capital
Investment in capital assets
Development of investment properties
2022 Budget
Per Suite
2021 Actual
Per Suite
$
32,100 $
965 $
32,287 $
103,763
94,716
$
135,863 $
4,084 $
127,003 $
$
44,475
$
10,511
965
2,831
3,796
In total, the Trust expects to invest $135.9 million (or $4,084 per suite) in capital assets in 2022, as compared to $127.0 million
(or $3,796 per suite) actually spent in 2021. The Trust has estimated its Maintenance Capital Expenditures for 2022 at $965 per suite
per year, compared to $965 per suite per year in 2021, using a three-year rolling average. Additionally, for 2022, Boardwalk is
estimating $44.5 million be spent on development of investment properties.
Selected Consolidated Financial Information
The following selected financial information should be read in conjunction with this MD&A and the audited annual consolidated
financial statements for the years ended December 31, 2021 and 2020, and the applicable unaudited condensed consolidated
interim financial statements of the Trust for the various quarterly interim periods, which are available under the Trust’s profile at
www.sedar.com.
The consolidated statements of comprehensive income (loss) and consolidated statements of financial position information set
forth in the following tables has been derived from the audited annual consolidated financial statements referred to above and the
unaudited condensed consolidated interim financial statements of the Trust for various quarterly interim periods.
Annual Comparative
(Cdn$ Thousands, except per Unit amount)
Rental revenue
Profit (loss)
FFO
Profit (loss) per Trust Unit
– Basic
– Diluted
FFO per Unit
Mortgages payable
Total assets
Number of suites
Rentable square feet (000's)
Twelve Months Ended
Dec. 31, 2021
Dec. 31, 2020
$
470,531
$
465,572
446,267
150,207
$
$
$
9.59
9.59
2.94
$
$
$
2,978,437
6,660,653
33,264
28,888
(197,279)
139,736
(4.24)
(4.85)
2.74
2,896,790
6,107,744
33,396
28,879
159
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Quarterly Comparative
(Cdn$ Thousands, except per Unit amount)
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Dec. 31,
2020
Sep. 30,
2020
Jun. 30,
2020
Mar. 31,
2020
Three Months Ended
Rental revenue
Profit (loss)
FFO
Profit (loss) per Trust Unit
– Basic
– Diluted
FFO per Unit
$ 118,728 $ 118,446 $ 117,596 $ 115,761 $ 116,543 $ 116,207 $ 116,818 $ 116,004
131,140
38,316
235,539
40,522
50,611
38,160
28,977
33,210
(118,435)
(31,444)
(35,269)
34,268
37,785
36,201
$
$
$
2.82 $
2.82 $
0.75 $
5.06 $
1.09 $
0.62 $
(4.05) $
(0.68) $
(0.76) $
5.06 $
1.09 $
0.62 $
(4.05) $
(0.79) $
(0.76) $
0.79 $
0.75 $
0.65 $
0.67 $
0.74 $
0.71 $
57,869
31,482
1.25
1.25
0.62
ADDITIONAL INFORMATION
Additional information relating to Boardwalk Equities Inc. and Boardwalk REIT, including the AIF, is available under the Trust’s profile
on SEDAR at www.sedar.com.
Respectfully,
[signed]
SAM KOLIAS
Chairman of the Board
and Chief Executive Officer
February 24, 2022
[signed]
LISA SMANDYCH
Chief Financial Officer
160
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
information 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 professional accountants, has been engaged to audit the consolidated financial
statements in accordance with Canadian generally accepted auditing standards and provide an independent auditors’ opinion.
[signed]
[signed]
SAM KOLIAS
Chief Executive Officer
February 24, 2022
LISA SMANDYCH
Chief Financial Officer
161
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 INDEPENDENT AUDITOR’S REPORT
To the Unitholders and the Board of Trustees of Boardwalk Real Estate Investment Trust
Opinion
We have audited the consolidated financial statements of Boardwalk Real Estate Investment Trust (the “Trust”), which comprise the
consolidated statements of financial position as at December 31, 2021 and 2020, and the consolidated statements of comprehensive
income (loss), changes in unitholders’ equity and cash flows for the years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Trust as at
December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with
International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our
report. We are independent of the Trust in accordance with the ethical requirements that are relevant to our audit of the financial
statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the financial statement for
the year ended December 31, 2021. This matter was addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on this matter.
FAIR VALUE OF INVESTMENT PROPERTIES – REFER TO NOTES 2(F) AND 4 OF THE
FINANCIAL STATEMENTS
Key Audit Matter Description
The Trust has elected the fair value model for all investment properties and accordingly measures all investment properties at fair
value subsequent to initial recognition on the statement of financial position. The Trust uses a combination of internal and external
processes and valuation techniques to estimate fair value based on a number of inputs.
While several inputs are required to determine the fair value of the investment properties, the assumptions with the highest degree
of subjectivity and impact on fair values are the forecast of rental income and capitalization rates. Auditing these assumptions
required a high degree of auditor judgment as the estimations made by management are subject to a high degree of estimation
uncertainty. This resulted in an increased extent of audit effort, including the need to involve fair value specialists.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecast of rental income and capitalization rates used to determine the fair value of the
investment properties included the following, among others:
• Evaluated the reasonableness of management’s forecast of rental income by comparing management’s forecast with historical
results, internal communications to management and the Board of Trustees, contractual information and market rents at the
valuation date, where applicable.
• With the assistance of fair value specialists, evaluated the reasonableness of capitalization rates by developing a range of
estimates based on recent market transactions and industry surveys and comparing them to the capitalization rates selected
by management.
162
Other Information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
• The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of
assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have
performed on this other information, we conclude that there is a material misstatement of this other information, we are required to
report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the work we will perform
on this other information, we conclude that there is a material misstatement of this other information, we are required to report that
fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance
for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for
such internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Trust’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Trust or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Trust’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Trust’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
163
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Trust to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Andrew Coutts.
/s/ Deloitte LLP
Chartered Professional Accountants
Calgary, Alberta
February 23, 2022
164
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(CDN $ THOUSANDS)
As at
ASSETS
Non-current assets
Investment properties
Property, plant and equipment
Equity accounted investment
Investment in private technology venture fund
Lease receivable
Mortgage receivable
Deferred tax assets
Current assets
Inventories
Prepaid assets
Lease receivable
Trade and other receivables
Segregated tenants’ security deposits
Cash and cash equivalents
Total Assets
LIABILITIES
Non-current liabilities
Mortgages payable
LP Class B Units
Lease liabilities
Deferred unit-based compensation
Deferred tax liabilities
Deferred government grant
Current liabilities
Mortgages payable
Lease liabilities
Construction loan payable
Deferred unit-based compensation
Deferred government grant
Refundable tenants’ security deposits
Trade and other payables
Total Liabilities
Equity
Unitholders’ equity
Total Equity
Total Liabilities and Equity
See accompanying notes to these consolidated financial statements.
On behalf of the Trust:
[signed]
SAM KOLIAS
Trustee
[signed]
GARY GOODMAN
Trustee
Note
Dec. 31, 2021
Dec. 31, 2020
4
5
6
7
8
19
9
8
10
11
12
13
14
15
17
19
20
13
15
16
17
20
18
21
$
6,492,969
29,877
41,118
2,019
267
-
933
$
5,948,955
32,189
34,967
2,019
964
2,790
825
6,567,183
6,022,709
8,015
6,478
697
6,155
7,825
64,300
93,470
6,660,653
2,471,014
245,364
76,182
4,660
-
4,128
$
$
6,441
6,184
652
11,174
7,624
52,960
85,035
$
6,107,744
$
2,452,681
150,987
80,030
2,242
2
4,506
2,801,348
2,690,448
507,423
3,909
21,187
2,328
378
11,129
59,773
606,127
3,407,475
3,253,178
3,253,178
6,660,653
$
444,109
3,842
21,187
973
378
10,797
59,561
540,847
3,231,295
2,876,449
2,876,449
$
6,107,744
165
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(CDN $ THOUSANDS)
Rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Financing costs
Administration
Deferred unit-based compensation
Depreciation
Profit before the undernoted
Loss on sale of assets
Adjustment to right-of-use asset related to lease receivable
Fair value gains (losses)
Other income
Profit (loss) before income tax
Income tax recovery
Profit (loss)
Other comprehensive income
Total comprehensive income (loss)
See accompanying notes to these consolidated financial statements.
Note
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
22
$
470,531
$
465,572
96,845
49,751
49,595
196,191
274,340
89,749
33,282
2,392
7,809
141,108
(1,953)
-
307,002
-
446,157
110
446,267
-
96,338
48,938
51,152
196,428
269,144
91,622
36,069
3,255
8,195
130,003
(1,136)
(159)
(326,134)
75
(197,351)
72
(197,279)
-
$
446,267
$
(197,279)
23
17
24
8
25
7
19
166
CONSOLIDATED STATEMENTS OF
CHANGES IN UNITHOLDERS’ EQUITY
(CDN $ THOUSANDS)
Balance, December 31, 2019
$
200,268
$ 4,352,759
$ (1,434,972)
$ 2,917,787
$ 3,118,055
Trust Units
Cumulative
Profit (Loss)
Cumulative
Distributions
to Unitholders
Retained
Earnings
Total
Unitholders’
Equity
Units issued
Loss
Total comprehensive loss
Distributions
Balance, December 31, 2020
Units issued
Units purchased and cancelled
Profit
Total comprehensive income
Distributions
Distribution in Units
2,244
-
-
-
-
(197,279)
(197,279)
-
-
-
-
(46,571)
-
(197,279)
(197,279)
(46,571)
2,244
(197,279)
(197,279)
(46,571)
$
202,512
$ 4,155,480
$ (1,481,543)
$ 2,673,937
$ 2,876,449
1,064
(3,882)
-
-
-
14,995
-
(20,167)
446,267
446,267
-
-
-
-
-
(46,553)
(14,995)
-
(20,167)
446,267
446,267
(46,553)
(14,995)
1,064
(24,049)
446,267
446,267
(46,553)
-
Balance, December 31, 2021
$ 214,689
$ 4,581,580
$ (1,543,091)
$ 3,038,489
$ 3,253,178
See accompanying notes to these consolidated financial statements.
167
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(CDN $ THOUSANDS)
Operating activities
Profit (loss)
Loss on sale of assets
Adjustment to right-of-use asset related to lease receivable
Financing costs
Interest paid
Deferred unit-based compensation
Fair value (gains) losses
Income tax recovery
Income tax paid
Government grant amortization
Depreciation
Net change in operating working capital
Cash flow from operating activities
Investing activities
Purchase of investment properties
Investment in capital assets
Development of investment properties
Net cash proceeds from sale of investment properties
Capital contribution in equity accounted investment
Capital contribution in private technology venture fund
Principal repayments on lease receivable
Repayment of mortgage receivable
Net change in investing working capital
Cash flow used in investing activities
Financing activities
Distributions paid
Unit repurchase program
Proceeds from mortgage financings
Mortgage payments upon refinancing
Scheduled mortgage principal repayments
Proceeds from construction loan financing
Deferred financing costs incurred
Principal repayments on lease liabilities
Net change in financing working capital
Cash flow (used in) from financing activities
Net increase in cash
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See accompanying notes to these consolidated financial statements.
168
Note
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
446,267
$
(197,279)
24
8
23
17
25
19
20
32
4
32
4
24
6
7
32
32
21
16
32
1,953
-
89,749
(82,951)
2,392
(307,002)
(110)
-
(378)
7,809
157,729
4,131
161,860
(40,316)
(127,003)
(10,511)
43,309
(6,151)
-
652
2,746
(603)
1,136
159
91,622
(85,448)
3,255
326,134
(72)
-
(378)
8,195
147,324
(6,243)
141,081
(65,329)
(113,616)
(32,906)
4,920
(9,216)
(565)
449
-
(773)
(137,877)
(217,036)
(46,587)
(24,049)
210,197
(65,861)
(72,459)
-
(10,039)
(3,841)
(4)
(12,643)
11,340
52,960
(46,564)
-
284,395
(63,056)
(69,686)
6,467
(14,793)
(3,465)
451
93,749
17,794
35,166
52,960
12
$
64,300
$
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the Years Ended, December 31, 2021 and 2020
(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 15, 2018, 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 acquisition of the assets and
operations of Boardwalk Equities Inc. (the “Corporation”), which was acquired on May 3, 2004. Boardwalk REIT Trust Units
(or “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.
(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.
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.
169
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 (D) INTEREST IN JOINT OPERATIONS
In accordance with IFRS 11 – Joint Arrangements (“IFRS 11”), a joint operation is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint
control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require unanimous consent of the parties sharing control. The Trust records only its share of the assets, liabilities, and
share of the revenue and expenses of the joint operation. The assets, liabilities, revenue and expenses of joint operations are
included within the respective line items of the consolidated statements of financial position and consolidated statements of
comprehensive income (loss).
(E) INTEREST IN ASSOCIATES AND JOINT VENTURES
In accordance with International Accounting Standard (“IAS”) 28 – Investments in associates and joint ventures (“IAS 28”), an
associate is defined as an entity over which the investor has significant influence, however the investor does not have control or joint
control. Significant influence generally arises when an entity holds, directly or indirectly, 20% or more of the voting power of the
investee. Significant influence is usually evidenced by representation on the board of directors or equivalent of the investee,
participation in policy-making processes, material transactions between the entity and its investee, interchange of managerial
personnel, or provision of essential technical information.
In accordance with IFRS 11, a joint venture is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the joint venture.
Investments in associates and joint ventures are accounted for using the equity method. Under the equity method, the investment is
initially recorded at cost, and the carrying amount is increased or decreased to recognize the investor’s share of profit or loss of the
investee after the date of acquisition. The Trust’s share of the investee’s profit or loss is recognized in the Trust’s profit or loss.
Distributions received from an investee reduce the carrying amount of the investment.
(F) INVESTMENT PROPERTIES
Investment properties consist of multi-family residential properties held to earn rental income and properties being constructed 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) 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 to a specific investment property,
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 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. The fair value of an investment property held by a
lessee as a right-of-use asset reflects expected cash flows (including variable lease payments that are expected to become payable).
Accordingly, if the valuation obtained for an investment property is net of all payments expected to be made, it will be necessary to
add back any recognized lease liability, to arrive at the carrying amount of the investment property using the fair value model.
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(i)).
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
170
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.
(G) PROPERTIES UNDER DEVELOPMENT
Properties under development include new development on excess land density or acquired land, re-development or re-positioning
of buildings the Trust currently owns that require substantial renovations, and incomplete apartment units acquired from third
parties that will take 12 months or longer to complete. The cost of land, if applicable, and buildings under development or
re-development (consisting of development sites, density or intensification rights and related infrastructure) are specifically
identifiable costs incurred in the period before construction is complete. Capitalized costs include pre-construction costs essential
to the development or re-development of the property, construction costs, borrowing costs directly attributable to the
development, real estate taxes, and other costs incurred during the period of development or re-development. Additions to
investment properties consist of costs of a capital nature and, in the case of properties under development and/or redevelopment,
capitalized interest. Directly attributable borrowing costs are also capitalized on land or properties acquired specifically for
development or redevelopment when activities necessary to prepare the asset for development or redevelopment are in progress in
accordance with IAS 23 – Borrowing Costs (“IAS 23”). Where borrowings are associated with specific developments, the amount
capitalized is the total cost incurred on those borrowings.
The capitalization of borrowing costs commences when the activities necessary to prepare an asset for development or
redevelopment begins, and continues until the date that substantially all of the construction is complete and all necessary
occupancy and related permits have been received, whether or not the space is leased. If the Trust is required, as a condition of a
lease, to construct tenant improvements that enhance the value of the property, then capitalization of costs continues until such
improvements are completed. Capitalization ceases if there is a prolonged period where development activity is interrupted.
Properties under active development are generally valued at market land values, if applicable, plus costs invested to date. Where
significant leasing and construction is in place and the future income stream is reasonably determinable, the valuation methodology
used is similar to that of revenue-producing properties, less estimates of future capital outlays, construction and development costs,
to determine a net “as-is” market value. Development risks such as planning, zoning, licenses, and building permits are considered in
the valuation process. Properties not under active development, such as land parcels held for future development, are valued based
on comparable sales of land. Significant increases (decreases) in construction costs, cost escalation rates, and estimated time to
complete construction in isolation would result in a significantly lower (higher) fair value for properties under development.
(H) 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(f)) and IFRS 5 (see NOTE 2(i)).
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(j)). 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 (loss) 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 estimates 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”).
171
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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 5)
Useful Life / Depreciation Rate
Depreciation Method Used
Administrative building
Administrative building
Site equipment
Automobiles
Warehouse assets
Corporate assets
Site equipment and other assets
Site equipment and other assets
Site equipment and other assets
Site equipment and other assets
Computer hardware
Corporate technology assets
Computer software (1)
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
(1)
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.
(I) ASSETS 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 resell, 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 (loss).
(J) 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 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
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 (loss). 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.
172
(K) INVENTORIES
Inventories 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.
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.
(L) LEASES
The Trust as a Lessee
The Trust assesses whether a contract is, or contains, a lease at inception of the contract. The Trust recognizes a right-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Trust recognizes the
lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Trust uses its incremental
borrowing rate. The incremental borrowing rate is defined as the rate of interest that the lessee would have to pay to borrow over a
similar term and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment.
Lease payments included in the measure of the lease liability comprise:
• Fixed payments (including in-substance fixed payments), less any lease incentives;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the lease payments made (see NOTE 2(r) for definition of
effective interest method).
The Trust re-measures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
• The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease
liability is re-measured by discounting the revised lease payments using a revised discount rate;
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual
value, in which cases the lease liability is re-measured by discounting the revised lease payments using the initial discount rate; or
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is
re-measured by discounting the revised lease payments using a revised discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are subsequently measured either at fair value (in the case of right-of-use
assets which are considered part of investment properties) or at cost less accumulated depreciation and impairment losses (for
right-of-use assets which are considered property, plant and equipment). Right-of-use assets are depreciated over the shorter
period of the lease term and the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The Trust applied IAS 36 to determine whether a right-of-use asset is impaired.
173
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use
asset. The related payments are recognized as an expense in the period in which the event or condition that triggers those payments
and are included in operating expenses in the consolidated statement of comprehensive income (loss).
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and
associated non-lease components as a single arrangement. The Trust has used this practical expedient on those contracts
(warehouse space and office space) which contain both lease and non-lease components.
The Trust as a Lessor
The Trust enters into lease agreements as a lessor with respect to its investment properties. Leases for which the Trust is a lessor are
classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. As the Trust has retained
substantially all of the risks and benefits of ownership of its investment properties, it accounts for leases with its tenants as operating
leases. As operating leases, lease payments are recognized as revenue when the tenant has a right to use the leased asset. The leased
asset is recognized in the consolidated statement of financial position according to the nature of the underlying asset.
(M) TAXATION
For fiscal 2021 and 2020, 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
Unitholders. This exemption, however, does not extend to the corporate subsidiaries of Boardwalk REIT that are subject to income tax
(NOTE 30 summarizes the Trust’s subsidiaries, including its corporate subsidiaries). The Trust establishes provisions for taxes when,
despite the belief that its tax positions are fully supportable, it is possible that its positions may be challenged and disallowed by the
relevant tax authorities. The consolidated tax expense (recovery) and related accruals include the impact of such reasonably estimated
disallowances as deemed appropriate. To the extent that the probable tax outcome of these matters changes, such changes in
estimates will impact the income tax expense (recovery) in the period in which such determination is made.
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 statements of comprehensive income (loss) 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 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 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.
(N) 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
174
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.
(O) UNIT-BASED PAYMENTS
Equity-settled unit-based payments to employees and Board of 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 Trust Units once the deferred units vest.
Under IFRS 9 – Financial Instruments (“IFRS 9”), 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 (loss).
Fair value of the deferred units is calculated based on the observable market price of Boardwalk REIT’s Trust Units.
(P) 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 (“IAS 20”), 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.
(Q) 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 incentives 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.
Lease revenue earned directly from leasing the asset is recognized and measured in accordance with IFRS 16. In addition to
revenue generated directly from the operating lease, rental revenue includes non-lease revenue earned from the tenant, which is
recognized and measured under IFRS 15 – Revenue from Contracts with Customers (“IFRS 15”). Non-lease revenue includes
parking revenue, other service revenue and fees, and recovery of certain operating costs, including retirement services and cable
(internet and television). These revenues are recognized when earned.
IFRS 15 requires revenue recognized from customer contracts (non-lease components) to be disclosed separately from its other
sources of revenue (NOTE 22 and NOTE 33).
(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 (loss).
175
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 (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.
(v) Development Management Fees
Boardwalk has an interest in an investment property through a joint arrangement whereby the Trust provides development
management services to the co-owners. As the services are provided over a period of time, income is recognized on a
straight-line basis, unless there is evidence that some other method would better reflect the pattern of performance.
(vi) Property Management Fees
Boardwalk has an interest in an investment property through a joint arrangement whereby the Trust provides residential
property management services to the co-owners for a management fee equal to 3.5% of gross revenue generated from the
residential component of the investment property. The management fees are recorded as services are provided.
(R) FINANCIAL INSTRUMENTS AND DERIVATIVES
Financial instruments and derivatives are accounted for, presented, and disclosed in accordance with IFRS 7 – Financial Instruments:
Disclosures, IFRS 9 and IAS 32. 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 and measured on the basis of the Trust’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets. As such, after initial recognition, financial assets are classified and
measured based on three categories: (i) amortized cost, (ii) fair value through other comprehensive income (FVTOCI), or (iii) fair value
through profit and loss (FVTPL). 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
Amortized cost
FVTOCI
FVTPL
Debt instrument is held within a business model whose objective
is to hold financial assets in order to collect contractual cash flows
and the contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Measured at amortized cost using
the effective interest rate method
less any expected credit loss. (1) (2)
Debt instrument is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling the
financial assets; and the contractual terms of the financial asset
give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Stated at fair value, with gains or
losses arising on measurement
recognized in other comprehensive
income (loss).
Financial assets that do not meet the criteria for being measured
at amortized cost or FVTOCI are measured at FVTPL. Specifically,
investments in equity instruments or debt instruments which do not
meet the amortized cost or FVTOCI definitions.
Measured at fair value, with
gains or losses recognized in
profit or loss.
(1)
(2)
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.
Financial assets, other than those at FVTPL, are required to use an expected credit loss impairment model. The expected credit loss model requires the Trust to account
for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in the credit risk since initial recognition of the financial
asset. It results in an allowance for estimated credit losses being recorded on financial assets regardless of whether there has been an actual loss event.
176
Boardwalk REIT’s financial assets are as follows:
Financial Asset
Classification and Measurement
Investment in private technology venture fund
Mortgage receivable
Trade and other receivables
Segregated tenants’ security deposits
Cash and cash equivalents
FVTPL
FVTPL
Amortized cost
Amortized cost
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 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 and measured as either amortized cost or FVTPL. 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.
Amortized cost
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.
177
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Boardwalk REIT’s financial liabilities are as follows:
Financial Liability
Mortgages payable
LP Class B Units
Construction loan payable
Classification and Measurement
Amortized cost
FVTPL
Amortized cost
Deferred unit-based compensation
FVTPL
Refundable tenants’ security deposits
Trade and other payables
Amortized cost
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. 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, 2021 and 2020, the Trust had no embedded derivatives
requiring separate recognition.
(S) CASH AND CASH EQUIVALENTS
Cash is comprised of bank balances, interest-earning bank accounts, and term deposits with maturities of 90 days or less.
(T) CRITICAL JUDGMENT IN APPLYING ACCOUNTING POLICIES
The following are the critical judgments, apart from those involving estimations (see NOTE 2(u) 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.
178
(ii)
Investment Property and Internal Capital Program
The Trust’s accounting policy relating to investment property is described in NOTE 2(f) 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.
(iii) Interest in Joint Operations, Associates, and Joint Ventures
When determining the appropriate basis of accounting for the Trust’s investees, the Trust makes judgement about the degree of
influence that Boardwalk REIT exerts directly or through an arrangement over the investee’s relevant activities. This may include
the ability to elect investee directors, appoint management, or influence key decisions. Judgement is also required in
determining whether or not an arrangement is a joint operation or joint venture.
(U) KEY ACCOUNTING ESTIMATES AND ASSUMPTIONS
Below 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.
In addition, beginning in 2020, the COVID-19 pandemic has had a substantial impact on the Canadian economy. As a result of the
uncertainty associated with the unprecedented nature of the COVID-19 pandemic, some of the Trust’s significant judgements were
impacted. Specifically, significant judgement was required when measuring the Trust’s investment properties which are carried at
fair value using assumptions based on market conditions, which currently have limited long-term visibility. The full long-term impact
of COVID-19 pandemic on the valuation of investment properties remains unknown. Furthermore, judgement was required in
assessing the collectability of any outstanding tenant receivable balances and the consideration of applying an allowance for
estimated credit losses to these balances, and one was not applied. In response to the spread of the virus, provincial governments
initially limited landlord’s ability to evict tenants for the non-payment of rent but have since lifted this regulation. Social (physical)
distancing actions resulted in the temporary closure of many businesses, which has had a significant impact on unemployment rates
across Canada and may adversely impact resident’s ability to pay rent, with the long-term impact being unknown.
(i)
Investment Properties
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 market 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 5, and forecasts 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 identified
as part of a specific upgrade or capital improvement. Elements included under the internal capital program are capitalized to
investment properties.
(iv) Utility Accrual
The 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.
179
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 (v) 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 19.
Note 3: 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
Summary of Requirements
IFRS 3 – Business Combinations
Amendments to IFRS 10 and IAS 28 –
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
IAS 1 – Presentation of
Financial Statements
The amendment updates reference to the Conceptual
Framework. Specifically, the standard is updated to
refer to the 2018 Conceptual Framework instead of the
1989 Framework; a new requirement is added that, for
transactions and other events within the scope of IAS 37
or interpretations of the IFRS Committee (“IFRIC”) 21 –
Levies, an acquirer applies IAS 37 or IFRIC 21 (instead of
the Conceptual Framework) to identify the liabilities it has
assumed in a business combination; and the addition of
an explicit statement that an acquirer does not recognize
contingent assets acquired in a business combination.
The amendment applied prospectively and is effective
for annual periods beginning on or after January 1, 2022.
Early adoption is permitted.
The amendments deal with situations where there is a
sale or contribution of assets between an investor and its
associate or joint venture. Specifically, the amendments
state that gains or losses resulting from the loss of control
of a subsidiary that does not contain a business in a
transaction with an associate or a joint venture that is
accounted for using the equity method, are recognized in
the parent’s profit or loss only to the extent of the unrelated
investor’s interests in that associate or joint venture. The
effective date of the amendments has yet to be set, however,
earlier application is permitted.
The amendment deals with the presentation of liabilities,
not the amount or timing of recognition, or disclosure.
Specifically, the amendment clarifies the classification of
liabilities as current or non-current should be based on
rights that are in existence at the end of the reporting period
and that classification is unaffected by expectations about
whether an entity will exercise its right to defer settlement
of a liability.
The amendment is effective for annual reporting periods
beginning on or after January 1, 2023 and are to be applied
retrospectively, with earlier application permitted.
Possible Impact on Consolidated
Financial Statements
The Trust does not expect this
amendment to have any impact on its
consolidated financial statements.
The Trust is assessing the potential
impact but does not expect any
significant impact.
The Trust is assessing the potential
impact but does not expect any
significant impact.
180
Possible Impact on Consolidated
Financial Statements
The Trust does not expect this
amendment to have any impact on its
consolidated financial statements.
The Trust is assessing the potential
impact but does not expect any
significant impact.
The Trust does not expect this
amendment to have any impact on its
consolidated financial statements.
New or Amended Standards
Summary of Requirements
IAS 16 – Property, Plant
and Equipment
IAS 37 – Provisions, Contingent
Liabilities and Contingent Assets
2018-2020 Cycle
IFRS 9 – Financial Instruments
The amendment covers proceeds from selling items
produced from property, plant and equipment before its
intended use. Specifically, the amendment to the standard
prohibit deducting from the cost of an item of property,
plant and equipment any proceeds from selling items
produced while bringing that asset to the location and
condition necessary for it to be capable of operating in
the manner intended by management. Instead, an entity
recognizes the proceeds from selling such items, and the
cost of producing those items, in profit or loss.
The amendment is applied retrospectively and is effective
for annual periods beginning on or after January 1, 2022.
Early application is permitted.
The amendment clarifies what costs an entity considers
in assessing whether a contract is onerous. Specifically,
the cost of fulfilling a contract comprises the costs that
relate directly to the contract. Costs that relate directly to
a contract can either be incremental costs of fulfilling that
contract or an allocation of other costs that relate directly to
fulfilling contracts.
The amendment is applied prospectively to contracts for
which the entity has not yet fulfilled all its obligations at the
beginning of the annual reporting period in which the entity
first applies the amendments or after the first reporting
period beginning on or after January 1, 2022.
The amendment clarifies which fees an entity includes
when it applies the ’10 per cent’ test in assessing whether
to derecognize a financial liability when there is an
exchange between an existing borrower and lender of debt
instruments with substantially different terms or similarly
when a substantial modification of the terms of an existing
financial liability or a part of it occurs. Specifically, an entity
includes only fees paid or received between the entity (the
borrower) and the lender, including fees paid or received by
either the entity or the lender on the other’s behalf.
The amendment is applied prospectively and is effective
for annual reporting periods beginning on or after
January 1, 2022.
181
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Note 4: Investment Properties
As at
Balance, beginning of year
Additions
Building acquisitions
Building improvements (incl. internal capital program)
Development of investment properties (1)
Dispositions
Fair value gains (losses), unrealized
Balance, end of year
As at
Fair value of investment properties, before buildings valued at
Level 2 inputs, right-of-use assets, and developments
Buildings valued at Level 2 inputs
Fair value, right-of-use assets (IFRS 16 – Leases)
Revenue producing properties
Properties under development (2)
Total
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
5,948,955
$
6,147,482
72,316
121,492
10,511
(64,174)
403,869
81,389
108,653
32,906
(38,504)
(382,971)
$
6,492,969
$
5,948,955
Dec. 31, 2021
Dec. 31, 2020
$
6,309,079
$
5,746,471
72,316
76,092
6,457,487
35,482
81,389
77,635
5,905,495
43,460
$
6,492,969
$
5,948,955
(1)
(2)
On February 1, 2021, and on September 1, 2020, and November 2, 2020, the Trust purchased adjacent parcels of land in Victoria, British Columbia, for a purchase price of
$1.9 million, $3.1 million, and $9.8 million, respectively. In addition, on November 23, 2020, the Trust purchased an additional parcel of land in Victoria, British Columbia,
for a purchase price of $14.0 million. The acquisitions were funded with cash on hand and are planned for two separate development projects of new rental units.
On February 21, 2020, a 162-unit development project in Calgary, Alberta (where the Trust owns 50%), with costs totaling $36.5 million was transferred from
development to revenue producing properties.
On April 19, 2021, the Trust acquired a property in Victoria, British Columbia. The property is comprised of 114 units and was
purchased for $48.2 million. The acquisition was funded with mortgage financing of $32.0 million and cash on hand of $16.2 million.
On April 16, 2021, the Trust acquired a property in Banff, Alberta. The property is comprised of 81 units and was purchased using
cash on hand for $24.1 million.
On September 28, 2020, the Trust acquired a portfolio of four properties in Southwestern Ontario, located in the markets of
Kitchener, Waterloo, and Cambridge. The portfolio is comprised of 226 units and was purchased for $64.6 million. The acquisition
was funded with cash on hand and the assumption of a mortgage for $7.0 million.
On August 27, 2020, the Trust purchased a property in Cambridge, Ontario. The property is comprised of 56 units and was purchased
for $16.8 million. The acquisition was funded with cash on hand and the assumption of a mortgage for $9.1 million.
Building Acquisitions
Purchase price
Transaction costs
Total
Allocation of fair value to investment properties
Multi-family units acquired
Purchase price
Transaction costs
Proceeds from mortgage financing
Mortgage financing assumed
Net cash paid
Please refer to NOTE 24 for details on the Trust’s dispositions in fiscal 2021 and 2020.
182
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
$
$
72,000
316
72,316
72,316
195
$
$
$
$
72,000
316
(32,000)
-
$
40,316
$
79,200
2,189
81,389
81,389
282
79,200
2,189
-
(16,060)
65,329
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, 2021, there has been no
change to the valuation techniques.
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 is 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, 2021
Balance,
Beginning
of Year
Building
Acquisitions
Improvements
to Investment
Properties
Development
of Investment
Properties
Dispositions
(NOTE 24)
Fair Value
Gains
(Losses)
Balance,
End of Year
Recurring measurements
Investment properties
Calgary
Edmonton
Other Alberta
Victoria
Brampton
Cambridge
Kitchener
London
Mississauga
Waterloo
Montreal
Quebec City
Regina
Saskatoon
Land leases
Total
$ 1,316,253 $
2,165,320
278,647
27,883
1,916
29,550
103,260
407,868
11,993
17,194
120,882
209,380
294,908
264,053
699,848
-
-
24,113
48,203
-
-
-
-
-
-
-
-
-
-
-
$
17,486
$
11
$
- $ 103,939 $ 1,437,689
44,234
7,252
32
-
285
2,961
7,951
-
160
3,433
10,560
7,666
6,540
12,932
-
-
2,828
1,170
-
-
-
-
-
-
6
-
-
(21,005)
53,811
2,242,360
(2,955)
307,057
-
-
-
-
-
-
(32)
-
3,083
13,729
62,710
-
-
-
-
(24,967)
1,516
14,543
14,094
19,497
32,558
78,914
3,086
32,918
119,950
478,529
-
18,870
138,858
234,034
322,077
278,184
-
87,663
800,443
6,496
(18,202)
(287)
$ 5,948,955 $
72,316
$ 121,492
$
10,511
$
(64,174) $ 403,869 $ 6,492,969
183
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Year Ended December 31, 2020
Balance,
Beginning
of Year
Building
Acquisitions
Improvements
to Investment
Properties
Development
of Investment
Properties
Dispositions
(NOTE 24)
Fair Value
(Losses)
Gains
Balance,
End of Year
$ 1,413,661 $
-
$
22,838
$
3,718
$
- $
(123,964) $ 1,316,253
2,314,352
297,793
-
978
-
68,200
407,318
11,631
-
-
-
-
29,550
34,645
-
-
-
17,194
116,351
201,800
323,440
269,356
722,602
-
-
-
-
-
43,841
7,066
-
-
69
1,103
5,991
-
31
2,828
3,891
6,306
7,219
7,470
-
-
27,883
938
-
-
-
362
-
-
-
5
-
-
-
-
-
-
-
-
-
-
-
-
-
(7,426)
-
(192,873)
2,165,320
(26,212)
278,647
-
-
(69)
(688)
(5,441)
-
(31)
1,703
3,689
(27,417)
(12,522)
27,883
1,916
29,550
103,260
407,868
11,993
17,194
120,882
209,380
294,908
264,053
(31,078)
854
699,848
$ 6,147,482 $
81,389
$
108,653
$
32,906
$
(38,504) $
(382,971) $ 5,948,955
Recurring measurements
Investment properties
Calgary
Edmonton
Other Alberta
Victoria
Brampton
Cambridge
Kitchener
London
Mississauga
Waterloo
Montreal
Quebec City
Regina
Saskatoon
Land leases
Total
Investment properties measured at fair value in the consolidated statements 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 circumstances
that caused the transfer. As at December 31, 2021, all of the Trust’s investment properties were Level 3 inputs, except newly
acquired buildings within the last year which were Level 2 inputs. For investment properties measured at fair value as at December
31, 2021 and December 31, 2020, there were five investment properties transferred during the third quarter of 2021 from Level 2
into Level 3 fair value measurements. These five investment properties were valued using Level 3 inputs for the third quarter in
2021, as at September 30, 2021, and valued using Level 2 inputs for the second and first quarters in 2021, as at June 30, 2021, and
March 31, 2021, as well as at December 31, 2020. The fair value of these five investment properties as at December 31, 2021, totaled
$90.6 million and were valued using Level 3 inputs (December 31, 2020 – $81.4 million valued using Level 2 inputs). These five
investment properties were previously valued at Level 2 because they were newly acquired buildings and used inputs which were
directly observable for these assets, as the fair value was based on a purchase and sale agreement between two willing market
participants. Other than these five investment properties, there were no other transfers into or out of Level 3 fair value
measurements for investment properties held as at December 31, 2021 and December 31, 2020.
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 and approved by the Trust’s Board of Trustees. The Appraisers are an independent valuation firm not related to the
Trust and employ valuation 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:
184
Date
December 31, 2021
September 30, 2021
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Number
of Properties
4
4
4
4
4
4
4
4
$
$
$
$
$
$
$
$
Aggregate
Fair Value
781,480
155,616
146,358
223,698
615,599
158,394
157,212
130,597
Percentage of Portfolio
as of that Date
12.0%
2.4%
2.4%
3.7%
10.3%
2.6%
2.6%
2.2%
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 Appraisers. 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 corroborate 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. This summary includes the Appraisers’ estimates of Capitalization Rates (“Cap Rate”) for each region (city) as
well as confirmation of the reasonableness of the assumptions used in determining stabilized net operating income (“NOI”) used in
calculating fair values.
The third-party valuation technique of the Trust’s investment property portfolio primarily utilizes the “Overall Capitalization Rate”
method. This method requires that a forecasted stabilized NOI for each individual property be divided by a Cap Rate to determine a
property’s 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. Fair value also
considers any forecasted capital expenditures within the year to maintain the property in good condition. Given the short-term
nature of residential leases (typically one year), revenue and costs are not discounted. A Cap 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.
Four of the Trust’s properties: one in Banff, Alberta, one in Edmonton, Alberta, and two in Montreal, Quebec, 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.
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 2029), this property 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 rate reflects 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.
185
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
The key valuation metrics (and significant unobservable inputs in Level 3) for the Trust’s investment properties are set out in the
following table:
As at
Dec. 31, 2021
Dec. 31, 2020
Capitalization Rate
Weighted Average
Forecasted Total
Stabilized Net
Operating Income
Capitalization Rate
Weighted Average
Forecasted Total
Stabilized Net
Operating Income
Calgary
Edmonton
Other Alberta
Cambridge
Kitchener
London
Waterloo
Montreal
Quebec City
Regina
Saskatoon
Land Leases
4.74%
$
68,154
5.00%
$
5.04%
6.44%
4.00%
4.00%
4.01%
4.00%
4.73%
5.00%
5.68%
5.69%
4.97%
4.66%
$
$
112,968
18,178
1,317
4,798
19,176
755
6,571
11,706
18,279
15,818
277,720
33,724
5.29%
6.47%
-%
4.50%
4.51%
-%
5.04%
5.44%
5.93%
5.94%
5.28%
5.18%
$
$
65,745
114,552
17,981
-
3,088
18,385
-
6,093
11,390
17,471
15,687
270,392
32,258
The overall weighted average stabilized Cap Rates for measuring the Trust’s investment properties at fair value using a forecasted
stabilized NOI as at December 31, 2021 and 2020 was 4.94% and 5.27%, respectively.
The Overall Capitalization Rate method requires inputs of both stabilized NOI and Cap Rate to determine a fair value. 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 Cap Rate will result in a decrease to the fair value of an investment
property. When the Cap Rate is applied to NOI to calculate fair value, there is a significant impact as the lower the Cap Rate, the larger
the impact. The following tables summarize the impact of changes in both the Cap Rates and forecasted stabilized NOI on the Trust’s
fair value of investment properties (excluding building acquisitions valued at Level 2 inputs, right-of-use assets, and developments):
As at December 31, 2021
Stabilized Net Operating Income
Cap Rate
-0.25%
Cap Rate As Reported
+0.25%
-3%
-1% As Forecasted
+1%
+3%
$ 302,101
$ 308,330
$ 311,444
$ 314,558
$
320,787
4.69%
$
137,191
$ 270,104
$ 336,560
$
403,017
$ 535,929
4.94%
5.19%
(189,272)
(484,263)
(63,091)
6,309,079
63,091
(364,164)
(304,114)
(244,064)
189,272
(123,965)
As at December 31, 2020
Stabilized Net Operating Income
Cap Rate
-0.25%
Cap Rate As Reported
+0.25%
-3%
-1%
As Forecasted
+1%
$
$
293,571
105,381
$
$
299,624
226,038
$
$
302,650
286,366
$
$
305,677
346,695
$
$
(172,394)
(424,994)
(57,465)
(315,273)
5,746,471
(266,484)
57,465
(205,551)
+3%
311,730
467,352
172,394
(95,830)
5.02%
5.27%
5.52%
Investment properties with a fair value of $724.4 million (December 31, 2020 – $622.2 million) are situated on land held under
land leases.
186
Investment properties with a fair value of $813.7 million (December 31, 2020 – $762.5 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 on a structured loan. In addition, investment properties with a fair value of $6.1 billion (December 31, 2020 –
$5.7 billion) are pledged as security against the Trust’s mortgages payable. As at December 31, 2021, there are no contractual
obligations to purchase, construct, or develop investment properties, or for repairs, maintenance, and enhancements, except for the
fixed-price contract in place for the construction of the new development project (amenities building) in Regina, Saskatchewan, and
the joint venture project to develop two mixed-use towers in Brampton, Ontario (NOTE 6).
For the years ended December 31, 2021 and 2020, investment properties earned rental revenue (including ancillary rental income) of
$470.5 million and $465.6 million, respectively. Total rental expenses in relation to investment properties were $196.2 million and
$196.4 million for the years ended December 31, 2021 and 2020, respectively.
Note 5: Property, Plant and Equipment
The carrying amounts of PP&E were as follows:
As at
Dec. 31, 2021
Dec. 31, 2020
Accumulated
Depreciation
Cost
Carrying
Amount
Cost
Accumulated
Depreciation
Carrying
Amount
Administration building
Site equipment and other
Corporate technology assets
$
6,851
$
(4,265)
$
2,586
$
6,750
$
(4,045)
$
2,705
64,666
49,105
(45,222)
(41,258)
19,444
7,847
62,702
45,787
(41,076)
(37,929)
21,626
7,858
Total
$ 120,622
$
(90,745)
$
29,877
$
115,239
$
(83,050)
$
32,189
The following table outlines a reconciliation of the carrying amount of PP&E as at December 31, 2021:
Administration building
Site equipment and other
Corporate technology assets (1)
Total
Balance,
Beginning of Year
Additions
to PP&E
Disposals
Depreciation
Balance,
End of Year
$
2,705
$
102
$
-
$
(221)
$
2,586
21,626
7,858
2,140
3,328
(72)
(1)
(4,250)
(3,338)
19,444
7,847
$
32,189
$
5,570
$
(73)
$
(7,809)
$
29,877
(1)
Included in corporate technology assets for the year ended December 31, 2021, was $1.1 million 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, 2020:
Balance,
Beginning of Year
Additions
to PP&E
Remove
Right-of-use
Asset
Disposals
Depreciation
Balance,
End of Year
Administration building
$
2,873
$
63
$
-
$
-
$
(231)
$
2,705
Site equipment and other
Corporate technology assets (1)
25,213
8,203
3,269
3,070
(2,260)
-
(46)
(1)
(4,550
(3,414
21,626
7,858
Total
$
36,289
$
6,402
$
(2,260)
$
(47)
$
(8,195)
$
32,189
(1)
Included in corporate technology assets for the year ended December 31, 2020, was $0.9 million of capitalized programmers’ salaries related to the internally developed
software applications used by the Trust in the normal course of its operations.
187
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Note 6: Equity Accounted Investment
On December 19, 2018, the Trust contributed $9.9 million into a limited partnership (with a general partner operating as “Redwalk
Brampton Inc.”) for a 50% interest in the partnership and the partnership is a joint venture. The principal activity of the partnership
is to develop and operate a mixed-use property in Brampton, Ontario.
For the year ended December 31, 2021, the Trust contributed $6.2 million (year ended December 31, 2020 – $9.2 million), resulting in a
total investment of $41.1 million as at December 31, 2021. As at December 31, 2021 and 2020, the partnership had the following
assets and liabilities:
As at
Non-current assets
Current assets (1)
Non-current liability
Current liabilities
Dec. 31, 2021
Dec. 31, 2020
$
126,593
$
1,387
36,393
9,352
73,147
1,011
-
4,226
(1)
Included in current assets, as at December 31, 2021, is cash of $(0.3) million (December 31, 2020 – $0.3 million).
During the first quarter of 2021, the Trust, in conjunction with its joint venture partner, entered into a $122 million revolving
construction facility loan with a third-party financial institution. As at December 31, 2021, $36.4 million has been drawn on this loan,
of which Boardwalk’s portion is $18.2 million. The facility is interest payable only and has a maturity date of January 31, 2025.
The facility bears interest at prime plus 0.25%, or a Bankers’ Acceptance stamping fee of 1.23% and a standby fee of 0.15%.
The revolving construction facility loan contains three financial covenants. These covenants are consistent with those found in the
credit facility outlined in NOTE 29(d). As at December 31, 2021, the Trust was in compliance with these covenants.
Note 7: Investment in Private Technology Venture Fund
For the year ended December 31, 2021, the Trust contributed $nil (year ended December 31, 2020 – $0.6 million) into a private real
estate technology venture fund. For the year ended December 31, 2021, there were no distributions received from this investment.
For the year ended December 31, 2020, the Trust received a distribution for $0.2 million from this investment representing a return
of capital of $0.1 million and an investment gain of $0.1 million recorded in the consolidated statement of comprehensive income
(loss) as other income. As at December 31, 2021, total investment was $2.0 million (December 31, 2020 – $2.0 million). The Trust has
committed to contribute an additional USD $0.4 million. As a financial asset, this investment is being carried at fair value through
profit and loss. As at December 31, 2021 and 2020, the fair value was equivalent to the contributed capital.
Note 8: Lease Receivable
In 2020, the Trust entered into a sublease for one of the warehouse spaces it carries as a lease obligation.
Dec. 31, 2021
Dec. 31, 2020
Weighted
Average Interest
Lease Balance
Weighted
Average Interest
Lease Balance
4.13%
$
$
$
$
964
964
697
267
964
4.13%
$
$
$
$
1,616
1,616
652
964
1,616
Lease receivable
Fixed rate
Total
Current
Non-current
188
In 2020, upon initial recognition of this lease receivable, the Trust derecognized the right-of-use asset it had recorded as a result of
the lease obligation. The difference between the right-of-use asset and the lease receivable of $0.2 million is recorded in the
consolidated statement of comprehensive income (loss) as an adjustment to the right-of-use asset related to the lease receivable.
Estimated future principal payments expected to be received for the lease receivable as at December 31, 2021 are as follows:
12 months ending December 31, 2022
12 months ending December 31, 2023
Note 9: Prepaid Assets
The major components of prepaid assets are as follows:
As at
Prepaid property taxes
Prepaid land leases
Prepaid expenses and other
Amount
697
267
964
$
$
Dec. 31, 2021
Dec. 31, 2020
$
$
380
$
2,856
3,242
6,478
$
363
2,856
2,965
6,184
Note 10: Trade and Other Receivables
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.
As at
Trade and other receivables
Receivable from insurers
Refundable mortgage fees
Dec. 31, 2021
Dec. 31, 2020
$
$
1,863
$
3,774
518
2,395
8,779
-
6,155
$
11,174
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 11: 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 $7.8 million at December 31, 2021 and $7.6 million at
December 31, 2020.
Note 12: Cash and Cash Equivalents
Cash and cash equivalents include cash of $64.3 million and term deposits with maturities of 90 days or less of $nil
(December 31, 2020 – cash of $38.0 million and term deposits of $15.0 million).
189
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Note 13: Mortgages Payable
As at
Mortgages payable
Fixed rate
Total
Current
Non-current
Dec. 31, 2021
Dec. 31, 2020
Weighted
Average Interest
Debt Balance
Weighted
Average Interest
Debt Balance
2.46%
$
$
$
2,978,437
2,978,437
507,423
2,471,014
$
2,978,437
2.58%
$
$
$
$
2,896,790
2,896,790
444,109
2,452,681
2,896,790
Estimated future principal payments required to meet mortgage obligations as at December 31, 2021 are as follows:
12 months ending December 31, 2022
12 months ending December 31, 2023
12 months ending December 31, 2024
12 months ending December 31, 2025
12 months ending December 31, 2026
Subsequent
Total mortgage principal outstanding
Unamortized deferred financing costs
Unamortized market debt adjustments
Secured By
Investment Properties
$
507,423
416,451
377,919
538,838
515,906
732,441
3,088,978
(110,855)
314
$
2,978,437
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 various dates between January 19, 2005
and April 22, 2021, 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 $250,000 under a Letter of Credit issued in favor of CMHC. This agreement has been extended to
April 25, 2023.
During the years ended December 31, 2021 and 2020, the Trust had a committed revolving credit facility with a major financial
institution. This credit facility is 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, 2021 (December 31, 2020 – $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 25, 2026.
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, 2021 (December 31, 2020 – $nil) under this facility, except for Letters of Credit
(“LCs”) issued and outstanding. The LCs totaled $0.3 million as at December 31, 2021 (December 31, 2020 – $0.3 million). As such,
approximately $199.7 million was unused and available from this facility on December 31, 2021 (December 31, 2020 – $199.7 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).
190
Note 14: LP Class B Units
The Class B Limited Partnership Units (“LP Class B Units”), as defined in NOTE 21, representing an aggregate fair value of $245.4 million
at December 31, 2021 (December 31, 2020 – $151.0 million), are non-transferable, except under certain circumstances, but are
exchangeable, on a one-for-one basis, into Trust 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 Trust Units. Each LP Class B Unit is 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 IFRS 9. Gains or losses resulting from changes in the fair value
at each reporting date are recorded in the consolidated statement of comprehensive income (loss) and are included in NOTE 25.
As at December 31, 2021 and December 31, 2020, there were 4,475,000 LP Class B Units issued and outstanding.
Note 15: Lease liabilities
As lessee, the Trust leases several assets which are secured by the lessor’s title to the leased assets for such leases. The following
represents the major type of leases the Trust maintains as lessee:
(i)
Land Leases
The Trust has entered into non-cancellable land leases for land related to four 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 3 to 74 years as at December 31, 2021.
Two of the land leases provide for annual rent.
(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 are for one to four years.
As at
Lease liabilities
Fixed rate
Total
Current
Non-current
Dec. 31, 2021
Dec. 31, 2020
Weighted
Average Interest
Lease Balance
Weighted
Average Interest
3.23%
$
$
$
$
80,091
80,091
3,909
76,182
80,091
3.26%
$
$
$
$
Estimated future principal payments required to meet lease liabilities as at December 31, 2021 are as follows:
12 months ending December 31, 2022
12 months ending December 31, 2023
12 months ending December 31, 2024
12 months ending December 31, 2025
12 months ending December 31, 2026
Subsequent
Total lease liabilities
$
$
Balance
83,872
83,872
3,842
80,030
83,872
Amount
3,909
2,722
2,142
1,875
1,795
67,648
80,091
The Trust had a land lease attributable to a property that was sold on June 25, 2020 (NOTE 24). Under this land lease, the Trust made
variable payments not linked to an index and, as such, these variable payments were excluded from lease liabilities and included in
operating expense. During 2020, up until the date the property was sold, variable lease payments related to this land lease and
included under operating expenses totaled $0.3 million.
191
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
In addition, the Trust has short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.
For these leases, the Trust recognizes the lease payments as an operating expense or applied against ancillary revenue. For the year
ended December 31, 2021, lease payments on short-term leases or leases of low value assets totaled $2.0 million (year ended
December 31, 2020 – $2.1 million).
Note 16: Construction Loan Payable
During 2019, the Trust, in conjunction with its joint operation partner, entered into a $50 million revolving construction facility loan
with a third-party financial institution. To date, $42.4 million has been drawn on this loan, of which Boardwalk’s portion is $21.2 million.
The facility is interest payable only and has a maturity date of January 31, 2022. The facility bears interest at prime plus 0.05%, or a
Bankers’ Acceptance interest rate of 1.97%, a Bankers’ Acceptance stamping fee of 1.05% and a standby fee of 0.21%.
The revolving construction facility loan contains two financial covenants. These covenants are consistent with those found in the
credit facility outlined in NOTE 29(d). The applicable covenants are those discussed in NOTE 29(d)(i) and NOTE 29(d)(iii). As at
December 31, 2021, the Trust was in compliance with these covenants.
Note 17: Deferred Unit-based Compensation
Deferred unit-based compensation is comprised of the following:
As at
Current
Non-current
Dec. 31, 2021
Dec. 31, 2020
$
$
2,328
4,660
6,988
$
$
973
2,242
3,215
The total of $7.0 million represents the fair value of the underlying deferred units at December 31, 2021 (December 31, 2020 –
$3.2 million). These units have been classified as “FVTPL” financial liabilities in accordance with IFRS 9. Gains or losses resulting
from changes in the fair value at each reporting date are recorded in the consolidated statement of comprehensive income (loss)
and are included in NOTE 25.
DETAILS OF THE DEFERRED UNIT-BASED COMPENSATION PLAN
During 2006, the Trust implemented a deferred unit-based compensation plan. The plan entitles the Board of Trustees, executives
and leaders, 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 was most recently amended on February 26, 2020.
192
As at December 31, 2021 and 2020, the deferred units outstanding, in whole or in part, were granted as follows:
Number
55,236
63,697
34,858
41,238
51,692
117,618
65,270
Deferred Units
Granted in
2015
2016
2017
2018
2019
2020
2021
Additional deferred
units earned
on units
Grant Date
Fair Value at
Grant Date
Vesting Date
Deferred Units
Outstanding
February, June & December 2015
$
February, June & December 2016
June & December 2017
June & December 2018
March, June & December 2019
March, June & December 2020
March, June & December 2021
3,094
3,065
1,614
1,771
2,188
4,454
2,676
February, June & December 2020
February, June & December 2021
June & December 2022
June & December 2023
March, June & December 2024
March, June & December 2025
March, June & December 2026
$
18,862
2,189
5,330
10,165
16,131
25,343
86,071
60,966
206,195
10,559
216,754
The initial cost of the deferred unit-based transactions is determined, in accordance with IFRS 2 – Share-based Payments, 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.
The status of the outstanding deferred units was as follows:
Balance, December 31, 2019
Deferred units granted
Additional deferred units earned on units
Deferred units forfeited
Deferred units converted to Trust Units or cash
Balance, December 31, 2020
Deferred units granted
Additional deferred units earned on units
Deferred units forfeited
Deferred units converted to Trust Units or cash
Balance, December 31, 2021
# of Units Outstanding
# of Units Vested
143,888
117,618
4,623
(1,838)
(87,660)
176,631
65,270
4,716
(3,280)
(26,583)
216,754
7,678
88,261
5,555
-
(87,660)
13,834
34,002
5,271
-
(26,583)
26,524
For the year ended December 31, 2021, total costs of $2.4 million (year ended December 31, 2020 – $3.3 million) were recorded in
expenses related to executive bonuses, leader bonuses, and trustee fees under the deferred unit plan.
193
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Note 18: 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
Distribution payable
Provisions
Dec. 31, 2021
Dec. 31, 2020
$
50,079
$
49,923
4,221
5,473
4,255
5,383
$
59,773
$
59,561
As at December 31, 2021 and 2020, the Trust’s most significant provision relates to vacation payable to its employees within each
employee’s individual employment agreement.
Note 19: Income taxes
CURRENT INCOME TAX
For the year ended December 31, 2021 and 2020, none of the Trust’s corporate entities had current tax expense. As such, none of
current income tax expense was recorded for the Trust’s corporate entities for the year ended December 31, 2021 (year ended
December 31, 2020 – $nil). All other corporate entities either have sufficient tax deductions to offset any taxable income or have
operating losses from previous years to apply against any taxable income.
DEFERRED INCOME TAX
For fiscal 2021 and 2020, Boardwalk REIT is a “mutual fund trust” as defined under the Tax Act and as a REIT is 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 Unitholders. This exemption, however, does not extend to the
corporate subsidiaries of Boardwalk REIT that are subject to income tax.
The sources of deferred tax balances and movements were as follows:
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
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
Dec. 31, 2020
Recognized
in Profit
Dec. 31, 2021
$
$
$
$
825
$
108
$
933
-
(2)
823
825
(2)
823
$
$
$
-
2
110
108
2
110
$
$
$
-
-
933
933
-
933
194
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
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
Dec. 31, 2019
Recognized
in Profit
Dec. 31, 2020
$
$
$
$
751
$
74
$
-
-
751
751
-
751
$
$
$
-
(2)
72
74
(2)
72
$
$
$
825
-
(2)
823
825
(2)
823
No current income taxes or deferred income taxes were recognized in equity, other than through profit or other comprehensive
income, for the years ended December 31, 2021 and 2020.
As at December 31, 2021, wholly-owned Canadian corporate subsidiaries have deferred tax assets of $0.9 million (December 31,
2020 – $0.8 million) related to operating losses, which expire over the next 11 to 19 years. The Trust believes that the future income of
these entities will be sufficient to utilize these deferred tax assets prior to their expiration.
The major components of income tax recovery include the following:
Current tax expense
Deferred tax recovery
Total income tax recovery
The income tax recovery for the year can be reconciled to the accounting profit as follows:
Profit (loss) before income tax
Remove (profit) loss from non-taxable entities
Accounting profit subject to tax
Deduct management fee charged to corporate entities
Taxable (loss) profit
Weighted average substantively enacted tax rate
Calculated income tax (recovery) expense
Changes to other deferred tax liabilities
Total income tax recovery
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
$
-
(110)
(110)
$
$
-
(72)
(72)
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
446,157
$
(197,351)
(396,156)
50,001
(50,224)
(223)
26.48%
(59)
(51)
$
(110)
$
247,004
49,653
(49,442)
211
26.51%
56
(128)
(72)
Note 20: Deferred Government Grant
In December 2013, the Trust received a government grant from the Province of Alberta totaling $7.5 million related to a 109-unit
property the Trust developed in Calgary, Alberta (the “Development”). 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.
Since the $7.5 million grant did not exceed 65% of the contracted construction costs of the Development, including land value,
attributable to the affordable units, no amount of the grant required immediate repayment to the government. 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.
This grant is being recognized to rental revenue on a systematic basis over the periods in which the Trust recognizes revenue from
the 54 units classified as affordable units.
195
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Note 21: Unitholders’ Equity
The Plan of Arrangement (the “Arrangement”) converting the Corporation to a real estate investment trust was completed on
May 3, 2004. Under the Arrangement, the former shareholders of the Corporation received Boardwalk REIT Trust Units or 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 “Trust Units” and a class described and designated as
“Special Voting Units”. The LP Class B Units are classified as a financial liability and are discussed in NOTE 14.
(A) TRUST UNITS
Trust Units represent an undivided beneficial interest in Boardwalk REIT and in distributions made by Boardwalk REIT. The Trust
Units are freely transferable, subject to applicable securities regulatory requirements. Each Trust Unit entitles the holder to one
vote at all meetings of Unitholders. Except as set out under the redemption rights below, the Trust Units have no conversion,
retraction, redemption or pre-emptive rights.
Trust 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 Trust Units tendered for
redemption shall be surrendered and the holder shall be entitled to receive a price per Trust Unit equal to the lesser of:
i)
ii)
90% of the “market price” of the Trust Units on the principal market on which the Trust Units are quoted for trading during
the twenty-day period ending on the trading day prior to the day on which the Trust Units were surrendered to Boardwalk
REIT for redemption; and,
100% of the “closing market price” of the Trust Units on the principal market on which the Trust Units are quoted for
trading on the redemption date.
The DOT authorizes Boardwalk REIT to issue an unlimited number of Trust Units for the consideration and on terms and conditions
established by the Board of Trustees without the approval of any Unitholders.
The Trust has the following capital securities outstanding:
As at
Trust Units outstanding, beginning of year
Units issued for vested deferred units
Units purchased and cancelled
Distribution in Units
Consolidation of Units
Dec. 31, 2021
Dec. 31, 2020
Units
Amount
Units
Amount
46,548,948
$ 202,512
46,461,293
$
200,268
26,564
(438,400)
273,474
(273,474)
1,064
(3,882)
14,995
-
87,655
2,244
-
-
-
-
-
-
Trust Units outstanding, end of year
46,137,112
$ 214,689
46,548,948
$
202,512
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 specified 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 November 18, 2021, Boardwalk REIT requested and received regulatory approval for a Normal Course Issuer Bid (a “Bid), which
commenced on November 22, 2021 and terminates on November 21, 2022. The Bid allows Boardwalk REIT to purchase and cancel up
to 3,780,351 Trust Units.
For the year ended December 31, 2021, Boardwalk REIT purchased and cancelled the following Trust Units:
Number of Trust Units Purchased and Cancelled
438,400
Purchase Cost
$ 24,049
Cost per Trust Unit
$
54.85
Year Ended December 31, 2021
196
For the year ended December 31, 2020, Boardwalk REIT did not have a normal course issuer bid in place and 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 6,860,047 Trust Units
at a total purchase cost of $296.0 million, or an average cost of $43.14 per Trust Unit.
Distribution in Trust Units and Consolidation of Trust Units
As a result of the increase in taxable income generated primarily from sale transactions in the year ended December 31, 2021,
the Board declared a special non-cash distribution on December 31, 2021, of 273,474 Trust Units at $0.325 per Trust Unit totaling
$15.0 million (December 31, 2020 – $nil).
Immediately following the issuance of Trust Units, the Trust Units were consolidated such that each Unitholder held the
same number of Trust Units after the consolidation as each Unitholder held prior to the special non-cash distribution. As at
December 31, 2021, the special distribution declared was recorded to Trust Units in accordance with IAS 32.
(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 Trust 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 Trust 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:
Boardwalk REIT Trust Units
Special Voting Units
Distributions
Units Outstanding
Dec. 31, 2021
Monthly
Distribution
Units Outstanding
Dec. 31, 2020
46,137,112
$0.0834/unit
4,475,000
N/A
46,548,948
4,475,000
Monthly
Distribution
$0.0834/unit
N/A
Monthly distributions and special distributions are determined at the discretion of the Board of Trustees, however the total income
distributed will not be less than the amount necessary to ensure the Trust will not be liable to pay income taxes under the Tax Act.
The taxable income allocated to the Unitholders and holders of LP Class B Units may vary in certain taxation years. Over time, such
differences, in aggregate, are expected to be minimal.
For the year ended December 31, 2021, the Trust declared cash distributions of $1.00 per Unit or $46.6 million (year ended
December 31, 2020 – $1.00 per Unit or $46.6 million). 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 Trust Units with a record date of January 31,
2022 (to be paid on February 15, 2022) totaled $3.8 million ($0.0834 per unit) and have not been included as a liability in the
consolidated statement of financial position as at December 31, 2021.
197
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
(C) PROFIT (LOSS) PER TRUST UNIT
Numerator
Profit (loss) – basic
Distribution declared on LP Class B Units
Gain on fair value adjustments on LP Class B Units
Gain on fair value adjustment to unexercised deferred units
Profit (loss) – diluted
Denominator
Weighted average Trust Units outstanding – basic
Conversion of LP Class B Units
Unexercised deferred units
Weighted average Trust Units outstanding – diluted
Profit (loss) per Trust Unit
– basic
– diluted
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
446,267
$
(197,279)
-
-
-
4,479
(54,550)
(169)
$
446,267
$
(247,519)
46,532,264
-
-
46,529,256
4,475,000
5,414
46,532,264
51,009,670
$
$
9.59
9.59
$
$
(4.24)
(4.85)
All dilutive elements were included in the calculation of diluted per unit amounts. For the year ended December 31, 2021, all items
were anti-dilutive as the conversion of the LP Class B Units and the exercise of deferred units would have increased earnings per
unit. As such, they were excluded in the calculation of diluted earnings per unit. For the year ended December 31, 2020, both the
conversion of LP Class B Units and the exercise of deferred units were dilutive and were included in the calculation of diluted loss
per unit.
Note 22: 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. Rental revenue represents all revenue earned from the Trust’s operating leases, as well as ancillary rental income earned
from revenue share service agreements with third parties, and totaled $470.5 million for the year ended December 31, 2021
(year ended December 31, 2020 – $465.6 million).
Rental revenue is comprised of the following:
Lease revenue
Parking revenue
Recoveries (cable, retirement) and revenue from telephone and cable providers
Revenue from coin laundry machines
Other (fees)
Total
Year Ended
Dec. 31, 2021
$
446,841
Year Ended
Dec. 31, 2020
440,831
7,928
8,341
4,012
3,409
7,157
7,097
4,189
6,298
$
470,531
$
465,572
198
As at December 31, 2021, under its non-cancellable operating leases, Boardwalk REIT was entitled to the following minimum
future payments:
Operating leases
Within 12 months
2 to 5 years
Over 5 years
$
234,925
$
12,394
$
278
Note 23: Financing Costs
Financing costs are comprised of interest on mortgages payable, distributions paid to the holders of LP Class B Units, other interest
charges, interest on lease obligations under IFRS 16, and the amortization of deferred financing costs. Financing costs are net of
interest income earned, including interest earned on the lease receivable. Financing costs total $89.7 million for the year ended
December 31, 2021 (year ended December 31, 2020 – $91.6 million) and can be summarized as follows:
Interest on secured debt (mortgages payable)
Interest capitalized to properties under development
LP Class B Unit distributions
Other interest charges
Interest on lease obligations
Interest income
Amortization of deferred financing costs
Total
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
75,810
$
(1,926)
4,479
2,146
2,665
(331)
6,906
77,962
(1,400)
4,479
1,939
3,206
(763)
6,199
$
89,749
$
91,622
For the year ended December 31, 2021, interest was capitalized to properties under development at a weighted average effective
interest rate of 1.54% (year ended December 31, 2020 – 2.41%).
Note 24: Loss on Sale of Assets and Net Cash Proceeds
On December 15, 2021, the Trust sold 179 units in Saskatoon, Saskatchewan, which forms part of the Saskatchewan geographical
segment, for the sale price of $25.0 million. On November 26, 2021, the Trust sold its 50% partnership interest in a joint operation to
develop a mixed-use project consisting of 470 residential units and approximately 12,000 square feet of retail space located in
Mississauga, Ontario, which forms part of the corporate segment, for the sale price of $18.2 million. On September 15, 2021, the Trust
sold 70 units in Edmonton, Alberta. Additionally, on June 30, 2021, the Trust sold 78 units in Edmonton, Alberta. Both projects
formed part of the Alberta geographical segment and were sold for a combined sales price of $21.1 million. The loss on sale of assets
and net cash proceeds is outlined below.
199
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
On June 25, 2020, the Trust sold 158 units in Calgary, Alberta, which forms part of the Alberta geographical segment, for the sale
price of $3.0 million. On November 17, 2020, the Trust sold 72 units in Regina, Saskatchewan, which forms part of the Saskatchewan
geographical segment, for the sale price of $7.5 million. The loss on sale of assets and net cash proceeds is outlined below.
Sales price
Costs of disposition
Net proceeds
Net book value
Investment property
Right-of-use asset (IFRS 16 – Leases)
Property, plant and equipment
Lease liability
Loss on sale of assets
Sales price
Mortgage discharged on sale
Costs of disposition
Net cash proceeds
Note 25: Fair Value Gains (Losses)
The components of fair value gains (losses) were as follows:
Investment properties (NOTE 4)
Financial asset designated as FVTPL
Mortgage receivable
Financial liabilities designated as FVTPL
Deferred unit-based compensation
LP Class B Units
Total fair value gains (losses)
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
64,247
$
(1,953)
62,294
64,174
-
73
-
64,247
(1,953)
$
64,247
$
(18,985)
(1,953)
$
43,309
$
10,459
(1,136)
9,323
10,412
28,092
47
(28,092)
10,459
(1,136)
10,459
(4,403)
(1,136)
4,920
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
403,869
$
(382,971)
(44)
82
(2,445)
(94,378)
2,205
54,550
$
307,002
$
(326,134)
Note 26: Guarantees, Contingencies, Commitments and Other
As discussed in NOTE 15, the Trust has four properties that are situated on land leases. One of the land leases situated in Montreal,
Quebec, is set to expire in 2029. 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 impact its ability to make distributions to Unitholders.
200
From time to time, the Trust enters into various physical supply contracts for energy commodities to hedge its own usage, which is
summarized below:
Natural Gas:
Area
Alberta
Alberta
Alberta
Alberta
Saskatchewan
Saskatchewan
Saskatchewan
Verdun, Quebec
Verdun, Quebec
London, Ontario
London, Ontario
Electrical:
Area
Alberta
Alberta
Alberta
Estimated Usage Coverage
Term
Cost
25%
25%
25%
25%
40%
60%
40%
75%
74%
75%
69%
November 1, 2017 to October 31, 2020
$2.75/Gigajoule ("GJ")
November 1, 2018 to October 31, 2023
November 1, 2019 to October 31, 2024
November 1, 2020 to October 31, 2025
November 1, 2017 to October 31, 2020
November 1, 2018 to October 31, 2022
November 1, 2020 to October 31, 2025
November 1, 2018 to October 31, 2021
November 1, 2021 to October 31, 2025
November 1, 2018 to October 31, 2021
November 1, 2021 to October 31, 2024
$2.08/GJ
$2.21/GJ
$2.78/GJ
$2.84/GJ
$2.56/GJ
$2.99/GJ
$3.40/GJ
$4.29/GJ
$3.45/GJ
$4.52/GJ
Estimated Usage Coverage
Term
Cost
40%
49%
45%
October 1, 2015 to September 30, 2020
$0.05/Kilowatt-hour (“kWh”)
October 1, 2017 to September 30, 2022
November 1, 2020 to October 31, 2024
$0.05/kWh
$0.06/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, 2021 will not have a material impact on the Trust.
In the normal course of business, various agreements may be entered into that may contain features that meet the definition of a
contingent liability in accordance with IFRS. With the property sale in Saskatoon, Saskatchewan on September 16, 2019, a mortgage
totaling $12.5 million was assumed by the purchaser. As at December 31, 2021, this mortgage had a balance of $11.8 million.
The mortgage, with a term maturity of April 1, 2023, has an indirect guarantee provided to the lender by the Trust until this mortgage
is renewed or refinanced by the purchaser, whichever occurs sooner. With the sale of properties in Regina, Saskatchewan in 2017,
mortgages totaling $24.4 million were assumed by the purchaser. As at December 31, 2021, these mortgages have a balance of
$21.3 million. The mortgages, with a term maturity of May 1, 2022, have an indirect guarantee provided to the lender by the Trust
until these mortgages are renewed or refinanced by the purchaser, whichever occurs sooner. With the British Columbia Property
Portfolio sale, mortgage balances totaling approximately $62.0 million were assumed by the purchaser. One of the three mortgages,
with a term maturity of October 1, 2022 and a mortgage balance of approximately $19.7 million as at December 31, 2021, assumed by
the purchaser has an indirect guarantee provided to the lender by the Trust until this mortgage is renewed or refinanced by the
purchaser, whichever occurs sooner. With all guarantees, 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, 2021 is approximately $52.8 million (December 31, 2020 – $54.4 million). 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 most likely exceed, the maximum potential liability associated with the amount
being guaranteed. Therefore, at December 31, 2021 and 2020, no amounts have been recorded in the consolidated financial
statements with respect to the above noted indirect guarantees.
201
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Note 27: Capital Management and Liquidity
The Trust defines capital resources as the aggregate of Unitholders’ equity at market value, debt (both secured and unsecured), 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 reviewed 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 costs.
The following table highlights Boardwalk REIT’s interest coverage ratio in accordance with the DOT:
As at
Net operating income
Administration
Deferred unit-based compensation
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, 2021
Dec. 31, 2020
$
274,340
$
269,144
(33,282)
(2,392)
238,666
80,291
2.97
1.50
(36,069)
(3,255)
229,820
82,345
2.79
1.50
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 initiatives and
consistent monitoring of the balance between debt and equity financing. As at December 31, 2021, the Trust’s weighted average cost
of capital was calculated to be 3.30%.
The following schedule details the components of the Trust’s capital and the related costs thereof:
As at
Liabilities
Mortgages payable
LP Class B Units
Deferred unit-based compensation
Unitholders’ equity
Boardwalk REIT Trust Units
Total
Dec. 31, 2021
Dec. 31, 2020
Cost of Capital (1)
Underlying Value (2)
Cost of Capital (1)
Underlying Value (2)
2.46%
$
3,017,545
2.58%
$
3,029,152
4.21%
4.21%
4.21%
3.30%
$
245,364
6,988
2,529,698
5,799,595
6.97%
6.97%
6.97%
4.17%
$
150,987
3,215
1,570,562
4,753,916
(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 Units.
Mortgages payable – These are the mortgages outstanding on the Trust’s investment properties. The debt is primarily fixed
rate debt and approximately 98% of this debt at December 31, 2021 is insured under the National Housing Act (“NHA”) and
administered by Canada Mortgage and Housing Corporation (“CMHC”) (December 31, 2020 – approximately 99%). These
financings can be structured on a loan to CMHC appraised value basis of between 75-80%. The Trust currently has a level of
indebtedness of approximately 46% of the fair value of the Trust’s investment properties (December 31, 2020 – approximately 49%).
This level of indebtedness is considered by the Trust to be within its target.
202
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 Trust 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 Trust 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 IFRS 9. Gains or losses resulting from changes in the fair value at each
reporting date are recorded in the consolidated statement of comprehensive income (loss).
As outlined in NOTE 29(d), Boardwalk REIT’s committed revolving credit facility agreements contain financial covenants.
The Trust had $306.3 million in total available liquidity as at December 31, 2021 (December 31, 2020 – $269.2 million), consisting
of cash and cash equivalents on hand of $64.3 million (December 31, 2020 – $53.0 million), subsequent committed/funded financing
of $42.2 million (December 31, 2020 – $16.5 million), as well as an unused committed revolving credit facility of $199.7 million
(December 31, 2020 – $199.7 million). The Trust monitors its ratios and as at December 31, 2021 and December 31, 2020, the Trust
was in compliance with all covenants in both its DOT and all existing debt facilities.
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)
ii)
iii)
the carrying amounts of trade and other receivables, segregated tenants’ security deposits, cash and cash equivalents,
refundable tenants’ security deposits, trade and other payables, and construction loan payable approximate their fair
values due to their short-term nature.
the fair value of the Trust’s investment in private technology venture fund is based on information provided from the
organization managing the investments.
the fair values of the Trust’s mortgage receivable and 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.
iv)
the fair values of the deferred unit-based compensation plan and the LP Class B Units are estimates at a specific point in
time, based on the closing market price of the Trust Units listed on the Toronto Stock Exchange.
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, 2021 and December 31, 2020 are as follows:
As at
Financial assets carried at FVTPL
Mortgage receivable
Dec. 31, 2021
Dec. 31, 2020
Carrying Value
Fair Value
Carrying Value
Fair Value
$
-
$
-
$
2,790
$
Investment in private technology venture fund
2,019
2,019
2,019
Financial liabilities carried at amortized cost
Mortgages payable
Construction loan payable
Financial liabilities carried at FVTPL
LP Class B Units
Deferred unit-based compensation
2,978,437
21,187
245,364
6,988
3,017,545
21,187
245,364
6,988
2,896,790
21,187
150,987
3,215
2,790
2,019
3,029,152
21,187
150,987
3,215
203
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
The fair value of the Trust’s mortgages payable was higher than the recorded value by approximately $39.1 million at December 31,
2021 (December 31, 2020 – higher by $132.4 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, 2021 and December 31, 2020, 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, 2021 and December 31, 2020, 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 statements of
financial position is as follows:
As at
Assets
Investment properties
Mortgage receivable
Investment in private
technology venture fund
Liabilities
LP Class B Units
Deferred unit-based compensation
Dec. 31, 2021
Dec. 31, 2020
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
$
-
$
72,316
$ 6,420,653
$
-
$
81,389
$ 5,867,566
-
-
245,364
6,988
-
-
-
-
-
2,019
-
-
-
-
150,987
3,215
-
-
-
-
2,790
2,019
-
-
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, 2021 and December 31, 2020, there were five
investment properties transferred during the third quarter of 2021 from Level 2 into Level 3 fair value measurements. These five
investment properties were valued using Level 3 inputs for the third quarter in 2021, as at September 30, 2021, and valued using
Level 2 inputs for the second and first quarters in 2021, as at June 30, 2021, and March 31, 2021, as well as at December 31, 2020.
The fair value of these five investment properties as at December 31, 2021, totaled $90.6 million and were valued using Level 3 inputs
(December 31, 2020 – $81.4 million valued using Level 2 inputs). These five investment properties were previously valued at Level 2
because they were newly acquired buildings and used inputs which were directly observable for these assets, as the fair value was
based on a purchase and sale agreement between two willing market participants. Other than these five investment properties,
there were no other transfers between Level 1, Level 2, and Level 3 assets and liabilities.
INTEREST RATE RISK
Note 29: Risk Management
A)
The Trust is exposed to interest rate risk as a result of its mortgages payable and credit facilities; however, this risk is minimized
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
204
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, 2021, the Trust had no amount outstanding on its committed revolving credit facility and its mortgages payable are
fixed-rate debt. However, the Trust had $21.2 million (December 31, 2020 – $21.2 million) extended on its construction loan payable,
which is carried at variable-rate interest. As such, for the year ended December 31, 2021, all else being equal, the increase or decrease
in net earnings for each 1% change in market interest rates would be $0.8 million (year ended December 31, 2020 – $0.8 million).
B) CREDIT RISK
The Trust is exposed to credit risk as a result of its lease receivable and trade and other receivables. The trade and other receivables
balance is comprised of mortgage holdbacks and refundable mortgage fees, accounts receivable from significant customers and
insurers, and tenant receivables. As at December 31, 2021 and December 31, 2020, no balance relating to mortgage holdbacks,
refundable mortgage fees, or accounts receivable from significant customers and insurers was past due. Additionally, the lease
receivable is in good standing.
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 agreement
(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 (NOTE 10). 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 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 estimated credit losses. The amount of the loss is
recognized in the consolidated statement of comprehensive income (loss) as part of operating expenses. As outlined in NOTE 2(u)
with respect to the COVID-19 pandemic, the Trust evaluated whether an allowance for estimated credit losses was needed for the
year ended December 31, 2021, and one was not applied. 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, 2021, bad debt expense totaled $5.2 million
(year ended December 31, 2020 – $6.2 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.
205
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 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 maintains what
it believes to be conservatively leveraged assets and can finance any future growth through one or a combination 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 financings 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 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:
Year of
Maturity
2022
2023
2024
2025
2026
Subsequent
Unamortized
deferred
financing
costs
Unamortized
market debt
adjustments
Weighted
Average
Interest
Rate
Mortgage
Principal
Outstanding
Mortgage
Interest (1)
Lease
Liabilities
Principal
Outstanding
Construction
Loan Payable
Tenants’
Security
Deposits
Distribution
Payable(2)
Trades
and Other
Payables
Total
2.67% $
445,221 $ 69,972 $
3,909 $
21,187 $ 11,129 $
4,221 $ 55,552 $
611,191
2.81%
2.45%
2.15%
1.98%
2.73%
2.46%
371,623
352,640
547,996
553,420
818,078
57,248
45,662
37,207
26,227
31,627
3,088,978
267,943
(110,855)
314
-
-
2,722
2,142
1,875
1,795
67,648
80,091
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
431,593
400,444
587,078
581,442
917,353
21,187
11,129
4,221
55,552
3,529,101
-
-
-
-
-
-
-
-
(110,855)
314
$ 2,978,437 $ 267,943 $
80,091 $
21,187 $ 11,129 $
4,221 $ 55,552 $ 3,418,560
(1) Based on current in-place interest rates for the remaining term to maturity.
(2) Distribution payable includes distributions owed on the Boardwalk REIT Trust Units and the LP Class B Units.
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 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 $250,000 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, 2021 of approximately $813.7 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 $199.7 million as at December 31, 2021 (December 31, 2020 – $199.7 million). The revolving facility requires
monthly interest payments, is for a five-year term maturing on July 25, 2026, 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.
206
The credit facility contains three financial covenants as follows:
i)
ii)
iii)
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, 2021, this ratio was 1.52 (December 31, 2020 – 1.48).
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, 2021, this ratio was 1.28 (December 31, 2020 – 1.41).
Total indebtedness of the Trust will not exceed 75% of the Gross Book Value of all assets for the two most recent quarters
as defined in the credit agreement. As at December 31, 2021, this ratio was 46.1% (December 31, 2020 – 47.8%).
As at December 31, 2021 and December 31, 2020, the Trust was in compliance with all financial covenants.
E) MARKET RISK
The Trust is exposed to market risk related to utilities as a result of fluctuations in the prices of natural gas and electricity. As
outlined in NOTE 26, the Trust has commitments to certain utility contracts to reduce the risk of exposure to adverse changes in
commodity prices.
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
207
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Entity
Type
Relationship
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
Helmcken Rd. Development B.C Ltd.
Corporation
100% owned by BGP
Carlisle Ave Development B.C. Ltd.
Corporation
100% owned by BGP
BRIO Holdings Ltd.
Corporation
50% Owned by BGP
Redwalk Brampton Limited Partnership
Partnership
49.99% owned by BGP
0.01% owned by Redwalk Brampton Inc.
Redwalk Brampton Inc.
Partnership
49.99% owned by BGP
Riowalk Sandalwood Inc. (1)
Corporation
50% Owned by BGP
(1) The Trust sold its 50% partnership interest on November 26, 2021 (NOTE 24).
BPCL represents the only entity which is included in the Trust’s consolidated financial statements by meeting the principle of control
and not based on the Trust’s ownership percentage. BPCL (formerly called Boardwalk Equities Inc.) was created to accomplish a
narrow and well-defined objective, which was to transfer the beneficial 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 equivalent 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.
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.
208
Key management personnel of the Trust during the year ended December 31, 2021, and up to the date of this report were:
Chief Executive Officer
Chief Financial Officer
Senior VP, Corporate Development (retired June 30, 2021)
Senior VP, Quality Control
VP, Finance & Investor Relations
VP, Human Resources
VP, Operations (effective July 1, 2021)
Members of the Board of Trustees
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 redeemed for Trust Units
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
1,130
$
3,444
53
4
1,065
$
2,252
$
51
4
2,154
5,653
In addition, the LP Class B Units are held by Mr. Sam Kolias (Chairman of the Board, Chief Executive Officer and Trustee) and
Mr. Van Kolias (Senior Vice President, Quality Control). Under IAS 32, the LP Class 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 financing costs
under IFRS. For the year ended December 31, 2021, distributions on the LP Class B Units totaled $4.5 million (year ended December 31,
2020 – $4.5 million). Distributions on the LP Class B Units are made on terms equal to distributions made on Boardwalk REIT
Trust Units.
As at December 31, 2021, there was $373,000 owed to related parties (December 31, 2020 – $373,000) based on the
LP Class B Units distribution outlined above.
During 2019, the Trust entered into an agreement with a related party for IT services. The largest shareholder of the company
providing the IT services is an individual associated with one of the Trust’s key personnel. The member of the Trust’s key personnel
has no ownership interest in the company providing the IT services. The agreement will provide for services over a three-year term
with a total cost of $1.1 million. For the year ended December 31, 2021, payments to this provider for these services totaled
$0.3 million (year ended December 31, 2020 – $0.2 million). In addition, during 2021, the Trust entered into another agreement with
this related party to design, develop, and implement an IT application to enhance operations. The agreement provides for delivery
of the application in 2022 with a total cost of $0.3 million. For the year ended December 31, 2021, payments to this provider related
to this project totaled $0.1 million. As at December 31, 2021 and 2020, there was no balance owed to this related party.
209
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
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 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
Investment in capital assets
Improvements to investment properties
Additions to property, plant and equipment
Distributions paid
Distributions declared
Distributions declared in prior period paid in current period
Distributions declared in current period paid in next period
Note
Year Ended
Dec. 31, 2021
Year Ended
Dec. 31, 2020
$
(1,574)
$
(294)
5,019
131
849
$
4,131
$
1,822
(57)
(6,804)
341
(1,545)
(6,243)
(603)
(773)
(4)
$
451
(121,492)
(5,511)
(127,003)
$
$
(108,653)
(4,963)
(113,616)
$
$
$
4
5
$
(46,553)
$
(46,571)
(3,882)
3,848
(3,875)
3,882
$
(46,587)
$
(46,564)
(B)
(C)
Included in administration costs was $2.9 million relating to Registered Retirement Savings Plan (“RRSP”) matching for the
year ended December 31, 2021 (year ended December 31, 2020 – $2.9 million).
The Trust declared regular distributions of $51.0 million for the year ended December 31, 2021, which includes $46.6 million
of distributions on the Trust Units and $4.5 million of distributions on the LP Class B Units, which under IFRS are considered
financing costs (year ended December 31, 2020 – $51.0 million, which includes $46.6 million of distributions on the Trust
Units and $4.5 million of distributions on the LP Class B Units).
Note 33: Segmented Information
Boardwalk REIT specializes in multi-family residential housing and operates within one business segment in five provinces located
wholly in Canada along with a corporate segment. Each provincial segment operates with a high degree of autonomy. Management
monitors the operating results on a province-by-province 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. 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, development of investment
properties, and certain comparative data for divested assets.
210
Details of segmented information are as follows:
As at
Assets
Liabilities
As at
Assets
Liabilities
December 31, 2021
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
$ 4,039,986
$
48,208
$ 601,737
$
650,755
$ 1,132,984
$ 186,983
$ 6,660,653
2,002,225
31,726
283,711
224,901
568,184
296,728
3,407,475
December 31, 2020
Alberta
$ 3,810,497
$
1,942,419
British
Columbia
-
-
Saskatchewan
Ontario
Quebec
Corporate
Total
$
560,228
$
558,374
$
995,460
$
183,185
$ 6,107,744
299,506
207,410
580,683
201,277
3,231,295
Rental revenue (a)
Rental expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income (loss)
Financing costs (b)
Administration
Deferred unit-based compensation
Depreciation (c)
Profit (loss) before the undernoted
Loss on sale of assets
Fair value gains (losses)
Year Ended December 31, 2021
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec Corporate
Total
$ 294,914 $
1,849
$
52,125 $ 38,473 $ 82,094 $ 1,076 $ 470,531
60,999
31,527
32,921
125,447
169,467
53,466
3,246
-
834
111,921
(837)
155,911
201
75
116
392
1,457
475
2
-
1
979
-
(32)
13,921
5,871
9,244
7,448
4,284
20,976
31,149
8,194
784
-
179
6,609
4,045
4,001
14,655
23,818
5,529
46
-
46
6,302
8,052
28,275
53,819
17,584
433
-
141
96,845
49,751
49,595
354
221
6,446
196,191
(5,370)
274,340
4,501
28,771
2,392
6,608
89,749
33,282
2,392
7,809
21,992
18,197
35,661
(47,642)
141,108
(474)
-
-
(642)
(1,953)
52,055
81,038
115,184
(97,154)
307,002
Profit (loss) before income tax
$ 266,995 $
947
$
73,573 $ 99,235 $ 150,845 $ (145,438) $ 446,157
Income tax recovery (d)
Profit (loss)
Other comprehensive income
-
-
-
-
-
110
110
$ 266,995 $
947
$
73,573 $ 99,235 $ 150,845 $ (145,328) $ 446,267
-
-
-
-
-
-
-
Total comprehensive income (loss)
$ 266,995 $
947
Additions to non-current assets (e)
$ 94,963 $
48,241
$
$
73,573 $ 99,235 $ 150,845 $ (145,328) $ 446,267
13,850 $ 11,391 $ 24,043 $ 17,402 $ 209,890
211
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
Year Ended December 31, 2020
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
$ 300,031 $
-
$
50,956 $ 33,200 $ 80,988 $
397 $ 465,572
Rental revenue (a)
Rental expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income (loss)
Financing costs (b)
Administration
Deferred unit-based compensation
Depreciation (c)
Profit (loss) before the undernoted
Loss on sale of assets
Adjustment to right-of-use asset
related to lease receivable
Fair value (losses) gains
Other income
62,101
30,825
34,415
127,341
172,690
55,595
2,952
-
861
113,282
(604)
-
(349,742)
-
(Loss) profit before income tax
$ (237,064) $
Income tax recovery (d)
(Loss) profit
Other comprehensive income
Total comprehensive (loss) income
Additions to non-current assets (e)
-
$ (237,064) $
-
$ (237,064) $
$ 73,996 $
(A) RENTAL REVENUE
Rental revenue was as follows:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,581
7,722
4,830
22,133
28,823
9,222
671
-
187
5,451
4,031
3,491
12,973
20,227
4,889
15
-
48
13,443
6,009
8,252
27,704
53,284
17,602
388
-
148
5,762
351
164
96,338
48,938
51,152
6,277
196,428
(5,880)
269,144
4,314
32,043
3,255
6,951
91,622
36,069
3,255
8,195
18,743
15,275
35,146
(52,443)
130,003
(532)
-
-
-
-
-
-
(1,136)
(159)
(159)
(39,940)
(6,229)
12,941
56,836
(326,134)
-
-
-
75
75
$
(21,729) $
9,046 $ 48,087 $
4,309 $ (197,351)
-
-
-
72
72
$
(21,729) $
9,046 $ 48,087 $
4,381 $ (197,279)
-
-
-
-
-
$
$
(21,729) $
9,046 $ 48,087 $
4,381 $ (197,279)
13,682 $ 72,560 $ 12,382 $ 39,231 $ 211,851
Lease revenue
Parking revenue
Recoveries (cable, retirement) and revenue
from telephone and cable providers
Revenue from coin laundry machines
Other (fees)
Total
Year Ended December 31, 2021
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec Corporate
Total
$ 279,822 $
1,788
$
48,655 $ 37,649 $ 77,971 $
956 $ 446,841
4,839
5,039
2,593
2,621
68
2
-
(9)
566
279
2,173
3
7,928
2,171
271
462
118
511
(84)
894
637
419
117
-
-
8,341
4,012
3,409
$ 294,914 $
1,849
$
52,125 $ 38,473 $ 82,094 $ 1,076 $ 470,531
212
Year Ended December 31, 2020
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
$ 283,647 $
-
$
47,526 $ 32,542 $ 76,845 $
271 $ 440,831
4,425
3,577
2,777
5,605
-
-
-
-
517
136
2,079
-
7,157
2,200
278
435
95
515
(88)
1,099
619
346
126
-
-
7,097
4,189
6,298
$ 300,031 $
-
$
50,956 $ 33,200 $ 80,988 $
397 $ 465,572
Lease revenue
Parking revenue
Recoveries (cable, retirement) and revenue
from telephone and cable providers
Revenue from coin laundry machines
Other (fees)
Total
(B) FINANCING COSTS
Financing costs were as follows:
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec Corporate
Total
Year Ended December 31, 2021
Interest on secured debt (mortgages payable)
$ 48,793 $
439
$
7,509 $ 5,038 $ 14,031 $
- $ 75,810
Interest capitalized to properties
under development
LP Class B Unit distribution
Other interest charges
Interest on lease obligations
Interest income
-
-
168
-
(2)
Amortization of deferred financing costs
4,507
-
-
(1)
-
-
37
-
-
-
-
(43)
(25)
-
-
-
-
-
-
(16)
2,451
-
728
516
1,118
(1,926)
(1,926)
4,479
2,063
214
(329)
-
4,479
2,146
2,665
(331)
6,906
Total
$ 53,466 $
475
$
8,194 $ 5,529 $ 17,584 $ 4,501 $ 89,749
Alberta
British
Columbia
Saskatchewan
Ontario
Quebec
Corporate
Total
Year Ended December 31, 2020
Interest on secured debt (mortgages payable)
$ 50,972 $
-
$
8,475 $
4,435 $ 14,080 $
- $ 77,962
Interest capitalized to properties
under development
LP Class B Unit distribution
Other interest charges
Interest on lease obligations
Interest income
Amortization of deferred financing costs
(149)
-
311
435
-
4,026
-
-
-
-
-
-
-
-
(15)
-
-
-
-
53
-
-
-
-
8
2,505
-
762
401
1,009
(1,251)
(1,400)
4,479
1,582
266
(763)
1
4,479
1,939
3,206
(763)
6,199
Total
$ 55,595 $
-
$
9,222 $
4,889 $ 17,602 $
4,314 $ 91,622
(C) DEPRECIATION
This represents depreciation on items carried at cost and primarily includes corporate assets, technology assets, site equipment and
other assets. These figures exclude any impairment charges.
(D) INCOME TAX RECOVERY
This relates to any current and deferred taxes.
213
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
(E) 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: Approval of Consolidated Financial Statements
The consolidated financial statements were approved by the Board of Trustees and authorized on February 23, 2022.
214
FIVE YEAR SUMMARY
($000’s except per Unit and per square foot)
2017 (IFRS)
2018 (IFRS)
2019 (IFRS)
2020 (IFRS)
2021 (IFRS)
Assets
Total Assets
Liabilities
Total Liabilities
Equity
Unitholders' equity
$ 5,865,075
$ 6,109,091
$ 6,276,384
$ 6,107,744
$ 6,660,653
$ 2,887,468
$ 2,982,406
$ 3,158,329
$ 3,231,295
$ 3,407,475
2,977,607
3,126,685
3,118,055
2,876,449
3,253,178
Total Liabilities and Equity
$ 5,865,075
$ 6,109,091
$ 6,276,384
$ 6,107,744
$ 6,660,653
Trust unit outstanding (000) (including LP Class B Units)
50,813
50,867
50,936
51,024
50,612
$
43.09
$
37.81
$
45.93
$
33.74
$
54.83
Trust unit price at year-end ($)
Market capitalization ($MM)
Number of rental suites
Total Assets per suite ($000)
Total Liabilities per suite ($000)
Net rentable square feet (000)
Total Assets per square foot ($)
Total Liabilities per square foot ($)
Average net rentable SF per suite
2,189.5
33,187
177
87
1,923.3
33,417
183
89
2,339.5
33,263
189
95
1,721.5
33,396
183
97
28,539
28,793
28,674
28,879
206
101
860
212
104
862
219
110
862
211
112
865
L/T debt weighted average interest rate
2.61%
2.65%
2.74%
2.58%
2,775.1
33,264
200
102
28,888
231
118
868
2.46%
215
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
FIVE YEAR SUMMARY
($000’s except per Unit)
Rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Operating margin
Financing costs
Administration
Deferred unit-based compensation
Depreciation
Profit before the undernoted
Proceeds on insurance settlement
Loss on sale of assets
Adjustment to right-of-use asset related to
lease receivable
Fair value (losses) gains
Other income
Profit (loss) before income tax
Income tax (expense) recovery
Profit (loss)
Other comprehensive income
Total comprehensive income (loss)
Profit per Trust Unit – diluted
Funds from operations
Funds from operations per Unit
Interest Coverage Ratio
2017 (IFRS)
2018 (IFRS)
2019 (IFRS)
2020 (IFRS)
2021 (IFRS)
$
422,926
$
434,616
$
455,313
$
465,572
$
470,531
113,986
47,967
44,890
206,843
216,083
51%
85,763
33,402
-
5,586
91,332
3,162
(1,678)
-
113,615
47,628
45,966
207,209
227,407
52%
80,586
37,093
2,095
6,754
101,108
47,883
47,529
196,520
258,793
57%
88,198
38,645
2,268
8,809
96,338
48,938
51,152
196,428
269,144
58%
91,622
36,069
3,255
8,195
100,879
120,873
130,003
-
(714)
-
(1,136)
-
(27)
-
96,845
49,751
49,595
196,191
274,340
58%
89,749
33,282
2,392
7,809
141,108
-
(1,953)
-
(159)
-
(35,418)
92,371
(86,132)
(326,134)
307,002
-
57,398
(140)
57,258
-
57,258
0.84
106,987
2.11
2.60
-
193,223
(23)
193,200
-
193,200
3.43
112,112
2.21
2.68
$
$
$
$
$
$
$
$
-
34,027
754
34,781
-
34,781
0.75
130,967
2.57
2.76
75
-
(197,351)
446,157
72
110
(197,279)
446,267
-
-
(197,279)
$ 446,267
(4.85)
$
9.59
139,736
$ 150,207
2.74
$
2.79
2.94
2.97
$
$
$
$
$
$
$
$
Fiscal year ended December 31, 2018 has been restated to present deferred unit-based compensation consistent with December 31, 2019.
Years prior to December 31, 2018 did have deferred unit-based compensation but were not restated.
Years prior to December 31, 2020 have been restated to present rental revenue consolidated with ancillary rental income.
216
2021 QUARTERLY RESULTS
Rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Financing costs
Administration
Deferred unit-based compensation
Depreciation
Profit before the undernoted
Loss on sale of assets
Fair value (losses) gains
Profit (loss) before income tax
Income tax (expense) recovery
Profit (loss)
Other comprehensive income
Total comprehensive income
Profit per Trust Unit – diluted
Funds from operations
Funds from operations per Unit
Q1
Q2
Q3
Q4
Dec. 31, 2021
$
115,761
$
117,596
$
118,446
$
118,728
$
470,531
24,478
14,809
12,586
51,873
63,888
22,362
8,241
394
1,694
31,197
-
(2,210)
28,987
(10)
28,977
23,678
11,297
12,976
47,951
69,645
22,497
8,213
1,111
1,927
35,897
(103)
14,780
50,574
37
50,611
24,209
10,405
12,063
46,677
71,769
22,527
8,718
329
1,999
38,196
(734)
198,026
235,488
51
24,480
13,240
11,970
49,690
69,038
22,363
8,110
558
2,189
35,818
(1,116)
96,406
131,108
32
235,539
131,140
96,845
49,751
49,595
196,191
274,340
89,749
33,282
2,392
7,809
141,108
(1,953)
307,002
446,157
110
446,267
-
28,977
0.62
33,210
0.65
$
$
$
$
-
50,611
1.09
38,160
0.75
-
235,539
5.06
40,522
0.79
$
$
$
$
-
-
$
$
$
$
131,140
$ 446,267
2.82
$
9.59
38,316
$ 150,207
0.75
$
2.94
$
$
$
$
217
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
2020 QUARTERLY RESULTS
Rental revenue
Rental expenses
Operating expenses
Utilities
Property taxes
Total rental expenses
Net operating income
Financing costs
Administration
Deferred unit-based compensation
Depreciation
Profit before the undernoted
Loss on sale of assets
Adjustment to right-of-use asset related to
lease receivable
Fair value gains (losses)
Other income
Profit (loss) before income tax
Income tax recovery (expense)
Profit (loss)
Other comprehensive income
Total comprehensive income (loss)
(Loss) profit per Trust Unit – diluted
Funds from operations
Funds from operations per Unit
Q1
Q2
Q3
Q4
Dec. 31, 2020
$
116,004
$
116,818
$
116,207
$
116,543
$ 465,572
25,513
13,945
11,891
51,349
64,655
22,460
9,282
1,687
1,875
29,351
-
(159)
28,528
-
57,720
149
57,869
22,964
11,359
11,971
46,294
70,524
23,129
10,710
787
1,984
33,914
(604)
-
23,541
10,814
13,660
48,015
68,192
23,069
7,425
274
2,077
35,347
-
-
24,320
12,820
13,630
50,770
65,773
22,964
8,652
507
2,259
31,391
(532)
-
(68,661)
(66,890)
(219,111)
-
-
75
96,338
48,938
51,152
196,428
269,144
91,622
36,069
3,255
8,195
130,003
(1,136)
(159)
(326,134)
75
(35,351)
(31,543)
(188,177)
(197,351)
82
99
(258)
72
(35,269)
(31,444)
(188,435)
(197,279)
-
57,869
(0.86)
31,482
0.62
-
(35,269)
(0.76)
36,201
0.71
$
$
$
$
-
(31,444)
(0.79)
37,785
0.74
-
(188,435)
(4.05)
34,268
0.67
$
$
$
$
-
$
$
$
$
(197,279)
(4.85)
139,736
2.74
$
$
$
$
$
$
$
$
218
MARKET AND UNITHOLDER
INFORMATION
Solicitors
GOWLING WLG (CANADA) LLP
1600, 421 – 7th Avenue SW
Calgary, Alberta T2P 4K9
FIRST WEST LAW LLP
100, 1501 – 1st Street SW
Calgary, Alberta T2R 0W1
Bankers
TD COMMERCIAL BANKING
1100, 421 – 7th Avenue SW
Calgary, Alberta T2P 4K9
Auditors
DELOITTE LLP
700, 850 – 2nd Street SW
Calgary, Alberta T2P 0R8
Registrar and 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.
800, 324 – 8th Avenue SW
Calgary AB T2P 2Z2
Telephone: 403-267-6800
Investor Relations
Unitholders seeking financial and operating information
may contact:
ERIC BOWERS
Vice-President, Finance and Investor Relations
Telephone: 403-531-9255
Toll Free: 855-626-6739
Facsimile: 403-531-9565
Web: www.bwalk.com/investors
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.bwalk.com/investors.
Annual General Meeting
The Annual General Meeting of the Unitholders of Boardwalk
REIT will be held on May 9, 2022 at 4:00 PM mountain time.
Unitholders are encouraged to complete the Form of Proxy
and participate via webcast. Webcast information available on
www.bwalk.com/investors.
Exchange Listings
The Toronto Stock Exchange
Symbol: BEI.UN
Trading Profile
TSX: January 1, 2021 to December 31, 2021
High: $57.10
Low: $33.06
Year-end Closing Price: $54.83
MONTHLY DISTRIBUTIONS
Month
Per Unit
Annualized
Record Date
Distribution
Date
Jan-21
$0.0834
$1.00
Feb-21
$0.0834
$1.00
Mar-21
$0.0834
$1.00
Apr-21
$0.0834
$1.00
May-21
$0.0834
$1.00
Jun-21
$0.0834
$1.00
Jul-21
$0.0834
$1.00
Aug-21
$0.0834
$1.00
Sep-21
$0.0834
$1.00
Oct-21
$0.0834
$1.00
Nov-21
$0.0834
$1.00
Dec-21
$0.0834
$1.00
Jan-22
$0.0834
$1.00
Feb-22
$0.0834
$1.00
Mar-22
$0.0900
Apr-22
$0.0900
$1.08
$1.08
29-Jan-21
26-Feb-21
31-Mar-21
30-Apr-21
31-May-21
30-Jun-21
30-Jul-21
31-Aug-21
30-Sep-21
29-Oct-21
30-Nov-21
31-Dec-21
31-Jan-22
28-Feb-22
31-Mar-22
29-Apr-22
15-Feb-21
15-Mar-21
15-Apr-21
17-May-21
15-Jun-21
15-Jul-21
16-Aug-21
15-Sep-21
15-Oct-21
15-Nov-21
15-Dec-21
17-Jan-22
15-Feb-22
15-Mar-22
15-Apr-22
16-May-22
219
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021
NOTES
220
CORPORATE INFORMATION
Executive Office
FIRST WEST PROFESSIONAL BUILDING
200, 1501 – 1st Street SW
Calgary, Alberta T2R 0W1
Phone: 403-531-9255
Board of Trustees
SAM KOLIAS
Chairman of the Board
Calgary, Alberta
ANDREA GOERTZ (2)(3)
Calgary, Alberta
GARY GOODMAN (2)
Toronto, Ontario
ARTHUR HAVENER (1)(3)
St. Louis, MO
SAMANTHA KOLIAS-GUNN
Calgary, Alberta
SCOTT MORRISON (2)
Toronto, Ontario
BRIAN ROBINSON (3)
Calgary, Alberta
(1) Lead Trustee
(2) Member of the Audit &
Risk Management Committee
(3) Compensation, Governance,
Nominations & Sustainability Committee
Senior Management
BOYD BELISLE
Vice President,
Community & Culture
ERIC BOWERS
Vice President,
Finance & Investor Relations
LEONORA DAVIDS
Senior Vice President,
Operations
JAMES HA
President
BHAVNESH JAIRAM
CIO, Vice President,
Technology
EVA KANOVICH
Vice President,
Marketing
JEFF KLAUS
Vice President,
Asset Management & Development
SAM KOLIAS
Chief Executive Officer
VAN KOLIAS
Senior Vice President,
Quality Control
HELEN MIX
Vice President,
People
LISA SMANDYCH
Chief Financial Officer
221
BOARDWALK REIT | MD&A AND FINANCIAL REPORT | 2021 Boardwalk REIT
bwalk.com
200–1501 1 St. SW
Calgary, Alberta T2R 0W1
T 403.531.9255
F 403.531.9565