Look Past The Yield: Why Boardwalk REIT’s Fundamentals Outshine Its Dividend

Eli GrantThursday, May 8, 2025 5:43 am ET
16min read

In a world where dividend yields often command the spotlight, Boardwalk Real Estate Investment Trust (TSX: BEI.UN) is proving that the most compelling investment stories aren’t always about what’s on the surface. While its 2.18% dividend yield lags behind the 3.35% average of its real estate peers, the REIT’s robust financial performance, strategic portfolio moves, and disciplined risk management offer a compelling case for investors to look beyond the headline number. Let’s dissect why Boardwalk’s fundamentals make it a standout play in a challenging real estate market.

The Numbers Tell a Strong Story

Boardwalk’s first-quarter 2025 results revealed a REIT in command of its destiny. Funds From Operations (FFO) surged to $1.06 per unit, a 11.6% year-over-year increase, while Net Operating Income (NOI) rose 10.3% to $96.5 million. These metrics are not just about growth—they signal operational resilience. Even as occupancy dipped slightly to 97.8% (from 98.8% a year earlier), the Trust maintained occupancy above 98% in May, demonstrating its ability to navigate a more balanced rental market.

What’s more, Boardwalk’s dividend isn’t just consistent—it’s sustainable. The payout ratio of 12.37% (based on 2024 earnings) leaves ample room for growth. In March 2025, the Trust even raised its monthly distribution to $0.14 per unit from $0.12—a 16.7% increase—highlighting its confidence in cash flow generation.

Strategic Moves to Future-Proof Growth

Boardwalk isn’t resting on its laurels. Its acquisitions and dispositions in 2025 exemplify a REIT that’s both opportunistic and prudent:
- Acquiring Quality Assets: The $93 million purchase of Calgary’s Elbow 5 Eight Community and its joint venture stake in BRIO added 255 suites, enhancing exposure to high-growth markets.
- Trimming Underperforming Assets: Selling three Edmonton communities for $80 million allowed the Trust to recycle capital into share buybacks, reducing its unit count by 474,972 and boosting per-unit value.

These moves reflect a focus on portfolio quality. Cumulative investments in property upgrades now cover 73% of its portfolio, improving tenant satisfaction and long-term cash flow.

Debt Management: A Conservative Edge

While many REITs face rising interest costs, Boardwalk’s debt profile stands out. Its debt-to-EBITDA ratio improved to 9.99x, and 96% of its mortgages are CMHC-insured, mitigating refinancing risk. With $272.8 million in liquidity, it’s well-positioned to handle the $505 million in mortgages maturing this year, likely at favorable rates (3.5%–4.05%).

This conservative approach contrasts with peers that have taken on riskier debt structures. The Trust’s focus on extending debt maturities and locking in low rates ensures its balance sheet remains a fortress.

Regional Strengths and Challenges

Boardwalk’s portfolio isn’t just geographically diversified—it’s thriving in key markets:
- Edmonton: The largest market delivered 13% NOI growth, driven by higher rents and reduced incentives.
- Saskatchewan: A 15.9% jump in NOI underscored strong demand for affordable housing.
- British Columbia: Despite oversupply in certain areas, NOI still grew 6.4%, aided by cost containment.

Yet challenges persist. Rising utility costs and new supply in Calgary forced gradual rent reductions in “high-end pockets.” However, CEO Sam Kolias’ strategy of “moderating lease renewal rates” has kept occupancy steady, proving the Trust’s operational agility.

Why the Yield Isn’t the Whole Picture

At first glance, Boardwalk’s 2.18% dividend yield may seem underwhelming. But consider this:
- Its AFFO per unit (a cash flow metric) is expected to hit $3.97 in 2025, up from $3.62 in 2024.
- The payout ratio over 12 months is just 33.8%, leaving ample room for hikes.
- A 6.0% trailing cap rate versus a 4.8% fair value cap rate suggests assets are undervalued.

Investors chasing yield often overlook these metrics. But for those seeking capital appreciation alongside income, Boardwalk’s low payout ratio and FFO growth (projected to hit $4.60 per unit) offer a dual-benefit proposition.

Conclusion: A REIT Built to Last

Boardwalk REIT isn’t just surviving—it’s thriving. With 10.3% NOI growth, strategic portfolio optimization, and one of the strongest balance sheets in its sector, it’s positioned to outperform even as real estate markets face headwinds.

While its dividend yield may not dazzle, the Trust’s fundamentals are undeniable:
- A 12.37% payout ratio ensures sustainability.
- 96% CMHC-insured mortgages reduce refinancing risks.
- $56.7 million FFO growth and 7.5% rental revenue increases signal operational excellence.

For investors willing to look past the headline yield, Boardwalk offers a rare blend of growth, stability, and value. As Kolias notes, the Trust is “well-equipped to capitalize on favorable market conditions”—and its results prove it.

In an era of rising rates and real estate volatility, this is a REIT that doesn’t just weather storms—it shapes them.