Boardwalk Real Estate Investment Trust

TSX:BEI.UN

Good afternoon, ladies and gentlemen, and welcome to the Boardwalk Real Estate Investment Trust First Quarter 2025 Earnings Call. [Operator Instructions] This call is being recorded on May 7, 2025.

I would now like to turn the conference over to Eric Bowers. Please go ahead.

Thank you, Andrew, and welcome to the Boardwalk REIT 2025 First Quarter Results Conference Call. With me here today are Sam Kolias, Chief Executive Officer; James Ha, President; Gregg Tinling, Chief Financial Officer; Samantha Kolias-Gunn, Senior VP of Corporate Development and Governance; and Samantha Adams, Senior VP of Investments.

We would like to begin this call by acknowledging, on behalf of Boardwalk, the treaties and traditional territories across our operations, and express gratitude and respect for the land we are gathered on today, and we now know is Canada. We respect indigenous peoples and communities as the original stewards of this land. We come with respect for this land that we are on today, for all the people who have and continue to reside here, and the rich diversity of First Nation, Inuit and Métis Peoples.

Before we get to our results, please note that this call is being broadly distributed by way of webcast. If you have not already done so, please visit bwalk.com/investors, where you will find a link to today's presentation as well as PDF files of the Trust's financial statements, MD&A and annual report.

Starting on Slide 2, we would like to remind our listeners that certain statements in this call and presentation may be considered forward-looking statements. Although the expectations set forth in such statements are based on reasonable assumptions, Boardwalk's future operation and its actual performance may differ materially from those in any forward-looking statements. Additional information that could cause actual results to differ materially from these statements are detailed in Boardwalk's publicly filed documents.

I would like to now turn the call over to Sam Kolias.

Thank you, Eric, and starting on Slide 4. Affordable multifamily communities have always been an essential product and service. A keyword in community is unity, as reflected in our new diagram. Most important word in multifamily communities is family. The most important part of our home is our family. Our family is where our heart is. Our heart is where love always lives, our true north. At the center of our beam is redefining BFF, our Boardwalk Family Forever. Welcome, everyone, to our Boardwalk Family Forever, and to our Q1 2025 results.

Next slide, our culture. From our humble beginnings over 40 years ago, our resident members remain at the top of our organization. Our leaders put our team first, and our team puts our resident members first. Guided by the golden rule, we have a peak performing customer service culture that creates exceptional results as we can see on our next Slide 6.

Our continued impressive performance with GAAP and non-GAAP measures increasing from the same quarter last year, same-property rental revenue increased 7.5% and same property net operating income increased 10.3%. Our operating margin increased by 160 basis points as well as our same property funds from operations per unit by 11.1%.

I would like to now pass it over to Samantha Kolias-Gunn.

Thank you so much, Sam. We are extremely grateful for our team's exceptional performance and continued commitment to our purpose, bringing our resident members home to love always.

Continuing on to Slide 7, our operational stability and the resilience of affordable housing, rental market fundamentals in our core markets are balanced. Our occupancy, retention and demand for affordable rental housing remains high. Average asking rents in Canada remain much higher than Boardwalk's occupied average rents. As a result of our self-regulation, we continue to provide Canadians with exceptional value.

Our economy continues to diversify, provide job opportunities, host world-class educational programs that attract skilled talent, offer an exceptional quality of life and affordability. A most recent article released by Better Dwelling highlights Alberta as the only province to substantially attract young workers, aged 25 to 45, the demographic critical to driving economic growth and long-term prosperity, a striking result of our provincial governments targeted Alberta'’s Calling campaign and the enduring Alberta advantage. Alberta continues to be a strong example of how lower taxes has a proven best practice public policy that increases growth and prosperity for all. We continue to be in the right place at the right time. Please refer to our appendix for more data on the persistent Alberta advantage.

For Rentals.ca data, our average occupied rent of $1,538 for 2-bedroom apartments are attractive, especially relative to the Canadian average of $2,222. Affordability continues to be in demand as evidenced by our strong portfolio occupancy of 98%, and is a leading factor in interprovincial migration. The fiscal strength of our Alberta and Saskatchewan jurisdictions will continue to attract employers, allow for innovation and increase our productivity, contributing to a more stable economic environment.

Our self-regulation has us well positioned in a competitive market as we continue to strategically moderate our rental rates within a resident-friendly renewal rate band, resulting in greater stability in occupancy and reputation. Paired with our strong financial foundation, minimum distribution policy resulting in maximum reinvestment and free cash flow, strategic repositioning unparalleled customer service and strong family values, we remain in a position to deliver stable performance. This is what sets us apart, bringing you home to where love always lives. Boardwalk strives to be the first choice in multifamily apartment communities to work, invest and call home with our Boardwalk Family Forever.

Slide 8 illustrates our amazing value, representing exceptional quality at an affordable price. Boardwalk has made significant investments in its communities to improve value proposition and leasing performance. Past investments in upgraded fitness facilities, amenity rooms and outdoor spaces, provide high-quality communities in the affordable housing market segment.

We would like to now pass the call on to Gregg Tinling, who will provide us with an overview of our quarter results, strong balance sheet, fair value and ESG.

Thank you, Samantha. Slide 9 shows our key operational metrics. Occupancy continues to remain high, along with increasing occupied rent. Although vacancy loss increased, the Trust was able to reduce incentives that helped contribute to the higher revenues reported for Q1 2025 compared to the same period a year ago. This is a reflection of our key strategic decisions made to maximize free cash flow and diversify our product offering, yielding significant financial performance.

Slide 10 shows leasing spreads on new and renewed leases within our self-regulated, resident-friendly centric model, keeping retention and referrals high and our turnover and expense is low. Year-over-year, leasing spreads on new and renewed leases have decreased, reflecting a return to a more balanced supply and demand picture, with new supply entering select markets within the portfolio that resulted in increased competition and vacancy, particularly for product at the higher price point.

Our renewal spreads were 5.3% in April 2025 for Alberta. New lease spreads in Calgary are slightly negative as we prioritize occupancy in the more competitive, higher-priced markets within the city. Edmonton continues to see positive new lease spreads as our portfolio of high-quality, affordable housing continues to see high demand. Overall, our blended Alberta spreads in the month of April were 2.9%, and on a portfolio basis, 3.3%.

We continue to prioritize maintaining occupancy and maximizing retention. This will continue to provide resident-friendly affordable housing options in our core markets, while lowering our costs and steadying operational results, a win-win for all our stakeholders.

Slide 11 shows sequential quarterly rental revenue growth, including 1.1% growth in Q1 2025 compared to Q4 2024. The change over each quarter is a reflection of Boardwalk's strategy, striving towards balancing the optimum level of market rents, rental incentives and occupancy rates in order to achieve its NOI optimization strategy.

Moving to Slide 12. For Q1 2025, same-property net operating income increased by 10.3% compared to Q1 2024, with revenue growth of 7.5%. Alberta, the Trust's largest region, saw a revenue growth of 7.9% in Q1 2025 as compared to Q1 2024. Total rental expenses increased 3% for Q1 2025 compared to the same period in the prior year, primarily attributable to higher utilities due to increased consumption, particularly in Quebec. Overall, operating expenses and property taxes were relatively comparable to the same period in the prior year. The team remains committed to ensuring focus and discipline when managing controllable operating expenses.

On Slide 13, administration costs decreased $0.3 million as compared to Q4 2024 due to a smaller profit share and bonus accrual, partially offset by inflationary wage adjustments at the onset of the calendar year. Third unit-based compensation decreased $1 million compared to Q4 2024 due mainly to an $850,000 onetime true-up adjustment in the prior quarter to recognize unvested deferred units that would automatically vest if the participants who are eligible were to depart from Boardwalk due to retirement or resignation, for example.

Slide 14 illustrates Boardwalk's mortgage maturity schedule. Our mortgages are well staggered, with approximately 96% of our mortgage balance carrying NHA insurance through the Canada Mortgage and Housing Corporation. This insurance remains in effect for the full amortization of the mortgage. And in addition to carrying the government of Canada's backing, provides access to financing at rates lower than conventional mortgages, with a current estimated 5-year and 10-year CMHC rate of 3.50% and 4.05%, respectively. Though current interest rates are above the Trust maturing rates, the Trust maturity curve remains staggered, reducing the amounts -- the renewal amount in any particular year. Lastly, the Trust has an interest coverage of 3.0 in the current quarter.

Slide 15 summarizes our 2025 mortgage program. To date, we have renewed or forward locked $148.3 million at an average rate of 3.80% at an average term of 4 years. Current underwriting criteria in our most recent submissions to CMHC and our lenders has remained in line with our historically conservative estimates. The Trust is well positioned in approximately $27 million in cash as well as an undrawn $246 million operating line. This approximate $273 million in liquidity provides the Trust with a flexible financial position.

Slide 16 illustrates the Trust's estimated fair value of its investment properties, excluding adjustments for IFRS 16, which totaled $8.4 billion as at March 31, 2024, compared to $8.2 billion at December 31, 2024. The increase in overall fair value is the result of increases from rental rate growth as well as the acquisition of Elbow 5 Eight in Calgary, Alberta, while being slightly offset by an upward adjustment for vacancy assumptions in Calgary to reflect a more balanced market. Current estimated fair value of approximately $241,000 per apartment door remains below replacement cost.

In consultation with our external appraisers, the Capitalization Rates or Cap Rates used in determining Q1 2025 fair value were unchanged from Q4 2024. As it does every quarter, the Trust will continue to review completed asset sales transactions and market reports to determine if adjustments to Cap Rates are necessary. Most recent published Cap Rate reports suggest that the Cap Rates being utilized by the Trust for calculating fair value are within their estimated ranges.

Slide 17 highlights our ESG initiatives. Using a disciplined capital allocation approach, we are focused on reducing emissions through reduced utilities consumption, and, therefore, reducing utilities costs while always promoting social and governance initiatives. As part of our 2024 annual reporting, the Trust will be publishing its ESG report in May 2025, which will be available on our website.

I would like to now turn the call over to Samantha Adams to highlight our capital allocation and discuss our development pipeline.

Thank you, Gregg. We started 2025 where we left off in 2024, building on our prudent and accretive capital deployment initiatives and focusing on our successful repositioning and value-add strategy, acquisitions and dispositions as well as our NCIB.

In Q1, we invested approximately $352,000 into our value-add projects to upgrade our communities. Slide 18 illustrates the investment of our free cash flow into repositioning and capital improvements, including suite optimization. We are currently under construction on 16 spaces and assessing the feasibility of converting 37 additional spaces into rental suites.

By the end of 2025, we anticipate that we will have renovated 73% of the common areas in our portfolio as well. Each project we undertake is evaluated individually, and we target at least an 8% return on cost, providing an accretive return on our capital.

During the quarter, Boardwalk completed or announced $210 million of real estate transactions as illustrated on Slide 19. Within these transactions, we acquired 336 units, representing an average year of construction of 2024 at an average stabilized Cap Rate of 5.5%.

In March, we successfully completed the forward sale of Elbow 5 Eight, our brand-new 6-storey 255 suite community in Calgary. We also finalized the terms to acquire the remaining 50% interest in our joint venture community, BRIO, which is very well located in the University District of Calgary.

Boardwalk, together with our joint venture partner, built this 162-suite apartment community, and it was delivered in the spring of 2020. The acquisition of the remaining 50% allows us to enhance our operating efficiencies, and is expected to close in August of 2025.

As discussed on our previous call, in January, we announced the successful sale of 3 noncore assets in Edmonton, with an average vintage of 1992 for a total sale price of just under $80 million. This price represents $205,000 per door and a Cap Rate of 4.8%. A portion of the net proceeds from the sale was used to support the NCIB to strategically benefit from the disconnect that existed between our unit price and the value of our portfolio, as illustrated on Slide 20.

Through the end of the quarter, Boardwalk has invested $30 million in unit buybacks at an average price of $63.16. This represents a Cap Rate of over 6%, which exceeded other opportunities that were available during that time.

Slide 21 provides an update on our selective development pipeline, which has been designed to support the Trust's long-term growth strategy to improve the quality and variety of our product offering over time. We anticipate the Aspire will be welcoming our first resident members in Building 1 around July 1, and occupancy for the balance of the buildings is expected to be in September of this year. As a reminder, the Aspire is located adjacent to our existing Aurora community, which will allow for greater operational efficiencies once completed.

Although The Marin site building permit has been submitted and our concept development for Marda Loop is underway, we are pausing these developments in the short term as we wait for greater cost certainty and improved overall market conditions for development. We have completed the rezoning for Island Highway, and we are evaluating our next steps, including listing the project for sale.

I would now like to turn the call over to James Ha to discuss our track record of creating value and our updated 2025 guidance.

Thank you, Samantha, and thank you to our entire Boardwalk team for your service and commitment to our resident members, which continues to deliver consistent and strong performance that our team is sharing today.

Slide 22 updates our 2025 outlook as we build off our base of exceptional affordability, product quality and self-moderated rental rates. Each of these are key inputs into the strength of our platform and ability to compete and outperform in a more balanced housing market. We continue to see that the demand for affordable housing remains resilient, and our outlook for the year remains positive.

For 2025, our team's ability to maintain high occupancy and strong blended leasing spreads are allowing us to increase the bottom end of our expectations, while the recently announced reduction of the consumer carbon tax beginning in April is anticipated to decrease our utility cost and increase our cash flow for investment in future energy savings initiatives.

Our revised same-property NOI growth outlook is now forecasted to be between 5.5% and 8.5%. And our FFO per unit is anticipated to be between $4.35 and $4.60. This guidance is forward-looking in nature and reflects the most recent announcements to reduce carbon taxes to make housing more affordable. We look forward to regularly updating and refining our outlook in the quarters to come.

On Slide 23, we have confirmed the payment dates of our next 3 regular monthly distributions equating to $1.62 per trust unit on an annualized basis, and represents a 12.5% increase from our distribution a year ago. Since 2021, our distribution has increased at a compounded annual growth rate of over 12%, while still retaining an industry high proportion of our cash flow to reinvest and compound growth. Our formula and operating model has extended our FFO per unit track record and now positions Boardwalk in 2025 to more than double our FFO per unit in just 8 years.

On Slide 24, this growth, along with our approach to maximum cash flow retention, has improved our leverage metrics to provide Boardwalk with one of the strongest and most flexible balance sheets. Our discipline and solid financial foundation provides us with flexibility to take advantage of opportunities that may arise.

As Samantha shared, one of the biggest opportunities we are currently seeing is in our own platform, which, on Slides 25 and 26, shows the exceptional value that our Trust Units represent. Our current trading price equates to well under $200,000 per apartment door and over a 6% Cap Rate on a forward basis. Both metrics are exceptional when considering our product quality, locations, spread of financing costs and cash flow growth as shared in our outlook.

Recent private market transactions continue to be supportive of our estimated net asset value of $240,000 per door or $96 per Trust Unit. Team continues to be active in the private market in sourcing noncore asset sales that our team can recycle toward accretive opportunities, including potential buyback or unique acquisition opportunities.

In closing, we would like to thank again our resident members, our team, our partners and all our stakeholders for trusting Boardwalk to provide the best quality homes and communities and are looking forward to continuing our track record of growth.

We would now be happy to take questions from the line. Andrew?

[Operator Instructions] Your first question is from Fred Blondeau from Green Street.

In terms of job growth in Alberta, maybe a question for James or Sam. Just in terms of job growth in Alberta, are you starting to see some cracks coming, for example, from the oil and gas sector? And I mean, I guess my real question is, do you see risk that interprovincial immigration could be negatively impacted sometime this year?

Fred, it's Eric. I think, great question. Thank you, first and foremost. Specifically on the oil and gas jobs, I think one thing that is very different today as compared to sort of -- if you go back to the peak of the last cycle, is our oil producers, from a balance sheet perspective, have really improved their debt levels. That position -- that puts them in a much better position as compared to what we've seen in past cycles in terms of the need to potentially downsize, which is what we would have saw last time.

It's very different today. I think in addition to that, we've also seen diversification throughout many, many industries. I think as Samantha commented in her opening remarks as well, our government has done a great job in diversifying the economy by attracting new job growth in areas like health care, clean tech, warehousing and other industries as well.

And the -- I think to your question as well on the oil and gas side, they have -- the other thing that will help mitigate some of that concern, I think, is the low Canadian dollar at the moment.

I'll just add, Fred, it's James here, to Eric's comments. There's Slide 32 in our appendix that really shows that change that's occurred in Alberta, that diversification that's occurred. We can see on Slide 32 in the appendix, oil and gas -- the oil and gas industry and the percentage of total employment in our province has declined since 2012 despite our population growth growing significantly here in Alberta over that same time period.

So does that mean that you still feel proactively positive in terms of interprovincial immigration at least this year?

Yes. Fred, affordability remains some of the best in the country right here in Alberta. Our average rents in Edmonton of sub-$1,500 with affordability defined as rent relative to income, you can't find that in any other major city in Canada, and that's a big reason why we continue to see positive migration.

In addition to the low taxes, job vacancies that exist, all the reasons that Alberta has won on an immigration standpoint over the last few years continue to exist today. And in fact, we saw that in our most recent population stats that came out just about a month ago, where Alberta led population growth, not only on a relative basis, on an absolute basis, we saw Alberta have the best population growth in the country.

Okay. No, that's great. And quickly, just my last question. How do you feel in terms of new supply in Calgary and Edmonton for the rest of the year? How bad is it? And where do you see supply heading during the rest of the year?

Fred, it's Eric again. So certainly, we've seen higher deliveries over the last couple of years, particularly in Calgary. However, as James just commented on, nowhere in the country at the moment, do we have as high demand as we have in Alberta right now. So we do need that supply to meet that demand.

What we have a shortage of, in particular, is affordable, high-quality housing. And good news for us is that, that is what we have. And we've also taken that self-moderation approach along the way. So while we do see elevated supply levels in particular in Calgary, we think the approach that we've taken within our model, will continue to be viewed very favorably. And you can see that as well in our ability to maintain our higher occupancy levels given the amount we've reinvested in our portfolio over the last number of years.

Your next question is from Jonathan Kelcher from TD Cowen.

Just sort of continuing on Calgary with the negative new leasing spread that you guys are doing that to maintain occupancy. But -- at what point do you think you find the balance in terms of where you're getting new leasing versus where market rents are?

Jonathan, we're -- it's Sam. Seeing indicators right now and just reviewed the daily dashboard before this call. And we have several of our communities with 0 availability. And so our occupancies are really high right now, and it's only the 7th of the month. We've got lots of rentals and applications and we're well on target to get close to 0 availability in Calgary. So those are very positive.

We asked our operations leader yesterday, how things are going. And very little pocket deals are being offered or even advertised. And so the indicators are positive and continue to show demand for affordability, good value, large apartment units and also in migration into provincially and even still international. And so all of those are positive for more stable market in Calgary. We do want to emphasize, though, we have enough, more expensive, higher-end rentals in Calgary and really across Canada. We've done a great job on providing additional supply with our CMHC financing and our policymakers. And so overall, we're seeing across Canada a more balanced market.

Okay. That's helpful. And then just switching gears, and you guys bought out or are about to buy out RioCan's interest in BRIO. Was there any thought to listing that property for sale by the partnership?

It's Samantha Adams speaking. We did contemplate that. But to be honest, we believe so strongly in BRIO. It's in a fantastic area, really close to the University of Calgary. And so I would suggest we contemplated that for about the equivalent of 5 seconds. We're big believers in that asset. It's a great opportunity for us now too, from an operational perspective, to enhance our efficiencies on site. So we're really excited.

Okay. Could we -- would be -- if you're looking at -- and I think you sort of hinted at looking at unique acquisitions, I think was the term that was used. Would that sort of fall into that category if you guys were to be on the acquisition side going forward, the balance of the year, we look like assets similar to that?

Well, this is a unique opportunity for us for sure because it's essentially an off-market deal and a property that we know and understand and so BRIO for us was a great opportunity. We continue to -- we're really active right now actually on other opportunities. We're being very, very selective. When you say like BRIO, do you mean more sort of new or nearly new type product or...

Yes, newer vintage type product.

Jonathan, it's Sam. The one part about the university area also has the largest regional hospital foothills, the new cancer research, $1 billion investment or more with employment. Our health care continues to be a big employer and a growing employer. Not to mention the research element that goes with our health care and our sole provider, which provides excellent research opportunities and data for research. And so that hub, over the last 40 years, has rarely seen cyclicality. And that's why we love BRIO and that Northwest hub and location in particular.

Another big amenity is grocery store just within hundreds of feet away, and our residents love the proximity of a grocery store. And that's always been a very positive amenity that's very hard to replace as well. And so that's why we love BRIO. The design, the large unit sizes, very difficult to replace. Over the last 40 years, we haven't been able to buy something like this. And so building it was the only way to own and provide a high-quality product and service like this in that area.

Your next question is from Mike Markidis from BMO.

Just a quick question on -- questions. The first one being -- thanks for the guidance, of course. I'm just curious if you could give us some sense of how you expect your sequential revenue to traject through the remainder of this year? I guess your [indiscernible] Q1. So how should we be thinking about the trajectory in Q2 through Q4 in your guidance?

I think -- Mike, it's Eric. I think Q2, you're likely, on a sequential basis, I think, to see a little bit of a lower number sequentially, and that's mainly a virtue of just your new leasing spreads that we're seeing at the moment.

If you move to Q3, I think, both from a volume perspective but also because we have a good chunk of our Quebec leases coming up at that time, I think we're -- you will see that essentially reaccelerate in Q3 from the Q2 number. So it's going to be a little bit down and up throughout the year, but generally speaking, that's what we're expecting.

Okay. And I guess in Q2, you're capturing lower spreads, but you should have higher occupancy, it sounds like, right, on an average basis because you started in January pretty low.

Mike, it's James. We are absolutely striving for that higher occupancy, that is critical to our revenue management strategy.

Okay. Simple one here. I can probably back into it, but a lot's going on right now. BRIO, can you provide the Cap Rate -- or save me from doing the math.

From our perspective, it's sort of a mid- to a high [ 4 ] cap.

Mid- to high [ 4s ]. Okay. Great. And then Samantha, while I got you, you gave some updates on development. It sounds like Marda Loop -- and I'm going to get it mixed up Marin, are on pause for now. And the cost uncertainty, is that just related to tariffs?

Correct. We just -- I think we're not unique in that. We're just waiting to see -- we need greater cost certainty at this stage. So we just -- we felt the most prudent use of our capital is just a pause in the short term while we sort of wait and see what the costs look like in the sort of near term...

Yes, of course. And then I think you mentioned in the short term, just some uncertainty with respect to the fundamentals. Was that more specific to the Victoria market itself or?

No. Just -- it all relates to the cost uncertainty and time lines now associated with development. We are -- the Marda Loop land is here in Calgary in a fantastic location. And The Marin in Esquimalt one -- for those who don't know, it sort of a suburb of Victoria, it's also in an excellent location. So we are big believers in the location. It really has to do now with timing and cost uncertainties with development.

Okay. And then last one, just I think for me, just you picked up, you said you were going to sell the third site as well?

We're looking at that, yes. Yes.

Next question is from Brad Sturges from Raymond James.

Just to kind of put all the commentary together on leasing it. It sounds like you're getting a little bit more confident about your ability to push asking rents similar to what, I guess, the commentary would have been last quarter? Just kind of comment on what you're thinking about maybe being a little bit more opportunistic on pushing rents?

Brad, it's Sam. Our occupancy, really strong, high occupancy is one factor. Our renewal rates, we're now targeting 80% or over, and retention is super strong and high, and that's actually creating a scarcity and lower turnover and fewer apartments to rent every month. Our move-outs this month, much lower than they were last year. So a lot of positive indicators that we're very, very pleased with.

And we're starting off the month with a lot of rentals, too. So that gives us great confidence that we're on the right trajectory and path, and we continue to see a balance and a strong demand for affordability and our product and the result of all the reinvestment that we've made that our competitors -- for some of our competitors, that haven't made as much of an investment in communities as we have. And so we're seeing a market share increase as well. A lot of our residents that have rented with us, moved away from our competitors. And now that we have a little availability, are really happy to rent with us and come back home with us. Interest rates are rising, and renewal interest rates are rising. So many of our residents have moved to buy a home with higher interest rates, are moving back home with us.

And so there's a lot of positive factors that we're seeing that continue and an amazing team. First and foremost, our team has to get all the credit on our team's big shoulders, quick response time, super service, just an amazing attitude and service for our residents. Our -- the Net Promoter Scores -- our associate Net Promoter Scores. Happy associates make happy residents and great results and KPIs. And I've gone on and off.

I appreciate the color there and the response. Just -- I guess, while I have you, Sam, like how are you thinking about the election results? The Liberal minority government. Does that change much in terms of policy? And how do you think that could sort of impact the apartment sector and the housing market over the next couple of years?

So we're seeing a shift of public policy to less taxes. We are a big fan and a big example of our Premier Smith, who -- who won on less taxes and reduced taxes in our economy is -- a good case example of when we reduce taxes, it's great for economic growth. And so reducing our carbon tax is a really positive step forward to reducing taxes. And some of the policy that's tried, tested and proven is reducing more taxes for housing, which is very positive.

The minority government that we have right now, the -- the big opportunity we have is for our biggest, most popular parties that being the Liberal and the United Conservative to come together and to put policy forward that 80% of us, we, the people, Canadians, support and back. And so never has there been such a great opportunity for two of the most popular parties with public policies that are very similar now and pro economic growth.

So we think it's a good thing. We think the election and our Prime Minister did a great job the other day, didn't get into any situations that other international leaders got into, not to mention any names, but we're very pleased also with our Prime Minister backing and supporting the by election in Alberta for our former conservative leader as well. So far so good. We're very impressed with what's happening.

And as well as the support and the knowledge for Eastern Canadian population and provinces to become energy independent. We need to build energy corridors to make all of Canada energy independent. And isn't the United States the best case example of what happens to economy. When a country becomes energy independent, no coincidence. America's economy has grown ever since America became energy independent. And so what a huge opportunity for us, Canadians, and we can use all our 300 billion trees as a carbon offset to continue to do our green part as well.

Your next question is from Kyle Stanley from Desjardins.

The solid growth in Edmonton appears to be continuing as per your results here. But if we do look at the Rentals.ca data, the growth does look like it's slowing a little bit. So I just love your thoughts on maybe the outlook in Edmonton, obviously, is your largest market, and how, maybe Boardwalk has been able to outperform what we're seeing in the broader market as per these stats.

Kyle, it's James. As we've talked about throughout, we are seeing more balanced rental market conditions pretty well across the country with the delivery of new supply. In Edmonton, our average rents are $1,500, and we continue to see positive new and renewal leasing spreads. Affordability here remains some of the best in the country.

We'll highlight that the strong results this quarter really through more balanced housing conditions is just another great example, to Sam's earlier point, of about our team's ability to compete and outperform through all market conditions. And so with our average rents and the investments that we've made in Edmonton, Kyle, we still stick to that call that we think Edmonton is going to be one of the best rental markets in Canada for 2025.

Okay. Maybe just sticking on the supply in Calgary, it's been talked about a lot, but I'm just curious, as we sit here today, where is the gap between your rent and the new supply that's been delivered? And maybe how has that changed in the last months or quarters as a result of maybe developers discounting rents? What's been going on kind of behind the scenes there?

A lot of the new supply that's coming online generally is going to be priced anywhere from $2,300 to $3,000 a month. Our average rents are about $1,900 in Calgary. To Sam's earlier point, we have several communities in Calgary that have 0 availability. Our more affordable product continues to be in very high demand. And we, in fact, see positive leasing spreads out of those communities.

Where we are seeing some competition is in that upper end, where residents do have more choice. Residents are price sensitive, and our team is competing to retain and attract new residents, which our team is doing a fantastic job with our continued high occupancy.

Okay. Just last one. Obviously, I think you've proven the merit of the strategic lease moderation strategy. As we sit here today, like what is your outlook for the upside that still left as a result of that strategy as we move through the year?

We're going to continue to stay moderated for our residents, and we're going to be extremely flexible with each and every single one of our residents. So I think our high retention rates, some of the highest that we've seen ever before, a proof of that, where our value offering is better than anybody else in the market. Our price point is right. Our affordability is there, the service that we offer is there, the quality of our communities is there. And that's a function of all the investments that we've done over the past several years and our team's commitment to high product quality and service.

And so I think going forward, we're going to continue to capture similar gains, especially on retention and renewals as we are. And on a new pricing front, we're going to continue to maintain that high occupancy. And so far, as you've seen over the last couple of months, we've been able to do that with just very small price discounts so far.

Your next question is from Jimmy Shan from RBC Capital Markets.

So just on the operating expense, it barely moved on a year-over-year basis. And I was wondering if you could talk generally about where you're finding the savings and what is the sustainability of those savings going forward?

Jimmy, it's Gregg. Yes, the operating expenses, as you pointed, were relatively flat. I mean, that was a combination like higher wages and salaries, building repairs and maintenance were higher as well as our advertisement. That was largely offset by our lower bad debts and insurance.

We did see wages and salaries increase, but I mean, as far as the savings that's contributing to that, it's the bad debt, our collection efforts have been stellar. The team is doing a great job. The insurance premium, as you know, when we renewed at July 1 last year, we were able to get quite a significant reduction in our renewal. So those have been the main factors.

So that pace of growth, if we were to extrapolate for the balance of the year, would that be reasonable?

I mean for the remainder of the year, like our guidance, like when it comes to operating expenses specific, we're looking around 0.5% to about 3% higher than last year.

Okay. Okay. And then in relation to your Edmonton comment, can you remind me -- or maybe how would you describe the supply picture in Edmonton relative to Calgary?

Yes. So I'd say -- Jimmy, it's Eric again. I would say, Edmonton, certainly, we're seeing I guess, a higher amount under construction than we have by historical standards, but certainly the same comment holds true from earlier on the demand side. I'd say slightly different markets. So if you look at purpose-built rental supply and add in secondary condo supply in the Edmonton market, it's significantly lower than we see in Calgary. So I would use the word, it's a little bit steadier in Edmonton than we've seen in Calgary over the last -- from a supply perspective over the last couple of years.

One thing I would add as well to our overall supply outlook is we have been in our conversations with various counterparties hearing that CMHC has been tightening up on their underwriting criteria for new supply specifically. So from a forward outlook basis, I think it's going to be potentially more challenging for certain developers to achieve the same leverage levels that they would have been able to a year or 2 ago.

Jimmy, it's James. I'll just reiterate that the gap in our average rents in Edmonton to the economic rents for new development in Edmonton are -- remain quite wide, but yes, that product quality because of the investment that we've made back into our assets has never been tighter. So that provides us with a great opportunity in Edmonton be on that base of $1,500 rents to continue to see solid and strong.

Okay. And I don't know if this is a relevant comparison. But if I look at the rent differential between Edmonton market rent, as you stated, and the Calgary market rent, that is -- I think it's about $250 per month. And I could be wrong here, but that seems to be wider than it's historically been. Again, I don't know if that's a relevant comparison though. I wonder, does that -- would that -- is that same thing to you in terms of that differential being wider than normal?

Yes. And that's a function of the additional supply that's been added to Calgary over the last few years. Keep in mind, Calgary also has one of the smallest bases of rental universe in the country. And so when we are adding supply on a relative basis, that's going to weight that average more and more towards that upper end.

So having that price gap or that affordability gap between Edmonton and Calgary provides great opportunity for -- as Sam always says, the way to solve affordability is to have everybody move to into Edmonton.

There are no further questions at this time. I will turn the call over to Sam Kolias for closing remarks.

Thank you, Andrew. As always, if there are any other further questions or comments, please do not hesitate to contact us.

With gratitude, we would like to thank our extraordinary team, loyal residents, CMHC, our lenders and of course, our unitholders from far and wide and local. It really is all about our BFF, our Boardwalk Family Forever, whose huge holders, we stand. And as leaders, we continue to do everything we can to support continued growth and extraordinary. We really can't thank our extraordinary team and great leaders enough. We are pleased with our improving results on a foundation of exceptional value service and experience we continue to provide our resident members, our investors and all our stakeholders.

We conclude, home is where our heart is, our heart is where our family is, and our family is where love always lives. Our occupied rent average, $1,538. Our love always, priceless. Welcome home to love always. Our future is Boardwalk Family Forever. What can be more important when choosing where to call home. God bless us, and now more than ever, grant us all peace.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.