* REIT is slowly raising rents in Alberta apartment market
* Average monthly rent slips, but occupancy rises in Q1
* FFO per unit of C$0.55 vs C$0.58 year ago (Adds detail, adds dateline)
By Ka Yan Ng
TORONTO, May 18 (Reuters) - Boardwalk REIT (BEI_u.TO) is slowly and selectively raising rents in key markets and paring back on offered incentives for its apartments as the Canadian economy improves, the real estate investment trust said on Tuesday.
The average monthly rent in the trust’s rental apartment portfolio for the quarter slipped to C$973 ($936) per suite, compared with C$979 a year ago, Boardwalk said.
But Boardwalk said it was pleased that it had achieved its primary goal of increasing occupancy through the slower economic period, raising its average occupancy to 96.9 percent from 94.7 percent. It has nearly 36,000 units in its portfolio, with most located in Alberta.
“We continue to monitor our markets on a constant basis, adjusting rents and incentives with an agility and market sensitivity,” said Chief Executive Sam Kolias on a conference call.
“With higher occupancy and improved economic conditions helping to stabilize rental revenues, we’re moving away from incentives, especially in the Alberta market.”
The REIT also said an estimated C$142 billion in oil sands investment will also help sustain long-term growth in the province, while neighboring Saskatchewan, also rich in resources, is a growing market.
There are signs of rental demand but Boardwalk said it was not yet in a hurry to hike rents across the board as it looks for solid evidence that the domestic and global economic recovery is fully entrenched.
The REIT, which generates more than half its rental revenue from Alberta, also said renting may also become a more affordable option for its prospective and current tenants as interest rates and home prices rise.
For instance, in Calgary and Edmonton, the two major cities in Alberta, the price of a single-family home has increased more than 10 percent from a year ago, while mortgage rates have also been on the rise.
Late on Monday, Boardwalk reported lower-than-expected funds from operations, a key measure of performance for real estate companies, partly as a result of the dilutive effect of holding higher levels of low-return cash. [ID:nWNAB1655]
It reported FFO of C$29 million, or 55 Canadian cents a unit, down slightly from C$30.8 million, or 58 Canadian cents a unit, a year earlier.
The REIT had available cash of about C$168 million at the end of the quarter, and with its committed revolving credit facility, it has a total current liquidity of C$366 million.
Boardwalk said it was comfortable with its cash position and stood ready to use it, though acquisition opportunities were scarce at the moment.
“It’s all about and always has been about flexibility and choice,” Kolias said.
Boardwalk units were up 0.2 percent at C$42.15 on the Toronto Stock Exchange in early afternoon.
Additional reporting by Shrutika Verma in Bangalore; Editing by Frank McGurty