Calgary-based Boardwalk Investment Trust is feeling the pain in the ongoing rout in oil prices, as job layoffs across Alberta along with a decrease in net migration push rental apartment vacancy rates higher.
Boardwalk’s unit price has sharply declined to about $41 since closing in an all-time high of $71.40 roughly 14 months ago. The company’s real estate portfolio is heavily exposed to Saskatchewan and Alberta, two provinces that rely on the energy industry. But according to an analysis by Canaccord Genuity, Boardwalk’s unit price has fallen a lot more than it should have, and is trading at a 22-per-cent discount to its current net asset value.
“In the end do not believe that vacancy has bottomed, we all do think that the market is pricing inside a greater degree of pain than Boardwalk is likely to suffer,” Canaccord analysts said Tuesday inside a are accountable to clients that dropped the prospective price for Boardwalk to $45 from $50 and maintained a hold rating. “However, it is difficult to see a fabric near-term catalyst for that REIT’s units” to be an attractive buy.
In October, the rental apartment vacancy rate increased 390 basis suggests 5.3 per cent and 250 basis suggests 4.2 per cent in Calgary and Edmonton, respectively, from the prior year. “With continued job losses, it is reasonable to anticipate the marketplace vacancy rate to help increase in 2016,” Canaccord’s analysts said.