Intrinsic value of Boardwalk Real Estate Investment Trust - BEI-UN

Previous Close

$38.58

  Intrinsic Value

$18.33

stock screener

  Rating & Target

str. sell

-52%

Previous close

$38.58

 
Intrinsic value

$18.33

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of BEI-UN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -7.77
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  439
  448
  458
  470
  483
  498
  514
  531
  550
  571
  593
  616
  641
  668
  696
  726
  758
  791
  827
  865
  904
  946
  990
  1,037
  1,086
  1,138
  1,192
  1,250
  1,310
  1,373
  1,440
Variable operating expenses, $m
 
  212
  217
  223
  229
  236
  244
  252
  261
  270
  281
  292
  304
  316
  330
  344
  359
  375
  392
  410
  429
  449
  469
  492
  515
  539
  565
  592
  621
  651
  683
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  230
  212
  217
  223
  229
  236
  244
  252
  261
  270
  281
  292
  304
  316
  330
  344
  359
  375
  392
  410
  429
  449
  469
  492
  515
  539
  565
  592
  621
  651
  683
Operating income, $m
  209
  236
  241
  247
  254
  262
  270
  279
  289
  300
  312
  324
  337
  351
  366
  382
  399
  416
  435
  455
  476
  498
  521
  545
  571
  599
  627
  657
  689
  722
  757
EBITDA, $m
  219
  241
  247
  253
  260
  268
  277
  286
  296
  307
  319
  332
  345
  359
  375
  391
  408
  426
  445
  465
  487
  509
  533
  558
  585
  613
  642
  673
  705
  739
  775
Interest expense (income), $m
  84
  84
  87
  89
  91
  94
  97
  101
  105
  109
  113
  118
  123
  129
  135
  141
  147
  154
  162
  169
  178
  186
  195
  205
  215
  226
  237
  249
  262
  275
  289
Earnings before tax, $m
  -57
  151
  154
  158
  163
  168
  173
  179
  185
  191
  198
  206
  214
  222
  231
  241
  251
  262
  273
  285
  298
  312
  326
  340
  356
  373
  390
  408
  427
  448
  469
Tax expense, $m
  0
  41
  42
  43
  44
  45
  47
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  105
  110
  115
  121
  127
Net income, $m
  -57
  111
  113
  116
  119
  122
  126
  130
  135
  140
  145
  150
  156
  162
  169
  176
  183
  191
  200
  208
  218
  227
  238
  249
  260
  272
  285
  298
  312
  327
  342

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  99
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,769
  5,815
  5,949
  6,102
  6,274
  6,464
  6,673
  6,900
  7,146
  7,411
  7,695
  7,999
  8,324
  8,670
  9,037
  9,427
  9,840
  10,277
  10,740
  11,228
  11,744
  12,289
  12,863
  13,468
  14,106
  14,777
  15,484
  16,228
  17,011
  17,835
  18,702
Adjusted assets (=assets-cash), $m
  5,670
  5,815
  5,949
  6,102
  6,274
  6,464
  6,673
  6,900
  7,146
  7,411
  7,695
  7,999
  8,324
  8,670
  9,037
  9,427
  9,840
  10,277
  10,740
  11,228
  11,744
  12,289
  12,863
  13,468
  14,106
  14,777
  15,484
  16,228
  17,011
  17,835
  18,702
Revenue / Adjusted assets
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
  0.077
Average production assets, $m
  27
  28
  28
  29
  30
  31
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  71
  74
  77
  81
  85
  89
Working capital, $m
  -297
  -53
  -54
  -55
  -57
  -59
  -61
  -63
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -98
  -102
  -107
  -112
  -117
  -122
  -128
  -134
  -141
  -147
  -155
  -162
  -170
Total debt, $m
  2,436
  2,404
  2,466
  2,538
  2,618
  2,707
  2,804
  2,910
  3,025
  3,149
  3,282
  3,424
  3,575
  3,737
  3,908
  4,090
  4,283
  4,488
  4,703
  4,932
  5,173
  5,427
  5,695
  5,978
  6,275
  6,589
  6,919
  7,267
  7,632
  8,017
  8,422
Total liabilities, $m
  2,747
  2,716
  2,778
  2,850
  2,930
  3,019
  3,116
  3,222
  3,337
  3,461
  3,594
  3,736
  3,887
  4,049
  4,220
  4,402
  4,595
  4,800
  5,015
  5,244
  5,485
  5,739
  6,007
  6,290
  6,587
  6,901
  7,231
  7,579
  7,944
  8,329
  8,734
Total equity, $m
  3,021
  3,100
  3,171
  3,252
  3,344
  3,445
  3,556
  3,678
  3,809
  3,950
  4,102
  4,264
  4,437
  4,621
  4,817
  5,025
  5,245
  5,478
  5,724
  5,985
  6,260
  6,550
  6,856
  7,178
  7,518
  7,876
  8,253
  8,650
  9,067
  9,506
  9,968
Total liabilities and equity, $m
  5,768
  5,816
  5,949
  6,102
  6,274
  6,464
  6,672
  6,900
  7,146
  7,411
  7,696
  8,000
  8,324
  8,670
  9,037
  9,427
  9,840
  10,278
  10,739
  11,229
  11,745
  12,289
  12,863
  13,468
  14,105
  14,777
  15,484
  16,229
  17,011
  17,835
  18,702
Debt-to-equity ratio
  0.806
  0.780
  0.780
  0.780
  0.780
  0.790
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.810
  0.810
  0.810
  0.810
  0.820
  0.820
  0.820
  0.820
  0.830
  0.830
  0.830
  0.830
  0.830
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
Adjusted equity ratio
  0.515
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -57
  111
  113
  116
  119
  122
  126
  130
  135
  140
  145
  150
  156
  162
  169
  176
  183
  191
  200
  208
  218
  227
  238
  249
  260
  272
  285
  298
  312
  327
  342
Depreciation, amort., depletion, $m
  10
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
Funds from operations, $m
  49
  116
  118
  121
  125
  128
  133
  137
  142
  147
  152
  158
  164
  171
  178
  185
  193
  201
  210
  219
  229
  239
  250
  261
  273
  286
  299
  313
  328
  344
  360
Change in working capital, $m
  -85
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
Cash from operations, $m
  134
  117
  120
  123
  126
  130
  134
  139
  144
  149
  155
  161
  167
  174
  181
  189
  197
  205
  214
  224
  234
  244
  255
  267
  279
  292
  306
  320
  335
  351
  368
Maintenance CAPEX, $m
  0
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
New CAPEX, $m
  -247
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
Cash from investing activities, $m
  -248
  -6
  -7
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -19
  -19
  -20
  -21
Free cash flow, $m
  -114
  111
  113
  116
  120
  123
  127
  132
  136
  141
  146
  152
  158
  164
  171
  178
  186
  194
  202
  211
  220
  230
  241
  252
  263
  276
  288
  302
  316
  331
  347
Issuance/(repayment) of debt, $m
  170
  67
  62
  71
  80
  89
  97
  106
  115
  124
  133
  142
  152
  161
  172
  182
  193
  204
  216
  228
  241
  254
  268
  283
  298
  314
  330
  348
  366
  385
  405
Issuance/(repurchase) of shares, $m
  -33
  0
  0
  0
  0
  0
  0
  0
  0
  2
  7
  12
  17
  22
  27
  32
  37
  42
  47
  52
  57
  63
  68
  74
  80
  86
  92
  99
  105
  112
  120
Cash from financing (excl. dividends), $m  
  126
  67
  62
  71
  80
  89
  97
  106
  115
  126
  140
  154
  169
  183
  199
  214
  230
  246
  263
  280
  298
  317
  336
  357
  378
  400
  422
  447
  471
  497
  525
Total cash flow (excl. dividends), $m
  12
  178
  176
  188
  200
  212
  225
  238
  251
  266
  286
  306
  326
  347
  369
  392
  415
  440
  465
  491
  519
  547
  577
  608
  641
  675
  711
  748
  787
  828
  871
Retained Cash Flow (-), $m
  190
  -79
  -71
  -81
  -91
  -101
  -111
  -121
  -131
  -141
  -152
  -162
  -173
  -184
  -196
  -208
  -220
  -233
  -246
  -260
  -275
  -290
  -306
  -323
  -340
  -358
  -377
  -397
  -417
  -439
  -462
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  99
  105
  106
  108
  111
  113
  117
  120
  125
  134
  144
  153
  163
  173
  184
  195
  207
  218
  231
  244
  257
  271
  286
  301
  317
  334
  351
  370
  389
  409
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  92
  89
  82
  75
  69
  62
  56
  50
  44
  40
  36
  31
  27
  23
  19
  15
  12
  10
  7
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  99.9
  99.7
  99.3
  98.7
  98.0
  97.2
  96.3
  95.3
  94.2
  93.1
  91.9
  90.7
  89.4
  88.1
  86.7
  85.4
  84.0
  82.6
  81.2
  79.9
  78.5
  77.1

Boardwalk Real Estate Investment Trust (the Trust) is an open-ended real estate investment trust (REIT). The Company is focused on the acquisition, refurbishment, management, ownership and development of multi-family residential communities within Canada. The Trust owns over 200 properties containing approximately 33,770 residential units within the Provinces of Alberta, Saskatchewan, Ontario and Quebec, representing over 30 million net rentable square feet. Its assets represent a portfolio of residential real estate, both from the standpoint of geographic diversification and mix of asset type, which consists of mid-sized suburban and downtown apartment buildings, and regional, mid-sized community and neighborhood residential centers located in urban markets. Its residential properties in the portfolio are located in Montreal and Quebec City, Quebec; London and Kitchener, Ontario; Saskatoon and Regina, Saskatchewan, and Edmonton, Grande Prairie, Banff, Red Deer and Calgary, Alberta.

FINANCIAL RATIOS  of  Boardwalk Real Estate Investment Trust (BEI-UN)

Valuation Ratios
P/E Ratio -34.3
Price to Sales 4.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 14.6
Price to Free Cash Flow -17.3
Growth Rates
Sales Growth Rate -7.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 168.5%
Cap. Spend. - 3 Yr. Gr. Rate 25%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 69.2%
Total Debt to Equity 80.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital -1%
Ret/ On T. Cap. - 3 Yr. Avg. 1.3%
Return On Equity -1.8%
Return On Equity - 3 Yr. Avg. 2.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 57.6%
Gross Margin - 3 Yr. Avg. 60.4%
EBITDA Margin 8.4%
EBITDA Margin - 3 Yr. Avg. 35.2%
Operating Margin 47.6%
Oper. Margin - 3 Yr. Avg. 50.8%
Pre-Tax Margin -13%
Pre-Tax Margin - 3 Yr. Avg. 14.3%
Net Profit Margin -13%
Net Profit Margin - 3 Yr. Avg. 15.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio -263.2%

BEI-UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BEI-UN stock intrinsic value calculation we used $439 million for the last fiscal year's total revenue generated by Boardwalk Real Estate Investment Trust. The default revenue input number comes from 2016 income statement of Boardwalk Real Estate Investment Trust. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BEI-UN stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.3%, whose default value for BEI-UN is calculated based on our internal credit rating of Boardwalk Real Estate Investment Trust, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Boardwalk Real Estate Investment Trust.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BEI-UN stock the variable cost ratio is equal to 47.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BEI-UN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.6% for Boardwalk Real Estate Investment Trust.

Corporate tax rate of 27% is the nominal tax rate for Boardwalk Real Estate Investment Trust. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BEI-UN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BEI-UN are equal to 6.2%.

Life of production assets of 2.7 years is the average useful life of capital assets used in Boardwalk Real Estate Investment Trust operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BEI-UN is equal to -11.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3021 million for Boardwalk Real Estate Investment Trust - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 46.161 million for Boardwalk Real Estate Investment Trust is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Boardwalk Real Estate Investment Trust at the current share price and the inputted number of shares is $1.8 billion.

RELATED COMPANIES Price Int.Val. Rating
Financial statements of BEI-UN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.