BOARDWALK REAL ESTATE INVESTMENT ... - Boardwalk REIT

- 27 -Acquiring Selected Multi-Family Residential PropertiesBoardwalk REIT seeks to expand its property portfolio by continuing to acquire multi-family residentialproperties within Canada. Future real property acquisitions will be subject to specific investment guidelines andthe operation of Boardwalk REIT and its subsidiaries is subject to specific operating policies, as describedelsewhere in this AIF. The Trustees are responsible for the general control, direction and management ofBoardwalk REIT and have determined that in evaluating a potential acquisition the Trust‘s investment prioritiesshould be based on the following;.1. the target asset must be located in Canada;2. the target asset must be an Apartment;3. the overall all anticipated return from the target asset must be Risk Adjusted;4. the target asset must be located in a Major Market;5. the Apartment must be Well Located; and6. the Apartment must be of a Better Quality.To further assist in the interpretation of the above noted investment criteria the following enhancedinterpretations are provided.Apartment - a structure that has a roof and walls that stands permanently in one place;Risk Adjusted – a focus on investments where anticipated returns are justified given the risk associatedwith the investment... The Risk Adjusted rate is adjusted internally on an ongoing basis.Major Centres – Markets that have a solid growth economy and have sufficient apartment stock todevelop economies of scale of a minimum of 1000 apartment units.Well Located – in areas of Major Centres that command higher than average rents.Better Quality Assets – The asset has no functional obsolescence, (i.e. a good unit mix, good commonareas, strong construction specifications).In reviewing potential apartment acquisitions, Management always keeps in mind the short and long termaccretiveness of the transaction under review. As a bench mark, the Trust will look to the underlyingcapitalization rate that its Trust units are being valued at on the Toronto Stock Exchange. On occasion, anapartment building may come up for sale that potentially may transact at a capitalization rate that is lower than theTrust‘s implied cap rate. However, further examination may find underlying economics, such as current rentalrates are well below market rates and, once these are stabilized, the asset itself will be accretive.In a competitive acquisition market like the one the Trust currently finds itself, the focus of managementis on growing the value, quality and service of our existing portfolio through our most valuable asset, our team ofAssociates. The Trusts‘s most significant returns come from growing the expertise of our Associates. By way ofexample, Boardwalk‘s program over the last three (3) years to reduce the contracting out of repairs andmaintenance and to increase the internalization of those functions has led to higher productivity among the Trust‘sAssociates. Acquisitions in a competitive market can be dilutive because of high deferred capital expendituresand vacancy. Accordingly, in the current competitive acquisition market, the Trust has and will continue to focuson improving the quality, value and service of its existing portfolio, which, management is confident, will lead tohigher revenues and funds from operations (―FFO‖).During the 12 months ended December 31, 2010, the Trust disposed of 1,142 units in the Provinces ofAlberta, British Columbia, Saskatchewan and Quebec.