Boardwalk Real Estate Investment Trust

TSX:BEI.UN

Earnings Call Transcript 2023-Q1

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Boardwalk Real Estate Investment Trust First Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on May, 10, 2023.

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

[Eric Bowers, Vice President of Finance and Investor Relations]

Thank you, Brain, and welcome to the Boardwalk REIT 2023 first quarter results conference call. With me here today are Sam Kolias, Chief Executive Officer; James Ha, President; and Lisa Smandych, Chief Financial Officer. 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 and MD&A.

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.

[Sam Kolias, Chairman and Chief Executive Officer]

Thank you, Eric, and welcome, everyone to our Q1 2023 conference call. Starting on Slide 4, our performance with our GAAP and non-GAAP measures of FFO per unit, profit, net asset value, and unitholder equity, all seen an increase from the same quarter of the prior year or December 31, 2022.

Slide 5, our culture. From our humble beginning to 1984, our Resident Members are asset talk of our organization. Our leaders put our team first and our team puts our Resident Members first. The rest takes care of itself.

Slide 6, our strategy. To create value for all our stakeholders begins with our people. We are so grateful for our extraordinary team who continues to innovate and deliver our places, homes for our Resident Members where love always lives. In turn, this leads to leading earnings performance, which we believe will continue to result in strong total returns for our stakeholders.

Our strategic focuses are significant organic growth from utilizing our proven team and platform that focuses on operational excellence to optimize NOI growth. When we pair this with the current improvements in apartment rental market fundamentals on a solid foundation of some of the most affordable rents in Canada, we are well positioned to continue to accelerate on our organic growth trend. Accretive capital recycling focuses on opportunistic investment into acquisitions, developments and investment into our own high-quality existing portfolio with a tactical unit buyback when appropriate.

These opportunistic investments combined with our operational optimization have positioned Boardwalk for increasing asset values within Boardwalk's diversified and high-quality multifamily portfolio. Our solid financial foundation provides flexibility on our balance sheet with our growing free cash flow and with CMHC insurance on 96% of our financings, which provides access to low-cost mortgage capital with reduced renewal risk.

Slide 7. We are delivering solid growth. Boardwalk's existing exposure to strong rental demand, non-price controlled markets with record immigration, significant organic growth as Alberta have some of the most affordable rental rates in the country with limited new supply versus demand from both international and interprovincial migration. Our solid financial foundation and partnership with CMHC allows us to provide some of the most affordable rents in Canada, with rising interest rates making homeownership more expensive and rising construction costs, all widening the gap between our replacement cost of our assets and our current evaluation.

Construction levels in our core markets remain low relative to anticipated household formation with record high immigration into our core Alberta markets. Our largest market Edmonton ended last month with under 1% availability, contributing to our solid performance. Apartment rental fundamentals continue to improve with higher revenues as a result of inflationary adjustments coupled with essentially no new incentives on new and renewing leases. All our markets now have high occupancy and strong apartment rental fundamentals.

Slide 8 shows the significant magnitude and scale on a historic level of all-time record high immigration into our largest region, Alberta from both interprovincial and international migrants calling Alberta home. This significant migration reflects the affordability that Alberta provides relative to other provinces coupled with higher job vacancies.

Slide 9 shows strong overall employment growth in Alberta, along with how diversified new jobs are helping with the diversification of the Alberta economy.

Slide 10 shows some headlines that reflect a diversifying economy for Alberta. Some economists predict Alberta will avoid recession. In addition, there are many major projects under development in the province of Alberta, which will further promote more job opportunities in the future.

Slide 11 shows our large presence in affordable and non-price controlled markets, with Alberta and Saskatchewan representing 62.4% and 10.4% of our portfolio, respectively. Boardwalk has the highest concentration of non-price controlled departments among our public peers. Boardwalk's current mark-to-market, which includes the reduction of incentives averages $152 per suite and equates to approximately $59 million of revenue opportunity.

Slide 12 shows our high affordability in our core Edmonton and Calgary markets with rents well below 30% of median rental household income. To the right of the affordability chart is a graph which shows occupied rents in Alberta are at similar levels to Q3 2015. There remains a significant gap between occupied rents and the changeover consumer price index over the last eight years. Boardwalk rents continue to provide exceptional value versus consumer price index over the last eight years.

Slide 13 shows the significant imbalance between strong demand or immigration versus supply or new builds with demand or migration accelerating further in our core Edmonton and Calgary marketplaces, far outstripping new supply. To the right a graph showing how high population growth or demand of housing is growing versus new supply.

Slide 14 shows high occupancy as a result of strong apartment rental fundamentals in all our key markets. Move-outs versus last year are also dropping as our retention and value proposition increases. It is important to compare same month over previous month last year because of seasonality.

Slide 15 shows our key operational metrics with high occupancy, lower incentives, higher occupied rents, resulting in higher revenues for the quarter.

Slide 16 shows steady net new and renewal rental rates. Year-over-year, we have seen a significant improvement. Existing lease spreads or renewals are strategically moderated to keep providing 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 17 shows a 1.6% sequential quarterly revenue gain lower than the 2.2% and 2.3% from the last two quarters, reflecting Edmonton's quarter-over-quarter high occupancy. Market rents have increased now in Edmonton, reflecting high occupancy and no vacancy in most of our communities, which is increasing sequential revenues in the current months and upcoming quarters in Edmonton.

We would now like to pass the call on to Lisa Smandych, who will provide us with an overview of our portfolio performance and balance sheet. Lisa?

[Lisa Smandych, Chief Financial Officer]

Thank you, Sam. Moving to Slide 18. For Q1 2023 same property net operating income increased by 13.7% as compared to Q1 2022 with revenue growth of 8.5%. Edmonton, the Trust's largest market saw revenue increase by 8.8% in Q1 2023 as compared to Q1 2022. Operating expenses increased by 1.8% in Q1 2023, primarily the result of increased wages and salaries and insurance costs while mild weather resulted in a moderate increase in utilities as compared to Q1 2022.

Moving to Slide 19. Administration costs increased by $2.1 million in Q1 2023 as compared to Q1 2022. The increase was attributable to bonus accruals reported in Q1 2023, which were not accrued in Q1 2022. Retirement costs associated with a senior operations leader, travel costs, software-as-a-service cost as well as increases in the cost of professional fees. In addition, inflationary wage adjustments were made at the beginning of 2023. Lastly, deferred unit based compensation increased due to an increase in the number of participants as well as the cost of the program.

Slide 20 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 five-year and 10-year CMHC rates of 3.9% and 3.75% respectively.

Though current interest rates are above the Trust’s maturing rates, the Trust maturity curve remains staggered, reducing the renewal amount in any particular year. Mortgage financing continued to be a low cost of capital available to the Trust. Lastly, the trust had an interest coverage of 2.91 in the current quarter.

Slide 21 summarizes our 2023 mortgage program. Overall, we have renewed or forward locked $197 million as well as secured $19 million in new financing at an average rate of 4.44% and an average term of four years. Included in these financings is $106 million of conventional mortgage financing, which was renewed on shorter terms to allow them to be replaced with CMHC financing upon next renewal. In addition, the Trust obtained $46.5 million of CMHC financing at 3.89% and a seven year term for its recent acquisition, which James will discuss. Current underwriting criteria and our most recent submissions to CMHC and our lenders has remained in line with our historically conservative estimates.

Moving to the right of the slide, we provide a summary of Boardwalk's available liquidity. The Trust is well positioned with approximately $48 million in cash and subsequently funded financings as well as an undrawn $196 million operating line. This approximate $244 million in liquidity provides the Trust with a flexible financial position.

Slide 22 illustrates the Trust estimated fair value of its investment properties, excluding adjustments for IFRS-16, which totaled $7.1 billion as at March 31, 2023, as compared to $6.8 billion as at December 31, 2022. The increase in overall fair value is the result of increases in market rents at select sites and communities as market fundamentals improve. Current estimated fair value of approximately 207,000 per apartment door remains well below replacement cost.

Moving to Slide 23. In consultation with our external appraisers, the capitalization rates or cap rates used in determining Q1 2023 fair value were unchanged from Q4 2022. 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 CAPREIT reports from CBRE in Q1 2023 suggest that the CAPREIT’s being utilized by the Trust for calculating fair value are within their estimated ranges. In addition, the Trust CAPREIT’s used in estimating fair value remain at a positive spread to interest rates.

I would now like to turn the call to James Ha to highlight our capital allocation, acquisitions, developments and the Trust exceptional value. James?

[James Ha, President]

Thank you, Lisa. As we move into discussing our recent capital deployment initiatives, our regular listeners will note that we have moved our matrix of capital sources and uses to the appendix of this presentation. There are no changes to a relative view of sources and uses at this time, and we will update our stakeholders should a change occur.

Our maximum cash flow retention strategy remains key to our ability to opportunistically invest and compound returns for our stakeholders. And as a result, our growing cash flow is increasing our available capital for deployment, while also organically improving our leverage metrics. For larger opportunities that may arise, CMHC-insured mortgage financing continues to represent an attractive source of capital.

Additionally, non-core asset dispositions allow for capital recycling opportunities similar to our approach over the last several years. Each of these capital sources can be utilized to fund opportunities such as our value add capital improvement program, strategic and accretive acquisitions, new development in undersupplied housing markets, and the opportunistic use of our normal course issuer bid.

For the first quarter, we are pleased to share an update on our capital uses starting on Slide 24, which provides an update to our progress on our value add repositioning and renovation program. Our common area and amenity renovations have positioned our communities to offer the best value, service and experience to our Resident Members and are key contributor to Boardwalk's success in both competitive as well as strong market conditions.

2023, our team is targeting 11 common area and amenity renovations to further enhance our portfolio and product offering, resulting in over 60% of our total suites benefiting from our repositioning program. In addition, our suite renovation program continues to be opportunistically used to improve and enhance our offering for residents. Boardwalk's existing vertically integrated platform provides us with the unique ability to quickly and cost effectively complete these renovations.

With limited availability and the current strong demand for housing, our ability to reduce days vacant are significant differentiator of Boardwalk communities. By measuring vacancy by the day, we are able to ensure that much needed housing is made available to Canadians looking for a new home.

With low availability in our markets and additional initiative we are undertaking is the conversion of existing storage and administrative spaces within our communities into rental suites. This initiative aligns with our platform optimization and to-date, we have identified approximately 25 units that we are targeting to return to the housing market. By investing small renovations to turn suites from administrative use back into rentable units, we will add much needed additional housing in our communities. We look forward to sharing more detail and information on this in our coming quarters.

On Slide 25, we are pleased to announce the opportunistic acquisition of The Vue, a recently built 12-storey tower with 124 residential units and over 8,000 square feet of ground floor retail. Located in the rapidly growing Greater Victoria market, this new community futures large suites, high quality finishes, and is well located in Central Langford with close access to the University of Victoria's West Shore Campus.

As of the closing date on April 25, The Vue was 94% occupied with year-one projected cap rate of 5.1%, providing immediate accretion and growing cash flows. A big thank you to our team for sourcing and closing on this strategic and opportunistic acquisition, and a warm welcome to our newest Boardwalk Resident Members in Victoria.

On Slide 26, we provide an update to our ongoing development pipeline to add much needed housing and supply constrained markets. The lease up of the first tower of our 45 railroad development continues to progress on schedule with full lease up anticipated to occur by the end of summer and at rental rates at the upper end of our original expectations. Our team continues to progress on construction of the second tower and is scheduled for delivery in the fourth quarter of 2023. The project remains on time and on budget.

Our Victoria development pipeline presents an opportunity for the Trust to add and contribute housing while also creating strong value for our stakeholders. Aspire is our first of three developments in Victoria. Excavation is nearing completion for this 234 unit development, which is located adjacent to our existing Aurora Community that remains fully occupied with strong rental demand for any units that become available.

On Slide 27, we highlight the exceptional value that Boardwalk's Trust Units represent at yesterday's trading price, which implied a value of approximately 181,000 per apartment door. This compares favorably to the substantive transactions that have occurred in the external market. Our NAV of $75 per trust unit equates to just 207,000 per apartment door and represents an exceptional opportunity relative to market pricing and remains well below the increasing cost of replacement.

On Slide 28, Boardwalk's trading price equates to an attractive 5% cap rate on our trailing NOI and provides a significant spread to the current cost of mortgage capital and transactional cap rates in private markets. With favorable fundamentals, strong leasing trends, and leading NOI growth in our portfolio, this cap rate represents exceptional value and growth for our stakeholders.

Moving on to Slide 29. Our first quarter operating performance was at the upper end of our original forecast range for the period. This allows the Trust to provide an update to our 2023 guidance that takes into account our strong performance to-date, while also incorporating the positive accretion from its acquisition of The Vue subsequent to the end of the quarter.

As a result, Boardwalk is tightening and upwardly revising our 2023 same property NOI growth range to 9.5% to 13%, and FFO per unit guidance of $3.30 to $3.46 per Trust Unit. Our Boardwalk team is committed to leading in transparency and will continue to update our stakeholders in the event of any change in conditions that may materially impact our forecast.

On Slide 30, our Board of Trustees has confirmed our monthly cash distribution of a $1.17 per Trust Unit on an annualized basis for the next three months. Our distributions have increased by 8% since last year and aligns with our growing cash flow while maintaining our industry low payout ratio, providing significant cash flow reinvestment and positioning Boardwalk with ample capital for growth.

Lastly, on Slide 31, we are proud to have released our latest ESG report that highlights how we are putting the we into ESG, working together to positively impact our communities. Our ESG report can be found on our website, bwalk.com/investors.

This concludes the formal portion of our presentation and would now like to open up the line for questions. Brian?

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] First question, we have Jonathan Kelcher with TD Cowen. Please go ahead.

[Jonathan Kelcher, TD Cowen]

Good morning.

[Sam Kolias, Chairman and Chief Executive Officer]

Good morning, Jonathan.

[Jonathan Kelcher, TD Cowen]

First question – and congrats on the good start to the year. First question, I just want to talk a little bit about renewals and incentives. In Alberta, you guys are getting really good growth that continued into Q2 on renewals. How much of that is just incentives burning off?

[James Ha, President]

Hey, Jonathan, it's James. With regards to our renewals, as you can see in the spreads, we continue to see that move up into the right. It's a combination. It's a combination of incentives declining as well as market rents being adjusted over the last several quarters. And so with those renewals, you're seeing spreads increase in line with – or at least on the same trajectory with – as our new leasing spreads as well.

[Jonathan Kelcher, TD Cowen]

Okay. And then Sam, I think you mentioned in your prepared remarks as incentives are basically gone right now. But the average is still around 120. It's sweet. Like how low do you think that can go? I don't think it's ever been close to – it's never really been close to zero, but how low do you think that can go?

[Sam Kolias, Chairman and Chief Executive Officer]

The history shows it has been in the few million dollar range, like the $2 million, $3 million range, so that's how low it's gone in the past. We looked at a lease the other day, in Edmonton, for example. The market rent was 1,200 roughly, and the incentive was about 150. And the renewal, essentially we saw a market rent adjustment to 1,300 and incentive for $75 with one of the renewals. And so the new net amount really affected zero incentive. But because we want to show our goodwill to our existing resident members and that is accounted for an incentive between the market rents in the marketplace versus the net rent are resident members. Especially our longer term resident members realize a benefit by renewing with us and savings versus what new residents would pay with no incentives. And so that's one odd example. And the only reason we looked at that is because we hardly see any incentives at all in all our renewals. So for the most part, renewals have zero incentive. There's always exceptions, there's always flexibility. And as per our first slide, our resident members are at the top of our organization, so we do everything to make our boss happy.

[Jonathan Kelcher, TD Cowen]

Okay. And then just secondly on, I guess this is more on new leasing. You're sitting at 98% or 98% plus, how do you balance maximizing your revenue growth between occupancy and pushing rent? And I'm less concerned about the markets with no rent control because that's fairly easy to catch up on, but maybe some of the markets you have where there is rent control. How do you think about that?

[Sam Kolias, Chairman and Chief Executive Officer]

Sorry, the question is where there's rent control versus non-rent controlled?

[Jonathan Kelcher, TD Cowen]

Well, yes, like where there's rent control, maybe you want to let the occupancy drift down a little bit in order to try and push on new leases because you might not get that unit back for three, four, five years versus where there's no rent control if the market rents go up 7%, 8%, 9%, you can catch that the next year anyways.

[Sam Kolias, Chairman and Chief Executive Officer]

Well, we're having strong demand in all our markets, and so when a rent control department comes available, we're seeing much higher adjustments because the in-place rent is artificially low because of the rent control. And so we are seeing much higher adjustments and we adjust to market rents in our rent control regions in London and in Quebec. In our non-rent controlled markets, we follow consumer price index as much as we can. Why? Because over the long-term, 10, 20, 30 years, rents essentially track consumer price index. So why does that help us? It essentially takes out the uncertainty and the inefficiencies of an open and competitive market for our resident members, first and foremost can depend on a more inflationary CPI adjustment.

And then for us and our bottom line, it increases retention, it lowers our expenses. And at the end of the day, we can provide a much better NOI and bottom line and return for our investors. And so it truly is a win-win approach. It's more of a long-term approach. It is absolutely beneficial for both our residents and our investors and that's what we've learned over the last 40 years that we've been providing affordable housing.

[Jonathan Kelcher, TD Cowen]

Okay. That's helpful. Thanks. I'll turn it back.

[Sam Kolias, Chairman and Chief Executive Officer]

Thanks, Jonathan.

[Operator]

Thank you. Your next question comes from Kyle Stanley with Desjardins. Please go ahead.

[Kyle Stanley, Desjardins Capital Markets]

Thanks. Hi everyone.

[Sam Kolias, Chairman and Chief Executive Officer]

Good morning, Kyle.

[Kyle Stanley, Desjardins Capital Markets]

So just I guess a little higher level question, but I mean, having managed a significant portfolio in Alberta for decades now. How does the current leasing environment compare with the period post-GFC and maybe pre the oil price decline or other past periods of elevated leasing in the province?

[Sam Kolias, Chairman and Chief Executive Officer]

It'd be very similar to the late 90s where we saw similar lack of new supply and elevated new immigration and rent adjustments that were as significant or as high. So we'd have to go back quite a ways. Post-GFC, we saw strength, but not like the late 90s. And this period right now, we have never seen it this high ever as per the charts and immigration. There has never in a period of our 40-year history. And even going back into the 60s, when we still answered the phone for our parents and apartments for rent and people looking for apartments in the late 60s, we have never seen a market more tight and more people move into our province versus the amount of new supply that we're building ever really in our lifetime.

[James Ha, President]

Kyle, it’s James. I would just add. It's certainly a huge differentiator we are experiencing on the ground here in Alberta is the diversity that's occurred, right? Sam talked about in his prepared remarks, some of the employment growth that we have. If you look back at that over the past several years, we're seeing growth in pretty well all industries here in Alberta. And so that's – we believe that's going to provide more sustainability to our province going forward and place Alberta into a different trend path going forward.

[Kyle Stanley, Desjardins Capital Markets]

Okay, great. That's helpful. And I mean, I think you mentioned it in prepared remarks and even as part of the answer there. But the question of supply in Alberta often comes up, I know right now maybe the economics are not penciling for some developers. But to the extent that maybe rates start to come off late this year or next. Is more rapid supply response just given how strong the fundamentals are? Is that something that concerns you at this point or just nothing to really suggest that's a near-term issue at this point?

[James Ha, President]

Kyle, it’s James. Great question. And from our standpoint, we're watching it every single day. The good news is we need more supply in our markets here. You saw the demand growth or the immigration growth Sam touched on it. We brought in 52,000 people two quarters ago into Alberta, 42,000 people the most recent quarter. Again, we don't have – at this juncture you're seeing available housing be absorbed. And so we certainly do need more supply going forward if that is the type of population growth we are going to experience.

Today, if you look at purpose-built rental under construction in each of Calgary and Edmonton, we have seen that increase. However, we have seen a decline, almost proportionate decline for condominiums in those same markets. And so when we do look at total supply under construction, it does view fairly balanced from our standpoint. But we'll continue to watch that. As we've always said, that is a risk to any housing market. But at this juncture, the supply picture relative to the amount of demand that we are anticipating, again, it continues to be favorable for housing fundamentals.

[Kyle Stanley, Desjardins Capital Markets]

Okay. Thanks for that. And just last one, a bit of housekeeping. How much of – and this is I guess for Lisa. How much of the $2.1 million G&A uptick year-over-year is kind of a recurring number? Or I guess just what would be a good kind of run rate?

[Lisa Smandych, Chief Financial Officer]

Yes. Great question, Kyle. So the G&A cost that we incurred, that was in line with our initial guidance. So as we're looking for the remainder of 2023 seeing some of that inflationary pressure that we are seeing on that line item. We actually think that looking at the current quarter run rate, that would be a reasonable rate to carry forward. There's a couple, there's a little bit of variability I would say in that admin line. So on a positive note, should our business continue to outperform that admin line might go up further just given what might have to happen for bonuses. The flip side is, as we have done and as you would've noticed with operating expenses, we continue to try to be disciplined. So we are going to look for ways on how we can look for cost savings in that admin line. But we certainly are seeing inflationary pressure there. So taking the current quarters run rate would be a reasonable expectation moving forward. And we'll keep the group posted as we move through the year.

[Kyle Stanley, Desjardins Capital Markets]

Okay, great. That's it for me. I'll turn it back. Thanks.

[Operator]

Thank you. [Operator Instructions] Next question, we have Matt Kornack with National Bank Financial. Please go ahead.

[Matt Kornack, National Bank Financial]

Hey guys. Continuing on Kyle's questioning there on controllable costs, but in the op-cost line items, there was a time when Boardwalk had 60 plus percent NOI margins sitting at kind of 58% in 2022, but Q1 was solid on the margin front. Do you anticipate getting back into those levels, maybe not this year, but over the next couple of years as rent growth outstrips inflationary costs?

[Lisa Smandych, Chief Financial Officer]

Yes. Hi, Matt. Yes. Certainly that is our goal. Our goal is for margin expansion. You've hit it well. We anticipate that that revenue growth will be the primary driver. However, that focus on expenses is going to remain. We're going to continue to be disciplined with our controllable expenses, look for efficiencies on how we can optimize the platform. So certainly getting above that 60 is the goal and so yes, you you've got it.

[Matt Kornack, National Bank Financial]

Okay. But presumably this quarter just the year-over-year expansion that's not attainable at least in the immediate term for Q2 through Q4. I mean, it wouldn't be in your guidance, I would think, given the revenue growth you're seeing. But should we assume maybe a little bit of marginal improvement year-over-year versus those quarters?

[Lisa Smandych, Chief Financial Officer]

Yes. 2023 we anticipate margin expansion.

[Matt Kornack, National Bank Financial]

Okay, fair enough. And then on the rent growth side renewals, I mean, have been very strong in Alberta with new leasing spreads improving and expanding, but because its non-rent controlled, you do capture more in renewals. So how should we think about the interplay between kind of renewal spreads versus new leasing spreads for this year, but yes, sort of as things normalize on the inflation front as well?

[James Ha, President]

Hi, Matt, it’s James. Renewal spreads to your point our goal and as Sam touched on, I mean, keeping as many residents as we can within Boardwalk, being hyper flexible with our residents when appropriate. But I think one of the keys to the non-price control that we have in Alberta is that we have the highest affordability as well in the country. And so with that affordability, that provides that opportunity for us to recapture these incentives and to maintain revenue growth in line with the expense growth that we are experiencing in the marketplace.

When we look at renewals, we'll continue to be flexible with our residents. Certainly the pace that you're seeing today with March and April numbers as we disclosed on Slide 16, anticipate that to continue going forward here into the summer. We are going to see higher volumes in the summer months, right. As we know, our leasing volumes are lower in Q4 and Q1 than they are in Q2 and Q3. And so that should help incrementally drive revenue as we're doing more deals at these rates.

[Matt Kornack, National Bank Financial]

Okay. No, that makes sense. And then a quick one, and I won't make you talk politics in terms of where you are or where you lean. But with regards to the election that's upcoming, are both political parties kind of on side with what has been kind of a key to keeping Alberta rents low in all, which is non-rent control policy.

[Sam Kolias, Chairman and Chief Executive Officer]

Well, regardless of which political party we support, the case studies and examples clearly show an open and competitive market provides the most affordable housing in the country. So the evidence is more than clear. It's really hard for anybody to argue that rent control is a good thing because the highest rents in Canada are where we have rent control. And so there's no evidence whatsoever that would support anybody with that policy. And so we continue to work with anybody. And regardless of political party that supports solid public policy that's proven and tested and provides the most affordable housing for all Canadians versus getting involved in politics. So that's really helping us.

We're seeing real positive results and outcomes where we are big proponents of more rent supports for folks that need it, and we're seeing a lot of that in the budget and a lot of that is in the form of grocery and cost of living supports, which actually helps folks in housing, stay in housing and keep housing more affordable with more supports for living expenses. And so that's a big win-win for everybody. It's very cost effective and it's immediate for Canadians that need it now.

And so there's nobody that's proposing a public policy that is not working like rents controls. And so we're not seeing anybody propose that. We're not seeing much support when it comes to that. There's some very few that still believe in that public policy, and they're real far and few between. There's very little support or anybody that really supports that because it's very clear, it just doesn't work. There's better policies like rent supports, like capital grants to make construction viable, like reducing taxes in the 60s, 70s, there is much less taxes. And keeping our markets open and competitive are 100% the best way to lower prices that we know in this free world.

[Matt Kornack, National Bank Financial]

Yes. No, it makes sense. And the proof is in the statistics. Just on that note though, it is more difficult these days just given financing costs to build. Are there any programs that you can take advantage of or that you would be willing to take advantage of at this point in terms of adding new supply of affordable or high quality housing into the Alberta market?

[Sam Kolias, Chairman and Chief Executive Officer]

We really have to stress CMHC contribution to the new supply with the first and foremost CMHC-insurance, a huge success. Couldn't imagine where we would be without Canada mortgage and housing insurance. It's just unimaginable. There's no way we would be able to provide the affordable rents without Canada Mortgage and Housing Corporation’s partnership.

Then the MLI Select program that offers a high amount of leverage for a long-term for builders that commit to limiting rent increases over the next 10 years. That's a great, great program as well. There's nothing like though, 0% capital in a high interest in high capital environment. Like we saw 10, 15 years ago and 20, 30 years ago, we really saw very low cost and no cost capital that would really help build affordable housing and capital grants that we built many, many years ago in 2011, 2012 with the provincial, federal and municipal governments helping us with zoning. After not-for-profits just couldn't match and find matching equity to continue to build housing. So again, we have to continue to work together as the chief economist of CMHC says an all-hands-on-deck approach. And together we will absolutely build enough housing and together we'll deliver what we need to deliver with the right public policies and partnerships we have. No doubt we'll be able to do it.

[Matt Kornack, National Bank Financial]

That’s great. Thanks for that perspective.

[Sam Kolias, Chairman and Chief Executive Officer]

Thanks, Matt.

[Operator]

[Operator Instructions] There are no further questions at this time. I'll turn it over to Sam Kolias for any remarks.

[Sam Kolias, Chairman and Chief Executive Officer]

Thank you, Brian. As always, if there are any 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, our unitholders, and all our stakeholders. It really is all about our people whose huge shoulders we stand. And as leaders, we continue to do everything we can to support continued growth in 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. Welcome home to love always. Our future is family. What can be more important when choosing where to call home. Thank you again, everyone for joining us this morning. God bless us and grant us all peace.

[Operator]

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