May 14, 2021
Operator
Good morning, ladies and gentlemen, and welcome to the Boardwalk Real Estate Investment Trust First Quarter 2021 Earnings Conference Call. At this time note that, all participant lines are in a listen-only mode.
But following the presentation, we will conduct a question-and-answer session. A reminder, that this call is being recorded on May 14th, 2021.
And I would like to turn the conference over to Mr. James Hart.
Please go ahead, sir.
James Ha
Thank you, Sylvie and welcome to the Boardwalk REIT's 2021 first quarter results conference call. With me here today is; Sam Kolias, Chief Executive Officer; Lisa Smandych, Chief Financial Officer; Lisa Russell, Senior Vice President of Corporate Development.
Sam Kolias
reengineered for growth through pandemic condition, our results reflect we have adapted, we are evolving and are emerging with a focus on our organic growth, optimizing our revenues, reducing our controllable costs and seeing market gains with our brand renovation and repositioned communities. Strong demand growth is reflected by record population in Alberta in Q1, a return of post-secondary students, immigration and increasing demand for affordable housing.
Our focus on quality service and experience is reflected by strong resident retention, community engagement initiatives and world-class resident member experience measured by our record high Net Promoter Score. Our geographic expansion is providing accretive results from economic and geographically diversified markets.
Our combination of acquisitions and development provides us with exciting opportunities for the post-pandemic transition. Our next slide highlights Boardwalk's national portfolio and reflects on record affordability levels at current rental rates that provide for us sustainable growth opportunity across all our markets.
Our most affordable markets, are our largest Edmonton and Calgary market. Slide 5 illustrates how Boardwalk is capturing market share by outperforming in both occupancy and average rental rates.
Slide 6, our Q1 2020 operating results reflect positive NOI growth in our Quebec, Saskatchewan and Ontario markets. A drop in NOI for our Edmonton and Calgary markets due to the slower winter months last year.
And further lockdowns with vacancy dropping in the first quarter, and occupancy and revenues rising into the second quarter.
Lisa Smandych
Thank you, Sam. On Slide 18, the Trust deliver strong FFO and AFFO growth, with FFO increasing by 5.5% from $31.5 million to $33.2 million for the three months ended March 31st, 2021.
AFFO increased by 9.1% from $22.7 million to $24.8 million, using an annualized maintenance CapEx estimate of $1,012 per apartment units. During the recent quarter, the Trust completed a thorough review of its capital investment program, with a focus on defining its value-add and maintenance CapEx activities.
The results of this review is summarized on Slide 19, with the Trust anticipating total capital investment of $3,980 per suite in 2021, as compared to $3,402 incurred in 2020. The Trust defines value-add capital investments as those investments which focus on increasing the productivity of the property, with the goal of increasing net operating income through revenue growth and/or decreasing operating expenses.
Value-add investments include, building improvements and common area renovations, as well as suite upgrades and technology initiatives, all with a goal of supporting NOI growth. For fiscal 2021, the Trust anticipates to incur $2,968 per suite on value-add investments.
Maintenance capital expenditures include those expenditures that are incurred to maintain and sustain the existing earning capacity of a property. Using a three-year rolling average as a reserve, the Trust estimates to spend $1,012 per suite on maintenance CapEx in 2021.
Please note, the 2020 results presented were calculated using the same methodology as just described, as well as noting that significant judgment is required to determine whether a capital expenditure is needed to maintain versus increase the earning capacity of an asset. Slide 20 summarizes the Trust's monthly revenue collections from its resident members for the past year.
Please note, collections are reported for the calendar month only, and do not include revenue collected in subsequent months. 98.7% of April revenue was collected in April, which was consistent with the Trust's historic run rate.
For the quarter ended March 31st, 2021, bad debt expenses totaled $1.2 million or approximately 1% of rental revenue, which is in line with our pre-pandemic bad debt rates.
Lisa Russell
Thank you, Lisa. Starting on Slide 24.
We are pleased to announce the acquisition of Aurora, a newly constructed 114 unit community which is well located in View Royal, an established and growing municipality in Victoria, British Columbia. Built in 2019, this community was purchased for $48 million at an approximate cap rate of 4.25% and is currently a 100% occupied.
Aurora offers spacious living with average suite sizes over 840 square feet. This community is surrounded by natural park and walking trails.
Aurora is nestled between one of our future development sites and the Victoria General Hospital, which will provide future operational efficiencies and complements our reentry into the Victoria market. This acquisition represents the Trust's ongoing commitment towards the execution of its long-term strategy to geographically diversify in high growth markets.
James Ha
Thank you, Lisa, and thank you for everything. Slide 27 illustrates the exceptional value Boardwalk's current trading price represents when comparing to recent transactions in our core markets.
$37 per Trust unit equates to approximately $142,000 per apartment door. Boardwalk's high quality, well located portfolio has an estimated NAV of approximately $175.000 per apartment door and compares in line with recent market transactions and well below the increasing cost of replacement, utilizing 12 - trailing 12-month property NOI on Slide 28, Boardwalk's current trading price equates to an attractive 5.75% cap rate and is a significant spread to the cost of available mortgage capital, as well as recent capitalization rates seen in major markets in Canada.
As shown on Slide 29, each of Boardwalk's core markets present unique opportunities to accelerate on our trend of organic growth as we near the end of the pandemic. Our Alberta and Saskatchewan portfolio provides an opportunity to gain on occupancy, while targeting sustainable incentive productions on lease renewals.
Our affordable and high value offering Ontario and Quebec markets remain near full occupancy. Trust continues to focus on achieving sustainable AGI increases for community improvements and optimizing rental rates when units turn over.
With just a $25 adjustment in our monthly average in-place rents or a 2% improvement to our occupancy, each equate to approximately $0.20 in annual FFO per unit and represents a significant growth opportunity over the near and long-term as we continue to optimize our revenue and NOI. Slide 30 shares a summary of our progress on our objectives.
Through this pandemic, our competitive advantage, disciplined approach and resident-friendly focus has been rewarded with continued growth in FFO per unit of 4.8% compared to the first quarter a year ago, which preceded the pandemic. Our accretive capital allocation combined with our gains and occupancies since February, have positioned us to grow revenue sequentially through the year and in advance of the return of post-secondary students, immigration and a new post-pandemic environment.
Slide 31 provides some highlights from our recent ESG report. While Slide 32 provides measurable objectives the Trust has set for the year.
The Boardwalk team is proud to highlight our continued focus on ESG like continuing to provide our essential service of affordable housing to Canadians and striving to improve how we can further improve on our environmental and social impact, while enhancing our already top-rated governance practices. We look forward to updating our stakeholders on our progress towards our measurable objectives in the coming quarters.
We would now like to open up the phone line for questions. Sylvie?
Operator
Thank you, sir. And your first question will be from Jonathan Kelcher at TD Securities.
Please go ahead.
Jonathan Kelcher
Thanks. Good morning.
Sam Kolias
Good morning.
Jonathan Kelcher
First, just Lisa, congrats on your retirement. We will miss you in the analyst community here.
Lisa Russell
Thank you very much, Jonathan. I appreciate it.
Jonathan Kelcher
First, just on the Edmonton market, I guess in the report, in your quarterly report you talk about new supply and making the market a little bit more competitive. You did see occupancy tick up in April.
Do you think you're through the worst of the new supply, the competition from that?
Sam Kolias
Jonathan, good morning, and it's Sam. The MLS statistics in Edmonton shows a very, very strong absorption of listings and a drop off of inventory.
Our rentals are very, very strong in May during a full lockdown. And so the difference between this lockdown and the last lockdown is, we are experiencing super strong rentals.
Now the good news, in our market surveys, everybody is experiencing this strong demand for rentals. In Edmonton, in Calgary, our rentals in Edmonton today are outpacing rentals in Calgary.
We are on track to absorb much more units in Edmonton, because we have more units to absorb in Edmonton than Calgary. And so Calgary's occupancy has risen very, very well.
Edmonton following through on a really strong note. And we're seeing population movement into Alberta, through other sources like the MLS listings that are on Edmonton Real Estate Board, Live Data, Calgary Real Estate Board, record high sales in both those markets and when ask or contract home builders over 50% are new migrants coming to Canada and citing Alberta is the most affordable place in Canada to move to and as a result of coming, bringing their families, buying homes, renting with us and moving to Alberta during a pandemic.
Jonathan Kelcher
Okay, that's a good positive color. And I guess in your opening comments, Sam, you said May continues to be very strong, I guess that's across the Board.
You certainly said that in EBITDA. And so is it fair to say that new leasing is outpacing move outs again in May?
Sam Kolias
Significantly. Significantly and we're in a full shutdown.
So we're extremely pleased with how rental is doing and one word describes our team, extraordinary. There's no other word to describe our team and the efforts we're all making.
And really the Alberta market is absolutely turning around. There's lots of evidence again, both on the Edmonton Real Estate Board and the Calgary Real Estate Board, live MLS data, there are a lot of people moving back to and to Alberta as we speak.
Jonathan Kelcher
Okay, that's very helpful. That's it for me.
Thanks.
Sam Kolias
Thank you, Jonathan.
Operator
Thank you. Next question will be from Brendon Abrams at Canaccord Genuity.
Please go ahead.
Brendon Abrams
Hi, good morning, everyone.
Sam Kolias
Good morning, Brendon.
Brendon Abrams
Maybe just the follow-up on Jonathan's line of questioning, seems like you're seeing a strong demand so far in May on the leasing front. You know, occupancy did pick up or increase in March and April but you know, coincided I guess, with higher incentive use.
So, I guess what's the current incentive use maybe in Edmonton and Calgary? And, you know, what do you expect that to look like over the next few months during the high leasing season?
Sam Kolias
Thank you, Brendon. What we're seeing in - let's go to Saskatoon, Regina for example.
When we hit 99%, 100% occupancy in most of our communities, our availability at 1%, we saw an essential evaporation of incentives for new rentals. And so in Saskatchewan with our occupancy is high as it is, we're not seeing incentives like we were and we're gaining on new lease rates and renewals, of course.
And so as we bill up, and many communities in Calgary and Edmonton are seeing much less incentive, because our occupancy is much higher. And so, several of our communities in Calgary are over 98% occupied and in Edmonton, we're seeing absorption and rentals that our availability at the end of the month will be much, much lower than it has been the entire year, and certainly at the end of last year.
And so as our occupancy moves up to over 97%, 98% overall, that's when we will be seeing incentives come down on new rentals in Alberta. And we believe that is on track for the strong summer and fall months, we're already seeing slight drops overall in incentives.
But again, we look at the overall revenue gain, the net revenue gain is positive. And that's the reason we continue to use incentives on new rentals in Edmonton and in Calgary to gain on occupancy, because it's opportunity lost if we leave an apartment empty, and that revenue is gone for good, if we lose that opportunity and that's the reason we use this methodology and it absolutely drives our NOI higher.
When vacancy unit is essentially all paid for, because of our expense nature, it's typically all fixed expenses. Any dollar to the top line goes right to the bottom line, because most of our expenses, if not all, are fixed and that's why we use this occupancy and focusing on occupancy so much.
Brendon Abrams
Right. Okay, you now, that's very helpful.
Just as you were flipping through the slides there in the opening remarks, I noticed West Edmonton Village, I guess is going through a rebranding, I think it's either your you know largest or second largest asset. Can you just provide some more color there in terms of, you know, what you're planning to do?
Is it just the amenities building or is it you know, the interior suites as well and the projected costs of the overall project and you know, what you see as the return profile for the property?
Sam Kolias
So the renovations as per the picturesque that we have provided is including an amazing amenity, because of the size of that community, approximately 11,073 units. It is our largest community in the West, Nun's Island is the largest community we have.
And that's in Nun's Island. We're also doing common areas, because we find the return on doing common areas is the highest and it's a phenomenal community, the scale of the community, the diversity of that community, the location of the community, we've identified that as a prime candidate to reposition and our target's 8%.
The budgets, again, they're being finalized. We're, you know, we're actually doing an amazing job, keeping our prices under control and securing materials in this inflationary - commodity inflationary environments that we find ourselves in.
And, again, our target is a minimum 8%, we're very confident we're going to get at least that by renovating that phenomenal community. And it will really provide unique value proposition, given the scale and the amenities that we are providing and brushing up, that will really stand out in that community.
And as a result, we're very confident that the returns that will realize will be very, very significant and beat our 8% target -
James Ha
Hi, Brendan, it's James -
Sam Kolias
Sorry, the budget is between two $2 million to $2.5 million.
James Ha
Yeah. And, Brendan, it's James here.
Just to add to Sam's comments there, obviously with a community that's over 3,100 apartment units and very much like other communities that we've renovated in the past, not a small rental rate adjustment is all it takes for us to accomplish those returns. And so, as we target those rental rate adjustments on those common areas, we do anticipate that we're going to be able to obtain yield on cost well above that 8% hurdle.
Brendon Abrams
Right. Okay.
Now, that's helpful. Maybe I thought you guys are just going to be building a whole brand new amenities building.
But given the projected cost, it seems like that's not the case. Okay, that's great.
I'll turn it over. Thank you.
Sam Kolias
Thank you, Brendon. Again, what we have been saying is, the use of our eyedropper when it comes to the use of our capital.
It's very, very focused, concentrated and it must provide a great value proposition for everybody. Thank you.
Operator
Thank you. Our next question will be from Matt Logan at RBC.
Please go ahead.
Matt Logan
Thank you, and good morning.
Sam Kolias
Good morning, Matt.
Matt Logan
Sam it certainly seems like your eyedropper approach to deploying capital is paying off and the company's doing a good job of controlling the controllables. Could either you or maybe, Lisa, talk about where you see the NOI margin trending this year?
And give us a few examples of that capital conservation kind of within the operating side of the business?
James Ha
Sure, Matt it's - sorry, it's James here. Just to get started on the operating margin front.
Our team's doing a fantastic job to your point, Matt on the operating cost control. On the - specifically on the controllable costs front.
As everybody remembers on the non-controllable side, we faced some significant increases in the second half of 2020, you know, specifically in property taxes and insurance. We haven't yet lapped those expenses.
Good news is coming quarter into the third quarter and the second half of the year and we should get more color on this in the coming weeks. On the property tax front, there's some potential good news there, right, relative to last year, especially where we faced you know 20% tax increases in Calgary and high single-digit tax increases in Edmonton, those are tax increases that we aren't anticipating, continuing into this year.
And so with the revenue build that Sam spoke of, that weren't - they didn't gain into the spring and into the summer, that combined with lapping those expenses should provide some stability on margins going forward.
Matt Logan
Good color. And if we were to build off of Brendon's question with respect to the incentives, they were $9.4 million in the quarter, based on what you've seen to date, you know, how should we think about the burn off over the next 12 months?
Like is that a 2%, 3% reduction? Is that a 5% reduction?
Any sort of general color would be appreciated.
James Ha
Sure, yeah. On the incentives, I mean, when we think about the incentives going forward, you see our pace on lease renewals, that's been where our focus is.
And on retention, we've seen success in sustainably reducing those incentives. Our team continues to target through this environment, conservative numbers, right, $20, $30, $40, $50 adjustments and seeing success with that.
To Sam's earlier point as occupancy continues to gain, that's going to position us to reduce those incentives on new leases. As we look back to pre-pandemic, Matt.
Certainly, we believe in retention and continuing sustainable adjustments going forward. So if I look at pre-pandemic, we were adjusting our incentives on a 4% to 8% basis, right.
So again, continuing to target $40, $50, $60, $70 incentive reductions, pre-pandemic, I think that's fair to say in terms of our targets going forward to build that sustainable revenue growth for the coming years.
Matt Logan
Great color. And maybe if we turn to the transaction market, wondering where assets are trading in your core Edmonton and Calgary markets, either on a cap rate or place per suite.
And if we think about where your stock is trading, would it make sense to perhaps, you know, sell a few assets and buy back units?
Lisa Russell
So I'll just take the first part of the question, and then I - probably James will jump in. So for transactions, it's been relatively quiet in Calgary, there's been a couple of transactions in 2021 in Edmonton, and the cap's ranging around to 4% to kind of the 4.5% niche.
And probably on a door basis, like about 170 to 180 on that kind of a transaction. James, if you want to add some color on?
James Ha
Yeah, Matt, I think we've seen that's been quite active in terms of trading assets, right. So pairing non-core assets, then using that capital and recycling it into geographic expansion opportunities, much like we did this quarter with our Banff in Victoria acquisitions, which are very accretive to our bottom line, if you still continue to see us do that.
To your point in the past, we have certainly taken that opportunity to pair non-core assets and repurchase stock, right today, you know much of the non-core asset sales are being redeployed into geographic expansion opportunities that are providing great accretion to our bottom line.
Lisa Russell
And just to add to that, right now, we currently have 3 sales in Edmonton under contract and we'll be able to give more color in that in August.
Matt Logan
Excellent. Appreciate the color.
And maybe one last one for me before I turn it back. I don't know if I missed this.
But can you tell us where the occupancy stands you know, today in May? Like is that up at all from April at 95.7%?
James Ha
Yeah, we'll continue to - we'll provide that update, Matt in the coming months, specifically with our regular operational updates through this pandemic. Our availability is lower, though, as Sam pointed out, rentals are continuing on the same pace relative to move outs as we've seen in the last few months.
That availability is much lower than that occupancy.
Matt Logan
Appreciate it. That's all for me.
I'll turn it back. Thank you.
Operator
Thank you. Next question will be from Howard Leung at Veritas Investment.
Please go ahead.
Howard Leung
Thanks and good morning all. I just want to ask about - thanks.
I just wanted to ask about the recent move ins that you're seeing, you know, are they seasonally different from what you've seen in the last year? You know in terms of the competition of the tenants that you talked about coming on from - being from outside Alberta, can you just give a little more color on that?
Sam Kolias
Sure. Thank you, Howard.
When we asked our team where folks are coming from, some are selling homes and moving back into rentals, because of the current economic situation. So we're seeing local demand from home or condominium ownership back into rentals.
Foreign and migrants moving to Alberta, coming back to school setting up for the fall early, going through the quarantine, going through all the rules and regulations that we have, that it's going to take longer. And also preparing for the fall because of the expectation that leaving - finding an apartment in the last minute in the summer is going to be a very tough situation, given that the - as we all have discussed, the double cohort having this and last year's classes come back - excuse me, in the summer time.
So there's a lot of keeners already coming back, then we ask our team space and size it really makes a big difference. And so our larger units we hear from our team are very attractive, residents moving out of smaller one and studio apartments.
And smaller apartments in the marketplace to our larger 2, 3, 4 bedroom formats that we talked about. Our average unit size is a two bedroom unit size, just under 900 square feet.
And so the larger space is really helping. The other phenomenon that we have seen and many others have discussed is the suburban locations.
When we do our market shops, there's high absorption in the new product, very quick filling up of new supply and that continues to drive demand into our low-rise, low density suburban locations, where and new residents are looking for communities that they can walk to their apartment units, not take elevators. And so there is a difference and a change in preference to lower density communities.
And that's why we're seeing a really high occupancy, especially in our towns, townhomes. And so that's the trends we're seeing.
Howard Leung
Yeah, that's helpful. And I guess as a follow-up to that, I mean we have heard that there's a gap between the suburban and urban property for many landlords.
What would you say for your portfolio, the delta in terms of occupancy between your buildings in the core Alberta in the suburban area?
Sam Kolias
Approximately 200 basis points or 300 basis points, 2% or 3% is the delta. And we have to give a lot of credit to our teams for repositioning our urban and core communities.
And really, the improvements that we've made in our core really has helped us outpace the competition, especially the brand new high-rise, when we polled and surveyed in the downtown core has the highest vacancy, because of both price and small size. That is where the highest vacancy is and we do not have any downtown new developments high-rise concrete communities that we've developed and they'll be fine, everything is now filling up.
Again, the demand for housing overall is very strong. And again, our Slide 8, the rentals jump out on our Slide 8 on the right-hand side, and our rentals are jumping out in May again.
And again, we're in a full lockdown as what we're in the middle of and we are renting, I'd like to use the word like hotcakes, it's a strong word. I don't really know any other word to describe it though, you know, we talk to our competitors all the time.
They're seeing the same thing.
Howard Leung
Yeah. It looks like there is a big surge in rentals there.
I guess my last one is on incentives. It's - looking at your deck it looks like the average incentive last quarter was $175 per unit.
I guess running the numbers. It's implied that the number of free months there it's about 1.2%.
How many free months of rent are you offering lately? I guess in during incentives and has it been declining from let's say the past year?
James Ha
Hey, Howard, it's James here. The incentives really vary from community to community as you know, you're right.
On average, that is approximately where we're at. You compare that with our leasing spread's flight deduce.
Really, those incentives are ranging anywhere from, you know, zero in Saskatchewan, where we are effectively zero availability, you know, two or three months in some of our communities that might temporarily have higher availability today, but on average, yeah in that 1 to 1.5 month range. However, it would be fair, I believe.
Again, on lease renewals is where we're targeting and seeing success in reducing those incentives as well.
Howard Leung
Right, okay that makes sense. Okay, thanks guys.
Those are my questions, though. I'll turn back.
Sam Kolias
Thank you.
Operator
Thank you. Next question will be from Joanne Chen at BMO.
Please go ahead.
Joanne Chen
All right, good morning. Apologies if I missed this earlier, but just wanted to check in on in terms of obviously very good control.
But on the expense side, I just wondering what the runway is, I guess for more opportunities throughout in the 2021?
Sam Kolias
Let's say, Joanne on the controllable expense side, our team is doing a fantastic job and continuing to do so. I'd like to see us continue to maintain that.
And I think our team can do so. We're, again, we may get some reprieve or on some of our non-controllable expenses as you know.
And so, keep an eye out for property taxes, we're watching that very closely, I will get more color on that in the coming weeks. Maybe Lisa can just touch on insurance, that's a place where we might see.
Lisa Smandych
Yeah, I would say from an insurance side, we're a little bit more cautious there, I would love to share James optimistic that we might see the property tax. But unfortunately, on the insurance side, capacity is still an issue in the insurance space.
But we're just entering into our renewal period as we speak. And so we're probably - we're a bit cautious, I'd say on the insurance side, but again, insurances roughly 3% to 4% of our total operating expenses.
So not a big cost. However, we sometimes do see some larger increases on that line.
Joanne Chen
Got it. And I guess just one last one, with respect to the occupancy, it was great to see continue to climb through the tail end of the quarter and obviously into April as well.
Do you see kind of the same magnitude of kind of that improvement over the next few months?
Sam Kolias
It's Sam, Joanne and with vaccinations and with all the evidence that we're seeing in the United States with the CDC announcement the other day, saying that double vaccers will not require masks. Thank god, the vaccinations work and so we're well on our way.
God Bless America for helping Canadians out on vaccinations supply. And it's awesome to see how many are open to getting vaccinations and how effective vaccinations really, really are.
They do work. And we're well on our way to reopenings like, Great Britain like United States and so that, you know, the evidence is overwhelming.
And our premier, our health advisors, premier Mollen, Saskatchewan put out an opening plan together that's very clear. Saskatchewan has the lowest unemployment rate in the Country of Canada right now is in a great position, an example of how we all can reopen and look to a more typical living that we used to have and share our smiles that we're all looking so forward to do.
And so we're very happy with the evidence and the science and how other nations are coming through with the pandemic and crushing COVID.
Joanne Chen
For sure. And that was good to hear.
Okay, that's most of my other questions have been answered. So I'll turn it back.
Thank you.
Sam Kolias
Thank you, Joanne.
Operator
Thank you. Next question will be from Mario Saric at Scotiabank.
Please go ahead.
Mario Saric
Hi, good morning.
Sam Kolias
Good morning, Mario.
Mario Saric
Maybe a couple of specific questions with respect to the rent change on prior release in May. I recognize that it's moving half a month so far, but it does seem our country is trending in the right direction ever since of what the 2.1% lease renewal and negative 4.7% that was disclosed for April would be in May as well?
James Ha
Hey, Mario, it's James. Likely fairly on the lease renewal sides consistent.
On the new lease side, it's early year. But to Sam's point earlier, you know our availability is quite down.
And so I would expect, you know that to potentially come in, you know, we'll keep everybody updated with our release in the coming months.
Mario Saric
Okay. And then maybe shifting gears to the property taxes.
Q1 versus Q4, they were down about $1 million quarter-over-quarter. I think in your disclosure, you highlighted some potential savings in Quebec with some near-term COVID related initiatives and then a disposition in Saskatchewan as well that helped.
Can you maybe reconcile $1 million decline quarter-over-quarter? And how much of that you think is sustainable versus one-time origination?
James Ha
Hey, Mario, it's James again. Yeah, I would say most of that that was related to that successful tax appeal that we received in the first quarter in Quebec.
Likely for Q2, we're likely to see a property tax number that's somewhere in between where you saw, the first and the fourth quarter. That said, as we mentioned earlier, the third quarter is when we would anticipate our new builds come in, especially in Western Canada and fingers crossed, we're looking forward to seeing where that comes in.
And certainly, you know, anticipating something that is much better than what we saw this time last year.
Mario Saric
Got it. And when the optimism, just to get clarified.
So if we look at your Q3 '20 property tax total of $30.7 million, I know there's been some portfolio mix changes since then. But in terms of the potential change is simply a deceleration in the expected growth rate in areas like Alberta, or could you see actual flat or lower property taxes year-over-year?
James Ha
Now we're hoping for the latter there, Mario. Again, we won't know for certain for another few weeks here, but you know, keep in mind, we think of Edmonton and Calgary, you know, as Calgary specifically facing 20% tax increase last year, you know, even flat, right, 20% over two years is a significant increase.
So we'll keep everybody posted, again, fingers crossed, but we would be looking for the latter on that in Western Canada.
Mario Saric
Got it. Okay and my last question just relates to the kind of broader market supply growth.
There's various metrics out there, but you internally based on the metrics that you look at in Calgary and Edmonton, in particular, can you give us a sense of what the expected development, rental development completions in '21 or as a percentage of the existing inventory in both Calgary and Edmonton?
James Ha
Yeah, I think from a development supply standpoint, I mean, the good news in terms of more urban projects, in other words, you know, not on the outskirts of the city. You know we can count many of those projects on our fingers here.
You know, through the pandemic, we've seen as our development community slowed down significantly in terms of starting new construction, you know, that really provides us this opportunity as Sam was mentioning, as we see this return as we see students come back, as we see immigration come back. You know, we really are setting ourselves up for a very quick rebalancing of the housing market.
In terms of the actual deliverables, we have that information in our investor presentation in the appendix, and you know we can certainly point you to reference that, but we're fairly comfortable with the supply deliveries that are anticipated over the next 12 months to 24 months.
Sam Kolias
Mario, the other thing everybody's seeing is the double and triple-digit commodity and resource inflation that we're seeing a triple-digit with lumber, for example, in our discussions with, again, a large home builders seeing approximately a 35% increase in construction costs. And so replacement value we're seeing our wood replacement costs go up to $300,000 three to $400,000 per unit, and then our concrete high-rise at about $600,000 a unit.
Comparing that to our $140,000 a door. We're in phenomenal shape.
There's a huge moat around our products. And our cost base is unbeatable right now.
We are in a very strong solid position as the result of the huge increases in commodity prices and resource prices that we're seeing right now.
Mario Saric
Got it. I don't have the appendix in front of me, but would it be fair to say when we factor in expected condo completions as well in both Calgary and Edmonton as a percentage of the existing inventory, it would be fair to say that you're kind of sub 3% in terms of that supply and development?
Sam Kolias
Yeah. We do have that in our appendix.
And, as James noted, when we drive around the new supply and development is shrinking. And the new developments are getting very difficult to justify, given how low rents continue to be, it's just a big squeeze to develop anything, given how low rents still are.
And our appendix is, Page 59 is the Edmonton new construction. And that's backward looking.
But when we look out and drive around, there's fewer and fewer new developments going on. So the cranes moving to other cities with higher rents, and better economics.
Mario Saric
But I guess the rising construction costs should benefit that supply growth or lack thereof two to three years from now in terms of completions, I was just more kind of interested in you know what was started kind of pre-pandemic and what's going to come onto the market call in the next 6 months to 12 months?
Sam Kolias
Agree a 100%. Just want to follow-up with the West Edmonton rental adjustment is between $10 and $14, because we have approximately 11,073 units there, we only require a $10 to $14 adjustment for all the improvements that we're doing there in our common areas.
They just wanted to follow that up. Thanks.
Mario Saric
And that's it for me. Thank you for your time today.
Sam Kolias
Thank you, Mario.
Operator
Thank you. And at this time, I would like to turn the call back over to Sam.
Sam Kolias
Thank you, Sylvie. 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 amazing team of heroes, our great leaders, loyal residents, they may see our lenders and all our stakeholders. It is really all about our amazing team of heroes 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 amazing team and great leaders enough.
Because this is the last conference call that Lisa Russell will be attending as our Senior VP of Corporate Development, giving over 25 years of extraordinary service. We would like to say a very special thank you, Lisa.
And wish her and her family. All of God's choices, blessings for her retirement and thank her for the huge shoulders she has provided us to keep standing on.
We remain very blessed to have her in our BFF or Boardwalk Family Forever. Thank you so much, Lisa.
We're pleased with our improving results on a foundation of exceptional value we continue to provide our resident members, our investors and all our stakeholders. Our home is much more than a place.
Our future is family, where love always live. What can be more important when choosing where to call home?
Thank you again, everyone for joining us this morning. And may god bless us all with healing health and peace through all times.
Operator
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today.
Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
Have a good weekend.