CALGARY - With occupancy rates increasing, Boardwalk Real Estate Investment Trust is moving away from rental incentives, particularly in Alberta, the REIT reported in a conference call Tuesday for its first-quarter financial results.

Sam Kolias, CEO of Calgary-based Boardwalk, Canada’s largest owner/operator of multi-family rental communities, called the first quarter a “successful” one with supply and demand in balance at 97 per cent occupancy.

He said higher occupancy and improved economic conditions will help stabilize rental revenue.

“When the rental market firms up, we will focus on reducing incentives further to maximize our rental revenue going forward and selectively increase market rents,” said Kolias.

He said “increasing interest rates and home prices may make renting an attractive option for potential homebuyers.”

In the first quarter of this year, Boardwalk reported

$2.6 million in incentives compared with $1.3 million for the same period in 2009.

As of Monday, Boardwalk had 35,829 units — 5,071, or 14.2 per cent of the portfolio, in Calgary and 12,145, or 33.9 per cent, in Edmonton.

In Calgary, occupancy was 98.41 per cent in the first quarter, up from 96.87 per cent in the previous quarter and from 94.31 per cent in the first quarter of 2009.

For the entire portfolio, the average rent in the first quarter of 2010 was $973 compared with $979 in 2009.

Gerry Baxter, executive director of the Calgary Apartment Association, said the state of Calgary’s current rental market depends on whom you talk to.

“Some of our members are telling me that they’re running much fuller in their buildings and vacancies aren’t the same, as bad as what they were,” said Baxter.

“Others are saying it’s still taking them a long time to rent their units,” said Baxter, “and I’m still hearing that.”

Baxter said the vacancy rate among the association members is probably in the five to seven per cent range.

“I think the market is improving slightly but still what we have right now, there’s a lot of supply out there. So there’s lots of choice for tenants. It truly is a tenant shopping market. It has been now for about the last year,” added Baxter.

Boardwalk reported distributable income per unit slid 3.4 per cent compared with a year ago while funds from operations per unit declined by 3.5 per cent during the period ending March 31.

Rental revenue was also down by one per cent to $105 million in the quarter. For the quarter, it reported funds from operations of $29 million and funds from operations per unit of 55 cents on a diluted basis, compared with $30.5 million and per unit funds of 57 cents for the same period last year.

Distributable income for the quarter was $29.3 million and distributable income per unit was 56 cents on a diluted basis, compared with $30.8 million and 58 cents per unit for the same period last year.

In its last rental market survey for Calgary, released in December, Canada Mortgage and Housing Corp. said Calgary’s overall vacancy rate was 5.3 per cent, more than double the 2.1 per cent vacancy rate in December 2008.

The increase was due to job losses, lower migration, improved affordability for homebuyers and greater competition from the secondary rental market, said the CMHC which forecast for year-end 2010 a vacancy rate of 3.5 per cent because of an improving economy which will lure more migrants to the city.

The CMHC has completed its spring rental market survey but those results won’t be released until June.

The December report also showed that the average two-bedroom rent fell by 4.3 per cent to $1,099 in 2009 from $1,148 in 2008.

mtoneguzzi@theherald.canwest.com