BTB Real Estate Investment (BTB-UN) Q2 2024 earnings summary

Executive summary

• Portfolio consists of 75 properties totaling 6.1M sq ft and valued at over $1.2B, with a strategic focus on increasing industrial exposure and value creation opportunities.

• Achieved record occupancy rate of 94.6%, up 10 bps sequentially and 50 bps year-over-year, reflecting strong leasing and asset management performance.

• Leasing activity included 216,605 sq ft of renewals and 40,080 sq ft of new leases, with average rent renewal rates up 5.7% for the quarter and 6.6% for the six-month period.

• Disposed of two suburban office properties for $6.2M and advanced densification and development projects in Montreal, Québec City, Ottawa, and Lévis.

• Notable tenant bankruptcies (Énergie Cardio and Nuera Air) impacted results, but vacant spaces are being actively marketed and re-leased.

Financial highlights

• Q2 2024 rental revenue was $32.2M, up 1.6% year-over-year; six-month rental revenue was $64.9M, up 0.5% year-over-year (2.7% excluding a one-time adjustment).

• Net operating income for Q2 was $18.9M, down 0.5% year-over-year; six-month NOI was $37.2M, down 2.1% (up 1.6% excluding the one-time adjustment).

• Net income for Q2 was $7.3M, down from $10.8M in Q2 2023, mainly due to higher financial and administrative expenses.

• FFO adjusted per unit was 10.4¢ (Q2 2023: 11.8¢); AFFO adjusted per unit was 9.4¢ (Q2 2023: 10.9¢).

• FFO adjusted payout ratio rose to 72.2% (Q2 2023: 63.8%); AFFO adjusted payout ratio increased to 80.2% (Q2 2023: 69.0%).

Outlook and guidance

• Management remains focused on targeted dispositions and acquisitions, prudent capital management, and ongoing property improvements.

• Mortgage refinancing maturities are being spread out to mitigate interest rate fluctuations, with recent Bank of Canada rate cuts seen as positive for future refinancing.

• Strategic priorities include maximizing portfolio value through industrial asset growth, densification, and new developments.