BTB Real Estate Investment (BTB-UN) Q3 2024 earnings summary

Executive summary

• Portfolio consists of 75 properties totaling 6.1M sq. ft. and valued at $1.2B, with a strategic focus on industrial assets and value creation through densification and targeted dispositions.

• Q3 2024 saw rental revenue up 3.9% year-over-year and same-property NOI up 7.3%, despite a decline in occupancy to 92.3% due to a major tenant bankruptcy.

• Robust leasing activity included 64,583 sq. ft. of new leases and 254,912 sq. ft. of renewals, with a major new Winners/HomeSense store in Lévis completed and fully leased.

• Disposed of two suburban office properties for $6.2M and have additional office assets on the market.

• Fully redeemed Series G convertible debentures post-quarter using mortgage financing, maintaining stable debt ratios.

Financial highlights

• Q3 2024 rental revenue was $32.5M (up 3.9% YoY); nine-month rental revenue was $97.4M (up 1.5% YoY, or 3.1% excluding a one-time adjustment).

• Net operating income for Q3 was $18.8M (up 3.8% YoY); same-property NOI up 7.3% YoY; nine-month NOI was $56.0M (down 0.3% YoY, up 2.3% excluding adjustment).

• FFO adjusted per unit was 10.7¢ (up from 10.4¢ YoY); AFFO adjusted per unit was 9.7¢ (up from 8.8¢ YoY); AFFO payout ratio improved to 77.2%.

• Net income for Q3 was $5.5M, down from $15.2M YoY due to non-cash fair value adjustments.

• Investment property value exceeded $1.2B; IFRS NAV at $5.43/unit; enterprise value at $1,041M.

Outlook and guidance

• Focus remains on industrial asset acquisitions, densification, and maximizing portfolio value, with ongoing projects in Montreal, Quebec City, and Ottawa.

• Management expects a favorable outlook for mortgage financing following Bank of Canada rate changes.

• Winners store in Lévis to open March 2025, with full-year NOI contribution of about $1M.

• Densification project in Ottawa could add up to 1,000 residential units, with phased construction starting as early as 2026.

• Commitment to disciplined capital management and long-term value creation.