Canadian Net Real Estate Investment Trust (NET-UN) Q3 2024 earnings summary

Executive summary

• Maintained 100% occupancy in Q3 2024 and completed the capital recycling program, selling four properties for CAD 12.8 million and acquiring a CAD 9 million grocery store at a 7% cap rate, enhancing portfolio quality and FFO per unit accretion.

• Opened a new Benny&Co. location post-quarter, contributing CAD 68,000 in annual NOI; necessity-based retail remains a strong focus.

• All 2024 lease renewals completed; 78% of 2025 expiring rents already renewed, with a 5% expected increase in expiring rents.

• Successfully navigated higher interest rates, redeployed capital, and positioned for growth in 2025, with optimism for a favorable rate environment and industry fundamentals.

Financial highlights

• For the nine months ended September 30, 2024, normalized FFO was CAD 9.3 million (CAD 0.453/unit), down 4% year-over-year; Q3 2024 FFO was $2.8M ($0.137/unit), normalized FFO $3.0M ($0.147/unit).

• NOI for the nine months was CAD 14.2 million, a 3% decrease; Q3 2024 NOI was $4.6M, down 5.6% year-over-year.

• Property rental income for the nine months was CAD 19.3 million, flat year-over-year; Q3 2024 rental income was $6.2M, down 3%.

• Net income attributable to unitholders rose to $13.0M in Q3 2024 from $3.0M in Q3 2023, mainly due to fair value changes in investment properties.

• Administrative expenses rose to CAD 960,487, mainly due to a one-time CAD 117,000 sales tax expense and higher legal/professional fees.

Outlook and guidance

• Announced monthly cash distributions of $0.02875 per unit for January–March 2025, annualized at $0.345 per unit.

• Expect Q3 2024 admin expenses to be a good run rate for the remainder of 2024 and 2025, after adjusting for one-time items.

• Anticipate continued growth opportunities in necessity-based retail and accretive acquisitions as interest rates decline.

• Capital recycling for 2024 is complete; future dispositions will be opportunistic and property-specific.