BTB Highlights Revenue Growth and Strong Portfolio Performance in its Q3 2024 Financial Results
MONTRÉAL , Nov. 4, 2024 /CNW/ - BTB Real Estate Investment Trust (TSX:BTB) ("BTB", the "REIT" or the "Trust") announced today its financial results for the third quarter of 2024 ended September 30, 2024 (the "Third Quarter").
"This quarter was marked by a good performance of our properties, except for one industrial asset where the tenant declared bankruptcy, resulting in a drop in our occupancy rate to 92.3%" said Michel Léonard, President and CEO of BTB. "For the cumulative nine-month period, rental income and net operating income from the same portfolio increased by 1.5% and 4.8%, respectively, compared to the same period last year. These results reflect the organic growth of our portfolio and our sound property management. Our FFO adjusted and AFFO adjusted also increased compared to the previous quarter, reflecting the good performance of our assets. Our debt ratios remained relatively stable, with a total debt ratio of 58.3% and a mortgage debt ratio of 52.5%. In fact, strategically, we are spreading out our mortgage refinancing maturities to try to balance the fluctuations in interest rates on mortgages concluded in recent months, and, with the latest announcements from the Central Bank of Canada, the outlook appears to bode well for future mortgage financing. Subsequent to the end of the quarter, we fully redeemed the Series G debenture that matured on October 31, 2024, using BTB's available funds, which were generated primarily through mortgage financings. As of today, only the Series H debenture remains outstanding, which will mature on October 31, 2025. This strategy demonstrates our proactive and prudent approach to debt management in the current environment. We remain committed to our strategic priorities, including targeted dispositions and acquisitions, prudent capital management and ongoing property improvements. We are confident that our disciplined approach will continue to deliver strong results and drive long-term value creation for all our stakeholders."
SUMMARY OF SIGNIFICANT ITEMS AS AT SEPTEMBER 30th, 2024
Total number of properties: 75
Total leasable area: 6.1 million square feet
Total value of assets: $1.2 billion
Market capitalization: $317 million (unit trading price of $3.61 as at September 30, 2024)
OPERATIONAL HIGHLIGHTS
Periods ended September 30
Quarter
Cumulative (9 months)
2024
2023
2024
2023
Occupancy – committed (%)
92.3 %
93.7 %
-
-
Signed new leases (in sq.ft.)
18,713
25,476
116,855
217,900
Renewed leases at term (in sq.ft.)
47,109
52,178
297,345
258,131
Renewal rate (%)
58.4 %
52.2 %
75.3 %
58.1 %
Other ([1])
45,870
-
45,870
-
Renewed leases prior to the end of the term (in sq.ft.)
207,803
8,070
269,711
68,830
Increase in average lease renewal rate
2.4 %
11.9 %
4.6 %
7.1 %
During the quarter, the Trust completed a total of 254,912 square feet of lease renewals and 18,713 square feet of new leases. The occupancy rate decreased to 92.3%, representing a 230 basis points decrease compared to the prior quarter and a 140 basis points decrease compared to the same period in 2023. The decrease in occupancy is primarily due to the bankruptcy of Nuera Air. The Trust has already retained the services of a national commercial brokerage firm specialized in the industrial segment to lease the property. Mitigating this decrease is the addition of 45,870 square feet to the Trusts' total leasable area recorded this quarter, as a result of the construction of an expansion to a necessity-based retail property located in Lévis, Québec, which is leased on a long-term basis to Winners/Home Sense. The increase in the average rent renewal rate for the current quarter and current cumulative nine-month period was respectively 2.4% and 4.6%.
FINANCIAL RESULTS HIGHLIGHTS
Periods ended September 30
Quarter
Cumulative (9 months)
(in thousands of dollars, except for ratios and per unit data)
2024
2023
2024
2023
$
$
$
$
Rental revenue
32,505
31,285
97,359
95,904
Net operating income (NOI)
18,753
18,075
55,969
56,124
Net income and comprehensive income
5,470
15,216
19,895
34,864
Adjusted EBITDA ([2])
18,030
16,544
52,606
51,654
Same-property NOI (2)
18,594
17,323
52,508
50,085
FFO Adjusted (2)
9,426
9,030
27,501
29,258
FFO Adjusted payout ratio
70.3 %
72.5 %
71.9 %
66.5 %
AFFO Adjusted (2)
8,581
7,675
24,630
25,990
AFFO Adjusted payout ratio
77.2 %
85.3 %
80.3 %
74.8 %
FINANCIAL RESULTS PER UNIT
Net income and comprehensive income
6.2¢
17.5¢
22.6¢
40.3¢
Distributions
7.5¢
7.5¢
22.5¢
22.5¢
FFO Adjusted (2)
10.7¢
10.4¢
31.3¢
33.8¢
AFFO Adjusted (2)
9.7¢
8.8¢
28.0¢
30.1¢
Rental revenue: Stood at $32.5 million for the current quarter, which represents an increase of 3.9% compared to the same quarter of 2023. For the cumulative nine-month period, rental revenue totaled $97.4 million which represents an increase of 1.5% compared to the same period in 2023. During Q1 2023, the Trust recorded a one-time $1.4 million increase of rental revenue pursuant to unrecorded revenue for previous quarters associated to a specific lease (the "One-Time Adjustment"). Excluding the One-Time Adjustment, rental revenue for the current cumulative nine-month period vs the same period in 2023 would have increased by 3.1%.
Net Operating Income (NOI): Totaled $18.8 million for the current quarter, which represents an increase of 3.8% compared to the same quarter of 2023. The increase for the quarter is due to operating improvements, higher rent renewal rates, and increases in rental spreads for in-place leases ($1.4 million). The recorded increase is partially offset by the bankruptcies of two tenants: (1) Énergie Cardio in Quebec City ($0.3 million), which space was rapidly leased to the group that purchased the assets of the bankrupt business and (2) Nuera Air, a tenant occupying 132,665 square feet in an industrial property in Laval, Québec ($0.5 million). For the cumulative nine-month period, the NOI totalled $56.0 million which represents a decrease of 0.3% compared to the same period in 2023. Excluding the One-Time adjustment, the cumulative nine-month period NOI for Q3 2024 vs the same period in 2023 would have increased by 2.3%.
Net income and comprehensive income: Totalled $5.5 million for the quarter compared to $15.2 million for the same period in 2023, representing a decrease of $9.7 million. The result for the quarter is affected by a $6.2 million non-cash net reduction in the gain of the fair value of investment properties and a $2.8 million non-cash loss in the net adjustment of the fair value of derivative financial instruments. For the cumulative nine-month period, net income and comprehensive income totalled $19.9 million, representing a decrease of $15 million. Excluding the One-Time Adjustment, the decrease for the cumulative nine-month period from Q3 2024 vs Q3 2023 would have been $13.5 million.
Same-property NOI (1): For the quarter, the same-property NOI increased by 7.3% compared to the same period in 2023, and for the cumulative nine-month period, the same-property NOI increased by 4.8% compared to the same period in 2023. These increases are due to higher rent renewal rates of 4.6% across all three segments of the portfolio. For the cumulative nine-month period, the Trust achieved increases of rent renewal rates of 5.8% for the industrial segment, 3.2% for the suburban office segment and 6.1% for the necessity-based retail segment. The industrial segment is also positively impacted by increases in rental rates for in-place leases.
FFO adjusted per unit (1): Was 10.7¢ per unit for the quarter compared to 10.4¢ per unit for the same period in 2023, representing an increase of 0.3¢ per unit. The increase of FFO adjusted for the quarter is explained by an increase in NOI of $0.7 million offset by an increase of interest expense net of financial income of $0.5 million. For the cumulative nine-month period, the FFO adjusted was 31.3¢ per unit compared to 33.8¢ per unit for the same period in 2023, representing a decrease of 2.5¢ per unit. Excluding the One-Time Adjustment, the cumulative nine-month period FFO adjusted per unit for Q3 2024 vs the same period in 2023 would have recorded a decrease of 0.9¢ per unit. In addition, FFO adjusted per unit was negatively impacted by an increase in weighted average number of units outstanding of 1.4 million units, due to the unitholder's participation in the distribution reinvestment plan.
FFO adjusted payout ratio (1): Was 70.3% for the quarter compared to 72.5% for the same period in 2023, an improvement of 2.2%. For the cumulative nine-month period, the FFO adjusted payout ratio was 71.9% compared to 66.5% for the same period in 2023, an increase of 5.4%. Excluding the One-Time Adjustment, the cumulative nine-month period FFO adjusted payout ratio for Q3 2024 vs the same period in 2023 would have increased by 2.0%.
AFFO adjusted per unit (1): Was 9.7¢ per unit for the quarter compared to 8.8¢ per unit for the same period in 2023, representing an increase of 0.9¢ per unit, in line with the increase of FFO adjusted explained above. For the cumulative nine-month period, the AFFO adjusted per unit was 28.0¢ per unit compared to 30.1¢ per unit for the same period in 2023, representing a decrease of 2.1¢ per unit compared to the same period in 2023. Excluding the One-Time Adjustment, the cumulative nine-month period AFFO adjusted per unit would have decreased by 0.4¢ per unit. AFFO adjusted per unit was also negatively impacted by the increase in weighted average number of units outstanding of 1.4 million units, due to the unitholder's participation in the distribution reinvestment plan.
AFFO adjusted payout ratio (1): W as 77.2% for the quarter compared to 85.3% for the same period in 2023. For the cumulative nine-month period, the AFFO adjusted payout ratio was 80.3% compared to 74.8% for the same period in 2023, representing an increase of 5.5%. Excluding the One-Time adjustment, the cumulative nine-month period AFFO adjusted payout ratio for Q3 2024 vs the same period in 2023 would have increased by 1.1%.
_____________________
(1)
Other adjustments on the occupied area represent mainly area remeasurements and new leases related to construction projects.
(2)
Non-IFRS financial measure. See Appendix 1. The referred non-IFRS financial measures do not have a standardized meaning prescribed by IFRS and these measures cannot be compared to similar measures used by other issuers.
BALANCE SHEET AND LIQUIDITY HIGHLIGHTS
Periods ended September 30
(in thousands of dollars, except for ratios and per unit data)
