Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BTB Real Estate Investment Trust (BTBIF, Financial) reported a 3.9% increase in rental revenue for the quarter compared to the same period last year, driven by acquisitions, operating improvements, and higher lease renewal rates.
- The company achieved a 7.3% increase in same property net operating income (NOI), indicating strong organic growth.
- BTB Real Estate Investment Trust (BTBIF) successfully repaid the entire principal amount of its convertible debentures, optimizing its debt structure.
- The company maintained a stable distribution to unit holders with an annualized rate of 30¢ per unit, reflecting a strong financial position.
- BTB Real Estate Investment Trust (BTBIF) reported a significant leasing activity with a total of 319,495 square feet for the quarter, contributing to a 4.6% increase in average lease renewal rates since the beginning of the year.
Negative Points
- The occupancy rate decreased to 92.3%, partly due to the bankruptcy of a tenant, Nuera Air, which left a significant industrial property vacant.
- The suburban office segment saw a 0.2% decrease in lease renewal rates, primarily due to an 'as is where is' renewal with Hydro Quebec.
- BTB Real Estate Investment Trust (BTBIF) faced challenges in leasing a vacant industrial property in Laval due to its poor condition after the tenant's bankruptcy.
- The company's total debt ratio remained high at 58.3%, with a mortgage debt ratio of 52.5%, indicating a significant leverage position.
- BTB Real Estate Investment Trust (BTBIF) has a substantial portion of its debt maturing in 2026, which could pose refinancing risks if market conditions change unfavorably.
Q & A Highlights
Q: Can you provide details on the property sales underway and potential mortgage top-ups for capital?
A: We have three office properties on the market with expected gross proceeds between $50 to $60 million, netting $30 to $40 million after mortgages. We are constantly reviewing our portfolio for mortgage top-ups, aiming to maintain leverage below 60%. We managed to secure almost the full $24 million needed for the convertible debenture repayment through mortgage top-ups. - Marc-André Lefebvre, Vice President & Chief Financial Officer
Q: Could you update us on the leasing status, particularly the industrial vacancy and the Winners lease?
A: The industrial vacancy is being addressed, with cash flow from the Energy Cardio space expected to commence in Q1 2025 after a free rent period. The Winners lease will start in January 2025, with no free rent period beyond March 2025, contributing approximately $1 million in NOI annually. - Stéphanie Léonard, Senior Director of Leasing
Q: How do you view the future portfolio allocation between industrial and necessity-based retail?
A: We plan to retain our grocery-anchored retail properties due to their current market appeal and potential for densification. While industrial remains a focus, we see value in maintaining a diverse portfolio that includes necessity-based retail. - Michel Leonard, President, Chief Executive Officer, Trustee
Q: What are the prospects for releasing the industrial vacancy and expected rental rates?
A: We are targeting a rental rate of around $12 to $13 net. The premises were left in poor condition, hindering showings, but we are making improvements to facilitate leasing. We expect to have the property ready for tenant visits by the end of November. - Michel Leonard, President, Chief Executive Officer, Trustee
Q: Can you elaborate on the debt maturities in 2026 and any specific asset types involved?
A: The 2026 debt maturities are not skewed towards any particular asset type; they are spread across our portfolio. We are actively managing our debt ladder to mitigate interest rate risks. - Marc-André Lefebvre, Vice President & Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
