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

Executive summary

• Achieved a record occupancy rate of 94.6%, up 10 bps sequentially and 50 bps year-over-year, reflecting strong leasing and property management performance across a portfolio of 75 properties totaling 6.1M sq. ft. and valued at over $1.2B.

• Leasing activity included 257,000 sq. ft. in Q2, with major renewals and new leases, and a focus on increasing industrial asset allocation.

• Disposed of two suburban office properties for over $6M; three more are on the market with expected proceeds of $50–60M.

• Major development includes a 43,000 sq. ft. Winners lease at Méga Centre Rive-Sud, with delivery expected in February 2025, and a 43,500 sq. ft. retail pad in Lévis, QC.

• Ongoing densification and rezoning initiatives in Ottawa, Montreal, and Québec City.

Financial highlights

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

• Net operating income for Q2 was $18.9M, down 0.5% year-over-year; same property NOI increased 1.5% for the quarter and 2.6% for the six-month period.

• 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¢); payout ratios increased year-over-year.

• Committed occupancy rate reached 94.6%, up 50 bps year-over-year.

Outlook and guidance

• Management remains focused on targeted dispositions, acquisitions, prudent capital management, and ongoing property improvements, with a strategic emphasis on industrial assets and densification.

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

• No major issues anticipated for the remaining 200,000 sq. ft. of office leases maturing this year.