Crombie Real Estate Investment Trust (CRR.UN) Q2 2024 earnings summary

Executive summary

• Achieved strong operational and financial results in Q2 2024, with 3.4% same-asset NOI growth, 6.7% normalized FFO per unit growth, and a resilient necessity-based portfolio focused on grocery-anchored retail, industrial, and mixed-use residential assets.

• Committed occupancy remained high at 96.4%, with renewal spreads of 9.6% on 293,000 sq ft and new leases increasing occupancy by 122,000 sq ft at an average first-year rate of CAD 25.61 per sq ft.

• Strategic focus on operational excellence, asset optimization, prudent capital allocation, and expanding partnerships, especially with Empire.

Financial highlights

• Property revenue increased by 3.1% to $116.4M, and net property income rose 4.8% to $74.9M year-over-year.

• Same-asset NOI grew 3.4% year-over-year; normalized AFFO and FFO per unit rose 7.7% and 6.7% respectively, after adjusting for employee transition costs.

• FFO per unit (basic) grew 23.1% to $0.32; AFFO per unit (basic) up 27.3% to $0.28.

• FFO payout ratio improved to 70.1% from 86.7% in Q2 2023; AFFO payout ratio improved to 80.6% from 102.1%.

• Available liquidity at quarter-end was $707 million; unencumbered asset pool grew to $2.7 billion.

Outlook and guidance

• Maintaining annual same asset property cash NOI growth guidance of 2%-3% for 2024.

• Management anticipates continued NOI, AFFO, and NAV growth, with ongoing development activity and a focus on achieving a credit rating upgrade and Net Zero commitment.

• Expecting healthy renewal spreads to continue, targeting mid- to high single-digit increases.

• Development fee revenue for 2024 expected to be consistent with Q1 levels for the remainder of the year; 2023 full-year fees were CAD 3.4 million.

• Completion of The Marlstone major development in Halifax expected in H1 2026.