Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CT Real Estate Investment Trust (CTRRF, Financial) reported a healthy and stable Q3 with strong growth metrics, including a 3.4% increase in NOI and a 2.3% increase in AFFO per unit.
- The REIT announced $85 million in new investments this quarter, which will bolster their strong pipeline of projects, including over 0.5 million square feet of new development projects by the end of 2025.
- The occupancy rate remains high at 99.4%, indicating a substantially fully leased portfolio and reflecting the quality and strength of their assets.
- CT Real Estate Investment Trust (CTRRF) maintains a strong relationship with Canadian Tire, which continues to provide strategic growth opportunities and a stable development pipeline.
- The REIT's balance sheet remains strong with an indebtedness ratio of 40.7% and significant liquidity available through committed and uncommitted credit facilities.
Negative Points
- Transaction volumes remain low by historic standards, which could impact future growth opportunities.
- Same-store NOI growth is tracking lower than previous years, primarily due to higher nonrecoverable property costs and reduced contributions from maintenance capital.
- Interest coverage ratio decreased to 3.52 times from 3.71 times in the comparable quarter of 2023, driven by increased interest expenses.
- The REIT faces challenges with the timing of debenture refinancing, with $200 million coming due in June 2025, amidst a fluctuating interest rate environment.
- Development costs have increased on a per square foot basis, which could impact future project returns compared to acquisition yields.
Q & A Highlights
Q: Can you provide more details on the timing and value of the recent vend-in investments and how you plan to fund them?
A: The Winnipeg property is a stand-alone Canadian Tire store, and the Mantra Black Quebec property is a newly built shopping center. Both are expected to close in Q4, with a combined value of approximately $70 million. These will be funded largely with cash and a small amount of Class B units. - Kevin Salsberg, CEO, and Jodi Shpigel, SVP Real Estate
Q: How do you see investment activity evolving over the next four quarters?
A: 2025 will be significant for development completions, with over $100 million to be spent on previously announced projects. Acquisition activity will be opportunistic, especially third-party acquisitions, as we feel better about the market backdrop. - Kevin Salsberg, CEO
Q: What are your plans for the $200 million debentures coming due next year?
A: We are considering refinancing these in the public markets, but we have time to decide. We will monitor interest rates and make decisions over the next quarter or two. - Lesley Gibson, CFO
Q: How will the reduction in Canadian Tire store count impact your acquisition pipeline?
A: While the number of stores has remained flat, Canadian Tire has been expanding and relocating to larger locations, which benefits our development activities. We expect continued opportunities from this relationship and hope for increased third-party transaction activity. - Kevin Salsberg, CEO
Q: Can you provide insights on same-store NOI growth expectations for next year?
A: Same-store NOI growth has been impacted by higher nonrecoverable property costs and reduced contributions from maintenance capital. We expect lower growth until interest rates stabilize, which will affect quarter-over-quarter comparisons. - Lesley Gibson, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
