BTB.UN BTB Real Estate Investment Trust

i.       

Tenant Retention: Leases representing 96,548 square feet were renewed during this quarter for a total of 351,158 square feet for the cumulative nine-month period. Since the beginning of the year, BTB achieved a cumulative average increase of 13.9% in lease renewal rates across all its business segments.

ii.       

New leases concluded: 57,353 square feet were leased to new tenants. During the quarter, 30,297 square feet or 52.9% were concluded with industrial tenants, 16,594 square feet or 28.9% were concluded with off-downtown core office tenants and 10,462 square feet or 18.2% of the new leases were concluded in the necessity-based retail segment.

__________________________________

(1)      Non-IFRS financial measure. See Appendix 1.
(2)      Credit facilities is a term used that reconciles with the bank loans as presented and defined in the Trust's interim condensed consolidated financial statements.

Periods ended September 30

Quarter

Cumulative (9 months)

(in thousands of dollars, except for ratios and per unit data)

2022

∆

2022

2021

∆

$

$

%

$

$

%

FINANCIAL INFORMATION

Rental revenue

29,962

23,988

24.9

88,009

73,554

19.7

Net operating income (NOI)

17,974

13,572

32.4

51,806

41,560

24.7

Net income and comprehensive income

11,693

8,678

34.7

36,385

18,349

98.3

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) ⁽¹⁾

16,507

12,535

31.7

48,062

38,564

24.6

NOI from the same-property portfolio ⁽¹⁾

13,512

12,833

5.3

39,248

37,592

4.4

Distributions

6,394

5,551

15.2

18,619

15,886

17.2

Recurring funds from operations (FFO) ⁽¹⁾

9,785

7,018

39.4

27,820

21,950

26.7

Recurring adjusted funds from operations (AFFO) ⁽¹⁾

8,674

6,453

34.4

25,587

20,606

24.2

Cash flow from operating activities

20,359

10,090

101.8

47,279

31,401

50.6

Total assets

1,206,916

962,207

25.4

Total debt ratio ⁽¹⁾

58.6 %

55.8 %

2.8

Weighted average interest rate on mortgage debt

3.6 %

3.8 %

(0.1)

Market capitalization

271,104

296,667

(8.6)

FINANCIAL INFORMATION PER UNIT

Net income and comprehensive income

13.7¢

11.7¢

2.0¢

44.0¢

26.0¢

18.0¢

Distributions

7.5¢

7.5¢

22.5¢

22.5¢

Recurring FFO ⁽¹⁾

11.5¢

9.5¢

2.0¢

33.6¢

31.1¢

2.5¢

Recurring AFFO ⁽¹⁾

10.2¢

8.7¢

1.5¢

30.9¢

29.2¢

1.7¢

⁽¹⁾         Non-IFRS financial measure. See Appendix 1.

Periods ended September 30

Quarter

Cumulative (9 months)

(in thousands of dollars, except per unit data)

2022

2022

2021

$

$

$

$

CASH FLOWS FROM OPERATING ACTIVITIES

20,359

10,090

47,279

31,401

Leasing payroll expenses

182

173

561

576

Transaction costs on purchase and disposition of investment properties and early repayment fees

(93)

-

(984)

(188)

Adjustments for changes in other working capital items

(3,730)

2,486

1,230

7,670

Financial income

122

185

399

581

Interest expenses

(7,197)

(5,538)

(20,744)

(16,753)

Provision for non-recoverable capital expenditures ⁽¹⁾

(599)

(478)

(1,760)

(1,468)

Provision for non-recovered rental fees ⁽¹⁾

(375)

(375)

(1,125)

(1,125)

Accretion of non-derivative liability component of convertible debentures

(88)

(90)

(253)

(276)

AFFO ⁽¹⁾

8,581

6,453

24,603

20,418

93

-

984

188

RECURRING AFFO ⁽¹⁾

8,674

6,453

25,587

20,606

⁽¹⁾         Non-IFRS financial measure. See Appendix 1.

TIME:

9 am, Eastern Time

DIAL:

Toronto and over-seas: 1-416-764-8688

WEB:

https://app.webinar.net/LyJ172PK84A

VISUAL:

A presentation will be uploaded on BTB's website prior to the call

https://bit.ly/3rMNk2Q

SAME-PROPERTY NOI

Same-property NOI is a non-IFRS financial measure defined as net operating income ("NOI") for the properties that the Trust owned and operated for the entire duration of both the current year and the previous year. The most directly comparable IFRS measure to same-property NOI is Operating Income.

FUNDS FROM OPERATIONS (FFO) & RECURRING FFO

FFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in its January 2022 White Paper ("White Paper"). FFO is defined as net income and comprehensive income less certain adjustments, on a proportionate basis, including (i) fair value adjustments on investment properties, class B LP units and derivative financial instruments; (ii) amortization of lease incentives; (iii) incremental leasing costs; and (iv) distribution on class B LP units. FFO is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. FFO is also reconciled with the cash flows from operating activities, which is an IFRS measure.

Recurring FFO is also a non-IFRS financial measure that starts with FFO and removes the impact of non-recurring items such as transaction cost on acquisitions and dispositions of investment properties and early repayment fees.

The Trust believes FFO and recurring FFO are key measures of operating performance and allow the investors to compare its historical performance.

ADJUSTED FUNDS FROM OPERATIONS (AFFO) & RECURRING AFFO

AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in its January 2022 White Paper ("White Paper"). AFFO is defined as FFO less: (i) straight-line rental revenue adjustment; (ii) accretion of effective interest; (iii) amortization of other property and equipment; (iv) unit-based compensation expenses; (v) provision for non-recoverable capital expenditures; and (vi) provision for unrecovered rental fees (related to regular leasing expenditures). AFFO is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. AFFO is also reconciled with the cash flows from operating activities, which is an IFRS measure.

Recurring AFFO is also a non-IFRS financial measure that starts with AFFO and removes the impact of non-recurring items such as transaction costs on acquisitions and dispositions of investment properties and early repayment fees.

The Trust considers AFFO and recurring AFFO to be useful measures of recurring economic earnings and relevant in understanding its ability to service its debt, fund capital expenditures, and provide distributions to unitholders.

FFO & AFFO PAYOUT RATIOS AND RECURRING FFO & RECURRING AFFO PAYOUT RATIOS

FFO and AFFO payout ratios and recurring FFO and recurring AFFO payout ratios are non-IFRS financial measures. These payout ratios are calculated by dividing the actual distributions per unit by FFO, AFFO, and recurring FFO and recurring AFFO per unit in each period.

The Trust considers these metrics a useful way to evaluate its distribution paying capacity.

TOTAL DEBT RATIO

The total debt ratio is a non-IFRS financial measure of the Trust's financial leverage, which is calculated by taking the total long-term debt less cash divided by the total gross value of the assets of the Trust less cash.

The Trust considers this metric useful as it indicates its ability to meet its debt obligations and its capacity for future additional acquisitions.

PROVISION FOR NON-RECOVERABLE CAPITAL EXPENDITURES

In calculating AFFO, the Trust deducts a provision for non-recoverable capital expenditures to consider capital expenditures invested to maintain the condition of its properties and to preserve rental revenue.

The provision for non-recoverable capital expenditures is calculated based on 2% of rental revenues. This provision is based on management's assessment of industry practices and its investment forecasts for the coming years.

PROVISION FOR UNRECOVERED RENTAL FEES

The Trust also deducts a provision for unrecovered rental fees in the amount of approximately 25¢ per sq. ft. on an annualized basis. Even though quarterly rental fee disbursements vary significantly from one quarter to another, management considers that this provision fairly presents, in the long term, the average disbursements not recovered directly in establishing the rent that the Trust will undertake. These disbursements consist of inducements paid or granted when leases are signed that are generally amortized over the term of the lease and are subject to an equivalent increase in rent per square foot, and of brokerage commissions and leasing payroll expenses.

TOTAL LONG-TERM DEBT LESS CASH AND CASH EQUIVALENTS

This is a non-IFRS financial measure. Long-term debt less cash and cash equivalent is a non-IFRS financial measure, calculated as the total of (i) fixed-rate mortgage loans payable; (ii) floating rate mortgage loans payable; (iii) Series G debenture capital amount; (iv) Series F debenture capital adjusted with non-derivative component fewer conversion options exercised by holders; and (v) credit facilities, less cash, and cash equivalents. The most directly comparable IFRS measure to net debt is debt.

TOTAL GROSS VALUE OF THE ASSETS OF THE TRUST LESS CASH AND CASH EQUIVALENT

This is a non-IFRS financial measure. Gross value of the assets of the Trust less cash and cash equivalent ("GVALC") is a non-IFRS financial measure defined as the Trust's total assets adding the cumulated amortization property and equipment and removing the cash and cash equivalent. The most directly comparable IFRS measure to GVALC is total assets.

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("ADJUSTED BAIA")

Adjusted EBITDA income is a non-IFRS financial measure that starts with net income and comprehensive income and removes the effects of certain adjustments, on a proportionate basis, including: (i) interest expense; (ii) taxes; (iii) depreciation of property and equipment; (iv) amortization of intangible assets; (v) fair value adjustments (including investment properties, financial instruments, Class B LP units and unit price remeasurement for unit-based compensation); (vi) transaction costs on acquisitions and dispositions of investment properties and early repayment fees; and (vii) straight-line rental revenue adjustment.

The most directly comparable IFRS measure to Adjusted EBITDA is net income and comprehensive income. The Trust believes Adjusted EBITDA is a useful metric to determine its ability to service its debt, finance capital expenditures and provide distributions to its Unitholders.

.

2022

2022

2022

2021

2021

2021

2021

2020

Q-3  

Q-2  

Q-1

Q-4  

Q-3  

Q-2  

Q-1  

Q-4  

(in thousands of dollars, except for per unit)

$

$

$

$

$

$

$

$

Net income and comprehensive income

11,693

18,243

6,449

23,219

8,678

7,161

2,510

3,850

Fair value adjustment on investment properties

1,230

197

(1,007)

(19,571)

-

-

-

(2,130)

Fair value adjustment on Class B LP units

(142)

(233)

66

21

(18)

(52)

280

242

Amortization of lease incentives

773

818

735

858

780

777

877

794

Fair value adjustment on derivative financial instruments

(3,898)

(9,344)

997

3,297

(2,598)

733

1,814

2,950

Leasing payroll expenses

182

158

221

208

173

184

219

146

Distributions – Class B LP units

26

26

26

30

22

26

30

30

Unit-based compensation (Unit price remeasurement) ⁽⁵⁾

(172)

(285)

77

23

(19)

185

-

-

FFO ⁽¹⁾

9,692

9,580

7,564

8,085

7,018

9,014

5,730

5,882

Non-recurring item

Transaction cost on acquisitions and dispositions of investment properties and early repayment fees

93

138

753

109

-

188

-

440

Recurring FFO ⁽¹⁾

9,785

9,718

8,317

8,194

7,018

9,202

5,730

6,322

FFO per unit ^{(1) (2) (3)}

11.4¢

11.3¢

9.7¢

10.9¢

9.5¢

12.3¢

8.9¢

9.2¢

Recurring FFO per unit ^{(1) (2) (4)}

11.5¢

11.4¢

10.7¢

11.0¢

9.5¢

12.5¢

8.9¢

9.9¢

FFO payout ratio ⁽¹⁾

65.9 %

66.4 %

77.2 %

68.9 %

79.0 %

61.1 %

84.0 %

81.1 %

Recurring FFO payout ratio ⁽¹⁾

65.2 %

65.5 %

70.2 %

68.0 %

79.0 %

59.9 %

84.0 %

75.5 %

⁽¹⁾         

This is a non-IFRS financial measure.

⁽²⁾         

Including Class B LP units.

⁽³⁾         

The FFO per unit ratio is calculated by dividing the FFO ⁽¹⁾ by the Trust's unit outstanding at the end of the period (including the Class B LP units at outstanding at the end of the period).

⁽⁴⁾         

The recurring FFO per unit ratio is calculated by dividing the recurring FFO ⁽¹⁾ by the Trust's unit outstanding at the end of the period (including the Class B LP units at outstanding at the end of the period).

⁽⁵⁾         

The impact of the unit price remeasurement on the deferred unit-based compensation plan has been considered in the calculation of the recurring FFO and AFFO starting Q2 2021.

2022

2022

2022

2021

2021

2021

2021

2020

Q-3  

Q-2  

Q-1  

Q-4  

Q-3  

Q-2   

Q-1  

Q-4  

(in thousands of dollars, except for per unit)

$

$

$

$

$

$

$

$

FFO ⁽¹⁾

9,692

9,580

7,564

8,085

7,018

9,014

5,730

5,882

Straight-line rental revenue adjustment

(521)

(74)

(150)

(758)

(88)

(91)

(397)

108

Accretion of effective interest

219

284

288

275

239

428

359

343

Amortization of other property and equipment

35

26

30

22

23

27

15

23

Unit-based compensation expenses

130

312

73

143

114

(24)

644

281

Provision for non-recoverable capital expenditures ⁽¹⁾

(599)

(580)

(581)

(539)

(478)

(519)

(471)

(449)

Provision for unrecovered rental fees ⁽¹⁾

(375)

(375)

(375)

(375)

(375)

(376)

(374)

(375)

AFFO ⁽¹⁾

8,581

9,173

6,849

6,853

6,453

8,459

5,506

5,813

Non-recurring item

Transaction cost on acquisitions and dispositions of investment properties and early repayment fees

93

138

753

109

-

188

-

440

Recurring AFFO ⁽¹⁾

8,674

9,311

7,602

6,962

6,453

8,647

5,506

6,253

AFFO per unit ^{(1) (2) (3)}

10.1¢

10.8¢

8.8¢

9.2¢

8.7¢

11.5¢

8.6¢

9.1¢

Recurring AFFO per unit ^{(1) (2) (4)}

10.2¢

11.0¢

9.7¢

9.4¢

8.7¢

11.8¢

8.6¢

9.8¢

AFFO payout ratio ⁽¹⁾

74.4 %

69.4 %

85.3 %

81.3 %

85.9 %

65.1 %

87.4 %

82.1 %

Recurring AFFO payout ratio ⁽¹⁾

73.6 %

68.3 %

76.8 %

80.0 %

85.9 %

63.7 %

87.4 %

76.3 %

⁽¹⁾         

This is a non-IFRS financial measure.

⁽²⁾         

Including Class B LP units.

⁽³⁾         

The AFFO per unit ratio is calculated by dividing the AFFO ⁽¹⁾ by the Trust's unit outstanding at the end of the period (including the Class B LP units at outstanding at the end of the period).

⁽⁴⁾         

The recurring AFFO per unit ratio is calculated by dividing the recurring AFFO ⁽¹⁾ by the Trust's unit outstanding at the end of the period (including the Class B LP units at outstanding at the end of the period).

(in thousands of dollars)

September 30, 2022

December 31, 2021

September 30, 2021

$

$

$

Cash and cash equivalents

(10,417)

(7,191)

(19,173)

Mortgage loans outstanding ⁽¹⁾

631,808

607,038

496,166

Convertible debentures ⁽¹⁾

43,086

44,564

44,931

Credit facilities

36,991

35,468

5,100

Total long-term debt less cash and cash equivalents ^{(2) (3)}

701,468

679,879

527,024

Total gross value of the assets of the Trust less cash and cash equivalents ^{(2) (4)}

1,197,582

1,124,690

944,004

Mortgage debt ratio (excluding convertible debentures and credit facilities) ^{(2) (5)}

52.8 %

54.0 %

52.6 %

Debt ratio – convertible debentures ^{(2) (6)}

3.6 %

4.0 %

4.8 %

Debt ratio – credit facilities ^{(2) (7)}

3.1 %

3.2 %

0.5 %

Total debt ratio ⁽²⁾

58.6 %

60.5 %

55.8 %

⁽¹⁾         

Before unamortized financing expenses and fair value assumption adjustments.

⁽²⁾         

This is a non-IFRS financial measure.

⁽³⁾         

Long-term debt cash and cash equivalents is a non-IFRS financial measure, calculated as total of: (i) fixed rate mortgage loans payable; (ii) floating rate mortgage loans payable; (iii) Series G debenture capital amount; (iv) Series F debenture capital adjusted with non-derivative component less conversion options exercised by holders; and (v) credit facilities, less cash and cash equivalents. The most directly comparable IFRS measure to net debt is debt.

⁽⁴⁾         

Gross value of the assets of the Trust less cash and cash equivalent (GVALC) is a non-IFRS financial measure defined as the Trust total assets adding the cumulated amortization property and equipment and removing the cash and cash equivalent. The most directly comparable IFRS measure to GVALC is total assets.

⁽⁵⁾         

Mortgage debt ratio is calculated by dividing the mortgage loans outstanding by the GVALC.

⁽⁶⁾         

Debt ratio – convertible debentures is calculated by dividing the convertible debentures by the GVALC.

⁽⁷⁾         

Debt ratio – credit facilities is calculated by dividing the credit facilities by the GVALC.