BTB Real Estate Investment Trust Q3 2025 Earnings Report

BTB Real Estate Investment Trust EPS Results

• Actual EPS: C$0.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

BTB Real Estate Investment Trust Revenue Results

• Actual Revenue: $32.88 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BTB Real Estate Investment Trust Announcement Details

• Quarter: Q3 2025
• Date: 11/3/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 4, 2025
• Conference Call Time: 9:00AM ET

BTB is a real estate investment trust listed on the Toronto Stock Exchange. BTB invests in industrial, suburban office and necessity-based retail properties across Canada for the benefit of their investors. As of today, BTB owns and manages 72 properties, representing a total leasable area of approximately 6 million square feet. People and their stories are at the heart of our success.

BTB Real Estate Investment Trust Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Leasing momentum — 281,000 sq ft transacted in Q3 (129k new, 152k renewals) with a Q3 renewal rental spread of 14.5%, and an 80k-sq-ft Kraft Heinz industrial deal was committed in Q3 but recorded Oct 1, explaining the committed vs in-place occupancy difference.
• Positive Sentiment: Improved financials — Q3 rental revenue was CAD 32.9M (+1.1%), NOI +5.9%, cash NOI +4.2%, FFO/unit CAD 0.115 (+7.5%) and AFFO/unit CAD 0.101 (+4.1%); the quarterly distribution was maintained and the AFFO payout ratio improved to 74.3%.
• Neutral Sentiment: Industrial vacancy and potential upside — a 132k-sq-ft vacancy at 3695 Delorencier lowered occupancy by ~221 bps, but management is negotiating with a disclosed AAA tenant that they say would materially raise net rents if the lease closes.
• Neutral Sentiment: Portfolio and balance-sheet position — portfolio fair value remained ~CAD 1.2 billion across 6.0M sq ft with 91.5% occupancy, total debt ratio 56.8%, weighted average mortgage rate 4.4% (2.3-year term), and ~CAD 31M of total liquidity.

Presentation

[Operator]

Good morning. My name is Sylvie, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the BTB Real Estate Investment Trust's 2025 third quarter results conference call, for which management will discuss the quarter ended September 30th, 2025. Note that all lines have been placed on mute to prevent any background noise. Should you wish to follow the presentation in greater detail, management has made a presentation available on BTB's website at www.BTReit.com/investors/presentations/. Quarterly meeting presentation. After the speaker's remarks, there will be a question and answer period reserved exclusively for analysts. If you would like to ask a question during this time, simply press star followed by the number one on your keypad.

[Operator]

Before turning the meeting over to management, please be advised that some of the statements that may be made during this call may be forward-looking in nature. Such statements involve numerous factors and assumptions and are subject to inherent risk and uncertainties, both general and specific, which gives rise to the possibility that predictions, forecasts, projections, and other forward-looking statements will not be achieved. Several important factors could cause BTB Real Estate Investment Trust's actual results to differ materially from the expectations expressed or implied by such forward-looking statements. The risks, uncertainties, and other factors that could influence actual results are described in BTB Real Estate Investment Trust's management discussion and analysis in its annual information form, which was filed on SEDAR+ and on BTB's website at www.BTBReit.com/investors/. Reports. I would like to remind everyone that this conference is being recorded. Thank you.

[Operator]

I will now turn the conference over to Michel Léonard, President and Chief Executive Officer, accompanied today by Monsieur Marc-André Lefebvre, Vice President and Chief Financial Officer, Monsieur Charles Doré-Bédard, Vice President of Finance, and Ms. Stephanie Léonard, Senior Director of Leasing. Michel Léonard, you may begin the conference.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Thank you very much, Sylvie, and welcome to all that have joined us in the call for our result of the Q3 2025. So, as far as the highlights are concerned, we sit at 6 million sq ft in the portfolio. We concluded lease renewals and new leases during the quarter for 280,000 sq ft. The fair value of our investment property stood at CAD 1.2 billion, and the occupancy rate is at 91.5%. As far as the weight of our real estate portfolio, we sit with suburban office properties at 41%. Industrial properties at 36%, and necessity-based retail at 23%. As far as the geographical diversification, there's been generally no change in the holding of our portfolio. As far as the quarter at a glance, we are still actively involved in zoning changes to create density on two sites by adding residential units in Montreal and in Ottawa.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

We've disposed of one property located in Quebec City on Lebonheur Boulevard for proceeds of CAD 10.5 million. And this property was a little bit more than 100,000 sq ft of office space, hence the reduction from 6.1 million sq ft reported in the last quarter to 6 million sq ft in this quarter. After the quarter, we disposed of small retail property located in Terrebonne, and the total proceeds received prior to transaction costs and adjustments were CAD 3.1 million. With this, I would turn to Stephanie to go through in more details regarding the leasing and renewal activity.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

Good morning. So, for those of you that are following us on our online presentation, just to note that we are currently at slide seven. So, our total leasing activity, which is the combination of new leases and lease renewals, totals 280,000, and you round up to 281,000 sq ft for the quarter, of which 129,000 sq ft were new lease transactions and 152,000 sq ft belonged to lease renewals. Again, just rounding up. Our total leasing transaction volume for the year stands at just 519,000 sq ft. Our most noteworthy transaction for the quarter was signed with Kraft Heinz Company, representing 80,000 sq ft in our industrial segment located in Montreal, which was committed as of the third quarter but was recorded in place as of October 1st, therefore the fourth quarter. This also explains the difference between our committed and our in-place occupancy rates for the quarter.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

Our second most important transaction for the quarter was a 10-year lease that we signed with SFL Gestion Patrimoine, or Wealth Management in English, representing 7,420 sq ft in Trois-Rivières, Quebec, again in our suburban office segment. The remaining new transactions, representing roughly 41,000 sq ft, were also mainly concluded in our suburban office segment and specifically concentrated in our Quebec City portfolio. Our new transactions with Kraft and SFL provide a good segue into our lease renewal rates for the quarter, as both of these new leases constituted departing tenant replacements, therefore impacted our lease renewal rates. So, the previous tenant that occupied Kraft space, their lease came to maturity on September 30th. We replaced them with Kraft on October 1st, therefore creating no downtime between tenancies.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

However, as there was a change in tenancy, we had to record this departure as a non-renewal, therefore affecting our lease renewal rate by 36%. And this is just for the Kraft transaction. The same explanation is applied to the case of SFL, and both these transactions impacted our lease renewal rate but did not impact our occupancy rate. In terms of a comparison, because we reduced our lease renewal rate by 36%, our comparable lease renewal rates for the quarter and for the nine-month period would have been comparable to the previous nine-month period, comparable to Q3 2024 and 2024 lease renewal rates at this point of time.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

In terms of our important lease renewals concluded for Q3, we signed a 26,000 sq ft five-year renewal with the Government of Quebec in our suburban office segment in Montreal, 18,000 sq ft with a 10-year term with Shoppers Drug Mart in our necessity-based retail segment located in Dollard-des-Ormeaux, 12,000 sq ft renewed with Analog Devices in our suburban office segment in Ottawa. In terms of our early lease renewals, so lease renewals that we conclude with tenants whose leases come to maturity in 2026 and thereafter, therefore not in the current year, which reduces our future maturities, totals roughly 61,000 sq ft. Our most noteworthy transaction in this segment belongs to Hewlett-Packard for 29,000 sq ft in our suburban office segment located in Montreal.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

In terms of our rental spreads for the quarter, we achieved a 14.5% increase in our renewal rate, which is our highest spread for the third quarter in comparison to 2022, 2023, and 2024. We achieved rental spreads of 15.4% for the quarter in our suburban office segment and 8.3% in our necessity-based retail segment. Our nine-month period rental spreads also continue to outshine our performance in 2023 and 2022, standing at 11.3% for our portfolio. Our committed occupancy rate at the end of the second quarter stood at 91.5%, a 30 basis point increase compared to Q2 2025. As you all know, we're still showing the effects of our 132,000 industrial vacancy at our property located at 3695 Delorencier in Laval, impacting our occupancy rate by 221 basis points. We are currently negotiating an offer to lease with a AAA tenant for the entire property.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

We have signed a non-disclosure agreement, so at this time, I cannot share any additional information as to whom the tenant is, net rents, or any incentives. However, I could say that the net rents are within our expectations, and it is our hope to be able to share news in the upcoming weeks about this tenancy. On this note, I'd like to turn the presentation over to Marc-André for a financial review.

[Marc-André Lefebvre, VP and CFO at BTB Real Estate Investment Trust]

Thank you, Stephanie, and good morning, everyone. The financial results for the third quarter once again reflect the resilience of our business. For the three-month period ending September 30th, 2025, rental revenues stood at CAD 32.9 million. That's an increase of 1.1% compared to the same quarter last year. NOI and cash NOI both increased by 5.9% and 4.2% respectively, again compared to the same quarter last year. The increase in cash NOI is related to several factors, including, number one, a payment of CAD 1.1 million triggered by a lease cancellation notice from an industrial tenant with a planned departure date at the end of Q1 2026. Second, higher rent renewal rates. Third, increases in rental spreads for in-place leases. On the negative side, cash NOI was impacted by the previously reported departure of an industrial tenant last quarter. That's Big Rig Trailers.

[Marc-André Lefebvre, VP and CFO at BTB Real Estate Investment Trust]

And second, the impact of the short-term lease negotiated with the group who purchased Lion Electric. Cash same property NOI increased by 4.2% for the quarter compared to the same period last year. This is a good performance considering the departures we had in the industrial segment. Now looking at FFO adjusted per unit, so we ended the quarter at CAD 0.115. That's an increase of 7.5% from the same quarter last year. AFFO adjusted per unit was CAD 0.101 for the quarter, an increase of 4.1% from the same quarter last year. This increase is mainly explained by a CAD 0.8 million increase in cash NOI. Second, a CAD 0.5 million increase in admin expenses. And third, a CAD 0.2 million decrease in net financial expenses before. Fair value adjustments.

[Marc-André Lefebvre, VP and CFO at BTB Real Estate Investment Trust]

We maintain our distribution to unit holders at CAD 0.075 per unit for the quarter, which represents an annual distribution of CAD 0.30 per unit. The AFFO adjusted payout ratio was 74.3% for the quarter. That's an improvement from 77.2% for the same period last year. The value of our investment properties remained stable at CAD 1.2 billion at the end of Q3. This quarter, we externally appraised 48% of our properties, and that's based on fair market value. The exercise resulted in a gain of CAD 2 million. The weighted average cap rate for the entire portfolio remained stable. At 6.7% compared to year-end 2024. As Michel previously mentioned, we had a disposition during the quarter, so we sold. A property in Quebec City located at 1170 Lebonheur Boulevard, and it resulted in gross proceeds of CAD 10.5 million.

[Marc-André Lefebvre, VP and CFO at BTB Real Estate Investment Trust]

After quarter-end, so subsequent to quarter-end, we disposed of our 50% interest in a small non-core retail property located at 5791 Laurier Boulevard. That's in Terrebonne. And the sale resulted in total gross proceeds of just over CAD 3 million. We concluded the quarter with a total debt ratio of 56.8%. The weighted average term and average interest rate on the mortgage portfolio was 2.3 years and 4.4%, respectively. Finally, at the end of the quarter, we held $5.5 million cash, and $25 million was available under our credit facilities for total liquidity of almost $31 million. So this completes our presentation, and we will now open the call to questions. Operator, can we please have the first question on the line? Thanks.

[Operator]

Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touch-tone phone. You will then hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by two. And if you're using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. First, we will hear from Matt Kornack at National Bank Financial. Please go ahead, Matt.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Good morning, guys. Just wanted to clarify on the lease cancellation income. That was in prior quarters, right? Not in Q3? Or am I reading that wrong? I just looked like it was only eight.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

There are, Matt, there are two lease cancellations in 2025. One that was at the beginning of the year where it's a tenant located in a suburban office property that basically, let's say, I forget the numbers, but let's say they lease 30,000 sq ft from us and they cancel 15,000 sq ft, and we release the 15,000 sq ft immediately to another entity called Belden. So there was no downtime as far as that one is concerned. The second one is a notice that we received not too long ago. I forget the date, but where a tenant had a right of basically canceling the lease after seven years, and they exercised that right. So now we've put that property on the market and received the funds, and we're actively trying to lease the property. It's 60,000 sq ft, and it's located on Autoroute 13 in Montreal.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. But did you actually receive those funds in Q3, or will you get them in Q4?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

We received the funds in Q3.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. So your NOI figure would include that number, the CAD 1.1 million for this quarter?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Yes, correct. Yes, it does.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. Fair enough. And then just on the margin front for the quarter, it looked, again, a little bit better. Maybe it's partially related, but it looks like you've been able to constrain costs. Is there anything to that, or is that just a function of timing?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

No, that's really, we're managing our expenses, and we're trying to be as efficient as possible.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Makes sense. I understand that you can't say much on this prospective lease, but congratulations on getting close to something, and we're looking forward to hearing what it is, but I remember correctly that.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Matt, depending on what you believe, touch wood or. Go light a candle in a church, or I don't know, but I think that if we all pull together, we will be able to finalize a transaction.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Fair enough. We're hoping for you. And then just. If I remember correctly, it was a bit of a Frankenstein of an asset. Are they going to take it as is, or is there kind of a redevelopment component to the potential lease, or how should we think?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

It's almost an as is. It's a basic base building. I can't say this is an industrial building, and the use that would be planned for it is a quasi-industrial tenant. So it's not a pure industrial type of occupancy. So there are improvements that they are going to have to invest in in order to, I don't want to use the word transform, but let's use the word transform the building into the use that they want to give to it. But as Stephanie Léonard mentioned, it's a AAA tenant. The rates that we received from the departing or the tenant in bankruptcy was less than $8, and we're talking about more than $10-$12 that we basically gave guidance on the last calls.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. So we'll wait for that one, but that would be great and then.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Absolutely. Please do.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Yeah. Maybe just lastly on the Kraft, and I appreciate that commentary. It sounds like one-day difference impacted your occupancy, but all things else, it would have been the same. But can you give a sense as to where the rent would have been relative to the expiry there?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

The tenant was paying us, I believe, CAD 7.75, and Kraft is.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

We're in double digits. I don't have it in front of me. Do I have it in front of me?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

We're going to get you the number. So it went from 775 or $8 to. It's a good jump. I think it's 4 bucks.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

Yeah. We're on market rents for sure with Kraft, Matt.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. Fair enough.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

But we'll email you the details. We're at 13, sorry, Charles just pulled it up here. We're at 1350 with Kraft. Net.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. No, appreciate that. And sorry, last one just came to my mind. On straight-line rent, it was up by a couple hundred thousand this quarter. Is that reflective of kind of some of the gap between in-place and committed occupancy, or how should anything one-time in nature in there that we should think about, or should we use that as a run rate, I guess, for 2026?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Straight-line rent. For the straight-line rent. It was largely out. Basically, the CAD 1.2 million that we recorded in Q1 is kind of creating a full - how could I say it? - an abnormal increase in straight-line. So you should bring it back to what we have right now in Q3, which is more our normalized run rate for straight-line amortization.

[Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial]

Okay. Fair enough. We will do that. And again, appreciate the color, and I'll turn it back to the others.

[Operator]

Thank you. This is the conference operator again. If analysts would like to ask questions, please press star and number one on your telephone keypad. Next, we will hear from Tal Woolley at CIBC Capital Markets. Please go ahead.

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

Hey, good morning, everybody.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

How are you?

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

Just again on the industrial side. So if you are able to close this lease, I'm just trying to, because if I remember correctly, Big Rig has already been released. This would sort of take care of the last of the sort of large vacancies that you've had to deal with over the last 18 months, right? If this Laval lease gets signed?

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

Yes.

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

Okay. Perfect. And then I guess the other place I just wanted to chat a little bit about was on the office side. It's obviously been pretty topical in the public markets over the last couple months. And you've seen sort of a steady performance. I'm just wondering if you can talk a little bit to lease demand right now in the office space in your portfolio?

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

So for our portfolio right now, what we're noticing is that with companies - and I know we kind of sound like broken records at this point - but with companies giving their back-to-work mandates, we're seeing a sustained interest within our portfolio. I think the strategic positioning of our suburban office assets creates - we have these different nodes that we could go fill for different companies that don't necessarily want to go to the downtown core, let's say want to be downtown Montreal. And for right now, one of the biggest pockets of interest is Quebec City. We're seeing a lot of leasing velocity right now within our office portfolio there. Laval is another segment that really works well for us as well.

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

So I think within the next couple - I think probably towards Q1 next year - we're going to see more demand within the office segment as companies start to unveil what their new plans are. I know there are some companies that still need to give their guidelines to their employees about the work-from-home versus work-from-office mandate. But as we're seeing right now, the pendulum is shifting back to pre-COVID times in terms of workforce presence at the office. So it should be positive for our portfolio. We see it right now, and I think the momentum should sustain into Q1 2026.

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

And in terms of just leasing rent or, sorry, your asking rents and incentive packages, has there been much change there at all over the last year or so?

[Stephanie Léonard, Senior Director of Leasing at BTB Real Estate Investment Trust]

No, not much change. I think the biggest change or comment I could give it really depends on the client, and it depends on the industry they're operating in, and it depends what the new mandate is, right, in terms of coming back to the office. We're seeing it with the federal government right now that they have a brand new plan that they're unveiling within their portfolios of their office space. So the federal government is investing more within their spaces right now. So I think there might be a little bit more investment, which is not a bad thing for our assets, not a bad thing for the workforce either. But right now, it's still pretty. It's standard for the past year, still the same rates and incentives.

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

Have you heard anything just from you bring up the governments, obviously, the budgets will be coming out this week but there is some question, I think, around what kind of spending cuts there might be. Are you getting any sense that or that the usage rate for the governments, whether it's federal, provincial, are going to come under some pressure as we sort of go through this?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

I think it's a little bit early to call because they haven't identified anything, any specific direction. What we hear from the market is that they're vacating downtown Ottawa and favoring suburban Ottawa. So that's the only direction that we've heard from the market, and as far as from the horse's mouth, absolutely nothing.

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

Perfect. Okay. And then I guess just lastly, too, on rates. They have been reasonably volatile over the last little bit. I'm just wondering if you can talk about where you're finding borrowing costs for the various asset classes you're involved in. So office, industrial, retail. Any material difference in the borrowing rates you're seeing?

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Not out of the usual. I mean, right now, year to date, we refinanced six properties for about CAD 55 million. And in terms of spread, it was flat. Until year-end, we have another six properties for, again, almost close to CAD 50 million. And we're estimating a spread of plus 40 basis points.

[Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets]

Okay. Perfect. All right. Thanks very much, gentlemen.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Thank you.

[Operator]

At this time, there are no further questions. Please go ahead, Mr. Léonard.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

Thank you very much for your attendance this morning. We didn't talk about it, but in the previous calls, we talked about the office assets that are on the market. So we have a building in Saint-Hilaire that we expect to close before the end of the year. And there are three other office buildings that are on the market. We do have traction, but it's slow coming as far as the offers are concerned. I'd like to point out our leasing efforts that are extremely strong. We almost turned so far this year 10% of the total portfolio of 6 million sq ft in renewals or new leases. And I'd like to also point out that we were absolutely quick to release the vacant spaces caused by non-renewals of certain tenants.

[Michel Léonard, CEO at BTB Real Estate Investment Trust]

This quarter, 14.5% increase in the average rent renewal rate, which is stellar, with the same property NOI at plus 4.2%. We're financially strong, and when we're showing our AFFO payout ratio at 74.3%, I think that we're at the right spot, and we had always targeted to be below 80%. So thank you very much for joining us this morning. It was a very good quarter for BTB, and we'll see you when we're going to publish our results for Q4 2025. Thank you again for attending this morning.

[Operator]

Thank you, sir. Ladies and gentlemen, this does indeed conclude today's conference call. Once again, thank you for attending, and you may now disconnect your lines. Have a good day.

Participants

Executives

• Marc-André Lefebvre, VP and CFO
• Michel Léonard, CEO
• Stephanie Léonard, Senior Director of Leasing

Analysts

• Matt Kornack, Real Estate Equity Research Analyst at National Bank Financial
• Tal Woolley, Experienced Sell-side Equity Research Analyst at CIBC Capital Markets