CT Real Estate Investment Trust Q3 2025 Earnings Report

CT Real Estate Investment Trust EPS Results

• Actual EPS: C$0.41
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

CT Real Estate Investment Trust Revenue Results

• Actual Revenue: $151.16 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

CT 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

CT Real Estate Investment Trust (TSE:CRT.UN) is an unincorporated real estate investment trust that invests in retail properties across Canada. The most significant portion of properties are located in Ontario, followed by Quebec and Western Canada. The trust generates the vast majority of revenue from leasing its properties to Canadian Tire Corporation, which operates the Canadian Tire retail stores. The trust's portfolio primarily consists of properties anchored by a Canadian Tire retail store, in addition to retail properties not anchored by Canadian Tire, distribution centres, and mixed-use commercial property.

CT Real Estate Investment Trust Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q3 operating performance was strong with NOI up 5.5%, diluted FFO per unit up 2.1%, AFFO per unit up 2.9%, portfolio occupancy at 99.4%, and an improved AFFO payout ratio of 74.8%.
• Positive Sentiment: CT REIT completed strategic moves this quarter—Calgary acquisition and Winkler redevelopment—started the Canada Square retrofit, bought out a Fort Saskatchewan freehold, and announced two new investments totaling CAD 19M at a going-in yield of 6.45% (~50k sq ft added).
• Positive Sentiment: The development pipeline remains meaningful with ~1 million sq ft expected by 2028, ~CAD 427 million of committed investment (CAD 113M spent, CAD 148M expected in the next 12 months) and roughly 90% pre-leased.
• Positive Sentiment: Financial flexibility is intact—indebtedness ratio improved to 39.8%, and liquidity includes CAD 5M cash on hand plus CAD 298M available under the committed credit facility and an additional CAD 186M uncommitted facility with Canadian Tire.
• Negative Sentiment: Interest coverage declined to 3.37x (from 3.52x) due to higher interest costs after rate resets, increased credit facility use for acquisitions/developments, and the issuance of CAD 200M Series J debentures.

Presentation

[Operator]

Thank you for standing by. My name is Lauren Cannon, and I will be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q3 2025 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question-and-answer period. If you would like to ask a question during that time, simply press star one one on your telephone keypad. To withdraw your question, please press star one one. The speakers on the call today are Kevin Salsberg, President and Chief Executive Officer of CT REIT; Jodi Shpigel, Senior Vice President, Real Estate; and Lesley Gibson, Chief Financial Officer. Today's discussion contains information that may constitute forward-looking information within the meaning of applicable securities laws.

[Operator]

Although the REIT believes that the forward-looking information in today's discussion is based on information, estimates, and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information. For information on these material risks, uncertainties, factors, and assumptions, please see the REIT's Q3 2025 and annual 2024 MD&A, as well as the 2024 AIF, which are available on our website and filed on SEDAR. The REIT does not undertake to update any forward-looking information, whether written or oral, except as is required by applicable laws. I will now turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin.

[Kevin Salsberg, President and CEO at CT REIT]

Thank you, Lorne. Good morning, everyone, and thank you for joining us today on CT REIT's quarterly investor conference call. I am happy to report that Q3 2025 was another strong quarter for CT REIT, as we delivered growth in net operating income of 5.5%. Growth in AFFO per unit of 2.9%, and continued to maintain our portfolio occupancy above 99%. CT REIT's stable portfolio and reliable growth have, for more than a decade now, provided our investors with an opportunity to participate in a real estate strategy that leverages our privileged relationship with Canadian Tire in order to deliver value for all of our unit holders.

[Kevin Salsberg, President and CEO at CT REIT]

In the quarter, we acquired a strong-performing Canadian Tire-anchored shopping center in Calgary from a third party, completed the redevelopment of an enclosed mall that we own in Winkler, Manitoba, and began construction on the Canadian Tire head office retrofit at Canada Square, and subsequent to the quarter-end, we bought out the underlying freehold interest in a property that we had previously land-leased in Fort Saskatchewan, Alberta. While each of these projects is different and unique in terms of geography, asset type, and real estate intervention, they collectively tell a story about CT REIT's ability to find new ways of deploying capital and source different avenues of growth.

[Kevin Salsberg, President and CEO at CT REIT]

We continue to work closely with Canadian Tire on their development requirements and the real estate components of their True North strategy, as we continue to build our own pipeline of deals, with over 1 million sq ft of development projects currently expected to be delivered between now and the end of 2028, including the newly announced expansion of a Canadian Tire store in Collingwood at a property that we acquired from a third party several years ago. Whether from organic growth derived from our existing portfolio of properties, new CTC-related development opportunities, or strategically consolidating the ownership of third-party-owned CTC-related assets, CT REIT's growth prospects continue to look bright.

[Kevin Salsberg, President and CEO at CT REIT]

With a conservative and prudently managed balance sheet, we have the financial flexibility to lean into these opportunities so that CT REIT can continue to deliver strong, reliable, and durable results and create value for our stakeholders as we look to the road ahead. I will now turn it over to Jodi and Lesley to provide some additional details on the quarter, our results, and our leasing, investment, and development activities. Jodi.

[Jodi Shpigel, Senior VP of Real Estate at CT REIT]

Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we are pleased to announce two new investments this quarter. Our first new investment involves the acquisition of the freehold interest underlying an existing ground lease, along with an adjacent multi-tenant commercial retail building in Fort Saskatchewan, Alberta. Additionally, we are expanding the Canadian Tire store located in Collingwood, Ontario, that Kevin mentioned earlier. These new investments require a total of CAD 19 million to complete and are projected to earn a going-in yield of 6.45%. Combined, they will add approximately 50,000 sq ft of high-quality GLA to our portfolio. In the third quarter, we completed two previously announced projects: the acquisition of a Canadian Tire Anchored property in Calgary, Alberta, that we discussed last quarter, and the redevelopment of our existing enclosed mall in Winkler, Manitoba.

[Jodi Shpigel, Senior VP of Real Estate at CT REIT]

Since acquiring Southland Mall in Winkler, Manitoba, in 2016, the REIT has made substantial improvements to the property, including the expansion of the Canadian Tire store in 2018, as well as a significant demolition and renovation that has allowed us to introduce new retailers to the mall, including Winners, Anytime Fitness, Stacked Pancake House, and a relocated and expanded marks. Part of the rationale for acquiring this property originally was based on the strength of the Canadian Tire store, and the steps that we have taken since that time illustrate how the REIT has been able to create value in an asset that we decided to invest in based on the insights that we gleaned through our relationship with Canadian Tire. The Calgary acquisition and the Winkler redevelopment totaled CAD 72 million and have added over 350,000 sq ft of additional GLA to our portfolio.

[Jodi Shpigel, Senior VP of Real Estate at CT REIT]

Our development pipeline overall remains strong, with 20 projects at various stages, seven of which are expected to be completed by the end of this year, and the remainder expected to be completed in 2026 and beyond. These developments, including Canada Square office retrofit project, represent a total committed investment of approximately CAD 427 million upon finalization, CAD 113 million of which has already been spent, and CAD 148 million of which we anticipate will be spent in the next 12 months. Once built, these projects will add a total incremental GLA of just over 1 million sq ft to the portfolio, approximately 90% of which has been leased.

[Jodi Shpigel, Senior VP of Real Estate at CT REIT]

With respect to our leasing activities, during the third quarter, CT REIT completed four Canadian Tire store lease extensions, and as of the end of Q3, the weighted average lease term for our portfolio was 7.3 years, which remains one of the longest in the sector. At the end of the quarter, CT REIT's occupancy rate remained strong at 99.4%. I will now turn it over to Lesley to discuss our financial results. Lesley.

[Lesley Gibson, CFO at CT REIT]

Thanks, Jodi, and good morning, everyone. We were pleased with the results delivered by the REIT again this quarter. This quarter, same store NOI increased 2.0%, or CAD 2.3 million, mainly driven by contractual rent escalations averaging 1.5% per year, as contained in the Canadian Tire leases. Same property NOI saw a rise of 2.6%, or CAD 3 million, compared to the previous year. This increase was largely due to the same store NOI growth mentioned earlier, along with approximately CAD 700,000 of additional contribution from intensifications completed in 2024 and 2025. Overall, in the third quarter, NOI experienced robust growth of 5.5%, or CAD 6.2 million. This was fueled by the CAD 3.2 million contribution from the four acquisitions completed in 2024 and 2025, as well as the development completions over that time.

[Lesley Gibson, CFO at CT REIT]

In the third quarter, excluding fair value adjustments, G&A expense as a percentage of property revenue was 2.5%, which was higher than the same period in the prior year of 2.2%. This increase was due to the timing of a deferred income tax provision in 2024 that reversed by the end of the year. On a year-to-date basis, G&A expenses as a percentage of revenue are running at a consistent 2.9%. The fair value adjustment of CAD 36.7 million in the quarter was primarily driven by contractual rent increases, leasing renewals, and changes to certain valuation metrics and assumptions, as well as the development completions within the property portfolio. In the quarter, diluted FFO per unit was up 2.1% to CAD 0.338, compared to CAD 0.331 in the third quarter of 2024. AFFO per unit on a diluted basis was CAD 0.317, up 2.9% compared to Q3 of 2024.

[Lesley Gibson, CFO at CT REIT]

Cash distributions paid in the quarter increased 2.5% compared to the same period in the previous year due to the increase in distributions, which became effective with the monthly distributions paid in July 2025. With the increase in AFFO per unit outpacing the rate of the monthly distributions, the AFFO payout ratio for Q3 was 74.8%, a slight improvement from 75.0% in the period last year. Turning to the balance sheet, our interest coverage ratio for the current quarter was 3.37x, compared to 3.52x in the same quarter of 2024.

[Lesley Gibson, CFO at CT REIT]

This decrease is due to a combination of increased interest costs resulting from the resetting of the interest rate on the Series 3 and 16 to 19 Class CLP units effective June 1st, 2025, higher utilization of the credit facilities to fund acquisitions, intensifications, and developments in 2024 and 2025, as well as the issuance of the CAD 200 million Series J unsecured debentures in June of this year. The indebtedness to EBIT fair value ratio was 6.61x during the quarter, improved from last year's ratio of 6.81x. Our indebtedness ratio this quarter was 39.8%, down from 40.7% at the end of last year. This improvement is mainly attributable to the continued increases in the fair value of investment properties and higher total assets from acquisitions and developments, partially offset by the increased use of the credit facilities.

[Lesley Gibson, CFO at CT REIT]

The ratio has consistently trended low over recent years, giving us ample financial flexibility for future growth. Lastly, with respect to liquidity, we ended Q3 with CAD 5 million of cash on hand. CAD 298 million of that remains available through our committed credit facility, and a further CAD 186 million is also available on our uncommitted facility with the Canadian Tire Corporation. And with that, I will turn the call back to the operator for any questions.

[Operator]

At this time, I would like to remind everyone, in order to ask a question, please press star 11, then the number on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Lorne Kalmar with Desjardins. Your line is now open.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Thanks. Good morning, everyone. Just on the Canada Square retrofit, I was wondering. What is the progress on tendering costs? I mean, obviously, you guys have started work there. Have you guys seen any reprieve on the cost side with sort of the slowdown in development activity more broadly?

[Jodi Shpigel, Senior VP of Real Estate at CT REIT]

Good morning, Lorne. It's Jodi. Thanks for the question. So the retrofit just started this quarter effectively. So it really starts to pick up the pace in 2026 and beyond. So it's in the initial stages so far. Oxford, of course, is managing this on behalf of the co-owners. They are in the process of tendering and securing the various contracts and trades. They have their CM in place. I don't think there's been any noticeable difference in terms of tendering versus budget at this stage. However, I would say it's early on in the retrofit, so that could be a case as we move forward.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Okay. Lovely. And then. Just on the intensification development side, obviously, Canadian Tire is the large chunk of that. But one thing we've been hearing is there's a lot of opportunity out there to intensify for other retailers. I was just wondering if you guys are seeing any demand and if that's something you look to focus the pipeline a little bit more on as dynamics call for it.

[Kevin Salsberg, President and CEO at CT REIT]

Hi, Lorne, it's Kevin. We definitely have inbound interest from retailers. We don't have a lot of large pad opportunities that can accommodate the users who are expressing interest, grocery, pharmacy, liquor. Most of our pad opportunities are smaller, and we've actually effected quite a few of them to date. But that doesn't mean we're not out selectively looking for alternative sites or opportunities to work with the retailers who are looking to expand. Our Lloydminster redevelopment is a good example of where we can take advantage of opportunities like that. So yeah, we're trying to find the balance between the demand side, finding opportunities that we can make financial sense of, and obviously where it complements existing assets.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Okay. Thank you so much. I'll turn it back.

[Kevin Salsberg, President and CEO at CT REIT]

Thanks.

[Operator]

Thank you. Our next question comes from the line of Sam Damiani with TD Securities. Your line is now open.

[Sam Damiani, Equity Research Analyst at TD Securities]

Thank you. Good morning, everyone. Maybe just to get into the leasing side of the business, maybe Jodi could just comment on leasing spreads in the quarter, both to Canadian Tire and third-party tenants.

[Jodi Shpigel, Senior VP of Real Estate at CT REIT]

Good morning, Sam. It's Jodi. So on third-party renewals, typically our volumes are on the lower side just because of the high occupancy rate and the bulk of our activity is with Canadian Tire. So it is at the lower end. I'd say the spreads, though, are consistent with what we see in every other quarter, so we're pleased with that. In terms of the related party, we had quite a number this quarter, as noted. Obviously, we don't comment on the specifics, but the escalations that we achieve have been continuing on these ones.

[Kevin Salsberg, President and CEO at CT REIT]

And Sam, as we've talked about before, as we look at the escalations, we are looking at market-specific dynamics. Whereas on average, certainly 1.5% is the number for the entire portfolio, there are selective opportunities within each set of renewals to address that and possibly get that number a little higher. And we also continue to have discussions with Canadian Tire about as we, I guess, enter into some of the meatier years in terms of the number of renewals that we'll be dealing with. What the best collective situation is for both the REIT and for CTC in terms of continuing on with the annual rent escalations or looking at more conventional fixed five-year rent numbers. As of right now, we're still playing with the same rhyme scheme, but that could be subject to change in the future, as we've discussed before.

[Sam Damiani, Equity Research Analyst at TD Securities]

Thank you both. And Kevin, your comment on looking at other alternatives versus the annual escalations, I mean, what would be the, I guess, the benefit for the REIT in looking at a different structure?

[Kevin Salsberg, President and CEO at CT REIT]

Like you guys, we can forecast out the next five to 10 years based on our portfolio and obviously looking to if there's any spread between one versus the other. The fixed contracts, to recall, have a floor and a ceiling in terms of the renewal rate. They can't be less than the amount they were paying in the preceding term, and it's capped out at 112%. So, just based on where we forecast the market to be and where it might be going, if there is a difference financially for us, that's a benefit to look at one version versus the other. To date, there hasn't been a big difference, but that might not always be the case.

[Sam Damiani, Equity Research Analyst at TD Securities]

Got it. Appreciate that. And then just on the macro, it's a little more challenging. Do you see any retailers start to feel some pain? Do you have any known move-outs in the portfolio? Any problem tenants, bad debt expense, any of that sort of getting a little bit coming into focus these days?

[Kevin Salsberg, President and CEO at CT REIT]

That hasn't been our experience. We don't have any real bad debt that's any different than in any preceding periods. I don't think the major retailers seem to be showing any signs of weakness at this point. Certainly, with the base stores coming back to some of the major landlords out there, there could be a little bit of distraction in terms of other opportunities. There's a lot of square footage to be addressed in the market. Not all of it, obviously, reusable or appropriate to the tenants that we deal with, but I think the only indication of potentially them slowing down with respect to our discussions would be based on other alternatives in the market that they're considering.

[Sam Damiani, Equity Research Analyst at TD Securities]

Okay. Very helpful. And last one for me, just in Kelowna with the new store, I guess, ready to be open soon. And I believe the REIT owns the other store that's going to be vacated in that market? Is there plans to backfill that? What's the sort of plan there?

[Kevin Salsberg, President and CEO at CT REIT]

We're working on that right now, Sam. We do have a couple of different alternatives for the site. So we're thinking our way through options. So stay tuned.

[Sam Damiani, Equity Research Analyst at TD Securities]

All right. Good luck with that. Thank you very much.

[Kevin Salsberg, President and CEO at CT REIT]

Thank you.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone keypad. Our next question comes from the line of Michael Markidis with BMO Capital Markets. Your line is now open.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Thank you, operator. Good morning, everyone. Two quick ones for me. I guess just first on Winkler, just a modeling question here. I guess it's a redevelopment that came on stream in the third quarter. Presumably, it's now substantially complete, but presumably, there was some income tied to it before. So how should we be thinking of the increment from that delivery that came on stream going forward?

[Kevin Salsberg, President and CEO at CT REIT]

With that particular one, Mike, we had at one point the Canadian Tire store in PUD because we were expanding it, and the mall wasn't. And then the store went back in, and the mall went into PUD. I would say maybe 60% is attributable to the mall versus 40% to the CT store, if that helps. That's my best guess.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

So the total amount delivered is just with respect to what was completed, not the entire project?

[Kevin Salsberg, President and CEO at CT REIT]

That's right. The mall redevelopment component of it.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Got it. Okay. Thank you for that. And then just with respect to the CAD 148 million of capital that you guys have to spend or are committed to spend over the next 12 months. Obviously, opportunity-dependent, but given where your balance sheet is, where your cost of capital is. What's your appetite if the opportunities presented themselves to ramp that up materially further? How much capacity do you see yourselves as having?

[Kevin Salsberg, President and CEO at CT REIT]

I think we have a strong appetite to ramp it up. I don't know if I would describe that appetite as material. We see some opportunities in the market, and I think we're in a good spot. We've talked about our dry powder in past quarters, and certainly, we have the financial capability and flexibility to go hunting a little bit, but retail is still among the most sought-after asset classes. The type of assets we're looking at are well-leased with good tenants, so there's competition for that, but we try to pick our spots, and I think we got a nice pipeline on the development side. We're showing all the different ways we can affect our growth through our investment program, and I think we'd like to do a little bit more as we look to 2026, if possible.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Okay. And actually, just one more from me before I turn it back. So with respect to hunting out there for retail, is the acquisition criteria such that if it doesn't come through third parties, if it doesn't have a CT Canadian Tire store in it, that it would potentially - that would be the goal - is to have something like that? Or would you ever purchase something that would just be a third-party retail property and so be it?

[Kevin Salsberg, President and CEO at CT REIT]

We would definitely purchase third-party retail property unaffiliated with Canadian Tire. Now, there's two versions of what that could look like. Something that's a little bit more strategic, so adjacent lands, adjacent assets, something that we think long-term we can bring Canadian Tire into. So I'll say unaffiliated with Canadian Tire in its current form, but potential strategic rationale for why we'd be acquiring it. The other ones that we would look at is things like what we've done in the past with our bank branch portfolio, just third-party, single-tenant, net lease, long-term leases, good credit type assets, portfolios preferably. But it's been a long time since we've seen something like that that we're interested in, that the pricing works for us. I mean, it's gotten quite expensive in that space. Especially when you're talking about tenants like banks or certain QSR restaurants or pharmacies.

[Kevin Salsberg, President and CEO at CT REIT]

So again, we've always looked at that opportunistically. We like it. We'd like to own more of it, but we're only going to do that if it makes sense for us.

[Michael Markidis, Managing Director of Global Markets at BMO Capital Markets]

Thank you for the comment. Turn it back.

[Operator]

Thank you.

[Operator]

Our next question comes from the line of Pammi Bir with RBC Capital Markets. Your line is now open.

[Pammi Bir, Managing Director of Real Estate and REITs at RBC Capital Markets]

Thanks. Maybe just one for me. Along the lines of acquisitions, can you maybe just comment on perhaps the timing of when we may see additional vendings from CTC, if I recall? I think there's maybe 15-20 properties left in that. Left at that level. And then secondly, if you have any comments on the potential value of those remaining assets.

[Kevin Salsberg, President and CEO at CT REIT]

Hi, Pammi. Yeah, there's probably closer to 15 now. We've always looked at the vendor takings as a lever we can pull when maybe there isn't as much development or as much third-party that's ongoing to continue our steady pace of investment activity generally. So I think you'll see us continue to do a couple a year. I think the total size of the Canadian Tire's portfolio that we would be interested in buying is probably somewhere between CAD 150 million and CAD 200 million today.

[Pammi Bir, Managing Director of Real Estate and REITs at RBC Capital Markets]

Got it. That's all I had. Thanks very much, Kevin.

[Kevin Salsberg, President and CEO at CT REIT]

Thanks, Pammi.

[Operator]

Thank you. As there are no further questions at this time, I will turn the call over to Kevin Salsberg, President and CEO, for closing remarks.

[Kevin Salsberg, President and CEO at CT REIT]

Thank you, Lauren. And thank you all for joining us today. We look forward to speaking with you again in February after we release our Q4 results. Have a good day.

[Operator]

This concludes today's call. You may now disconnect.

Participants

Analysts

• Pammi Bir, Managing Director of Real Estate and REITs at RBC Capital Markets
• Jodi Shpigel, Senior VP of Real Estate at CT REIT
• Lesley Gibson, CFO at CT REIT
• Kevin Salsberg, President and CEO at CT REIT
• Michael Markidis, Managing Director of Global Markets at BMO Capital Markets
• Lorne Kalmar, VP of Equity Research at Desjardins
• Sam Damiani, Equity Research Analyst at TD Securities