BTB Real Estate Investment Trust Q1 2026 Earnings Report

BTB Real Estate Investment Trust EPS Results

• Actual EPS: C$0.09
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

BTB Real Estate Investment Trust Revenue Results

• Actual Revenue: $31.96 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BTB Real Estate Investment Trust Announcement Details

• Quarter: Q1 2026
• Date: 5/12/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 13, 2026
• 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 Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: BTB continued to reposition its portfolio toward industrial, acquiring three industrial properties in Leduc and later buying the remaining 50% of 7 and 9 Montclair Boulevard, which management said should add about CAD 2.1 million in annualized NOI on a net basis.
• Neutral Sentiment: Portfolio occupancy remained relatively strong at 91.8% committed occupancy, with Q1 leasing activity totaling 206,000 sq. ft. and a solid 93.5% renewal rate.
• Positive Sentiment: Renewals achieved an average 7.2% rental spread across the portfolio, led by industrial at 7.6%, while notable renewals included Hooke Touchette in Saskatoon and Desjardins in Quebec City.
• Negative Sentiment: First-quarter financials softened, with rental revenues down 7.1% year over year and NOI and cash NOI down about 10%, reflecting tenant departures, free rent, and a rent reduction for Lion Electric.
• Neutral Sentiment: FFO adjusted per unit fell to CAD 0.099 and AFFO adjusted per unit to CAD 0.086, while the distribution stayed at CAD 0.075 per unit; the AFFO payout ratio rose to 87.2%. Management also said the proposed ATM equity program would be used opportunistically, not because of an immediate funding need.

Presentation

[Operator]

Good morning. My name is Julie, 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 2026 first quarter conference call, for which management will discuss the quarter ended March 31st, 2026. 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.btbreit.com/investor/presentations/quarterly-meeting-presentation. After the speaker's remarks, there will be a question and answer period reserved exclusively for analysts. If you'd like to ask a question during this time, please press star followed by one on your telephone keypad. 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.

[Operator]

Such statements involve numerous factors and assumptions and are subject to inherent risks 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 actual results to differ materially from the expectations expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors that could influence actual results are described in BTB Real Estate Investment Trust Management Discussion and Analysis and in its annual information form, which were filed on SEDAR+ and on BTB's website at www.btbreit.com/investors/reports. I would now like to remind everyone that this conference call is being recorded. Thank you.

[Operator]

I would now like to turn the conference over to Mr. Michel Léonard, President and Chief Executive Officer, accompanied today by Mr. Marc-André Lefebvre, Vice President and Chief Financial Officer, Mr. Charles Dorais Bédard, Vice President of Finance, and Miss Stéphanie Léonard, Principal Director of Leasing. Mr. Léonard, you may begin your conference.

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

Thank you, Julie. Good morning, everybody. We're pleased to present our Q1 results for the year 2026. Our portfolio stands at 6 million sq ft with 74 properties with a total asset value of CAD 1.3 billion. We're continuing on our investment activity, selling certain properties, mostly office properties, in order to redeploy the capital into industrial properties. During the first quarter, we did acquire three industrial properties located in Leduc, a suburb of Edmonton in Alberta, basically 143,000 sq ft. And this three properties are going to generate. We forecast that they will generate CAD 2.5 million of NOI on an annualized basis. We do continue our densification activities are on different properties.

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

We did dispose, as I mentioned, of a property, located in Quebec City for CAD 11.7 million. The purchaser was one of the tenants of the property. On an annualized basis, this property was to generate CAD 928,000 of NOI. Subsequent events regarding our activity, we did purchase a 50% interest that we did not own, so now we own a 100% interest in the property located at seven and nine Montclair Boulevard. Obviously, we purchased the 50% from our partner for CAD 7 million, and this property is scheduled to generate an additional CAD 500,000 of annualized net operating income.

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

The positive effect of the dispositions and acquisitions that we did conclude is CAD 2.1 million on an annualized basis, roughly CAD 1.6 million for the year. We saw our real estate portfolio regarding the suburban office segment reduced since 2021 from 51% to now 41%. We saw in our industrial weight increase from 22%-38% and a necessity base going down from 27%-21%. Regarding our geographic diversification, a little bit of increase on the weight in Edmonton as a result of the recent acquisitions. As I mentioned, the fair value of our investment in properties is CAD 1.2 million, and the difference between CAD 1.2 million and CAD 1.3 million are other assets of the REIT.

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

Our occupancy rate stands at almost 92%, we did conclude renewals and new leases for 206,000 sq ft in Q1. Regarding our leasing activity, I'll ask Stéphanie to brief you on the activity.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

Good morning, everyone. Just as a reminder for those of you following online, we're currently on page 8 of our presentation. Our total leasing activity, which is the combination of new leases and lease renewals, totals, as Michel mentioned, 206,000 sq ft for the quarter, of which 40,000 sq ft are attributed to new leases and 166,000 sq ft to lease renewals. Our most noteworthy transaction for the quarter was concluded with the Hub Sports Centre in Edmonton, Alberta in our industrial segment representing roughly 33,000 sq ft. During our last conference call, I noted that three vacancies were the principal reasons for our decrease in occupancy rate. With this transaction, we have successfully filled onr of the targeted vacancies in our portfolio.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

To remind you, this was a space which we had elected to terminate the lease of the tenant that was previously occupying due to the recurring default under their lease. In terms of our lease renewals, our total activity for the quarter amounted to 165,000 sq ft, representing a 93.5% lease renewal rate for the quarter. Out of our noteworthy transactions, we renewed important leases with Groupe Touchette in our industrial segment, located in Saskatoon for about 101,000 sq ft. With Desjardins in our suburban office segment, located in Quebec City for 22,000 sq ft. I'd just like to note that Desjardins renewed their entire space with us and did not downsize their Quebec City footprint with us.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

Finally, with the LCBO for roughly 7,000 sq ft in our suburban office segment located in Ottawa. In terms of our rental spreads, for the quarter, we achieved a 7.2% average increase in our lease renewal rate across all segments, and most specifically, a 7.6% increase in our industrial segment, 5.3% in our suburban office segment, and 10.9% in our retail-based segment. Our committed occupancy rates at the end of the quarter stood at 91.8%, which was a 70 basis point decrease since Q1 2025, the comparable quarter. I would like to note that it is a 50 basis point increase since the end of the fourth quarter last year. This was a rather quick quarter, short and sweet.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

On this note, I'll turn it over to Marc-André for our financial review.

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

Thank you, Stephanie. Good morning, everyone. For the first quarter, rental revenues stood at CAD 32 million. That's a decrease of 7.1% compared to the same quarter last year. The decrease is partially caused by a partial lease cancellation payment from a tenant, which positively affected the NOI by CAD 1 million in the first quarter of last year in 2025. Excluding that payment, the decrease would have been 4.3% compared to the same quarter last year. In terms of NOI and cash NOI, they both decreased by 10.3% and 10.2%, respectively. Again, compared to the same quarter last year.

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

The decrease was mainly driven by a CAD 1.3 million impact from planned tenant departures that have not yet been replaced, free rent granted to new tenants, and the rent reduction provided to Lion Electric. Dispositions completed throughout 2025 also had a net negative impact of CAD 200,000. This was partially offset by acquisitions completed at the end of the quarter, which will contribute more meaningfully to future quarters. Excluding the said lease cancellation payment previously described, the decrease would have been 5.5% for both NOI and cash NOI compared to the same quarter last year. Looking now at organic growth, cash same-property NOI decreased by 9.2% for the quarter compared to the same period last year. The quarterly decrease is driven by both industrial and office segments.

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

First, the industrial segment was impacted by a planned departure at the end of Q3 2025 of a tenant occupying over 24,000 sq ft in Edmonton, and that tenant has not been yet replaced. The impact of the new lease negotiated with a group of investors who purchased Lion Electric. Second, the decrease in the office segment is due to the previously mentioned lease cancellation payment and the planned departures of tenants in Ottawa at the end of the third quarter of 2025, not yet fully replaced. Excluding the lease cancellation payment, cash S-PNOI would have decreased by 4.4% compared to the same quarter last year. FFO adjusted per uni t was CAD 0.099 for the quarter, a decrease of CAD 0.012 compared to the same quarter last year.

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

This reduction was mainly driven by the previously explained decrease in NOI. Looking at AFFO. AFFO adjusted per unit was CAD 0.086 for the quarter, a decrease of CAD 0.017 compared to the same quarter last year. The decrease is explained by the previously outlined decrease in cash NOI of CAD 2.1 million and is partially offset by a decrease in administration expenses of CAD 300,000. Excluding the lease cancellation payment, previously described, FFO and AFFO adjusted per unit would have decreased by CAD 0.001 or 1%, and CAD 0.006 or 6.5% respectively. Compared to the same quarter last year.

[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 annualized distribution of CAD 0.30 per unit. The AFFO adjusted payout ratio was 87.2% for the quarter, an increase of 14.5% from the same quarter last year. That was driven by the decrease in AFFO. The value of our investment properties and the weighted average cap rate for the entire portfolio remains stable at CAD 1.2 billion and 6.7% respectively. That's compared to year-end 2025.

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

Previously mentioned by Michel, overall, the two acquisitions and the disposition that we completed will have a net contribution of CAD 2.1 million to NOI on an annualized basis. We concluded the quarter with a total debt ratio of 58%. The weighted average term and average interest rate on our mortgage portfolio were 2.2 years and 4.41% respectively. Finally, at the end of the quarter, we have CAD 1.4 million in cash and CAD 22.3 million was available under our credit facilities for total liquidity of CAD 23.7 million. This completes our presentation, and we will now open a call to questions.

[Operator]

Thank you. This is the conference operator. At this time, I would like to remind everyone that the analyst may now ask their question by pressing star followed by the number one on your telephone keypad. Again, if you'd like to ask a question, please press star one. One moment please, while we compile the Q and A roster. Your first question comes from Matt Kornack from National Bank Financial, please go ahead.

[Matt Kornack, Analyst at National Bank Financial]

Hi, guys. Good morning. Just quickly on the retention rate. It was significantly better and pretty high this quarter. Is that a reflection of a change in the nature of the demand? Is it just the nature of the tenancies that were maturing, or is it a nature of your approach to kind of renewals at this point?

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

I think it's the, Matt it's a combination of all factors that you mentioned. I think sometimes the renewal rate isn't always indicative of not necessarily what's going on in our portfolio. Sometimes we do terminate leases to then upswing tenancies within the portfolio. We have to keep that in mind. Of course, as well, within this quarter, we have Groupe Touchette for 101,000 sq ft that counted for a big portion. We always do, I think, we always try to retain our clients when we can, but in previous quarters, what we have done is we have terminated leases to make sure we could get better on NOI within our properties as well.

[Matt Kornack, Analyst at National Bank Financial]

Yeah. Makes sense. On the free rent front, can you give me a sense as to kind of how big that is and how it rolls off over the course of 2026? Are you giving free rent on new leases at this point? I'm just trying to figure out how our NOI will swing accordingly, as those arrangements fall off or come on?

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

Hey, Matt. I'll give you the number for Q1, and I'll let Stéphanie comment for the rest of the year. For Q1, free rent was CAD 800,000. That was granted to tenants.

[Matt Kornack, Analyst at National Bank Financial]

Yeah.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

I think to answer the other part of your question, I think it really does depend on the type of tenancy. We are seeing some free rent in terms of pre-occupancy periods, which we usually recuperate on the term. That's what we usually try to do. If we're gonna give free rent, we're trying to extend the term a further three months to be able to recoup that on the back end. I mean, it really does depend. I can't say that there will be no free rent that will be given because It's a market, it's a market incentive. However, we aren't, as of today, we aren't seeing any free rent incentives in terms of what we were doing maybe two to three years ago, that we're giving 18 months of free rent.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

That ship has sailed so far. I would stick it basically with just regular pre-occupancy and recouping that at the end of the term.

[Matt Kornack, Analyst at National Bank Financial]

Okay. If I think about, just how that cadence occurs, does that CAD 800,000 get smaller over the next few quarters, or should we expect that it kind of remains stable, per quarter?

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

I would expect that it remains stable just to keep it at those levels since I can't necessarily forecast that it would go down or go up. I would keep it stable right now.

[Matt Kornack, Analyst at National Bank Financial]

Okay. Then it was a lovely January and February in Central and Eastern Canada. Was there any impact on margins or recoveries, just given the amount of snow that we had in that period that would maybe have hit this quarter from an NOI standpoint on the I know some of your most of your leases are recoverable now, there's maybe some gross leases left as well?

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

No, it's, I call it, business as usual. You know, we still heated the properties and so on, and the demand was still there. I understand what you mean. Yes, we do recuperate almost all of those expenses.

[Matt Kornack, Analyst at National Bank Financial]

Okay. G&A looked quite low. Again, I don't know if that's should we use this as a proxy for a new run rate, or was there anything one time in the quarter in terms of timing on expenses there?

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

Yeah, there is a difference of CAD 300,000 with last year. However, I would use a run rate of maybe per quarter, a saving of CAD 100,000 for the year. All in all, total CAD 400,000 of savings versus last year in terms of G&A.

[Matt Kornack, Analyst at National Bank Financial]

Thanks. Last one for me. Just on the occupancy trend going forward, in some of those spaces that you're looking to lease, can you give us a sense how you see this year unfolding in terms of interest on vacant space and any potential non-renewals in the portfolio that you'd foresee?

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

I think right now the market is at a really good spot in terms of the positioning of our properties. We're seeing interest within our vacancies. I'm gonna say the biggest issue right now, I think, is just lead time in terms of negotiation. I know I've said this in the past, but some negotiations are extremely tedious. Like, we have a vacancy under negotiation. I think it's been I mean, almost a year now that we've been negotiating. It really depends. Again, the bigger the clients we negotiate with, the more complex it is and the more lead time it takes. I know during the last quarter, Yeah, during Q4, we did mention we had a vacancy coming up in Ottawa at our Walkley property.

[Stéphanie Léonard, Principal Director of Leasing at BTB Real Estate Investment Trust]

I think everyone has heard the news that the Federal Government is mobilizing, not necessarily quickly, but they're mobilizing. They need more space. They've let go a lot of their spaces, and now with their Work From Back to Work Mandate, they don't have enough seats for all of their employees. What we're trying to do for that specific property is capitalize on the Federal Government demand, and we are trying to put forward a proposals to them so we could stimulate interest before they start looking at the market more.

[Matt Kornack, Analyst at National Bank Financial]

Perfect. That makes sense, and I appreciate the update all.

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

[Clear.]

[Operator]

This is the conference operator again. If analyst would like to ask a question, please press star and the number one. Your next question comes from Tal Woolley from CIBC. Please go ahead.

[Tal Woolley, Analyst at CIBC Capital Markets]

Hey, good morning, everybody. You know, the asset classes, you know, continue to evolve, and it's great to see, you know, you're continuing to increase your penetration in the portfolio of industrial properties with the acquisitions in Alberta. I'm just wondering, though, when you sort of, like, sit back and look at the business, you know, we're seeing other asset classes like retail get a little bit more respect than they've gotten in the past. Have you thought at all about shifting from that 60% target for industrial or, Yeah, I'm just wondering if the last couple of years have made you sort of rethink what your long-term allocation should be to each asset class?

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

That's a very good question. I think that overall, what we've always stated is the fact that, we, you know, we're still opportunistic in looking at the market. If we were able to acquire a retail property accretively, we would still acquire that retail property as long as it is accretive. We've seen a lot of interest in groups soliciting us to sell our retail. We know that there's a lot of interest, and we know that overall it is a category that is really where we have a lot of interested parties within that category. I think that the key word is opportunistic. We, you know, we're holding very decent properties as far as retail and very desirable properties.

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

Just think about the, you know, the development that we did last year, where we delivered a property to Winners/HomeSense, and we're continuing our activity in that center in order to, you know, cancel certain leases at expiration or not renew certain leases from, let's call it, mom-and-pop operators in order to replace these tenancy by national tenants within this center. That's part of our strategy in order to obviously enhance value and also increase rents. As a result, you know, we're looking very, you know, positively in the retail segment. That's not to deter from our goal of being holding 60% of our portfolio in the industrial segment. That means, intrinsically, is the fact that we're reducing office to favor industrial and then remaining very opportunistic on the retail front.

[Tal Woolley, Analyst at CIBC Capital Markets]

In terms of what's on the market for industrial right now, do you think, you know, that growth is still sort of gonna be on, you know, small portfolios, going forward or, you know, individual properties? Or are you seeing any sort of industrial portfolios out there being marketed that, you know, that would be within your financial capabilities?

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

When you say financial capability, you talk about the accretion, I presume.

[Tal Woolley, Analyst at CIBC Capital Markets]

Just more size, I guess, is maybe what I'm thinking about.

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

Yeah. Okay. Well, on a pure size basis, you know, there's a property on the market in Montreal right now. It's 1.6 million sq ft. I think it may be a little bit too big for us. Overall, you know, we, you know, whether it's 300,000 sq ft, we would jump on it as long as it's accretive. In the acquisition of properties, that would be 40,000, 50,000, 100,000 sq ft, it's not something that is out of the realm for us, and it is definitely part of our process, you know. When, you know, a few years ago, we were smaller, we were buying smaller properties. Now we're larger, so we're buying larger properties.

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

Obviously, when you're looking at larger properties, the tenancy becomes more and more important within the evaluation of the acquisition.

[Tal Woolley, Analyst at CIBC Capital Markets]

Okay. I guess my third question sort of relates to the last one. It's just, you know, you in the press release, noted that, you know, you're interested in starting an at-the-market equity program. Do you have any immediate needs for using that, or is this more of a, you know, not precautionary, it's not the right word, but, you know, like you're trying to be prepared for potentially something in the near future that would require equity funding?

[Charles Dorais Bédard, VP of Finance at BTB Real Estate Investment Trust]

It's more the latter. We'll use the ATM on an opportunistic basis when we feel that the issue price is at the right level.

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

To confirm, we're putting it in place, but we don't need it in order to generate capital for BTB. It is a tool that would be part of our tool chest in order or toolbox in order to, you know, if we have a small acquisition that would require us to raise capital, you know, rapidly, we would use it. This is not to replace bought deals that we've been constantly using over the last few years. It is just part of the tools that we can use, and it's not to raise capital because we would be in a position where we need capital in order to sustain our daily needs.

[Tal Woolley, Analyst at CIBC Capital Markets]

Okay, that's great. Thank you very much, everyone.

[Charles Dorais Bédard, VP of Finance at BTB Real Estate Investment Trust]

Thanks.

[Operator]

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

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

Thank you very much for joining us today. The first quarter, as you saw, a little bit boring except for an acquisition, a disposition, and after the quarter, the acquisition of a 50% interest that will positively generate additional NOI for BTB. Last year, we did dispose, did not acquire. We have properties on the market right now that we're trying to dispose in order to generate the capital to redeploy in industrial and, as I mentioned, perhaps opportunistically into the retail segment. Overall, we like to transact, we like to reposition the portfolio in order to get to our goal of being at 60% weight into the industrial segment.

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

With this, thank you very much, for your presence today, and looking forward to seeing you or listening to you again for our Q2 results. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Participants

Executives

• Charles Dorais Bédard, VP of Finance
• Marc-André Lefebvre, VP and CFO
• Michel Léonard, President and CEO
• Stéphanie Léonard, Principal Director of Leasing

Analysts

• Matt Kornack, Analyst at National Bank Financial
• Tal Woolley, Analyst at CIBC Capital Markets