Mr. Michael Leonard reports

STRONG LEASING ACTIVITY CONTINUES TO BE THE KEY ELEMENT TO BTB'S SUSTAINED OPERATING RESULTS.

BTB Real Estate Investment Trust has released its financial results for the three- and nine-month periods ended Sept. 30, 2023.

"We are pleased with the sustained leasing activity that we see across all our three business segments," said Michel Leonard, president and chief executive officer of BTB. "During the quarter, we completed 85,724 square feet of lease agreements with existing and new tenants. In addition, a few days after the end of the quarter, we entered a lease, representing 26,000 square feet, with a well-known chartered accounting firm in the province of Quebec as well as the renewal of a lease with one of our tenants in the City of Ottawa, representing 27,638 square feet. In the last city, one of our tenants has completed a 16,000-square-foot expansion of its current premises. These last three leases have been completed into three of our office buildings. These are examples of major transactions in our portfolio that demonstrate good traction. Indeed, our occupancy rate for the Montreal area now stands at 96.3 per cent, a demonstration of the positioning of our assets and the occupancy rate never seen before in this region. Our total rental activity year to date is approximately 612,000 square feet, representing around 10 per cent of the square footage in our portfolio. It is also worth highlighting the excellent performance of our retail properties, which have an occupancy rate of 98.0 per cent. Our properties are in demand and national commercial tenants have demonstrated their interest in our properties. Our shift to industrial properties also supports our results. With an occupancy rate of 99.7 per cent and with leases whose rents are mostly below market, BTB could eventually see increases in revenues related to these lease renewals. Finally, we are pro-active as we approach mortgage maturities in our portfolio. As a result, several mortgages that will mature in the first quarter of 2024 are already under negotiation and we continue to partner well with our lenders to optimize the financing for the remaining properties of next year."

Summary of significant items as at Sept. 30, 2023:

• Total number of properties: 75 (1);
• Total leasable area: 6.1 million square feet;
• Total asset value: $1,236-million;
• Market capitalization: $258-million (unit price of $2.99 as at Sept. 30, 2023).

(1) Includes a property in Edmonton reclassified as a finance lease and not included in fair value.

Operational highlights

• BTB completed a total of 60,248 square feet of lease renewals and 25,476 square feet of new leases for the quarter. The occupancy rate stood at 93.7 per cent, representing a 40-basis-points decrease compared with the prior quarter and a 20-basis-point increase compared with the same period in 2022. The increase in the average renewal rate for the quarter was 11.9 per cent.
• Shortly after the end of the quarter, due to increased leasing efforts in the Quebec City region, the trust leased 26,000 square feet to a major Quebec-based accounting firm, increasing the Quebec city region committed occupancy rate from 81.8 per cent to 83.7 per cent; the decrease compared with the same quarter last year is now 3.3 per cent instead of 5.2 per cent.

Financial highlights:

• Rental revenue increased by 4.4 per cent compared with the same quarter of 2022 and increased 9.0 per cent for the cumulative nine-month period compared with the same period in 2022.
• Net operating income (NOI) increased by 0.6 per cent compared with the same quarter of 2022 and increased by 8.3 per cent for the cumulative nine-month period compared with the same period in 2022.
• Net income and comprehensive income increased by 29.9 per cent compared with the same quarter of 2022 and decreased by 4.2 per cent for the cumulative nine-month period compared with the same period in 2022.
• Same-property NOI (1) decreased by 2 per cent compared with the same quarter of 2022 and increased by 1.2 per cent for the cumulative nine-month period compared with the same period in 2022.
• Funds from operations (FFO) adjusted per unit (1) were 10.4 cents per unit for the quarter, compared with 11.5 cents per unit for the same period in 2022, representing a decrease of 1.1 cents per unit. The decrease is attributable to a gain of $200,000 recorded in the same quarter of the previous year due to a lease termination fee revenue and a one-time insurance deductible expense of $100,000 in the current quarter, with the remaining variance of $500,000 due to an increase in net financial expenses. For the cumulative nine-month period, the FFO adjusted was 33.8 cents per unit, which represents an increase of 0.7 per cent compared with the same period in 2022.
• FFO adjusted payout ratio was 72.5 per cent for the quarter, compared with 65.2 per cent for the same period in 2022. For the cumulative nine-month period, the FFO adjusted payout ratio was 66.5 per cent, compared with 66.9 per cent for the same period in 2022.
• Adjusted funds from operations (AFFO) adjusted (1) were 8.8 cents per unit for the quarter, compared with 10.2 cents per unit for the same period in 2022, representing a decrease of 1.4 cents per unit. The decrease is attributable to the adjusted variances of FFO and a $300,000 increase of straight-line rent compared with the same period in 2022. The $800,000 increase of net financial expenses had an impact of 1.0 cent per unit on the adjusted AFFO. For the cumulative nine-month period, the AFFO adjusted was 30.1 cents per unit, representing a decrease of 2.6 per cent compared with the same period in 2022.
• AFFO adjusted payout ratio (1) was 85.3 per cent for the quarter, compared with 73.6 per cent for the same period in 2022. For the cumulative nine-month period, the AFFO adjusted payout ratio was 74.8 per cent, compared with 72.8 per cent for the same period in 2022.

Balance sheet and liquidity highlights:

• Investment properties: Fifty-seven per cent of BTB's properties were appraised by a third party during the quarter, resulting in a net gain of $6.5-million. The result is driven by an increase in the fair value of the trust's industrial properties, offsetting a decrease in the fair value of its off-downtown core office and necessity-based retail properties.
• Debt metrics: BTB ended the quarter with a total debt ratio (1) of 58.4 per cent, recording a decrease of 10 basis points compared with Dec. 31, 2022. The trust ended the quarter with a mortgage debt ratio (1) of 52.2 per cent, a decrease of 200 basis points compared with Dec. 31, 2022.
• Liquidity position: The REIT held $2.4-million of cash at the end of the quarter and $21.6-million is available under its credit facilities. BTB has the option to increase its credit capacity under its credit facilities by $10.0-million (1) (3).
• Tenant exercise of an option to purchase a property: On Aug. 22,2023, an industrial tenant exercised its option to purchase the property with a closing date of Dec. 1, 2026, for a purchase price of $10.3-million. Consequently, the trust derecognized the property from investment properties to classify it as a finance lease.

(1) Non-IFRS (international financial reporting standards) financial measure. The referred non-IFRS financial measures do not have a standardized meaning prescribed by IFRS and these measures cannot be compared with similar measures used by other issuers.

(2) This is a non-IFRS financial measure. The mortgage debt ratio is calculated by dividing the mortgage loans outstanding by the total gross value of the assets of the trust less cash and cash equivalents.

(3) Credit facilities is a term used that reconciles with the bank loans as presented and defined in the trust's consolidated financial statements and accompanying notes.

Quarterly call information

Management will hold a conference call on Tuesday, Nov. 7, 2023, at 9 a.m. Eastern Time, to present BTB's financial results and performance for the third quarter of 2023.

Date:  Tuesday, Nov. 7, 2023

Time:  9 a.m. Eastern Time

Dial:  local at 1-416-764-8688 or North America (toll-free) at 1-888-390-0546

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

The media and all interested parties may attend the call-in listening mode only. Conference call operators will co-ordinate the question-and-answer period (from analysts only) and will instruct participants regarding the procedures during the call.

The audio recording of the conference call will be available via playback until Nov. 14, 2023, by dialling 1-416-764-8677 (local) or 1-888-390-0541 (toll-free) and by entering the access code 829432 followed by the pound key.

About BTB Real Estate Investment Trust

BTB is a real estate investment trust listed on the Toronto Stock Exchange. BTB invests in industrial, off-downtown core office and necessity-based retail properties across Canada for the benefit of their investors. As of today, BTB owns and manages 75 properties, representing a total leasable area of approximately 6.1 million square feet.

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