Mr. Mark Holly reports

CROMBIE REIT ANNOUNCES FIRST QUARTER 2023 RESULTS

Crombie Real Estate Investment Trust has released the results for its first quarter ended March 31, 2023. Management will host a conference call to discuss the results at 12 p.m. EDT on May 11, 2023.

"Our Q1 operating and financial results continue to demonstrate the stability and strength of our well-curated portfolio of grocery-anchored retail, industrial and residential assets," said Mark Holly, president and chief executive officer. "Our strong financial condition, further improved by our successful $200-million unsecured note issuance in March, positions us well to pursue growth-focused initiatives. Crombie is focused on unlocking the value embedded within our portfolio through Empire-related investments, the acceleration of entitlements and our commitment to our next major development, The Marlstone, in Halifax, N.S.

"Additionally, I am pleased to announce our enhanced focus on ESG and our newly formed climate action plan. We are committed to achieving net zero by 2050 with a near-term 2030 intention to reduce scope 1 and 2 greenhouse gas emissions by 50 per cent. Our reduction targets will be submitted to the science-based targets initiative for validation and approval, and will guide us as we pro-actively do our part to reduce our greenhouse gas emissions and strengthen the resilience of our properties."

First quarter summary

(in thousands of Canadian dollars, except per-unit amounts and square feet, and as otherwise noted)

Operational highlights:

• Committed occupancy 96.7 per cent and economic occupancy 94.5 per cent, a 30-basis-point increase and 100-basis-point decrease, respectively, compared with the first quarter of 2022 (Adjusting for the impact of Voila CFC 3, which reached substantial completion in the fourth quarter of 2022 and is expected to enter economic occupancy mid-2023, economic occupancy would be 96.1 per cent.);
• Renewals of 540,000 square feet at rents 5.7 per cent above expiring rental rates (7.0 per cent at weighted average rent during the renewal term);
• Acquisition of two investment properties added 81,000 square feet of gross leasable area (GLA) at a total aggregate purchase price of $16,722;
• The REIT is pleased to announce its next major development, The Marlstone, a 291-unit residential rental development in Halifax, N.S.;
• Advancing the REIT's climate action plan with a commitment to achieve net zero by 2050 for scopes 1, 2 and 3. In the near term, committed to reducing scope 1 and 2 emissions by a minimum of 50 per cent by 2030 from a 2019 base year.

Financial highlights:

• Completed offering of $200,000 Series K senior unsecured notes maturing Sept. 28, 2029, bearing an interest rate of 5.244 per cent per annum;
• Property revenue of $107,551, a 2.5-per-cent increase from $104,946 in the first quarter of 2022;
• Operating income of $25,173, a decrease of 0.3 per cent compared with the first quarter of 2022 at $25,248;
• Net property income of $68,648, a 1.0-per-cent decrease from $69,331 in the first quarter of 2022;
• FFO (funds from operations) of $52,835 or 30 cents per unit, compared with $49,091 or 28 cents per unit in the first quarter of 2022;
• FFO payout ratio of 75.3 per cent for the first quarter of 2023, compared with 79.9 per cent in the same period last year;
• AFFO (adjusted funds from operations) of $45,909 or 26 cents per unit, compared with $41,898 or 24 cents per unit in the first quarter of 2022;
• AFFO payout ratio of 86.6 per cent for the first quarter of 2023, compared with 93.6 per cent in the same period last year;
• Same-asset property cash NOI (net operating income) increased 2.4 per cent, compared with the first quarter of 2022;
• Debt to gross fair value of 41.9 per cent, an improvement from 42.5 per cent in the same period last year;
• Debt-to-trailing-12-months adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of 7.96 times, compared with the first quarter of 2022 at 8.72 times;
• Unencumbered investment properties of $2,291,396, a 14.0-per-cent increase from $2,009,252 in the same period last year;
• Available liquidity of $735,877, a 40.7-per-cent increase from $523,159 in the first quarter of 2022.

Information in this news release is a select summary of results. This news release should be read in conjunction with Crombie's management's discussion and analysis for the quarter ended March 31, 2023, and consolidated financial statements and notes for the quarters ended March 31, 2023, and March 31, 2022. Full details on our results can be found on the REIT's website and on SEDAR.

Financial results

Operating income attributable to unitholders decreased by $75, or 0.3 per cent, primarily due to a gain on distribution from equity-accounted investments of $1,933 in the first quarter of 2022, resulting from cash distributions received from 1600 Davie LP in excess of the REIT's investment in the joint venture and a reduction of $683 in net property income. The reduction in operating income was offset in part by growth in income from equity-accounted investments of $3,212 resulting from the sale of two parcels of land at our Opal Ridge property in Dartmouth, N.S., in the first quarter of 2023.

Same-asset property cash NOI increased by $1,621, or 2.4 per cent, compared with the first quarter of 2022, primarily due to renewals and new leasing, increased parking revenue of $626, and higher supplemental rent of $441 from modernizations and capital improvements.

The increase in FFO of $3,744 is primarily due to an increase in income from equity-accounted investments of $3,212 as a result of the sale of land inventory at the REIT's Opal Ridge property in Dartmouth, N.S., increased rental revenue compared with the first quarter of 2022 of $1,813 from renewals, new leasing and acquisitions, improved parking revenue of $626, and higher supplemental rent from modernizations of $540. FFO growth is offset in part by lost rental revenue of $1,543 due to dispositions.

The improvement in AFFO is primarily due to the same factors impacting FFO as described above. This is offset in part by the impact of the increase in the maintenance expenditure charge in the quarter from $1 to $1.10 per square foot of weighted average GLA, an increased charge of $468.

Operations and leasing

During the quarter, Crombie achieved economic occupancy of 94.5 per cent and committed occupancy of 96.7 per cent. Adjusting for the impact of Voila CFC 3, which reached substantial completion in the fourth quarter of 2022 and is expected to enter economic occupancy mid-2023, economic occupancy would be 96.1 per cent. Crombie renewed 540,000 square feet with an increase of 5.7 per cent over expiring rents during the quarter. Year to date, new leases increased occupancy by 62,000 square feet at an average first year rate of $18.91 per square foot.

Development

Crombie segregates its development pipeline by expected timing. Near-term projects are financially committed or expected to be committed within the next two years. Currently, Crombie has three developments classified as near-term projects. Upon completion, these projects will total approximately 905,000 square feet of residential GLA (1,381 residential units) and 112,000 square feet of commercial GLA. The geographical breakdown of GLA in square feet is as follows: 684,000 in Vancouver; 145,000 in Victoria and 188,000 in Halifax.

The Marlstone

Subsequent to the first quarter, the board of trustees approved the development of The Marlstone, a planned 291-unit residential rental project in the heart of downtown Halifax, located within the Scotia Square mixed-use retail, office and hotel complex. This development will be built to LEED Gold Standard and will be operational net zero ready, as well as a Rick Hansen Foundation-certified property.

Timing estimates are subject to change, as well as other development risks described in Crombie's first quarter management's discussion and analysis under development and risk management.

Climate action

Crombie is pleased to announce the advancement of its environmental commitments through a newly created climate action plan. Through this plan, Crombie is committing to achieve net zero by 2050 for scopes 1, 2 and 3. In the near term, Crombie is committed to reducing scope 1 and 2 emissions by a minimum of 50 per cent by 2030 from a 2019 base year. All targets will be submitted to the science based targets initiative (SBTi) for validation and approval.

SBTi is an internationally recognized body that defines and promotes best practice in emissions reductions and net zero targets in line with climate science. Scope 1 refers to an entity's direct emissions, while scope 2 is an entity's indirect emissions through its energy use. Scope 3 emissions are the result of activities not controlled by the entity, but indirectly related to its value chain.

Highlighted subsequent event

On May 1, 2023, Crombie acquired a 100-per-cent interest in a retail property from a subsidiary of Empire totalling 57,000 square feet for $9,760, excluding closing and transaction costs.

Conference call invitation

Crombie will provide additional details concerning its period ended March 31, 2023, results on a conference call to be held Thursday, May 11, 2023, beginning at 12 p.m. EDT. Accompanying the conference call will be a presentation that will be available on Crombie's website. To join this conference call, you may dial 416-764-8688 or 888-390-0546. To join the conference call without operator assistance, you may register and enter your phone number on-line to receive an instant automated callback. You may also listen to a live audio webcast of the conference call by visiting the investor section of Crombie's website.

Replay will be available until midnight on May 18, 2023, by dialling 416-764-8677 or 888-390-0541 and entering passcode 005478 followed by the pound key, or on the Crombie website, for 90 days following the conference call.

About Crombie Real Estate Investment Trust

Crombie invests in real estate that enriches local communities and enables long-term sustainable growth. As one of the country's leading owners, operators and developers of quality real estate, Crombie's portfolio primarily includes grocery-anchored retail, retail-related industrial and mixed-used residential properties in Canada's top urban and suburban markets. As at March 31, 2023, the REIT's portfolio contains 291 income-producing properties comprising approximately 18.6 million square feet and a significant pipeline of future development projects.

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