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CT REIT Announces Strong Second Quarter 2021 Results

T.CRT.UN | August 9, 2021

Delivers 8.2% growth in AFFO per unit for the second quarter
Announces five new investments totalling $60.3 million
Previously announced 4.5% distribution increase took effect June 2021

TORONTO, Aug. 9, 2021 /CNW/ - CT Real Estate Investment Trust ("CT REIT" or "the REIT") (TSX: CRT.UN) today reported its consolidated financial results for the second quarter ending June 30, 2021.

"CT REIT's track record throughout the pandemic has demonstrated that its core attributes generate attractive results across a range of economic conditions," said Ken Silver, CEO of CT REIT. "During the second quarter, we once again delivered strong financial results, a robust balance sheet and debt metrics, and growth in distributions. As vaccination rates reach significant milestones and the economy reopens, we continue to build our pipeline of compelling investment and development opportunities."

New Investment Activity

Today, CT REIT announced five new investments, which will require an estimated $60.3 million to complete. The investments are, in aggregate, expected to earn a weighted average cap rate of 6.52% when completed and represent approximately 266,000 square feet of incremental gross leasable area ("GLA"). CT REIT is funding these investments through the issuance of Class B LP Units and/or Class C LP Units to Canadian Tire Corporation ("CTC"), cash and/or draws on its credit facilities or any combination thereof.

The table below summarizes the new investments and their anticipated completion dates:

Property	Type	GLA (sf.)	Timing	Activity
Drummondville, QC	Third-Party Acquisition / Intensification	45,000	Q2 2021 / Q4 2022	Acquisition of land from a third-party and expansion of an existing Canadian Tire store
Trenton, ON	Vend-In	70,000	Q3 2021	Vend-in of an existing Canadian Tire store and Canadian Tire Gas+ gas bar
Moose Jaw, SK	Vend-In / Development	133,000	Q2 2022 / Q2 2023	Vend-in of land for the development of a new Canadian Tire store and third-party tenants
Toronto (Leslie & Sheppard), ON	Store Expansion	—	Q2 2022	Expansion of an existing Canadian Tire store into existing CRU space
Chambly, QC	Intensification	18,000	Q4 2023	Expansion of an existing Canadian Tire store

Update on Investment and Development Activity

As of June 30, 2021, CT REIT had 923,000 square feet of GLA under development, of which approximately 95% is subject to committed lease agreements. These developments represent an investment of approximately $280 million once completed.

Financial and Operational Summary

Summary of Selected Information
(in thousands of Canadian dollars, except unit, per unit and square footage amounts)	Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		Change	2021		2020		Change
Property revenue	$	129,560	$	125,498	3.2%	$	259,463	$	252,343	2.8%
Net operating income 1	$	100,368	$	94,272	6.5%	$	199,392	$	189,591	5.2%
Net income	$	178,628	$	61,970	NM	$	253,186	$	105,166	NM
Net income per Unit - basic 2	$	0.770	$	0.271	NM	$	1.094	$	0.460	NM
Net income per Unit - diluted 3	$	0.610	$	0.235	NM	$	0.895	$	0.415	NM
Funds from operations 1	$	71,932	$	67,212	7.0%	$	143,095	$	134,097	6.7%
Funds from operations per Unit - diluted (non-GAAP) 1,2,4	$	0.310	$	0.294	5.4%	$	0.617	$	0.586	5.3%
Adjusted funds from operations 1	$	64,256	$	58,490	9.9%	$	127,477	$	116,664	9.3%
Adjusted funds from operations per Unit - diluted (non-GAAP) 1,2,4	$	0.277	$	0.256	8.2%	$	0.550	$	0.510	7.8%
Distributions per Unit - paid 2	$	0.201	$	0.197	2.0%	$	0.402	$	0.394	2.0%
AFFO payout ratio 1	72.6%		77.0%		(5.7)%	73.1%		77.3%		(5.4)%
Cash generated from operating activities	$	92,522	$	87,940	5.2%	$	187,662	$	186,757	0.5%
Adjusted cashflow from operations 1	$	59,712	$	63,591	(6.1)%	$	116,445	$	118,709	(1.9)%
Weighted average number of units outstanding 2
Basic	231,850,832		228,639,153		1.4%	231,490,733		228,494,899		1.3%
Diluted 3	318,982,414		334,814,938		(4.7)%	318,620,311		334,663,659		(4.8)%
Diluted (non-GAAP) 1,4	232,149,611		228,899,731		1.4%	231,787,508		228,748,453		1.3%
Indebtedness ratio						41.6%		42.4%		(1.9)%
Interest coverage (times)	3.73		3.50		6.6%	3.71		3.46		7.2%
Gross leasable area (square feet) 5						28,667,567		27,995,410		2.4%
Occupancy rate 5,6						99.2%		99.3%		(0.1)%

1 Non-GAAP measure. Refer to section 11.0 of the MD&A for further information.

2 Total units means Units and Class B LP Units outstanding.

3 Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 8.0 of the MD&A.

4 Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 8.0 of the MD&A.

5 Refers to retail, mixed-use commercial and industrial properties and excludes Properties Under Development.

6 Occupancy and other leasing key performance measures have been prepared on a committed basis which includes the impact of existing lease agreements contracted on or before June 30, 2021 and June 30, 2020.

Financial Highlights

Net Income - Net income was $178.6 million for the quarter, an increase of 188.2%, compared to the same period in the prior year, primarily due to an increase in NOI* and an increase in the fair value adjustment on investment properties.

Net Operating Income (NOI)* - In the second quarter, NOI was $100.4 million, which was $6.1 million or 6.5% higher compared to the same period in the prior year, primarily due to rent escalations in CTC banner leases which contributed $3.3 million and the acquisition of income-producing properties completed in 2021 and 2020, which contributed a further $1.8 million to NOI growth. Same store NOI was $96.6 million and same property NOI was $96.9 million for the quarter, which were $3.3 million or 3.6% and $3.6 million or 3.8%, respectively, higher when compared to the prior year, primarily due to increased revenue derived from contractual rent escalations and lower provision on COVID-19 pandemic-related impacts.

Funds from Operations (FFO)* - FFO for the quarter was $71.9 million or $0.310 per unit - diluted (non-GAAP), which was 5.4% or $0.016 per unit - diluted (non-GAAP), higher than the same period in 2020, primarily due to the impact of NOI variances, and lower interest expense.

Adjusted Funds from Operations (AFFO)* - AFFO for the quarter was $64.3 million or $0.277 per unit - diluted (non-GAAP), 8.2% or $0.021 per unit - diluted (non-GAAP) higher than the same period in 2020, primarily due to the impact of NOI variances, and lower interest expense.

Distributions - Distributions per unit in the quarter amounted to $0.201, 2.0% higher than the same period in 2020 due to the increase in the annual rate of distributions which became effective as of the monthly distribution paid in September 2020. During the second quarter, a 4.5% increase in monthly distributions to $0.06994 per unit or $0.83930 on an annualized basis was approved, commencing with the June 2021 distribution paid on July 15, 2021 to Unitholders of record on June 30, 2021.

*NOI, FFO and AFFO are non-GAAP measures. Refer to Non-GAAP section 11.0 "Non-GAAP Measures" in CT REIT's Q2 2021 MD&A, which is available on SEDAR at www.sedar.com and at www.ctreit.com.

Operating Results

Leasing - CTC is CT REIT's most significant tenant. As at June 30, 2021, CTC represented 92.4% of total GLA and 91.7% of annualized base minimum rent.

Occupancy - As at June 30, 2021, CT REIT's portfolio occupancy rate, on a committed basis, was 99.2%.

Management's Discussion and Analysis (MD&A) and Interim Condensed Consolidated Financial Statements (Unaudited) and Notes

Information in this press release is a select summary of results. This press release should be read in conjunction with CT REIT's management's discussion and analysis for the period ended June 30, 2021 (Q2 2021 MD&A) and Interim Condensed Consolidated Financial Statements (Unaudited) and Notes which are available on SEDAR at www.sedar.com and at www.ctreit.com.

Note: Unless otherwise indicated, all figures in this press release are as of June 30, 2021 and are presented in Canadian dollars.

Forward-Looking Statements

This press release contains forward-looking statements and information that reflects management's current expectations related to matters such as future financial performance, operating results and the effect of the COVID-19 pandemic (Pandemic) on CT REIT's business and operations. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our future outlook, anticipated events or results and our operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Certain statements other than statements of historical facts included in this document may constitute forward-looking information, including, but not limited to, statements concerning the REIT's ability to complete the investments in the acquisitions under the headings "New Investment Activity", the timing and terms of any such investment and/or agreements and the benefits expected to result from such investment and statements concerning developments, intensifications, results, performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.

By its very nature, forward-looking information requires the use of estimates and assumptions and is subject to inherent risks and uncertainties. It is possible that the REIT's assumptions, estimates, analyses, beliefs and opinions are not correct, and that the REIT's expectations and plans will not be achieved. Although the forward-looking information contained in this press release is based on information, assumptions and beliefs which are reasonable in the opinion of management and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information. Without limiting the generality of the foregoing, given the continued evolving circumstances surrounding the Pandemic, including the uncertainty of variants of concern and future waves, it is difficult to predict with certainty the nature, duration and extent of the adverse impact of the Pandemic on, among others: the global and domestic economy; the business, operations and financial position of the REIT's tenants, including CTC; the expected benefits from the investments described under the heading "New Investment Activity" and "Update on Investment and Development Activity", including the timing of the acquisitions; and the business, operations, financial position, results, prospects or opportunities of CT REIT.

For more information on the risks, uncertainties and assumptions that could cause the REIT's actual results to differ from current expectations, refer to Section 4 "Risk Factors" of our Annual Information Form for fiscal 2020, and to Section 12.0 "Enterprise Risk Management" and section 14.0 "Forward-Looking Information" of CT REIT's MD&A for fiscal 2020 as well as the REIT's other public filings available at www.sedar.com and at www.ctreit.com.

In addition, for further factors related to the Pandemic impacting the REIT, refer to Section 2.0 "Factors Affecting the REIT as a Result of the Covid-19 Pandemic", Section 12.0, "Enterprise Risk Management" and Section 14.0 "Forward-looking Information" of our MD&A, available at www.sedar.com and at www.ctreit.com.

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.

Information contained in or otherwise accessible through the websites referenced in this press release does not form part of this press release and is not incorporated by reference into this press release.

Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available at www.sedar.com and at www.ctreit.com.

Conference Call

CT REIT will conduct a conference call to discuss information included in this news release and related matters at 9:00 a.m. ET on August 10, 2021. The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2217 (Participant passcode: 1743816#) or 1-800-898-3989 or through a webcast at https://www.ctreit.com/English/news-and-events/events-and-webcasts/default.aspx and will be available through replay for 12 months.

About CT Real Estate Investment Trust

CT REIT is an unincorporated, closed-end real estate investment trust formed to own income-producing commercial properties primarily located in Canada. Its portfolio is comprised of over 350 properties totalling approximately 29 million square feet of GLA, consisting primarily of net lease single-tenant retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit ctreit.com.