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BTB REIT's recent accretive acquisitions contributed to a 20% FFO per unit growth for the first quarter of 2022

T.BTB.DB.H

MONTRÉAL, May 9, 2022 /CNW/ - BTB Real Estate Investment Trust (TSX: BTB.UN) ("BTB" or the "REIT") releases today its financial results for the first quarter of the year 2022, compared to the same period of 2021, and announces the following highlights and information.

BTB logo (CNW Group/BTB Real Estate Investment Trust)

Acquisitions concluded during 2021 made a notable contribution to the first quarter of 2022. Overall, BTB's revenues increased by 23.5% and the net operating income by 33%, demonstrating another quarter with solid results.

  • Net income and comprehensive income: Totalled $6.4M for the quarter compared to $2.5M for the same period in 2021, representing an increase of $3.9M that can be attributed to the acquisitions concluded in 2021.
  • Rental revenue: Stood at $29.1M, which represents an increase of 23.5% compared to the same quarter of 2021.
  • Net Operating Income (NOI): Was $16.2M for the quarter which represents an increase of 30.8% compared to the same quarter of 2021.
  • Recurring FFO payout ratio1: Was 70.2% for the quarter compared to 84.0% for the same period in 2021.
  • Recurring FFO1: Was 10.7¢ per unit for the quarter compared to 8.9¢ per unit for the same period in 2021. FFO was positively impacted by the acquisitions concluded in 2021, the improvement of occupancy rates across all business segments, the increase in average renewal rates and reduced provision for credit losses
  • Recurring AFFO payout ratio1: Was at 76.8% for the quarter compared to 87.4% for the same period in 2021
  • Recurring AFFO1: Was 9.7¢ per unit for the quarter compared to 8.6¢ per unit for the same period in 2021. The increase for the quarter is mainly due to acquisitions concluded in 2021.
  • Acquisitions: On January 7th, 2022, BTB acquired two Class A office properties, located at 979 and 1031 Bank Street in Ottawa, Ontario, representing a total leasable area of 116,226 sq. ft. for a total consideration of $38.1M, excluding transaction costs and adjustments. The revenue from this acquisition contributed to the Q1 financial results.
  • Dispositions: On January 27th, 2022, BTB disposed of four industrial properties located on Boundary Road and Marleau Avenue in Cornwall, Ontario for total proceeds of $26M, excluding transaction costs and adjustments.
  • Leasing Activity: BTB experienced strong leasing activity during the quarter. At the end of Q1 2022, the occupancy rate was at 93.1%.













i.

Lease renewals: 175,484 sq. ft. of leases were renewed of which, 119,138 sq. ft. were renewed before the end of their term and
56,346 sq. ft. were renewed in anticipation of the end of their term for the years 2023 and after. 51.9% of lease renewals were concluded in the
off-downtown core segment.





























ii.

New leases: 17,560 sq. ft. were leased to new tenants in the off-core office properties segment. Rental rates for this segment increased by 19.6% during Q1 2022.

  • Same-property NOI1:Increased by 2% for Q1 of 2022 compared to the same period in 2021, mainly due to a combination of important leasing efforts made during previous quarters, resulting in an increase of the occupancy rate compared to the same quarter last year and an increase in the average lease renewal rate.
  • Debt metrics: BTB concluded the quarter with a total debt ratio1 of 60.3%, impacted by the temporary use of its acquisition credit facility, however, recording an improvement of 0.2% compared to the previous quarter. Following the completion of the bought deal on March 30th, 2022, the REIT repaid, on April 5th, 2022, the revolving credit facility by an amount of $30.9M, which reduced the total debt ratio to 58.6%.
  • Liquidity position: BTB concluded the quarter with a cash position of $40.7M and has a total of $47.7M available on its two credit facilities2.
  • Bought deal public offering: BTB issued 9,584,100 trust units at a price of
    $4.20 per unit for gross proceeds of approximately $40.3M. The offering closed on March 30th, 2022.
  • Collection rate: BTB collected 96.1% of invoiced rent during Q1 2022, demonstrating the strong fundamentals of its properties. The slight decrease in the collection rate was caused by the issuance of the year end reconciliation invoices to its tenants that the Trust didn't yet collect (timing effect). BTB's portfolio continued to show positive results through all asset classes and geographies.

__________________________

1 Non-IFRS financial measure. See Appendix 1.
2 Credit facilities is a term used that reconciles with the bank loans as presented and defined in the Trust's consolidated financial statements.

A MESSAGE FROM MICHEL LÉONARD, PRESIDENT, AND CHIEF EXECUTIVE OFFICER

The first quarter of 2022 shows solid results. We note the strong contribution from our 2021 acquisitions which are reflected in our first quarter results. Our revenue increased by 23% and net operating income by 33%. Our robust results support our growth and expansion strategy. BTB's portfolio continues to show stability across all its asset classes and geographies with an occupancy rate of 93.1% at the end of the first quarter. We're continuing to push forward with our business strategies and subsequent acquisitions.

SUBSEQUENT EVENTS

New acquisition of an industrial building: On April 5th, 2022, BTB concluded the acquisition of an industrial property located at 1100 Algoma Road in Ottawa, Ontario. Acquired for the purchase price of $12.5M, excluding transaction costs and adjustments. This acquisition was funded from the existing undrawn capacity on the REIT's credit facilities and available liquidity. The property increased the total leasable area by
46,400 sq. ft and is 100% occupied.

SUMMARY OF SIGNIFICANT ITEMS AS AT MARCH 31st, 2022

  • Total number of properties: 73
  • Total leasable area: approximately 5.7 million sq. ft.
  • Total asset value:$1,183 million
  • Market capitalization:$360 million

FINANCIAL INFORMATION

The following two tables summarize our results for the quarters ended
March 31, 2022, and 2021.

Quarterly Financial Results

Quarters ended March 31st

Quarter

(In thousands of dollars, except for ratios and per unit data)

2022

2021

∆%


$

$


FINANCIAL INFORMATION




Rental revenue

29,068

23,532

23.5

Net operating income

16,234

12,414

30.8

Net income and comprehensive income

6,449

2,510

156.9

Net property income from the same property

portfolio 1

12,281

12,036

2.0

Distributions

5,851

4,828

21.2

Recurring funds from operations (FFO) 1

8,317

5,730

45.1

Recurring adjusted funds from operations (AFFO) 1

7,602

5,506

38.1

Cash flow from operating activities

11,404

13,149

(13.3)

Total assets

1,182,836

923,854

28.0

Mortgage debt ratio 1

56.8%

52.5%

4.3%

Weighted average interest rate on mortgage debt

3.7%

3.6%

0.1%

Market capitalization

360,140

272,807

32.0

FINANCIAL INFORMATION PER UNIT




Net income and comprehensive income

8.3¢

3.9¢

4.4¢

Distributions

7.5¢

7.5¢

-

Recurring FFO1

10.7¢

8.9¢

1.8¢

Recurring AFFO 1

9.7¢

8.6¢

1.1¢

1 Non-IFRS financial measure. See Appendix 1.

Reconciliation of Cash Flows from Operating Activities and Adjusted Funds from Operations (AFFO) 1

Quarters ended March 31st

Quarter

(In thousands of dollars, except per unit data)

2022

2021


$

$

CASH FLOWS FROM OPERATING ACTIVITIES

11,404

13,149

Leasing payroll expenses

221

219

Transaction costs on purchase and disposition of investment properties and early repayment fees

(753)

-

Adjustments for changes in other working capital items

3,774

(1,263)

Financial income

145

134

Interest expenses

(6,904)

(5,791)

Provision for non-recoverable capital expenditures

(581)

(471)

Provision for non-recovered rental fees

(375)

(375)

Accretion of non-derivative liability component of convertible debentures

(82)

(96)

AFFO 1

6,849

5,506

NON-RECURRING ITEM



Transaction costs on purchase and disposition of investment properties and early repayment fees

753

-

RECURRING AFFO 1

7,602

5,506

1 Non-IFRS financial measure. See Appendix 1.

QUARTERLY CALL INFORMATION

Management will hold a conference call on Tuesday, May 10th, 2022, at 9 am, Eastern Time, to present BTB's financial results and performance for the first quarter of 2022.

DATE:

Tuesday, May 10th, 2022

TIME:

9 am, Eastern Time

DIAL:

Toronto and over-seas: 1-416-764-8688

North America (toll-free): 1-888-390-0546

WEB:

https://produceredition.webcasts.com/starthere.jsp?ei=1543285&tp_key=a8067e7f09

VISUAL:

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

https://www.btbreit.com/investor-relations-2/annual-meeting-presentations/

The media and all interested parties may attend the call-in listening mode only. Conference call operators will coordinate 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
May 17th, 2022, by dialing: 1 416 764-8677 (local) or, 1 888 390-0541 (toll-free) and by entering the following access code: 159528 #

ABOUT BTB

BTB is a real estate investment trust listed on the Toronto Stock Exchange. BTB is a property owner active in eastern and western Canada and owns 73 properties, representing a total leasable area of approximately 5.7Msquare feet and a total asset value that surpasses $1.183B.

BTB offers a distribution reinvestment plan to unitholders whereby the participants may elect to have their monthly cash distribution reinvested in additional units of BTB at a price based on the weighted average price for BTB's Units on the Toronto Stock Exchange for the five trading days immediately preceding the distribution date, discounted by 3%.

For more detailed information, visit BTB's website at www.btbreit.com.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements with respect to BTB. These statements generally can be identified by the use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intend", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of BTB could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulation, and the factors described from time to time in the documents filed by BTB with the securities regulators in Canada. The cautionary statements qualify all forward-looking statements attributable to BTB and persons acting on their behalf. Unless otherwise stated or required by applicable law, all forward-looking statements speak only as of the date of this press release.

APPENDIX 1: RECONCILIATION OF NON-IFRS MEASURES

Non-IFRS Financial Measures

Certain terms used in this press release are listed and defined in the table hereafter, including any per unit information if applicable, are not measures recognized by International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. Such measures may differ from similar computations as reported by similar entities and, accordingly, may not be comparable to similar measures. Explanations on how these non-IFRS financial measures provide useful information to investors and additional purposes, if any, for which the Trust uses these non-IFRS financial measures, are also included in the table hereafter.

Securities regulations require that non-IFRS financial measures be clearly defined and that they not be assigned greater weight than IFRS measures. The referred non-IFRS financial measures, which are reconciled to the most similar IFRS measure in the table thereafter if applicable, do not have a standardized meaning prescribed by IFRS and these measures cannot be compared to similar measures used by other issuers.

NON-IFRS MEASURES


DEFINITION

SAME-PROPERTY NOI

Same-property NOI is a non-IFRS financial measure defined as net operating income ("NOI") for the properties that the Trust owned and operated for the entire duration of both the current year and the previous year. The most directly comparable IFRS measure to same-property NOI is Operating Income.

FUNDS FROM OPERATIONS (FFO)

& RECURRING FFO

FFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in its February 2019 White Paper ("White Paper"). FFO is defined as net income and comprehensive income less certain adjustments, on a proportionate basis, including (i) fair value adjustments on investment properties, class B LP units and derivative financial instruments; (ii) amortization of lease incentives; (iii) incremental leasing costs; and (iv) distribution on class B LP units. FFO is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. FFO is also reconciled with the cash flows from operating activities, which is an IFRS measure.

Recurring FFO is also a non-IFRS financial measure that starts with FFO and removes the impact of non-recurring items such as transaction cost on acquisitions and dispositions of investment properties and early repayment fees.

The Trust believes FFO and recurring FFO are key measures of operating performance and allow the investors to compare its historical performance.

ADJUSTED FUNDS FROM OPERATIONS (AFFO) & RECURRING AFFO


AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in its February 2019 White Paper ("White Paper"). AFFO is defined as FFO less: (i) straight-line rental revenue adjustment; (ii) accretion of effective interest; (iii) amortization of other property and equipment; (iv) unit-based compensation expenses; (v) provision for non-recoverable capital expenditures; and (vi) provision for unrecovered rental fees (related to regular leasing expenditures). AFFO is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. AFFO is also reconciled with the cash flows from operating activities, which is an IFRS measure.

Recurring AFFO is also a non-IFRS financial measure that starts with AFFO and removes the impact of non-recurring items such as transaction costs on acquisitions and dispositions of investment properties and early repayment fees.

The Trust considers AFFO and recurring AFFO to be useful measures of recurring economic earnings and relevant in understanding its ability to service its debt, fund capital expenditures, and provide distributions to unitholders.

FFO & AFFO PAYOUT RATIOS

AND

RECURRING FFO & RECURRING AFFO PAYOUT RATIOS

FFO and AFFO payout ratios and recurring FFO and recurring AFFO payout ratios are non-IFRS financial measures. These payout ratios are calculated by dividing the actual distributions per unit by FFO, AFFO, and recurring FFO and recurring AFFO per unit in each period.

The Trust considers these metrics a useful way to evaluate its distribution paying capacity.

TOTAL DEBT RATIO

The total debt ratio is a non-IFRS financial measure of the Trust's financial leverage, which is calculated by taking the total long-term debt less cash divided by the total gross value of the assets of the Trust less cash.

The Trust considers this metric useful as it indicates its ability to meet its debt obligations and its capacity for future additional acquisitions.

PROVISION FOR

NON-RECOVERABLE CAPITAL EXPENDITURES

In calculating AFFO, the Trust deducts a provision for non-recoverable capital expenditures to consider capital expenditures invested to maintainthe condition of its properties and to preserve rental revenue.

The provision for non-recoverable capital expenditures is calculated based on 2% of rental revenues. This provision is based on management's assessment of industry practices and its investment forecasts for the coming years.

PROVISION FOR UNRECOVERED RENTAL FEES

The Trust also deducts a provision for unrecovered rental fees in the amount of approximately 25¢ per sq. ft. on an annualized basis. Even though quarterly rental fee disbursements vary significantly from one quarter to another, management considers that this provision fairly presents, in the long term, the average disbursements not recovered directly in establishing the rent that the Trust will undertake. These disbursements consist of inducements paid or granted when leases are signed that are generally amortized over the term of the lease and are subject to an equivalent increase in rent per square foot, and of brokerage commissions and leasing payroll expenses.

TOTAL LONG-TERM DEBT LESS CASH AND CASH EQUIVALENTS

This is a non-IFRS financial measure. Long-term debt less cash and cash equivalent is a non-IFRS financial measure, calculated as the total of (i) fixed-rate mortgage loans payable; (ii) floating rate mortgage loans payable; (iii) Series G debenture capital amount; (iv) Series F debenture capital adjusted with non-derivative component fewer conversion options exercised by holders; and (v) credit facilities, less cash, and cash equivalents. The most directly comparable IFRS measure to net debt is debt.

TOTAL GROSS VALUE OF THE ASSETS OF THE TRUST LESS CASH AND CASH EQUIVALENT

This is a non-IFRS financial measure. Gross value of the assets of the Trust less cash and cash equivalent ("GVALC") is a non-IFRS financial measure defined as the Trust's total assets adding the cumulated amortization property and equipment and removing the cash and cash equivalent. The most directly comparable IFRS measure to GVALC is total assets.

NON-IFRS FINANCIAL MEASURES – QUARTERLY RECONCILIATION

Funds from Operations (FFO) 1

The following table provides a reconciliation of net income and comprehensive income established in accordance with IFRS and FFO 1 for the last eight quarters:


2022

2021

2021

2021

2021

2020

2020

2020

Q-1

Q-4

Q-3

Q-2

Q-1

Q-4

Q-3

Q-2

(In thousands of dollars, except for per unit)

$

$

$

$

$

$

$

$

NET INCOME AND COMPREHENSIVE INCOME

6,449

23,219

8,678

7,161

2,510

3,850

5,757

(1,101)

Fair value adjustment on investment properties

(1,007)

(19,571)

-

-

-

(2,130)

-

3,607

Fair value adjustment on Class B LP units

66

21

(18)

(52)

280

242

(59)

39

Amortization of lease incentives

735

858

780

777

877

794

751

771

Fair value adjustment on derivative financial instruments

997

3,297

(2,598)

733

1,814

2,950

265

330

Leasing payroll expenses

221

208

173

184

219

146

176

137

Distributions – Class B LP units

26

30

22

26

30

30

30

45

Unit-based compensation (Unit price remeasurement) 5

77

23

(19)

185

-

-

-

-

FFO 1

7,564

8,085

7,018

9,014

5,730

5,882

6,920

3,828

NON-RECURRING ITEM









Transaction cost on acquisitions and dispositions of investment properties and early repayment fees

753

109

-

188

-

440

-

882

RECURRING FFO 1

8,317

8,194

7,018

9,202

5,730

6,322

6,920

4,710

FFO PER UNIT 1, 2, 3

9.7¢

10.9¢

9.5¢

12.3¢

8.9¢

9.2¢

10.9¢

6.1¢

RECURRING FFO PER UNIT 1, 2, 4

10.7¢

11.0¢

9.5¢

12.5¢

8.9¢

9.9¢

10.9¢

7.5¢

FFO payout ratio 1

77.2%

68.9%

79.0%

61.1%

84.0%

81.1%

68.6%

140.1%

Recurring FFO payout ratio 1

70.2%

68.0%

79.0%

59.9%

84.0%

75.5%

68.6%

113.9%

1

This is a non-IFRS financial measure.

2

Including Class B LP units.

3

The FFO per unit ratio is calculated by dividing the FFO 1 by the Trust's unit outstanding at the end of the period (including the Class B LP units outstanding at the end of the period).

4

The recurring FFO per unit ratio is calculated by dividing the recurring FFO 1 by the Trust's unit outstanding at the end of the period (including the Class B LP units outstanding at the end of the period).

5

The impact of the unit price remeasurement on the deferred unit-based compensation plan has been considered in the calculation of the recurring FFO and AFFO starting Q2 2021. As a reference, the cumulative impact for the 12 months cumulative period in 2020 was positive $373 or 0.1¢ per unit.

Adjusted Funds from Operations (AFFO) 1

The following table provides a reconciliation of FFO 1 and AFFO 1 for the last eight quarters:


2022

2021

2021

2021

2021

2020

2020

2020

Q-1

Q-4

Q-3

Q-2

Q-1

Q-4

Q-3

Q-2

(In thousands of dollars, except for per unit)

$

$

$

$

$

$

$

$

FFO 1

7,564

8,085

7,018

9,014

5,730

5,882

6,920

3,828

Straight-line rental revenue adjustment

(150)

(758)

(88)

(91)

(397)

108

(214)

1

Accretion of effective interest

288

275

239

428

359

343

229

287

Amortization of other property and equipment

30

22

23

27

15

23

29

24

Unit-based compensation expenses

73

143

114

(24)

644

281

22

51

Provision for non-recoverable capital expenditures

(581)

(539)

(478)

(519)

(471)

(449)

(472)

(461)

Provision for unrecovered rental fees

(375)

(375)

(375)

(376)

(374)

(375)

(375)

(375)

AFFO 1

6,849

6,853

6,453

8,459

5,506

5,813

6,139

3,355

NON-RECURRING ITEM









Transaction cost on acquisitions and dispositions of investment properties and early repayment fees

753

109

-

188

-

440

-

882

RECURRING AFFO 1

7,602

6,962

6,453

8,647

5,506

6,253

6,139

4,237

AFFO PER UNIT 1, 2, 3

8.8¢

9.2¢

8.7¢

11.5¢

8.6¢

9.1¢

9.7¢

5.3¢

RECURRING AFFO PER UNIT 1, 2, 4

9.7¢

9.4¢

8.7¢

11.8¢

8.6¢

9.8¢

9.7¢

6.7¢

AFFO payout ratio 1

85.3%

81.3%

85.9%

65.1%

87.4%

82.1%

77.4%

159.9%

Recurring AFFO payout ratio 1

76.8%

80.0%

85.9%

63.7%

87.4%

76.3%

77.4%

126.6%

1

This is a non-IFRS financial measure.

2

Including Class B LP units.

3

The AFFO per unit ratio is calculated by dividing the AFFO 1 by the Trust's unit outstanding at the end of the period (including the Class B LP units outstanding at the end of the period).

4

The recurring AFFO per unit ratio is calculated by dividing the recurring AFFO 1 by the Trust's unit outstanding at the end of the period (including the Class B LP units outstanding at the end of the period).

Debt Ratios 1

The following table summarizes the Trust's debt ratios1 as at March 31, 2022, and 2021 and December 31, 2021:

(In thousands of dollars)

March 31, 2022

December 31, 2021

March 31, 2021


$

$

$

Cash and cash equivalents

(40,666)

(7,191)

(6,255)

Mortgage loans outstanding 2

619,555

607,038

482,083

Convertible debentures 2

43,569

44,564

50,124

Credit facilities

35,318

35,468

15,000

TOTAL LONG-TERM DEBT LESS CASH AND CASH EQUIVALENTS 1, 3

657,776

679,879

540,952

Total gross value of the assets of the Trust less cash and cash equivalents 1, 4

1,091,245

1,124,690

918,519

Mortgage debt ratio (excluding convertible debentures and credit facilities) 1, 5

56.8%

54.0%

52.5%

Debt ratio – convertible debentures 1, 6

4.0%

4.0%

5.5%

Debt ratio – credit facilities 1, 7

3.2%

3.2%

1.6%

Total debt ratio 1

60.3%

60.5%

58.9%

1

This is a non-IFRS financial measure.

2

Before unamortized financing expenses and fair value assumption adjustments.

3

Long-term debt less cash and cash equivalent is a non-IFRS financial measure, calculated as total of: (i) fixed-rate mortgage loans payable; (ii) floating rate mortgage loans payable; (iii) Series G debenture capital amount; (iv) Series F debenture capital adjusted with non-derivative component fewer conversion options exercised by holders; and (v) credit facilities, less cash, and cash equivalents. The most directly comparable IFRS measure to net debt is debt.

4

Gross value of the assets of the Trust less cash and cash equivalent is a non-IFRS financial measure defined as the Trust's total assets adding the cumulated amortization property and equipment and removing the cash and cash equivalent. The most directly comparable IFRS measure to GVALC is total assets.

5

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 equivalent.

6

Debt ratio – convertible debentures is calculated by dividing the convertible debentures by the total gross value of the assets of the Trust less cash and cash equivalent.

7

Debt ratio – credit facilities is calculated by dividing the credit facilities by the total gross value of the assets of the Trust less cash and cash equivalent.

SOURCE BTB Real Estate Investment Trust

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/May2022/09/c3398.html