CT Real Estate Investment Trust (CTRRF) Q2 2024 Earnings Call Highlights: Strong NOI Growth and ...

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In this article:

  • NOI Growth: Increased by 4.4% or $4.8 million.

  • AFFO per Unit: Up 3.6% to $0.315.

  • Same-Store NOI Growth: Increased by 1.0% or $1.1 million.

  • Same-Property NOI Growth: Increased by 1.9% or $2 million.

  • Cash Distributions: Increased by 3.5% compared to the previous year.

  • Distribution Increase: 3% increase effective July 15, cumulative increase of 42.3% since IPO.

  • Occupancy Rate: 99.4%.

  • Weighted Average Lease Term: 8.0 years.

  • Interest Coverage Ratio: 3.59 times.

  • Indebtedness Ratio: 40.9%.

  • Cash on Hand: $31 million.

  • Available Credit Facility: $297 million committed, $300 million uncommitted.

  • Property Acquisition: $45.2 million investment in Nanaimo, BC.

  • Property Sale: Sold property in Chilliwack, BC for $19 million.

  • Development Projects: 19 projects with a total committed investment of $283 million.

Release Date: August 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • CT Real Estate Investment Trust (CTRRF) reported a 4.4% increase in net operating income (NOI) and a 3.6% increase in adjusted funds from operations (AFFO) per unit.

  • The company has raised its distributions 11 times since its IPO in 2013, with a compound annual growth rate of 4.1% over the last five years.

  • CT Real Estate Investment Trust (CTRRF) successfully acquired a Canadian Tire-anchored property in a strong market on Vancouver Island, British Columbia.

  • The company maintains a high occupancy rate of 99.4% with a weighted average lease term of 8.0 years, one of the longest in the sector.

  • CT Real Estate Investment Trust (CTRRF) released its third annual ESG report, highlighting its ongoing commitment to environmental, social, and governance initiatives.

Negative Points

  • The property transaction market remains slow, impacting the ability to source new acquisitions.

  • Interest coverage ratio decreased to 3.59 times from 3.74 times in the previous year, due to higher interest expenses.

  • The indebtedness ratio increased slightly to 40.9% from 39.9% in the previous year.

  • The company anticipates a potential slowdown in same-asset NOI growth due to lower recovery of capital expenditures and interest rate changes.

  • The pace of new development projects has slowed, influenced by Canadian Tire's strategic decisions and the current interest rate environment.

Q & A Highlights

Q: Is the recent property disposition in Chilliwack, BC, a sign of more such transactions in the future? A: Kevin Salsberg, President and CEO, explained that such dispositions are not typical. The decision to sell was driven by a compelling offer from an end-user, making it financially advantageous to sell rather than redevelop the site.

Q: Is the lease term income related to the Chilliwack property disposition? A: Kevin Salsberg clarified that while the lease term income wasn't directly tied to the purchase agreement, the end-user required vacant possession, making it indirectly related.

Q: With interest rates coming down, should we expect below typical same asset NOI growth in the coming quarters? A: Lesley Gibson, CFO, noted that while interest rates are decreasing, the more significant impact on NOI growth this quarter was due to final billings from the previous year. Future quarters may see modest changes due to interest rate adjustments.

Q: Can you provide more details on the recent BC acquisition and the current market environment? A: Kevin Salsberg described the acquisition as an off-market deal with favorable financial terms. He noted that the broader market remains light in terms of retail asset transactions, with no significant changes in pricing or volume.

Q: What are the renewal leasing spreads for the quarter, and how do they compare to previous quarters? A: Jodi Shpigel, Senior VP of Real Estate, reported that Canadian Tire store renewals were at 1.5%, while non-Canadian Tire renewals were in the high single digits. The market renewal piece was smaller this quarter but maintained a 10% spread, consistent with past experiences.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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