CT Real Estate Investment Trust

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" Desjardins Securities Inc.

" TD Cowen

" BMO Capital Markets

" RBC Capital Markets

Thank you, Lauren. Good morning, everyone, and thank you for joining us today on CT REIT's quarterly investor conference call.

I am happy to report that Q3 2025 was another strong quarter for CT REIT as we delivered growth in net operating income of 5.5%, growth in AFFO per unit of 2.9% and continue to maintain our portfolio occupancy above 99%. CT REIT's stable portfolio and reliable growth have for more than a decade now, provided our investors with an opportunity to participate in a real estate strategy that leverages our privileged relationship with Canadian Tire in order to deliver value for all of our unitholders.

In the quarter, we acquired a strong performing Canadian Tire-anchored shopping center in Calgary from a third party, completed the redevelopment of an enclosed mall that we own in Winkler, Manitoba and began construction on the Canadian Tire head office retrofit at Canada Square. And subsequent to the quarter end, we bought out the underlying freehold interest in a property that we had previously land leased in Fort Saskatchewan, Alberta.

While each of these projects is different and unique in terms of geography, asset type and real estate intervention, they collectively tell a story about CT REIT's ability to find new ways of deploying capital and source different avenues of growth. We continue to work closely with Canadian Tire on their development requirements and the real estate components of their True North strategy as we continue to build our own pipeline of deals with over 1 million square feet of development projects currently expected to be delivered between now and the end of 2028, including the newly announced expansion of a Canadian Tire store in Collingwood at a property that we acquired from a third party several years ago.

Whether from organic growth derived from our existing portfolio of properties, new CTC-related development opportunities or strategically consolidating the ownership of third party-owned CTC-related assets, CT REIT's growth prospects continue to look bright. And with a conservative and prudently managed balance sheet, we have the financial flexibility to lean into these opportunities so that CT REIT can continue to deliver strong, reliable and durable results and create value for our stakeholders as we look to the road ahead.

I will now turn it over to Jodi and Lesley to provide some additional details on the quarter, our results and our leasing investment and development activities. Jodi?

Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we are pleased to announce 2 new investments this quarter.

Our first new investment involves the acquisition of the freehold interest underlying an existing ground lease along with an adjacent multi-tenant commercial retail building in Fort Saskatchewan, Alberta. Additionally, we are expanding the Canadian Tire store located in Collingwood, Ontario that Kevin mentioned earlier.

These new investments require a total of $90 million to complete and are projected to earn a going-in yield of 6.45%. Combined, they will add approximately 50,000 square feet of high-quality GLA to our portfolio.

In the third quarter, we completed 2 previously announced projects, the acquisition of a Canadian Tire anchored property in Calgary, Alberta that we discussed last quarter and the redevelopment of our existing enclosed mall in Winkler, Manitoba. Since acquiring Southland Mall in Winkler, Manitoba in 2016, the REIT has made substantial improvements to the property, including the expansion of the Canadian Tire store in 2018 as well as a significant demalling and renovation that has allowed us to introduce new retailers to the mall, including Winners, Anytime Fitness, Stacked Pancake House and a relocated and expanded Mark.

Part of the rationale for acquiring this property originally was based on the strength of the Canadian Tire store and the steps that we have taken since that time illustrate how the REIT has been able to create value in an asset that we decided to invest in based on the insights that we gleaned through our relationship with Canadian Tire. The Calgary acquisition and the Winkler redevelopment totaled $72 million and have added over 350,000 square feet of additional GLA to our portfolio.

Our development pipeline overall remains strong with 20 projects at various stages, 7 of which are expected to be completed by the end of this year and the remainder expected to be completed in 2026 and beyond. These developments, including Canada Square office retrofit projects represent a total committed investment of approximately $427 million upon finalization, $113 million of which has already been spent and $148 million of which we anticipate will be spent in the next 12 months.

Once built, these projects will add a total incremental GLA of just over 1 million square feet to the portfolio, approximately 90% of which has been leased. With respect to our leasing activities, during the third quarter, CT REIT completed 4 Canadian Tire store lease extensions.

And as of the end of Q3, the weighted average lease term for our portfolio was 7.3 years, which remains one of the longest in the sector. At the end of the quarter, CT REIT's occupancy rate remained strong at 99.4%.

I will now turn it over to Lesley to discuss our financial results. Lesley?

Thanks, Jodi, and good morning, everyone. We were pleased with the results delivered by the REIT again this quarter.

This quarter, same-store NOI increased 2.0% or $2.3 million, mainly driven by contractual rent escalations averaging 1.5% per year as contained in the Canadian Tire leases. Same-property NOI saw a rise of 2.6% or $3 million compared to the previous year.

This increase was largely due to the same-store NOI growth mentioned earlier, along with approximately $700,000 of additional contribution from intensifications completed in 2024 and 2025. Overall, in the third quarter, NOI experienced robust growth of 5.5% or $6.2 million.

This was fueled by the $3.2 million contribution from the 4 acquisitions completed in '24 and '25 as well as the development completions over that time. In the third quarter, excluding fair value adjustments, G&A expense as a percentage of property revenue was 2.5%, which was higher than the same period in the prior year of 2.2%.

This increase was due to the timing of a deferred income tax provision in 2024 that reversed by the end of the year. On a year-to-date basis, G&A expenses as a percentage of revenue are running at a consistent 2.9%.

The fair value adjustment of $36.7 million in the quarter was primarily driven by contractual rent increases, leasing renewals and changes to certain valuation metrics and assumptions as well as the development completions within the property portfolio. In the quarter, diluted FFO per unit was up 2.1% to $0.338 compared to $0.331 in the third quarter of 2024.

AFFO per unit on a diluted basis was $0.317, up 2.9% compared to Q3 of 2024. Cash distributions paid in the quarter increased 2.5% compared to the same period in the previous year due to the increase in distributions, which became effective with the monthly distributions paid in July 2025.

With the increase in AFFO per unit outpacing the rate of the monthly distributions, the AFFO payout ratio for Q3 was 74.8%, a slight improvement from 75.0% in the period last year. Turning to the balance sheet.

Our interest coverage ratio for the current quarter was 3.37x compared to 3.52x in the same quarter of 2024. This decrease is due to a combination of increased interest costs resulting from the resetting of the interest rate on the Series 3 and 16 to 19 Class C LP units effective June 1, 2025, higher utilization of the credit facilities to fund acquisitions, intensifications and developments in '24 and '25 as well as the issuance of the $200 million Series J unsecured debentures in June of this year.

The indebtedness to EBIT fair value ratio was 6.61x during the quarter, improved from last year's ratio of 6.81x. Our indebtedness ratio this quarter was 39.8%, down from 40.7% at the end of last year.

This improvement is mainly attributable to the continued increases in the fair value of investment properties and higher total assets from acquisitions and developments, partially offset by the increased use of the credit facilities. The ratio has consistently trended lower over recent years, giving us ample financial flexibility for future growth.

Lastly, with respect to liquidity, we ended Q3 with $5 million of cash on hand, $298 million of that remains available through our committed credit facility and a further $186 million is also available on our uncommitted facility with Canadian Tire Corporation. And with that, I will turn the call back to the operator for any questions.

Just on the Canada Square retrofit, I was wondering what is the progress on tendering costs? I mean, obviously, you guys have started work there.

And have you guys seen any reprieve on the cost side with sort of the slowdown in development activity more broadly?

Lorne, it's Jodi. Thanks for the question.

So, the retrofit just started this quarter effectively. So, it really starts to pick up the pace in 2026 and beyond.

So, it's in the initial stages so far. Oxford, of course, is managing this on behalf of the co-owners.

They are in the process of tendering and securing the various contracts and trades. They have their CM in place.

I don't think there's been any noticeable difference in terms of tendering versus budget at this stage. However, I would say it's early on in the retrofit.

So that could be a case as we move forward.

Lovely. And then just on the intensification development side.

Obviously, Canadian Tire is a large chunk of that. But one thing we've been hearing is there's a lot of opportunity out there to intensify for other retailers.

I was just wondering if you guys are seeing any demand and if that's something you look to focus the pipeline a little bit more on as dynamics call for it.

Lorne, it's Kevin. We definitely have inbound interest from retailers.

We don't have a lot of large pad opportunities that can accommodate the users who are expressing interest, grocery, pharmacy, liquor. Most of our pad opportunities are smaller, and we've actually affected quite a few of them to date.

But that doesn't mean we're not out selectively looking for alternative sites or opportunities to work with the retailers who are looking to expand. Our Lloydminster redevelopment is a good example of where we can take advantage of opportunities like that.

So yes, we're trying to find the balance between the demand side, finding opportunities that we can make financial sense of and obviously, where it complements existing assets.

Maybe just to get into the leasing side of the business, maybe Jodi, if you could just comment on leasing spreads in the quarter, both to Canadian Tire and third-party tenants.

Sam, it's Jodi. On third-party renewals, it's typically our volumes are on the lower side just because of our -- the high occupancy rate and that the bulk of our activities with Canadian Tire.

So, it is at the lower end. I'd say the spreads though are consistent with what we see in every other quarter.

So, we're pleased with that. In terms of the related party, we had quite a number this quarter, as noted.

Obviously, we don't comment on the specifics, but the escalations that we achieved have been continuing on these fronts.

And Sam, as we've talked about before, as we look at the escalations, we are looking at market-specific dynamics. And whereas on average, certainly 1.5% is the number for the entire portfolio.

There are selective opportunities within each set of renewals to address that and possibly get that number a little higher. And we also continue to have discussions with Canadian Tire about as we, I guess, enter into some of the metier years in terms of the number of renewals that we'll be dealing with what the best collective situation is for both the REIT and for CTC in terms of continuing on with the annual rent escalations or looking at more conventional fixed 5-year rent numbers.

So as of right now, we're still playing with the same rhyme scheme, but that could be subject to change in the future as we've discussed before.

And Kevin, your comment on looking at other alternatives versus the annual escalations. I mean, what would be the, I guess, the benefit for the REIT in looking at a different structure?

Well, like you guys, we can forecast out the next 5 to 10 years based on our portfolio and obviously looking to if there's any spread between one versus the other. The fixed contracts to recall, have a floor and a ceiling in terms of the renewal rate.

They can't be less than the amount they were paying in the preceding term, and it's capped out at 112%. So just based on where we forecast the market to be and where it might be going, if there is a difference financially for us, that's a benefit to look at one version versus the other.

To date, there hasn't been a big difference, but that might not always be the case.

Appreciate that. And then just on the macro, it's a little more challenging.

Are you seeing any retailers start to feel some pain, given any known move-outs in the portfolio, any problem tenants, bad debt expense, any of that sort of getting a little bit coming into focus these days?

That hasn't been our experience. We don't have any real bad debt that's any different than in any preceding periods.

I don't think there's -- the major retailers are -- seem to be showing any signs of weakness at this point. Certainly, with the base stores coming back to some of the major landlords out there, there could be a little bit of distraction in terms of other opportunities.

There's a lot of square footage to be addressed in the market. Not all of it obviously reusable or appropriate to the tenants that we deal with.

But I don't -- I think the only indication of potentially them slowing down with respect to our discussions would be based on other alternatives in the market that they're considering.

And last one for me. Just in Kelowna with the new store, I guess, ready to be opened soon.

And I believe the REIT owns the other store that's going to be vacated in that market. Is there plans to backfill that?

What's the sort of plan there?

We're working on that right now, Sam. We do have a couple of different alternatives for the site.

So, we're thinking our way through options. So, stay tuned.

Two quick ones for me. I guess just first on Winkler, just a modeling question here.

I guess it's a redevelopment that came on stream in the third quarter. Presumably, there was -- it's now substantially complete, but presumably there is some income tied to it before.

So, what -- how should we be thinking of the increment from that delivery that came on stream going forward?

With that particular one, Mike, we had -- at one point, the Canadian Tire store in HUD because we're expanding it and the mall wasn't. And then the store went back in and the mall went into PUD.

I would say maybe 60% is attributable to the mall versus 40% to the CT store, if that helps.

So, the total amount delivered is just with respect to what was completed, not the entire project?

That's right. The mall redevelopment component of it.

And then just with respect to the $148 million of capital that you guys have to spend or are committed to spend over the next 12 months. Obviously, opportunity dependent.

But given where your balance sheet is, where your cost of capital is, what's your appetite if the opportunities present themselves to ramp that up materially further? How much capacity do you see yourselves as having?

I think we have a strong appetite to ramp it up. I don't know if I would describe that appetite as material.

We see some opportunities in the market. And I think we're in a good spot.

We've talked about our dry powder in past quarters. And certainly, we have the financial capability and flexibility to go hunting a little bit.

But retail is still among the most sought-after asset classes. The type of assets we're looking at are well leased with good tenants.

So, there's competition for that. But we try to pick our spots.

And I think we've got a nice pipeline on the development side. We're showing all the different ways we can affect our growth through our investment program.

And I think we'd like to do a little bit more as we look to 2026, if possible.

And actually, just one more for me before I turn it back. So, with respect to hunting out there for retail, is the acquisition criteria such that if it doesn't -- from third parties, if it doesn't have a CT Canadian Tire store in it, that it would potentially -- that would be the goal is to have something like that?

Or would you ever purchase something that would just be a third-party retail property and so be it?

We would definitely purchase third-party retail property unaffiliated with Canadian Tire. Now there's 2 versions of what that could look like, something that's a little bit more strategic.

So adjacent lands, adjacent assets, something that we think long-term, we can bring Canadian Tire into. So, I'll say, unaffiliated with Canadian Tire in its current form, but potential strategic rationale for why we'd be acquiring it.

The other ones that we would look at is things like what we've done in the past with our bank branch portfolio, just third-party single-tenant net lease, long-term leases, good credit type assets portfolios preferably. But it's been a long time since we've seen something like that, that we're interested in, that the pricing works for us.

I mean it's gotten quite expensive in that space, especially when you're talking about tenants like banks or certain QSR restaurants or pharmacies. So again, we've always looked at that opportunistically.

We like it. We'd like to own more of it, but we're only going to do that if it makes sense for us.

Maybe just one for me. Along the lines of acquisitions, can you maybe just comment on perhaps the timing of when we may see additional bend-ins from CTC.

If I recall, I think there's maybe 15, 20 properties left in that -- left at that level. And then secondly, if you have any comments on the potential value of those remaining assets?

Pammi, yes, there's probably closer to 15 now. We've always looked at the bend-ins as a lever we can pull when maybe there isn't as much development or as much third party that's ongoing to continue our steady pace of investment activity generally.

So, I think you'll see us continue to do a couple a year. I think the total size of the Canadian Tire portfolio that we would be interested in buying is probably somewhere between $150 million and $200 million today.

Thank you, Lauren, and thank you all for joining us today. We look forward to speaking with you again in February after we release our Q4 results.

Have a good day.