True North Commercial REIT Reports Q4-2024 Results
REIT to reinstate distribution of approximately $0.0575 per Unit per month effective record date of March 31, 2025 at an inferred distribution yield of approximately 8%
REIT achieves Q4-2024 normalized same property NOI growth of 2.3%, stable occupancy and strong progress on 2024 and 2025 debt maturities
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/
TORONTO, March 18, 2025 /CNW/ - True North Commercial Real Estate Investment Trust (TSX:TNT) (the "REIT") today announced its financial results for the three months ended December 31, 2024 ("Q4-2024") and year ended December 31, 2024 ("YTD-2024").
"Q4-2024 saw continued strength in leasing activity by the REIT highlighting its commitment to maintaining strong relationships with tenants which translated into reported occupancy within it's core portfolio of 93% and normalized same property net operating income growth of 2.3% for the quarter," stated Daniel Drimmer, the REIT's Chief Executive Officer. "The REIT also made significant progress on its near term debt maturities having completed the refinancing of all 2024 debt maturities and 70% of its 2025 debt maturities which along with the sale of non-core assets, continued to strengthen the REIT's financial position. The REIT is pleased to announce the reinstatement of the monthly distribution to Unitholders, which will commence with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575(1) per Unit per month."
Q4-2024 highlights
The REIT's core portfolio occupancy(2) excluding assets held for sale at the end of Q4-2024 was approximately 93% which remained above average occupancy for the markets in which the REIT operates. The REIT also had a weighted average lease term ("WALT")(2) of 4.2 years excluding investment properties held for sale.
The REIT contractually leased and renewed approximately 66,100 square feet with a WALT of 4.22 years with positive leasing spreads on renewals reported at 3.1% for the quarter.
The REIT's Q4-2024 revenue and Net Operating Income ("NOI")(2) decreased relative to the same period in 2023 by 4% and 11% (YTD-2024 - 4% and 9%) respectively, primarily due to the disposition activity in 2024 (the "Primary Variance Driver"), which was partially offset by Q4-2024 normalized same property NOI ("Same Property NOI")(2) growth of 2.3%. The normalized Same Property NOI growth was primarily due to the increase in occupancy to approximately 93% for Q4-2024 relative to approximately 92% in three months ended December 31, 2023 ("Q4-2023") (excluding held for sale properties) as well as contractual rent increases.
The REIT's Q4-2024 funds from operations ("FFO")(2) and adjusted funds from operations ("AFFO")(2) decreased by $760 and $315, respectively when compared to the same period in 2023 primarily due to the Primary Variance Driver and reduction in occupancy for the REIT's held for sale properties which was partially offset by normalized Same Property NOI growth.
Q4-2024 FFO basic and diluted per Unit(2) increased from $0.59 in Q4-2023 to $0.61 and $0.60 for the quarter, respectively, whereas AFFO basic and diluted per Unit(2) increased from $0.58 to $0.63 and $0.62 respectively relative to Q4-2023.
The REIT had $57.2 million of available funds ("Available Funds")(1) at the end of Q4-2024 representing an increase of $11,815 from December 31, 2023, primarily due to the disposition of non-core assets during YTD-2024 as well as the amendment of the REIT's credit facility (the "Credit Facility").
From the commencement of the normal course issuer bid ("NCIB") on April 18, 2024 (the "2024 NCIB") to the date of this filing, the REIT had repurchased and cancelled 815,126 Units for $8,290 at a weighted average price of $10.17 per Unit under the 2024 NCIB which represented an inferred distribution yield of approximately 16.8%(2).
(1) At an inferred distribution yield of approximately 8% based on the trading price of the REIT's Units as at March 17, 2025.
(2) This is a non-IFRS financial measure, refer to "Non-IFRS Financial Measures".
YTD highlights
Contractually leased and renewed approximately 498,200 square feet with a WALT of 5.5 years and a 0.7% decrease over expiring base rents. The lower leasing spread in YTD-2024 relative to the year ended December 31, 2023 ("YTD-2023") was primarily due to a specific tenant lease entered into at 6925 Century Avenue in three months ended September 30, 2024. Excluding the impact of one tenant renewal at 6925 Century Avenue, the REIT had positive renewal spreads of 3.2% for YTD-2024.
Continued the NCIB with YTD-2024 completing the repurchase of 784,420 Units for $7,220 under the 2023 NCIB and 815,126 Units for cash of $8,290 under 2024 NCIB at a weighted average price of $10.17 per Unit and representing a combined inferred distribution yield of 17.6%(2).
The REIT has completed the renewal or refinancing of all debt previously maturing in 2024 and as at December 31, 2024, the REIT had approximately $257,000 of principal mortgage debt maturing in 2025. Subsequent to December 31, 2024, the REIT successfully completed the refinancing of approximately $127,500 or approximately 50% of the 2025 maturities at a weighted average interest rate of approximately 4.80% and weighted average term to maturity of approximately 3.5 years. Furthermore, the REIT has substantially finalized terms on an additional approximately $88,600 or 35% of 2025 debt maturities which are expected to be finalized by Q2-2025 at a weighted average interest rate of approximately 5.40% whereby such amounts include approximately $41,000 of principal debt maturing on properties in Alberta (excluding Alberta assets, the refinancing rate on these maturities is expected to be approximately 4.42%). The debt maturities completed or expected to be completed were primarily with existing lender relationships. The REIT continues to focus on extending its 2025 debt maturities amounting to approximately $41,000, which are with lenders that the REIT has longstanding and strong relationships with. Subsequent to the anticipated refinancing of the 2025 debt maturities outlined above, the REIT has no further principal debt maturities until late Q3-2026 and onwards. The REIT continues to proactively focus on managing its debt maturity profile to strengthen the REIT's financial position.
Subsequent events
Subsequent to December 31, 2024, the REIT successfully completed the refinancing of approximately $127,500 or approximately 50% of such 2025 maturities at a weighted average interest rate of approximately 4.80% and weighted average term of approximately 3.5 years.
On February 28, 2025, the REIT amended the Credit Facility by modifying the pool of secured properties against such facility and extended the maturity date to December 1, 2026 with no changes to other terms.
The REIT is pleased to announce the reinstatement of a monthly distribution to Unitholders, which will commence with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per Unit per month. Assuming the payment of distributions at this level throughout 2024, the REIT's AFFO payout ratio would have been approximately 37% for YTD-2024 and based on the trading price of the REIT's Units as at March 17, 2025, the distribution yield would be approximately 8%.
(1) This is a non-IFRS financial measure, refer to "Non-IFRS Financial Measures".
(2) Estimated using the $1.70775 per Unit distribution prior to reallocating funds used for distributions to the NCIB and the average market price the REIT repurchased Units at under the NCIB up to the date of this filing.
Key performance indicators
Q4-2024
Q4-2023
YTD-2024
YTD-2023
Number of properties(1)
40
44
Portfolio gross leasable area ("GLA")(1)
4,618,800 sf
4,792,200 sf
Occupancy(1)(2)
93 %
89 %
Remaining WALT(1)(2)
4.2 years
4.6 years
Revenue from government and credit rated tenants(1)
75 %
77 %
Revenue
$ 31,682
$ 32,867
$ 126,908
$ 132,204
NOI
15,457
17,346
65,821
72,548
Net loss and comprehensive loss
(15,160)
(5,937)
(20,953)
(40,621)
Same Property NOI
18,886
18,730
78,180
75,926
FFO
$ 8,882
$ 9,642
$ 36,776
$ 41,412
FFO per Unit - basic
0.61
0.59
2.42
2.52
FFO per Unit - diluted
0.60
0.59
2.42
2.52
AFFO
$ 9,156
$ 9,471
$ 37,827
$ 40,619
AFFO per Unit - basic
0.63
0.58
2.49
2.47
AFFO per Unit - diluted
0.62
0.58
2.48
2.47
AFFO payout ratio - diluted(3)
— %
25 %
— %
69 %
Distributions declared
$ ,
$ 2,337
$ ,
$ 28,068
(1) This is presented as at the end of the applicable reporting period, rather than for the quarter.
(2) Excluding assets held for sale.
(3) This is a non-IFRS financial measure, refer to "Non-IFRS Financial Measures".
Operating results
The REIT's Q4-2024 revenue and NOI decreased relative to the same period in 2023 by 4% and 11% (YTD-2024 - 4% and 9%) respectively, primarily due to the Primary Variance Driver, which was partially offset by Q4-2024 normalized Same Property NOI growth of 2.3%. The normalized Same Property NOI growth was primarily due to the increase in occupancy to approximately 93% for Q4-2024 relative to approximately 92% in Q4-2023 (excluding held for sale properties) as well as contractual rent increases.
The REIT's Q4-2024 FFO and AFFO decreased by $760 and $315, respectively when compared to the same period in 2023 primarily due to the Primary Variance Driver and reduction in occupancy for the REIT's held for sale properties which was partially offset by normalized Same Property NOI growth. The REIT's YTD-2024 FFO and AFFO decreased by $4,636 and $2,792, respectively due to the same factors as outlined for Q4-2024. Same property interest costs (excluding the impact of properties' disposed during 2023 and 2024) remained relatively stable primarily as a result of the REIT's weighted average interest rate remaining relatively consistent with Q4-2023 at approximately 3.94% for Q4-2024.
Q4-2024 FFO basic and diluted per Unit increased from $0.59 in Q4-2023 to $0.61 and $0.60 respectively, whereas AFFO basic per Unit increased from $0.58 to $0.63 and $0.62 respectively over the comparable period. YTD-2024 FFO basic and diluted per Unit decreased $0.10 to $2.42 and AFFO basic and diluted per Unit increased $0.02 to $2.49 and $0.01 to $2.48 respectively, compared to YTD-2023 with variance driven by reasons noted above for FFO and AFFO positively impacted by a reduction in the number of Units as a result of the REIT's NCIB program.
Same Property NOI
Occupancy(1)
As at December 31
NOI
2024
2023
Q4-2024
Q4-2023
Variance
Variance %
