Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • BTB’s rental revenue fell 5.3% in Q2 2025 due to two non-cash lease adjustments
  • Cash NOI rose by 0.5% YoY to CAD19.5 million during the quarter
  • Adjusted AFFO per unit increased to 9.5¢, up from 9.4¢ in the same quarter last year

BTB Real Estate Investment Trust (TSX:BTB.UN) released its second quarter 2025 financial results, reporting a mixed performance characterized by a decline in rental revenue and net income, but improvements in certain operational metrics, including adjusted AFFO and lease renewal spreads.

Rental revenue for the quarter was CAD30.5 million, down 5.3% from CAD32.2 million in Q2 2024. The decrease was largely attributed to two non-cash straight-line rent adjustments totaling CAD1.8 million, related to a lease renegotiation with Lion Electric and the early termination of a lease by Big Rig Trailers. Adjusting for these one-time items, revenue would have shown a modest 0.3% YoY increase. Cash Net Operating Income (Cash NOI) reached CAD19.5 million, up 0.5% from CAD19.4 million a year earlier. For the six-month period, Cash NOI increased 4.4% to CAD39.7 million, reflecting income from a partial lease cancellation, improved leasing spreads, and contributions from new tenants, including Winners/HomeSense.

Net income and comprehensive income for the quarter declined 14.8% to CAD6.2 million, compared to CAD7.3 million in Q2FY24. Adjusted net income also fell to CAD5.8 million from CAD7.9 million, reflecting the impact of the rent adjustments. AFFO Adjusted per unit for Q2 2025 was 9.5¢, a slight increase from 9.4¢ last year. Over the first half of 2025, AFFO Adjusted totaled 19.8¢ per unit, up from 18.3¢ in the same period last year, driven by higher Cash NOI and lower administrative expenses. The adjusted payout ratio also improved to 79.2% in Q2, down from 80.2% a year earlier.

BTB completed 122,815 square feet in lease renewals and added 49,809 square feet in new leases during the quarter. The average rent renewal spread increased by 4.7% in Q2 and 4.8% for the first six months of 2025. However, occupancy declined to 91.2%, down from 94.6% in Q2 2024, primarily due to a previously disclosed industrial tenant bankruptcy. Including a post-quarter property sale, the occupancy rate would have improved to 92.0%. The REIT’s debt metrics showed modest improvement, with the total debt ratio falling to 57.1% and the mortgage debt ratio down to 51.7% as of June 30, 2025. BTB reported a liquidity position of CAD5.7 million in cash and CAD28.5 million in available credit.

Looking forward, BTB noted ongoing leasing momentum, particularly in its necessity-based retail and suburban office segments, which accounted for 96% of lease renewals this quarter.