On Tuesday, CT REAL ESTATE INV TRUST (TSX:CRT) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.

View the webcast at https://edge.media-server.com/mmc/p/3fpjuiku/

Summary

CT REAL ESTATE INV TRUST reported strong Q1 2026 results with high occupancy at 99.4%, and increases in same property NOI by 2.3% and net operating income by 4.7% year-over-year.

AFFO per unit rose by 2.8% and FFO per unit by 3.5%. The company announced a 3.5% increase in monthly distributions effective July 2026, marking the 13th increase since IPO.

The company announced three new investment opportunities totaling $43 million, expected to add 130,000 square feet to the portfolio and yield 6.28%. Development pipeline includes 11 projects with a committed investment of $380 million.

The balance sheet remains strong with an indebtedness ratio of 39% and an interest coverage ratio of 3.52 times. Leverage is considered conservative, allowing for opportunistic acquisitions.

Management expressed confidence in delivering long-term value with a stable portfolio, visible organic growth, and a solid development pipeline.

Full Transcript

OPERATOR

Thank you for standing by. My name is Shannon and I'll be your conference operator today. At this time I would like to welcome everyone to CT REIT's Q1 2026 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during that time, simply press Star 11 on your telephone keypad. To withdraw your question, please press star 11. The speakers on the call today are Kevin Salsberg, President and Chief Executive Officer of CT REAL ESTATE INV TRUST, Jodi Spiegel, Senior Vice President, Real Estate and Leslie Gibson, Chief Financial Officer. Today's discussion contains information that may constitute forward looking information within the meaning of applicable securities laws. Although CT REIT believes that the forward looking information in today's discussion is based on information estimates and assumptions that are reasonable information, such information is necessarily subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward looking information. For information on these material risks, uncertainties, factors and assumptions, please see the REITs Q1 2026 and full year 2025 MDNA as well as the 2025 AIF, which are available on the website and filed on SEDAR Plus. The REIT does not undertake to update any forward looking information, whether written or oral, except as required by applicable laws. I will now turn the call over to Kevin Salzberg, President and Chief Executive Officer of CT REAL ESTATE INV TRUST.

Kevin Salsberg (President and Chief Executive Officer)

Thank you, Shannon and good morning, everyone. Thank you for joining us today on our Q1 2026 earnings call. We are pleased with our start to the year and our first quarter results once again demonstrate the strength and stability of our portfolio, the benefits of our disciplined operating approach and the resilience of our business model. CT REIT's objective has always been straightforward to deliver dependable and growing results supported by a high quality portfolio and a conservatively managed balance sheet. Our Q1 results reflect our continued execution against this objective. From an operating perspective, our portfolio continued to perform very well. Occupancy remained high at 99.4% consistent with prior periods and we continued to benefit from the contractual rent escalations embedded in our long term leases. Same property NOI grew by 2.3% and net operating income increased by 4.7% year over year respectively. This steady growth at the property level translated into continued improvement in our earnings metrics. AFFO per unit increased by 2.8% compared to the first quarter of last year and FFO per unit increased by 3.5%. It is important to note that this growth was achieved while maintaining a disciplined approach to costs and capital allocation and while keeping our payout ratio stable in the low to mid 70% range. Against this backdrop, we were pleased to announce that our Board of Trustees has approved a further increase in our monthly distributions. Effective with the July 2026 payment, distributions will increase by 3.5%, which marks our 13th increase since our IPO and brings our cumulative distribution growth to more than 50% over that period. Turning to capital deployment, we were pleased to announce three new third party investment opportunities with a total expected capital commitment of approximately $43 million. These investments include the acquisition of a Canadian Tire anchored retail property in Edmonton as well as the acquisition of two separate properties that are located adjacent to existing CT REIT owned assets, one a land parcel in Oliver, British Columbia and the other an existing retail property in the Greater Montreal area. Collectively, these transactions are expected to deliver an attractive going in yield and will add nearly 130,000 square feet of incremental GLA to the portfolio. While individually modest in size, these investments are good examples of how we continue to source capital efficient growth opportunities that align with our strategy. In each case, we are leveraging our portfolio, existing relationships and market knowledge to deploy capital in a prudent manner. This approach has been a consistent hallmark of CT REIT's growth over time and works particularly well in a transaction environment where discipline and selectivity remain critical. At the same time, our development pipeline remains well positioned. We continue to advance a number of projects with four expected to be completed through the course of this year and others extending into 2027 and beyond, including our Canada Square retrofit project. These developments are all substantially pre leased and as Jody will outline in more detail, they are designed to deliver incremental growth while maintaining the overall quality and balance of our portfolio. From a balance sheet perspective, it remains in a very strong position. We ended the quarter with our indebtedness ratio sitting at 39% and our interest coverage ratio at 3.52 times. The potential liquidity that this provides coupled with our conservative approach differentiates us from our peers and will position us well to continue to execute on our strategy going forward. Looking ahead, we remain confident in CT REAL ESTATE INV TRUST's ability to deliver reliable performance, long term value creation with a stable predominantly net lease portfolio, visible organic growth, a well positioned development pipeline and a strong balance sheet, CT REIT will continue to navigate the current environment and capitalize on opportunities as they arise. With that I'll now turn the call over to Jody to discuss our investment, development and leasing activities in more detail.

Jodi Spiegel (Senior Vice President, Real Estate)

Jodi thanks Kevin and good morning everyone. As Kevin noted and as highlighted in our press release yesterday, we were pleased to announce three new investments this quarter. The first acquisition relates to a property in the eastern part of Edmonton. The roughly 76,000 square foot property is anchored by a Canadian Tire store and has two additional freestanding pads, one leased to the bank of Montreal and one leased to McDonald's. The second acquisition is a 54,000 square foot commercial retail unit building anchored by Value Village that is directly adjacent to the CT owned Canadian Tire store in Rosemere, Quebec which is a suburb located just north of Montreal. Lastly, we will be acquiring roughly 3.4 acres of land adjacent to a CT REIT owned Canadian Tire and grocery store anchored Open Air Shopping Centre in Oliver, British Columbia. These new investments are subject to closing conditions, are expected to close in Q2 and will require a total of $43 million to complete and and are projected to earn a going in yield of 6.28%. Combined they will add approximately 130,000 square feet of high quality gross leasable area to our portfolio. Looking ahead, our development pipeline remains healthy. We currently have 11 projects at various stages of progress. These developments, including the Canada Square office retrofit project in Toronto, represent a committed investment of approximately $380 million of which $177 million has been spent to date. We expect to invest roughly $78 million over the next 12 months to advance these projects. Once completed, they will add 629,000 square feet of new gross leasable area to the portfolio, approximately 95% of which has already been pre leased. Turning to leasing during the first quarter, CTREIT completed two Canadian Tire store lease extensions in the quarter. We also renewed nearly 200,000 square feet of third party tenancies on a blended basis. Total renewal spreads came in at 5.9% on approximately 340,000 square feet of gross leasable area. It should be noted that approximately 226,000 square feet of this gross leasable area related to extensions that were exercised with fixed options to renew at flat rents. Excluding this gross leasable area, blended renewal spreads came in at 11% as of quarter end. We maintained a long weighted average lease term for the portfolio at 7.0 years and our occupancy rate remained robust at 99.4%. I will now turn the call over to Leslie to discuss our financial results.

Leslie Gibson (Chief Financial Officer)

Leslie thanks Jody and good morning everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in the first quarter Once again, our results demonstrated the steady growth and resilience of our portfolio. Same property NOI, which includes the impact of intensifications, grew by 2.3% in the quarter compared to Q1 of 2025. These increases reflect the contractual rent escalations of approximately 1.5% per year in many of our Canadian Tire leases, as well as the contributions from intensification projects completed in 2025 of $1.2 million. For the quarter overall, NOI grew by 4.7% year over year, representing an increase of approximately $5.6 million. This strong performance was supported by the same property NOI growth I just spoke to and the impacts of seven acquisitions completed in 2025 as well as development activity over the relevant period. In the first quarter, general administrative expenses as a percentage of Property revenue were 2.6% compared to 2.9% in the same period last year. The decrease was mainly due to the timing of the deferred income tax provision. Excluding the fair value adjustments, G and A as a percentage of property revenue decreased 20 basis points to 2.5%. The fair value adjustment on investment properties was $31.2 million in the quarter compared to $24.8 million in the prior year. The gain was primarily driven by contractual rent increases and leasing activity within the property portfolio as well as adjustments to certain assumptions in our discounted cash flow models. In the first quarter, AFFO per unit on a diluted basis was 32.7 cents, up 2.8% compared to the first quarter of last year. FFO on a diluted basis was 35.4 cents per unit, up 3.5% compared to Q1 of 2025. Growth in FFO and AFFO primarily reflect the increase in NOI partially offset by higher property expenses, interest costs, and $1 million of development fee revenue earned in Q1 2025. Cash distributions paid in the quarter increased 2.5% compared to Q1 2025 to 23.7 cents per unit, reflecting the higher monthly distribution rate that became effective in July of 2025. As Kevin mentioned earlier, we are pleased to announce our 13th distribution increase since our IPO, reflecting our financial strength and consistent delivery of strong results. The new rate will become effective with the July 2026 distribution. The AFFO payout ratio for Q1 was 72.5%, stable from 72.6% in the same period last year. Turning to the balance sheet, our interest coverage ratio for the first quarter was 3.52 times, which is stable compared to 3.55 times in Q1 of 2025. This small change reflects our higher interest costs arriving from the reset of interest rates on several series of our class CLP units effective June 1, 2025, increased utilization of our credit facilities to fund acquisitions, intensification and developments, and the issuance of $200 million of the series J unsecured debentures in June of last year, partially offset by higher capitalized interest on properties under development. Even with these financing activities, our total indebtedness to EBIT fair value improved to 6.46 times in 2026 from 6.77 times a year ago as earning growth outpaced the increase in debt. Our strong balance sheet provides ample financial flexibility to fund future growth initiatives. With respect to liquidity, we ended Q1 with approximately $6 million of cash on hand. Our committed $300 million bank credit facility and our $300 million uncommitted credit facility with CTC with roughly $132 billion available on the line at quarter end, which provides adequate liquidity and balance sheet capacity to fund ongoing investments and to pursue new opportunities. And with that, I'll turn the call back over to the operator for any questions

OPERATOR

at this time, I would like to remind everyone, in order to ask a question, please press star then one one on your teleph. We'll pause for just a moment to compile the Q and A roster. Our first question is from the line of Lauren Calmar with Desjardin. Your line is now open. Lauren, your line is open. Please check your mute button.

Lauren Calmar

Oh, sorry about that. I don't know how that happened. Thank you. I was just saying congrats on a good start to the year on the acquisition front. Clearly a little bit of a flurry here in, I guess what will be 2Q. I was just wondering if you could provide us a little bit of an outlook in terms of the acquisition outlook for the balance of the year.

Kevin Salsberg (President and Chief Executive Officer)

Sure, Lauren. So obviously we're very pleased with the acquisitions that we've announced. They all fit very well into the portfolio and align with our strategy. I think, you know, the way we're thinking about 2026 is hitting singles and doubles. You know, we're going to be out there trying to find these opportunities, working obviously with our existing relationships to try to source them. You know, we're pretty confident in our ability to continue finding, finding these types of deals. We've talked about our development pipeline. It's still obviously quite robust. We're happy with the pipeline, but we'll be delivering a bunch of that through the course of the year. So we're trying to find the backfills to keep our investment activity up towards our typical run rate in a given year. So no specific deals to announce at this time or specific guidance on quantum type, but I would say we're hopeful the balance of the year shapes up similar to the way it started off.

Lauren Calmar

Okay, that's pretty helpful. Thank you. And then maybe a quick one here, just for Leslie. On the capped interest side of things, it bumped up, I think, a little bit, quarter over quarter. How should we be thinking about that over the balance of the year and into 2027?

Leslie Gibson (Chief Financial Officer)

Lauren? The increasingly capped interest relates to us having moved the Canada Square property into properties under development on December 31st. So sort of the higher run rate that you're seeing in Q1, that will sort of continue as that development continues over the course of the next two, two and a half years.

Lauren Calmar

Okay, so kind of use this as a good jumping off point. Yep, that would be fair. Fantastic. Thank you so much. Thank you.

OPERATOR

Thank you. As a reminder to ask a question, please press star 11 at this time. One moment, please. Our next question comes from the line of Tal Wooley with cibc. Your line is now open.

Tal Wooley

Hey, good morning. The Oliver, British Columbia land purchase, is that just to. Are you banking some land there or are there some plans for building on that site? Morning, pal. I wouldn't call it a land bank. I think we have active intention to develop the parcel. It's about 3.4 acres, so it can probably build somewhere around 40 to 50,000 square feet of GLA there. It's a really good market. South Okanagan. We got a lot of productive stores in and around the neighborhood. So when the opportunity came up, we wanted to obviously protect our existing assets and add to it because it's quite productive. We do have some tenant interest. We're working through that right now. And as long as that goes as we hope it will, it'll hopefully join our development pipeline soon. Okay. And then I guess I was just curious, you know, the choices. Choice Properties has moved forward with the proposal to acquire at least part of First Capitals portfolio. You know, I'm wondering, given that, you know, both you and Choice have started at roughly the same time with similar structures. Like, did this, you know, sort of open your eyes maybe to larger type transactions that might be possible for CT reit, or are you and Katie and Tyre more interested in just kind of sticking to your knitting rather than branching out in that fashion? I'd say it's probably more likely to be the latter than the former. Tal I mean, we always scan the market for opportunities. Obviously we're aware of the notion around something larger transformational on the M and A side, but it hasn't been the way that we've grown to date. And our growth to date has obviously been the secret to our success in terms of our, you know, our outperformance in terms of earnings and nav growth and our ability to continue to pushing our distribution increases on an annual basis. So, you know, obviously we think about these things, we contemplate them, we talk with our board and obviously Canadian Tire about the merits. But to date we have not found anything that we believe is in our best interest. But that doesn't mean that can't change over time. And are you seeing any larger retail portfolios in the market right now that you would be interested in or has it been relatively quiet on that front in terms of marketed opportunities? Definitely quiet. The marketed opportunities that we're seeing are more single tenant assets in the retail space, a lot of grocery anchored. But I would say even the quantity of marketed offerings has slowed down a little relative to where the last year ended off. There's one or two bigger single property acquisitions that we're aware of that are coming to market, but no specific portfolios that I'm aware of at this time. Okay, that's great. Thanks very much.

Kevin Salsberg (President and Chief Executive Officer)

Thanks, Tom.

OPERATOR

Our next question comes from the line of Palmy beer with RBC Capital Markets. Your line is now open.

Palmy Beer

Thanks. Good morning. Just on the development cost for the pipeline that's active, looks like the cost per square foot went up rather materially. Can you maybe just expand on that and what drove that? Or was it really just a function of maybe the transfer of Canada Square into a puds?

Kevin Salsberg (President and Chief Executive Officer)

I think a couple things Palmy. I definitely think Canada Square is a contributing factor to that. Obviously an office retrofit is a unique type of development investment for us. So the profile would look different than say building new retail gla. The other thing that's happened is we've completed a lot of new larger store projects and now we're left with on the retail side are store expansions. And typically when you're expanding a store or 20, 30,000 square feet at a time, it's slightly less efficient. You lose some of the economies of scale. So on a per square foot basis, it can be a little bit more expensive. So I think it's the combination of those two things that's driving that increased cost on A per square foot basis.

Palmy Beer

What's the bulk of it? What you just described in terms of the expansions or really the bulk of it, because some of these other ones do seem to be sort of rather smaller projects, but. Or was the bulk of it.

Kevin Salsberg (President and Chief Executive Officer)

Yeah. We'd have to get back to you on the breakdown. I'm not, I don't know that off the top of my head, but those two things at a high level would be the contributing factors. But if you'd like the breakdown, we can, we can circle back with you.

Palmy Beer

Sure. Oh, okay. And then just last one for me, just in terms of the. I think, I think it was Jody's comments or Leslie's comments on the. On the leasing spreads. Are there a lot of leases in the portfolio that. Where you do have flat rents? I think you mentioned 200 over 200,000 square feet had options at flat rents. And just curious if that was also. If those were Canadian Tire related.

Jodi Spiegel (Senior Vice President, Real Estate)

Good morning, Pommy. So 226,000 of those were the fixed flat renewals we do not have. That's really in the minority of the portfolio. And it's a combination of the tenancies. It's not just exclusively ctr. It was a combination, but it is an anomaly. It is not the norm.

Palmy Beer

Yeah, Pommy, Just for a little extra color, they were, I'd say, two anchor leases that were acquired subsequent to our IPO and our typical vending or development related transactions with Canadian Tire. So these would be the two that would be most prominent in the portfolio and they just happen to come up at the same quarter. Okay, got it. Thanks very much. I'll turn it back.

OPERATOR

Thank you. Our next question comes from the line of Juliano Thornhill with National Bank Yolani Snow.

Juliano Thornhill

Hey, guys. Good morning, everyone. So obviously your leverage is running pretty low. I think you're at six and a half this quarter. I'm just wondering, is that anticipation of really ramping up Canada Square or should we kind of expect that to be trending higher? And if so, where would you be investing that capital or directing that capital would be M and A or just incremental developments?

Leslie Gibson (Chief Financial Officer)

Julian, it's Leslie. The. The leverage is down at 39%. It's not sort of anticipation of leveraging that up as we spend through our development portfolio. Because this development portfolio is being spent over the couple of years and largely we can fund the vast majority of that through retained cash. Not expecting that to increase significantly over the next little while. It's really more a factor just of the increases in the property portfolio. As we continue to increase the value of those assets relative to development spend, it's crept down. But it's not a strategic objective to be lower. And we're not expecting it also to be sort of significantly higher in the coming quarters.

Kevin Salsberg (President and Chief Executive Officer)

I think we view it as a conservative way to manage the balance sheet while leaving dry powder on the side should we find opportunities that we want to capitalize on. So really trying to be opportunistic in this marketplace and be in a good position to obviously run the portfolio and complete our developments, but also leave ourselves open to new acquisitions should they present.

Juliano Thornhill

And so the new acquisitions, would you say that's kind of more focused on, like, CT related banners, or is it going to be kind of more adjacent properties to your existing portfolio going forward? Mixed bag. I mean, yeah, you know, buying the Canadian Tire anchored property in Edmonton, obviously that's core to our strategy. And repatriating Canadian Tire assets, this is what we do. The other ones are just taking advantage of our existing market knowledge and our existing portfolio to sort of find new opportunities. So I think it'll be a mix of both going forward, where you'll see us doing our typical stuff, but also trying to expand a little further afield while we try to find deals that still align with our strategic objectives. Okay, thank you, guys.

Kevin Salsberg (President and Chief Executive Officer)

Thank you.

OPERATOR

As there are no further questions at this time, I will now turn the call over to Kevin Salzberg, President and CEO, for closing remarks.

Kevin Salsberg (President and Chief Executive Officer)

Thank you, Shannon. And thank you all for joining us today. We look forward to welcoming you to our annual meeting of unitholders, which we will conduct virtually later this morning at

OPERATOR

10:00am we hope that you'll be able to listen in. We also look forward to speaking with you again in August after we release our Q2 results. Thank you. This concludes today's call. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.