CT Real Estate Investment Trust (TSE:CRT.UN) reported higher second-quarter net operating income and adjusted funds from operations per unit, supported by contractual rent escalations, completed intensification projects and recent acquisitions and developments.
President and Chief Executive Officer Kevin Salsberg said the REIT’s portfolio remained “substantially fully occupied” as it continued to address upcoming lease maturities. Same-property net operating income, including contributions from intensification projects, increased 2.5% from a year earlier, while overall NOI rose 4.8%.
Cash distributions paid during the quarter rose 2.5% year over year to C$0.237 per unit. The AFFO payout ratio was 72.7%, compared with 72.6% a year earlier. Salsberg also noted that the board had approved a 3.5% increase in monthly distributions.
Acquisitions and Development Activity
During the quarter, CT REIT completed a C$13 million vend-in of a Canadian Tire store and Canadian Tire Gas+ location in St. Catharines, Ontario. The property added about 52,400 square feet of gross leasable area and is expected to generate a going-in yield of 6.9%.
The REIT also closed about C$76 million of previously announced investments, adding more than 232,000 square feet of incremental gross leasable area. The completed transactions included:
- Centre 50, a Canadian Tire-anchored multi-tenant property in Edmonton, Alberta;
- Marché Rosemère, a multi-tenant retail property adjoining an existing Canadian Tire store in Rosemère, Quebec;
- Land adjacent to an existing CT REIT property in Oliver, British Columbia; and
- Intensifications at Canadian Tire stores in Penticton, British Columbia; Burlington, Ontario; and Valleyfield, Quebec.
Senior Vice President of Real Estate Jodi Shpigel said the REIT has nine projects under development, including the Canada Square Toronto office retrofit. Combined development costs for those projects total approximately C$354 million, with about C$191 million spent as of quarter-end. CT REIT expects to invest roughly C$66 million during the next 12 months to advance the projects.
Committed lease agreements cover 488,000 square feet, or 94.2% of total space under development. Canadian Tire accounts for 91.6% of the leased development space.
At Canada Square, the REIT is modernizing two office buildings at 2180 and 2200 Yonge Street, encompassing 680,000 square feet of gross leasable area. More than 90% of the space has been leased, Shpigel said. The project began in the fourth quarter of 2025 and remains on schedule, with approximately 17% of its budget spent to date. The office retrofit is expected to continue through the end of 2028.
Management said a future second phase at Canada Square would be distinct from the current office retrofit, involving residential development and ground-up construction.
Leasing and Portfolio Performance
CT REIT completed nine Canadian Tire store lease renewals during the quarter. Renewal activity across the portfolio covered more than 618,000 square feet and produced a blended rent increase of 10.4%.
- Canadian Tire store renewals totaled about 515,000 square feet, with a 10.9% increase.
- Other tenant renewals totaled about 103,000 square feet, with an 8.3% increase.
At quarter-end, the portfolio’s occupancy rate stood at 99.5%. Leases with Canadian Tire had a weighted average remaining term of 7.1 years.
Salsberg said Canadian Tire lease-renewal discussions generally begin after the tenant provides notice of its intent to renew, typically about 18 months before a lease expires. The renewals announced during the quarter addressed leases expiring through the first half of 2027.
Capital Position and Investment Outlook
CT REIT issued C$300 million of Series K unsecured debentures during the quarter. The notes have a five-and-a-half-year term and carry a 3.57% coupon. Net proceeds were used to repay C$200 million of Series D debentures that matured June 1, 2026, and to reduce amounts outstanding under credit facilities.
The REIT’s total indebtedness-to-EBITDA fair value ratio improved to 6.56 times at the end of June, from 6.77 times at the end of 2025. Interest coverage was 3.49 times, compared with 3.55 times in the prior-year quarter.
CT REIT ended the quarter with approximately C$12 million in cash and about C$312 million in total available liquidity, including an undrawn C$300 million committed bank facility. It also had roughly C$187 million available under a C$300 million uncommitted facility with Canadian Tire.
On acquisitions, Salsberg said there were limited marketed opportunities that fit the REIT’s strategy, as strong retail fundamentals have contributed to competition and elevated pricing. He said CT REIT remains focused on Canadian Tire stores, single-tenant properties, strategic assets and land or properties adjacent to existing holdings.
Management said Canadian Tire may still hold between 10 and 15 assets that meet the REIT’s investment criteria and could potentially become future vend-in opportunities. CT REIT also said it remains open to additional development activity but expects Canadian Tire-related development opportunities to be less frequent than in recent years.
About CT Real Estate Investment Trust (TSE:CRT.UN)
CT Real Estate Investment Trust is an unincorporated real estate investment trust that invests in retail properties across Canada. The most significant portion of properties are located in Ontario, followed by Quebec and Western Canada. The trust generates the vast majority of revenue from leasing its properties to Canadian Tire Corporation, which operates the Canadian Tire retail stores. The trust’s portfolio primarily consists of properties anchored by a Canadian Tire retail store, in addition to retail properties not anchored by Canadian Tire, distribution centres, and mixed-use commercial property.
