True North Commercial REIT Reports Q2-2025 Results
"We are pleased with the strong leasing momentum which continued during the second quarter including the renewal of 161,000 square feet with a major Canadian bank further highlighting the REIT's commitment to maintaining strong relationships with high quality credit rated tenants," said Daniel Drimmer, the REIT's Chief Executive Officer. "Our core portfolio continued to achieve strong occupancy of 93% and the REIT completed the sale of two non-core assets, which combined with the REIT substantially completing the refinancing of its 2025 debt maturities, continued to strengthen the REIT's financial position."
Q2-2025 highlights
The REIT's core portfolio occupancy ([1]) excluding assets held for sale at the end of Q2-2025 was approximately 93% which remained above the average occupancy for the markets in which the REIT operates. The REIT also had a weighted average lease term ("WALT") (1) of 4.2 years excluding investment properties held for sale.
The REIT contractually leased or renewed approximately 291,600 square feet with a WALT of 4.4 years with positive leasing spreads on renewals reported at 0.6% for the quarter.
The REIT's Q2-2025 revenue and Net Operating Income ("NOI") (1) decreased relative to the three months ended June 30, 2024 ("Q2-2024") by 13% and 21% (YTD-2025 - 9% and 17%), respectively, primarily due to the disposition activity in 2024, a decrease in occupancy for the REIT's held for sale properties and termination income amounts included in Q2-2024 with no comparable amounts in Q2-2025 (the "Primary Variance Driver"), partially offset by contractual rent increases achieved by the REIT throughout 2024 and YTD-2025.
Q2-2025 same property net operating income ("Same Property NOI") (1) excluding the impact of termination income in both periods, decreased by approximately 5% primarily due to a reduction in occupancy for the REIT's Alberta portfolio and the finalization of an early termination of a tenant in the REIT's Greater Toronto Area ("GTA") portfolio completed in Q1-2025, which space has been re-leased with a new tenant for a ten-year lease term commencing in 2026. Excluding the impact of these items, the REIT's Same Property NOI would have been relatively in line with Q2-2024.
The REIT's Q2-2025 funds from operations ("FFO") (1) and adjusted funds from operations ("AFFO") (1) decreased by $3,440 and $4,063 (YTD-2025 - $4,199 and $4,894), respectively when compared to the same period in 2024 primarily due to the reduction in NOI described above and increase in interest costs.
Q2-2025 FFO and AFFO basic and diluted per trust units ("Unit") (1) decreased from $0.65 and $0.66 in Q2-2024 to $0.45 and $0.42 respectively due to the reasons outlined above, partially offset by the impact of a reduction in number of outstanding Units as a result of repurchases under the the normal course issuer bid ("NCIB") program during 2024 and 2025.
YTD highlights
The REIT contractually leased and renewed approximately 437,500 square feet with a WALT of 4.8 years and a 0.8% increase over expiring base rents relative to the six months ended June 30, 2024 ("YTD-2024").
The REIT continued the NCIB with YTD-2025 completing the repurchase of 110,700 Units for cash of $1,021 under 2024 NCIB at a weighted average price of $9.23 per Unit.
On March 18, 2025, the REIT announced the reinstatement of the monthly distribution ("Distribution Reinstatement") to Unitholders, which commenced with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per Unit per month. For YTD-2025, the REIT's AFFO payout ratio was 41%.
During YTD-2025, the REIT successfully completed $215,800 of refinancing or approximately 86% of the 2025 maturities and $4,500 of new financing at a weighted average interest rate of approximately 4.72% and weighted average term of approximately 3.1 years and has substantially finalized terms on the remaining 2025 maturities which are with lenders the REIT has longstanding relationships with. Subsequent to June 30, 2025, the REIT successfully secured a second mortgage in the amount of $4,000, with a three-year term at an interest rate of 9%. The REIT continues to focus on managing its debt maturity profile to strengthen the REIT's financial position.
Subsequent events
On July 16, 2025, the REIT completed the sale of 78 Meg Drive, London, Ontario totaling 11,300 square feet, for a sale price of $3,500.
On August 6, 2025, the REIT successfully secured a second mortgage in the amount of $4,000, with a three-year term at an interest rate of 9%.
Key performance indicators
Q2-2025
Q2-2024
YTD-2025
YTD-2024
Number of properties (1)
39
40
Portfolio gross leasable area ("GLA") (1)
4,470,800 sf
4,608,800 sf
Occupancy (1)(2)
93 %
90 %
WALT (1)
4.2 years
4.3 years
Revenue from government and credit rated tenants (1)
74 %
76 %
Revenue
$ 28,116
$ 32,325
$ 59,202
$ 64,789
NOI
13,803
17,521
28,468
34,107
Net loss and comprehensive loss
(11,927)
(7,548)
(11,364)
(2,410)
Same Property NOI (3)
17,692
19,956
37,325
38,637
FFO
$ 6,499
$ 9,939
$ 14,581
$ 18,780
FFO per Unit - basic
0.45
0.65
1.01
1.20
FFO per Unit - diluted
0.45
0.65
1.00
1.20
AFFO
$ 6,035
$ 10,098
$ 14,264
$ 19,158
AFFO per Unit - basic
0.42
0.66
0.99
1.23
AFFO per Unit - diluted
0.42
0.66
0.98
1.23
AFFO payout ratio - diluted (4)
41 %
— %
23 %
— %
Distributions declared
$ 2,483
$ —
$ 3,311
$ —
(1) This is presented as at the end of the applicable reporting period, rather than for the quarter.
(2) Represents same property occupancy excluding assets classified as held for sale as at June 30, 2025. The REIT's occupancy for all assets owned as at the end of each reporting period (including any held for sale assets) was 89% as at the end of Q2-2025 (Q2-2024 - 88%).
(3) Represents Same Property NOI including assets classified as held for sale during Q2-2025 and Q2-2024. Same Property NOI excluding assets classified as held for sale have been presented separately in this press release.
(4) This is a non-IFRS financial measure, refer to "Non-IFRS Financial Measures". YTD-2025 AFFO payout ratio was lower as a result of the reinstatement of the REIT's distribution commencing the March 2025 record date.
Operating results
The REIT's Q2-2025 revenue and NOI decreased relative to Q2-2024 by 13% and 21% (YTD-2025 - 9% and 17%), respectively, primarily due to the Primary Variance Driver, partially offset by contractual rent increases achieved by the REIT throughout 2024 and YTD-2025.
The REIT's Q2-2025 FFO and AFFO decreased by $3,440 and $4,063 (YTD-2025 - $4,199 and $4,894), respectively when compared to the same period in 2024 primarily due to the reduction in NOI described above and increase in interest costs.
Q2-2025 FFO and AFFO basis and diluted per Unit decreased from $0.65 and $0.66 in Q2-2024 to $0.45 and $0.42 respectively due to the reasons outlined above, partially offset by the impact of a reduction in number of outstanding Units as a result of repurchases under the NCIB program during 2024 and 2025.
YTD-2025 FFO basic and diluted per Unit decreased $0.19 and $0.20 to $1.01 and $1.00, whereas AFFO basic and diluted per Unit decreased $0.24 and $0.25 to $0.99 and $0.98 respectively, compared to YTD-2024 with variance driven by reasons noted above for Q2-2025 FFO and AFFO per Unit.
On March 18, 2025, the REIT announced the Distribution Reinstatement to Unitholders, which commenced with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per Unit per month. For YTD-2025, the REIT's AFFO payout ratio was 41%.
Same Property NOI
Q2-2025 Same Property NOI excluding assets held for sale decreased by approximately 11% (YTD-2025 - 3%) compared to the same period in 2024. Q2-2025 Same Property NOI excluding the impact of termination income in both periods, decreased by approximately 5% primarily due to the decline in occupancy for the REIT's Alberta portfolio and the finalization of an early termination of a tenant in the REIT's GTA portfolio completed in Q1-2025, which space has been re-leased with a new tenant for a ten-year lease term commencing in 2026. Excluding the impact of these items, the REIT's Q2-2025 Same Property NOI would have been relatively in line with Q2-2024.
Q2-2025 Alberta Same Property NOI decreased by 16% primarily attributable to the downsizing of a tenant in the Calgary portfolio. Q2-2025 British Columbia Same Property NOI decreased by 33% primarily as a result of an expiring lease not renewed at the beginning of 2025 which was partially re-leased (23% of the non-renewed space) subsequent to June 30, 2025 with the new lease commencing by the end of 2025. Excluding these items, Q2-2025 Same Property NOI for British Columbia remained consistent relative to Q2-2024.
Q2-2025 New Brunswick Same Property NOI increased by 9% compared to Q2-2024, primarily due new lease commencements in 2024 and contractual rent increases. Occupancy is positively impacted by new leases and a lease expansion commencing in the second half of 2024. Q2-2025 Nova Scotia Same Property NOI increased by 21% as a result of the increase in occupancy between the two periods as well as contractual rent increases.
Q2-2025 Ontario Same Property NOI decreased by 13% relative to Q2-2024, primarily due to lower occupancy, driven by the early termination of a certain tenant in the REIT's GTA portfolio during Q1-2025 which space has been re-leased with a new tenant for a ten-year lease term commencing in 2026. Excluding the impact of the early termination mentioned, Q2-2025 Same Property NOI for Ontario would have been relatively consistent with the same period in the prior year.
Debt and liquidity
As at June 30, 2025, the REIT had access to available funds ("Available Funds") ([2]) of approximately $42,890 with its mortgage portfolio carrying a weighted average term to maturity of 2.61 years and weighted average fixed interest rate of 4.38%.
During YTD-2025, the REIT successfully completed $215,800 of refinancing or approximately 86% of the 2025 maturities and $4,500 of new financing at a weighted average interest rate of approximately 4.72% and weighted average term of approximately 3.1 years and has substantially finalized terms on the remaining 2025 maturities which are with lenders the REIT has longstanding relationships with. The REIT continues to focus on managing its debt maturity profile to strengthen the REIT's financial position.
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT currently owns and operates a portfolio of 39 commercial properties consisting of approximately 4.5 million square feet in urban and select strategic secondary markets across Canada focusing on long term leases with government and credit rated tenants.
The REIT is focused on growing its portfolio principally through acquisitions across Canada and such other jurisdictions where opportunities exist. Additional information concerning the REIT is available at www.sedarplus.c a or the REIT's website at www.truenorthreit.com.
Non-IFRS measures
Certain terms used in this press release such as FFO, AFFO, FFO and AFFO payout ratios, NOI, Same Property NOI, indebtedness ("Indebtedness"), gross book value ("GBV"), Indebtedness to GBV ratio, net earnings before interest, tax, depreciation and amortization and fair value gain (loss) on financial instruments and investment properties ("Adjusted EBITDA"), interest coverage ratio, net asset value ("NAV") per Unit, Available Funds, occupancy and WALT are not measures defined by IFRS Accounting Standards ("IFRS") as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and should not be compared to or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. FFO, AFFO, FFO and AFFO payout ratios, NOI, Same Property NOI, Indebtedness, GBV, Indebtedness to GBV ratio, Adjusted EBITDA, interest coverage ratio, adjusted cash provided by operating activities, NAV per Unit, Available Funds, occupancy and WALT as computed by the REIT may not be comparable to similar measures presented by other issuers. The REIT uses these measures to better assess the REIT's underlying performance and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for Q2-2025 and the Annual Information Form are available on the REIT's profile at www.sedarplus.c a.
Reconciliation of non-IFRS financial measures
The following tables reconcile the non-IFRS financial measures to the comparable IFRS measures for Q2-2025, Q2-2024, YTD-2025 and YTD-2024. These non-IFRS financial measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other issuers.
Same Property NOI
Same Property NOI is measured as the NOI for the properties owned and operated by the REIT for the current and comparative period. The following table reconciles the REIT's Same Property NOI to NOI:
FFO and AFFO
The following table reconciles the REIT's FFO and AFFO to net loss and comprehensive loss, for Q2-2025, Q2-2024, YTD-2025 and YTD-2024:
Q2-2025
Q2-2024
YTD-2025
YTD-2024
Net loss and comprehensive loss
$ (11,927)
$ (7,548)
$ (11,364)
$ (2,410)
Add (deduct):
Fair value adjustment of Unit-based compensation
30
154
(36)
108
Fair value adjustment of investment properties and investment properties held for sale
14,780
12,703
18,612
14,601
Fair value adjustment of Class B LP Units
(264)
(311)
(570)
(648)
Transaction costs on sale of investment properties
539
1,969
539
1,969
Distributions on Class B LP Units
72
—
96
—
Unrealized loss on change in fair value of derivative instruments
93
532
618
279
Amortization of leasing costs and tenant inducements
3,176
2,440
6,686
4,881
FFO
$ 6,499
$ 9,939
$ 14,581
$ 18,780
Add (deduct):
Unit-based compensation expense
38
(86)
160
(5)
Amortization of financing costs
358
482
688
845
Amortization of mortgage discounts
(15)
(8)
(18)
(16)
Instalment note receipts
10
12
21
24
Straight-line rent
297
933
1,123
1,899
Capital reserve
(1,152)
(1,174)
(2,291)
(2,369)
AFFO
$ 6,035
$ 10,098
$ 14,264
$ 19,158
FFO per Unit:
Basic
$0.45
$0.65
$1.01
$1.20
Diluted
0.45
0.65
1.00
1.20
AFFO per Unit:
Basic
$ 0.42
$ 0.66
$ 0.99
$ 1.23
Diluted
0.42
0.66
0.98
1.23
AFFO payout ratio:
Basic
41 %
— %
23 %
— %
Diluted
41 %
— %
23 %
— %
Distributions declared
$ 2,483
$ —
$ 3,311
$ —
Weighted average Units outstanding (000s):
Basic
14,398
15,246
14,428
15,589
Add:
Unit options and incentive Units
96
13
87
12
Diluted
14,494
15,259
14,515
15,601
Indebtedness to GBV ratio
The table below calculates the REIT's Indebtedness to GBV ratio as at June 30, 2025 and December 31, 2024. The Indebtedness to GBV ratio is calculated by dividing the Indebtedness by GBV:
Adjusted EBITDA
The table below reconciles the REIT's Adjusted EBITDA to net loss and comprehensive loss for the twelve months period ended June 30, 2025 and 2024:
Interest coverage ratio
The table below calculates the REIT's interest coverage ratio for the twelve months period ended June 30, 2025 and 2024. The interest coverage ratio is calculated by dividing Adjusted EBITDA by interest expense.
Available Funds
The table below calculates the REIT's Available Funds as at June 30, 2025 and December 31, 2024:
Forward-looking statements
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are provided for the purposes of assisting the reader in understanding the REIT's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, performance, debt financing, achievements, events, prospects or opportunities for the REIT or the real estate industry and may include statements regarding the financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes, distributions, plans, the benefits and renewal of the NCIB, or through other capital programs, the impact of the consolidation (the "Unit Consolidation") and objectives of or involving the REIT. In some cases, forward-looking information can be identified by such terms as "may", "might", "will", "could", "should", "would", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", or the negative thereof or other similar expressions suggesting future outcomes or events.
Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the REIT's control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: risks and uncertainties related to the Units and trading value of the Units; risks related to the REIT and its business; fluctuating interest rates and general economic conditions, including potential higher levels of inflation; the impact of any tariffs and retaliatory tariffs on the economy, credit, market, operational and liquidity risks generally; occupancy levels and defaults, including the failure to fulfill contractual obligations by tenants; lease renewals and rental increases; the ability to re-lease and secure new tenants for vacant space; the timing and ability of the REIT to acquire or sell certain properties; work-from-home flexibility initiatives on the business, operations and financial condition of the REIT and its tenants, as well as on consumer behavior and the economy in general; the ability to enforce leases, perform capital expenditure work, increase rents, raise capital through the issuance of Units or other securities of the REIT; the benefits of any NCIB program, or through other capital programs; the ability of the REIT to continue to pay distributions in future periods; and obtain mortgage financing on the REIT's properties and for potential acquisitions or to refinance debt at maturity on similar terms. The foregoing is not an exhaustive list of factors that may affect the REIT's forward-looking statements. Other risks and uncertainties not presently known to the REIT could also cause actual results or events to differ materially from those expressed in its forward-looking statements. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions applied in drawing a conclusion or making a forecast or projection, including management's perception of historical trends, current conditions and expected future developments, as well as other considerations believed to be appropriate in the circumstances. There can be no assurance regarding: (a) work-from-home initiatives on the REIT's business, operations and performance, including the performance of its Units; (b) the REIT's ability to mitigate any impacts related to fluctuating interest rates, potential higher levels of inflation; the impact of any current or future tariffs and the shift to hybrid working; (c) the factors, risks and uncertainties expressed above in regards to the hybrid work environment on the commercial real estate industry and property occupancy levels; (d) credit, market, operational, and liquidity risks generally; (e) the availability of investment opportunities for growth in Canada and the timing and ability of the REIT to acquire or sell certain properties; (f) repurchasing Units under the NCIB; (g) Starlight Group Property Holdings Inc., or any of its affiliates, continuing as asset manager of the REIT in accordance with its current asset management agreement; (h) the benefits of the NCIB, or through other capital programs; (i) the impact of the Unit Consolidation; (j) the availability of debt financing for potential acquisitions or refinancing loans at maturity on similar terms; (k) the ability of the REIT to continue to pay distributions in future periods; and (l) other risks inherent to the REIT's business and/or factors beyond its control which could have a material adverse effect on the REIT.
The forward-looking statements made relate only to events or information as of the date on which the statements are made. Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
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As lower border traffic weighs on the industry, Barrett said she is advocating for 'small regulatory changes.' 'We have some taxes on our products that, believe it or not, in a tax- and duty-free industry that our U.S. competitors don't have. So we're asking for those to be changed so we can be more competitive,' she said. 'Also, we're asking to qualify for some of these tariff relief programs or pandemic-level supports along the lines of what they did during the pandemic with wage subsidy or rent subsidy.' Barrett said the government is the landlord for many duty-free stores and said a rent deferral or subsidy would help the industry until travel patterns normalize. She added that there have been conversations between her organization and senior government officials. Barrett said those officials agreed the association was putting forward 'small asks' to support the industry. An Aug. 2 release announcing the Woodstock Duty Free Shop's closure mentioned that the federal and provincial governments had promised tariff relief support programs to help businesses impacted by trade tensions. 'I pinned a lot of hopes on those when both levels of government made those announcements. I was reminded of the pandemic support programs,' Slipp said, adding that his business had benefited from such programs. Monday Mornings The latest local business news and a lookahead to the coming week. His attention has now turned to advocating for rent deferral programs for duty-free shops renting land from either the federal government or from a bridge authority as well as loan programs for duty-free stores. When he looks at the future of the industry, he said the prospects 'are not bright.' 'I'm grieving the loss of my business, but I'm also accepting the reality that the business environment has changed and there is nothing in the bag of tricks that would suggest positive changes in this industry in the short to medium term,' Slipp said. 'I'm feeling bad that I was not able to succeed in the end and that I am having to lay to rest this business that my father and I have built and spent so many years working so hard on.' This report by The Canadian Press was first published Aug. 17, 2025.
Cision Canada
17 hours ago
- Cision Canada
Air Canada and Air Canada Rouge Operations Remain Suspended Pending Outcome of CIRB Process
Rolling cancellations now extend to the afternoon of August 17, 2025 MONTRÉAL, August 16, 2025 /CNW/ - Air Canada today said all flights of Air Canada and Air Canada Rouge remain suspended pending the outcome of a Canada Industrial Relations Board (CIRB) process related to a directive by the Government of Canada ordering binding arbitration in the company's contract negotiations with its flight attendants. Customers whose flights are cancelled are being notified of the cancellations and offered options that include a full refund, a future travel credit or rebooking on another airline. Those whose flights are cancelled are strongly advised not to go to the airport unless they have a confirmed booking on a flight by another carrier. In response to a labour disruption by the Canadian Union of Public Employees (CUPE) that led to a strike on August 16, Air Canada has been cancelling flights on a rolling basis. At present, all flights by Air Canada and Air Canada Rouge are cancelled until the afternoon (EDT) of August 17, 2025. Air Canada Express flights operated by Jazz or PAL continue to operate as normal. Air Canada deeply regrets the disruption's impact on customers. Additional customer information, including an FAQ, is available Air Canada is Canada's largest airline, the country's flag carrier and a founding member of Star Alliance, the world's most comprehensive air transportation network. Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and Internationally on six continents. It holds a Four-Star ranking from Skytrax. Air Canada's Aeroplan program is Canada's premier travel loyalty program, where members can earn or redeem points on the world's largest airline partner network of 45 airlines, plus through an extensive range of merchandise, hotel and car rental partners. Through Air Canada Vacations, it offers more travel choices than any other Canadian tour operator to hundreds of destinations worldwide, with a wide selection of hotels, flights, cruises, day tours, and car rentals. Its freight division, Air Canada Cargo, provides air freight lift and connectivity to hundreds of destinations across six continents using Air Canada's passenger and freighter aircraft. Air Canada's climate-related ambition includes a long-term aspirational goal of net-zero greenhouse gas emissions by 2050. For additional information, please see Air Canada's TCFD disclosure. Air Canada shares are publicly traded on the TSX in Canada and the OTCQX in the US. Media Resources: Photos Videos B-Roll Articles SOURCE Air Canada
