BTB REIT aims to grow to $1 billion in five years

BTB Real Estate Investment Trust coming off its “most successful year to date” is expressing confidence to analysts and investors that it expects to double the size of its holdings over the next five years to $1 billion.
“My goal is that in five years time I want to be on a conference call with you and talk about the fact that we have achieved $1 billion worth of assets,” BTB REIT’s President and Chief Executive Officer Michel Léonard, said during the company’s fourth-quarter conference call this week.
During the past year, the Montreal-based REIT acquired 10 properties for a total of $126.8 million.
Leonard said that he expects BTB to keep up a similar pace of acquisition activity over the next five years to reach that $1-billion asset target. “If we just spread it out evenly over the next five years it is $100 million of acquisitions for each of the following years, including this year.”
Acquisitions showed variety
BTB’s 2012 acquisitions were comprised of five industrial buildings, three office buildings and two commercial buildings, as well as an additional 50% interest in a Quebec City office complex.
Those new holdings added 958,000 square feet to the trust's area, split nearly evenly between its two principal provinces: 418,000 square feet in Ontario and 540,000 in Quebec.
BTB owns 66 commercial, office and industrial properties for a total of more than 4.3 million square feet, valued at approximately $500 million.
The trust’s objectives are three-fold:
*  to grow its revenues from its assets to increase distributable income and therefore fund distributions;
* to maximize the value of its assets “through dynamic management” of its properties in order to sustain the long-term value of its units;
* to generate cash distributions that are fiscally beneficial to unit holders.
 
Financing could be a challenge
The BTB chief executive said his preferred way to finance future acquisitions is to raise capital by selling new units in the REIT.
“We realize right now that our unit price is low and don’t really intend to go to the market with such a low price for the units,” Léonard said.
BTB units (BTB.UN-T) trade on the Toronto Stock Exchange currently at about $4.62 apiece. They have traded between $4.94 and $4.04 over the past 52 weeks. “Our shares are trading below book value, which is an indicator of unrealized gain for our unitholders,” Léonard stated regarding the company’s unit price.
The trust has some strong financial numbers to celebrate for 2012: namely a 141% increase in net income, 105% increase in recurring FFO, 55% increase in distributable recurring income and a 22.1% in net operating income.
During 2012, BTB financed its growth by securing and fully using its $15-million acquisition line of credit, seven new first and second-ranking mortgage financings for a total of $51 million, the assumption of four mortgages totaling $28 million, and the refinancing of two mortgage loans in the amount of $41 million by a new $43 million financing at 4.11%, generating annual savings of more than $800,000.
As well, it sold two unit issues for a total of 8,848,150 units and gross proceeds of $37.7 million, which went to its acquisition and investment program and general requirements.
Stick to Quebec-Ontario
Léonard said during BTB REIT’s conference call that it will continue to concentrate on making acquisitions in its home market of Quebec as well as neighbouring Ontario.
“Obviously out East could be interesting,” he said. “But so far what I have looked at, let’s say in Halifax, we can buy properties in Halifax for the same prices that we can buy them in Ontario. For us it is easier to make those purchases in Ontario.” 



Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

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Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

Read more




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