Balancing Growth and Responsibility
2023 Annual Report
1
Balancing Growth and Responsibility 2
Non-IFRS Financial Measures – Definitions
Non-IFRS Measure
Adjusted net income Adjusted net income is a non-IFRS financial measure that starts with net
Definition
income and comprehensive income and removes the effects of: (i) fair value
adjustment of investment properties; (ii) fair value adjustment of derivative
financial instruments; (iii) fair value adjustment of Class B LP units; and (iv)
transaction costs incurred for acquisitions and dispositions of investment
properties and early repayment fees.
Reconciliation
Operating results –
Adjusted net
income
Adjusted Earnings
Before Interest,
Taxes, Depreciation
and Amortization
(“Adjusted EBITDA”)
Same-Property NOI
Funds from
Operations (“FFO”)
and FFO Adjusted
The Trust considers this to be a useful measure of operating performance,
as fair value adjustments can fluctuate widely with the real estate market and
transaction costs are non-recurring in nature.
Adjusted EBITDA income is a non-IFRS financial measure that starts with
net income and comprehensive income and removes the effects of certain
adjustments, on a proportionate basis, including: (i) interest expense; (ii) taxes;
(iii) depreciation of property and equipment; (iv) amortization of intangible
assets; (v) fair value adjustments (including adjustments of investment
properties, of financial instruments, of Class B LP units and of unit price
adjustments related to unit-based compensation); (vi) transaction costs for
acquisitions and dispositions of investment properties and early repayment
fees; and (vii) straight-line rental revenue adjustments.
The most directly comparable IFRS measure to Adjusted EBITDA is net
income and comprehensive income. The Trust believes Adjusted EBITDA
is a useful metric to determine its ability to service debt, to finance capital
expenditures and to provide distributions to its Unitholders.
Adjusted Earnings
Before Interest,
Taxes, Depreciation
and Amortization
(“Adjusted EBITDA”);
Capital Resources –
Interest coverage
ratio; and
Capital Resources –
Debt service
coverage ratio
Operating results –
Same-Property
Portfolio
Funds from
Operations (FFO
and
Cash Flows
Same-Property NOI is a non-IFRS financial measure defined as net operating
income (“NOI”) for the properties that the Trust owned and operated for
the entire duration of both the current year and the previous year. The most
directly comparable IFRS measure to same-property NOI is Operating
Income.
The Trust believes this is a useful measure as NOI growth can be assessed on
its portfolio by excluding the impact of property acquisitions and dispositions
of both the current year and previous year. The Trust uses the Same-Property
NOI to indicate the profitability of its existing portfolio operations and the
Trust’s ability to increase its revenues, reduce its operating costs and
generate organic growth.
FFO is a non-IFRS financial measure used by most Canadian real estate
investment trusts based on a standardized definition established by REALPAC
in its January 2022 White Paper (“White Paper”). FFO is defined as net income
and comprehensive income less certain adjustments, on a proportionate
basis, including: (i) fair value adjustments on investment properties, class B LP
units and derivative financial instruments; (ii) amortization of lease incentives;
(iii) incremental leasing costs; and (iv) distribution on class B LP units. FFO
is reconciled to net income and comprehensive income, which is the most
directly comparable IFRS measure. FFO is also reconciled with the cash flows
from operating activities, which is an IFRS measure.
FFO Adjusted is also a non-IFRS financial measure that starts with FFO
and remove the impact of non-recurring items such as transaction cost on
acquisitions and dispositions of investment properties and early repayment
fees.
The Trust believes FFO and FFO Adjusted are key measures of operating
performance and allow the investors to compare its historical performance.
3
Reconciliation
Adjusted Funds
from Operations
(AFFO)
and
Cash Flows
Non-IFRS Measure
Adjusted Funds from
Operations (“AFFO”)
and
AFFO Adjusted
Definition
AFFO is a non-IFRS financial measure used by most Canadian real estate
investment trusts based on a standardized definition established by REALPAC
in its White Paper. AFFO is defined as FFO less: (i) straight-line rental revenue
adjustment; (ii) accretion of effective interest; (iii) amortization of other
property and equipment; (iv) unit-based compensation expenses; (v) provision
for non-recoverable capital expenditures; and (vi) provision for unrecovered
rental fees (related to regular leasing expenditures). AFFO is reconciled to net
income and comprehensive income, which is the most directly comparable
IFRS measure. AFFO is also reconciled with the cash flows from operating
activities, which is an IFRS measure.
AFFO Adjusted is also a non-IFRS financial measure that starts with AFFO
and removes the impact of non-recurring items such as transaction costs on
acquisitions and dispositions of investment properties and early repayment
fees.
The Trust considers AFFO and AFFO Adjusted to be useful measures of
recurring economic earnings and relevant in understanding its ability to
service its debt, fund capital expenditures and provide distributions to
unitholders.
FFO and AFFO per
unit
and
FFO adjusted and
AFFO adjusted per
unit
FFO and AFFO
payout ratios
and
FFO Adjusted and
AFFO Adjusted
payout ratios
FFO and AFFO per unit and FFO adjusted and AFFO adjusted per unit are
non-IFRS financial measures used by most Canadian real estate investment
trusts based on a standardized definition established by REALPAC in its White
Paper. These ratios are calculated by dividing the FFO, AFFO, FFO adjusted
and AFFO adjusted by the Weighted average number of units and Class B LP
units outstanding.
Funds from
Operations (FFO);
Adjusted Funds
from Operations
(AFFO)
The Trust believes these metrics to be key measures of operating
performances allowing the investors to compare its historical performance in
relation to an individual per unit investment in the Trust.
FFO and AFFO payout ratios and FFO Adjusted and AFFO Adjusted payout
ratios are non-IFRS financial measures used by most Canadian real estate
investment trusts based on a standardized definition established by REALPAC
in its White Paper. These payout ratios are calculated by dividing the actual
distributions per unit by FFO, AFFO and FFO Adjusted and AFFO Adjusted per
unit in each period.
The Trust considers these metrics a useful way to evaluate its distribution
paying capacity.
Funds from
Operations (FFO)
and
Adjusted Funds
from Operations
(AFFO)
Total debt ratio
Total debt ratio is a non-IFRS financial measure of the Trust financial leverage,
which is calculated by taking the total long-term debt less cash divided by
total gross value of the assets of the Trust less cash.
Capital Resources –
Debt ratio
Interest Coverage
Ratio
Debt Service
Coverage Ratio
The Trust considers this metric useful as it indicates its ability to meet its debt
obligations and its capacity for future additional acquisitions.
Interest coverage ratio is a non-IFRS financial measure which is calculated
by taking the Adjusted EBITDA divided by interest expenses net of financial
income (interest expenses exclude early repayment fees, accretion of
effective interest, distribution on Class B LP units, accretion of non-derivative
liability component of convertible debentures and the fair value adjustment on
derivative financial instruments and Class B LP units).
The Trust considers this metric useful as it indicates its ability to meet its
interest cost obligations for a given period.
Debt service coverage ratio is a non-IFRS financial measure which is
calculated by taking the Adjusted EBITDA divided by the Debt Service
Requirements, which consists of principal repayments and interest expenses
net of financial income (interest expenses exclude early repayment fees,
accretion of effective interest, distribution on Class B LP units, accretion of
non-derivative liability component of convertible debentures and the fair value
adjustment on derivative financial instruments and Class B LP units).
The Trust considers this metric useful as it indicates its ability to meet its
interest cost obligations for a given period.
Capital Resources –
Interest coverage
ratio
Capital Resources –
Debt service
coverage ratio
2023 Annual ReportBalancing Growth and Responsibility
4
Our Mission
is to provide environments
that meet our clients’
needs and contribute
to realizing their potential.
Our Values
5
Open-minded
Approachable
Dynamic
Driven
Authentic
2023 Annual ReportBalancing Growth and Responsibility 6
7
Table
of Contents
1
Our Year in Review
10 | A Word from our President and CEO
14 | Highlights
16 | Key Metric Evolution
18 | Asset Types
19 | Geographic Locations
28 | Client Portrait
30 | Top 10 Clients3 Our Clients
4 Inaugural ESG Report
32 | Our 2023 ESG Report
discloses information about our
ESG management approach and
performance for calendar year 2023.
Our Portfolio
2 22 | Our Properties
24 | Our 2023 Acquisitions
5 Financial Information
34 | Management Discussion and Analysis
80 | Audited Consolidated Financial Statements
2023 Annual ReportBalancing Growth and Responsibility 8
Our Year
in Review
9
2023 Annual ReportBalancing Growth and Responsibility 10
11
A Word from our
President and CEO,
Michel Léonard
I am delighted to reflect upon
the remarkable journey that
was 2023 for BTB. The past
twelve months have been
marked by record-breaking
financial performance,
strategic advancements, and
a steadfast commitment to
responsible growth. 2023
was a year that propelled us
further along our strategic
journey and I would like to
express my sincere gratitude
to each and every one of you
who have played a pivotal role
in making 2023 a resounding
success.
A Record Year for BTB
Our 2023 financial performance has been nothing
short of stellar. The rental revenues, a cornerstone
of our financial success, reached an all-time
high of $127.8 million for the year, showcasing a
remarkable 7.0% increase compared to the same
period in 2022. This achievement is a testament to
the effectiveness of our leasing strategies and the
robustness of our portfolio.
Our leasing strategies demonstrated exceptional
efficacy solidifying our position as a leader in the
real estate sector. In the last quarter alone, BTB
completed 158,790 square feet of lease renewals,
coupled with an additional 78,340 square feet of
new leases. These figures underscore the vitality
of our leasing efforts and our ability to attract and
retain clients in a dynamic market environment. On
an annual basis, BTB’s leasing accomplishments
for 2023 were also impressive: a total of 485,751
square feet of lease renewals were successfully
completed, complemented by 296,240 square feet
of new leases. These figures affirm our sustained
leasing momentum, underpinned by strategic
initiatives that resonate with the evolving needs
of our clients. As a direct result of these strong
leasing endeavors, our occupancy rate surged to
an impressive 94.2%, marking a significant 49
basis points increase compared to the prior quarter
and an outstanding 99 basis points increase
compared to the same period in 2022. The leasing
achievements echo our promise to optimizing the
use of our spaces, ensuring our properties remain
vibrant and integral components of their respective
communities. The average lease renewal rental
rate for the quarter demonstrated a substantial
14.3% increase, contributing to the overall growth
trajectory.
On the operating side of our business, the Net
Operating Income (NOI), a key indicator of our
operational excellence, totaled $75.4 million for
the year, reflecting a 7.0% increase compared to
the previous year. This growth is a direct result of
our priority to value creation across our assets
and our strategic focus on optimizing operational
efficiencies. Our same-property NOI demonstrated
resilience and growth as we witnessed a 2.1%
increase. Our leasing efforts in the necessity-
based retail segment, coupled with enhanced
rental spreads in the industrial sector, contributed
significantly to this positive performance. For the
off-downtown core office segment, we concluded
the year with a notable 7.7% increase in the
fourth quarter of the same-property NOI and an
impressive increase in the lease renewal rental rate
of 5.3%. It reaffirms our commitment to adaptability
and strategic repositioning in response to market
dynamics.
Strategic Repositioning and Industrial
Assets
Since 2018, BTB made significant strides in
the strategic repositioning of its portfolio. In
2023, we concluded the acquisitions of three
industrial properties – one in Mirabel, QC, and
two in Edmonton, AB, bringing our total industrial
properties to 36.4% of our portfolio, from 18.1% in
2020. These endeavors embody our deliberate shift
towards a future where industrial assets form the
bedrock of our sustained success.
2023 Annual ReportBalancing Growth and Responsibility 12
13
Reflecting on 2023, it is evident that our focus
of investing in industrial properties is a strategic
beacon guiding us through a dynamic market
environment. The acquired properties are not just
transactions; they represent a deliberate move
towards creating enduring value for our unitholders
and a holistic approach to shaping a resilient and
dynamic future.
Commitment to Responsible Growth
Amidst our financial improvements and strategic
advancements, we stand proudly at the pinnacle of
a transformative journey marked by the publication
of our inaugural Environmental, Social, and
Governance (ESG) report in January 2024. This
milestone represents more than a document; it
symbolizes our commitment to responsible growth,
sustainability, and the highest standards of ethical
business practices.
Our ESG report was not merely a procedural task,
it was a meticulous and comprehensive process
that engaged every facet of our organization. From
Finance to Operations, from Human Resources
to Leasing, every department played a crucial
role in shaping an ESG narrative that mirrors our
dedication to transparency and accountability.
As we actively integrate ESG initiatives into our
daily practices, we are aligning our business
strategies with broader environmental and social
responsibilities. This is a pledge embedded in the
fabric of our corporate culture. The positive impact
of our ESG initiatives is already discernible.
Heading into 2024
As we bid farewell to 2023, I am filled with gratitude
for the collective efforts that have propelled BTB
to new heights. The year was a demonstration of
our resilience, adaptability, and unyielding devotion
to excellence. As we stand on the cusp of 2024,
I am pleased to declare that we enter the new
year with serenity and confidence. Our financial
foundations are robust, our strategic vision is clear,
and our commitment to responsible growth is
relentless. We have weathered uncertainties and
embraced challenges as opportunities for growth
and innovation. The lessons learned in 2023 have
fortified our resolve to navigate the ever-evolving
real estate landscape with agility and foresight.
I would also like to take a moment to acknowledge
the significant contributions of our departing
Executive Vice President, CFO, and COO, Mathieu
Bolté. His leadership has been instrumental in
driving positive changes within the company,
particularly in terms of process improvements.
Mathieu’s strategic vision not only streamlined
our operations but also contributed to enhanced
efficiency and effectiveness across various
departments. His commitment to excellence has
left an indelible mark on our organizational culture,
fostering a spirit of innovation and continuous
improvement. The robust financial foundations and
clear vision we currently enjoy are a testament to
his transformative influence. His ability to navigate
challenges with foresight has played a critical
role in shaping our resilient and forward-thinking
approach. While Mathieu will be greatly missed, we
understand and respect his decision to move on to
new challenges. We wish him all the best, confident
that his skills and insights will continue to contribute
to success wherever his path may lead.
Looking ahead, our focus remains strong on
creating sustainable value for our unitholders. We
are optimistic about the opportunities that 2024 will
present, and we are well-positioned to capitalize on
them. Our strategic repositioning efforts, coupled
with conscientious growth, will guide us in shaping a
future that is not only financially rewarding but also
socially and environmentally responsible.
In conclusion, I extend my deepest appreciation to
our dedicated employees, devoted trustees, valued
clients, and unitholders who have been instrumental
in our success. Together, we have laid a solid
foundation for the future, and I am sure that the
coming year will be marked by continued success.
As we embark on this exciting journey into 2024, let
us do so with the collective spirit that has defined
BTB throughout its remarkable history – a spirit of
innovation, resilience, and a shared commitment to
building a better, more sustainable future.
Thank you for your continued trust and support.
Michel Léonard, President & CEO
2023 Annual ReportBalancing Growth and Responsibility 14
15
$1.2BAsset value
6.1M sq. ft.
Total leasable area
77Properties
Highlights
In 2023, BTB delivered a never-
before-seen performance,
with increased net operating
income and rental revenue.
Strategic portfolio expansion
and efficient financial
management contributed to
steady returns for unitholders.
BTB remains well-positioned
for sustained growth in the
dynamic real estate market.
94.2%
Occupancy rate
$127.8M
$75.4M
Rental revenue
2022: $119.5M
Net operating income (NOI)
2022: $70.4M
45.1¢
74.1%
FFO adjusted per unit(1)
2022: 45.4¢
AFFO adjusted payout ratio(1)
2022: 73.3%
42.4¢
Net earnings
per unit
30.0¢
Distributions
per unit
$66.5M
Same-property NOI(1)
2022: $65.2M (Increase of +2.1%)
*Highlights are presented for the 2023 calendar year or as at December 31st, 2023, unless otherwise specified.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
2023 Annual ReportBalancing Growth and Responsibility 16
17
Key Metric Evolution*
Rental revenue
Net Operating Income (NOI)
,
6
2
8
7
2
1
$
,
5
9
4
9
1
1
$
2
0
6
3
9
$
,
9
6
9
2
9
$
,
,
3
4
3
0
0
1
$
2023
2022
2021
2020
2019
$75,379
$70,430
$56,336
$51,260
$50,897
2019
2020
2021
2022
2023
FFO adjusted per unit (1)
AFFO adjusted payout ratio(1)
2023
2022
2021
2020
2019
45.1¢
45.4¢
42.1¢
38.3¢
40.7¢
%
9
.
1
1
1
%
1
.
7
9
%
9
7
7
.
%
3
3
7
.
%
1
.
4
7
2019
2020
2021
2022
2023
*For the years ending on December 31, in thousands of dollars. (1) This is a non-IFRS financial measure, refer to page 2 and 37.
Performance on the markets
BTB’s Total Return
S&P/TSX Index Total Return
S&P/TSX Capped REIT Index Total Return
9
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2611 Queensview Drive, Ottawa, ON
190
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2023 Annual ReportBalancing Growth and Responsibility
18
19
2020:
54.6%
43.0%
36.4%
2020:
18.1%
Asset
Types
In 2023, BTB continued to
strategically move towards
the industrial sector while
maintaining a diversified
portfolio with three types
of key assets: 20.6% in
necessity-based retail for
stability (vs. 27.3% in 2020),
43.0% in off-downtown core
office for prime spaces (vs.
54.6% in 2020) and 36.4%
in industrial for growth in
logistics and distribution (vs.
18.1% in 2020). This deliberate
allocation underscores our
commitment to maximizing
returns through a well-
calibrated asset mix.
l
a
i
r
t
s
u
d
n
I
2020:
27.3%
20.6%
l
i
a
t
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r
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e
s
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O
Geographic Locations
BTB maintained the strategic distribution of
its portfolio across major geographic locations,
encompassing Edmonton, Saskatoon, Ottawa,
Montreal, Trois-Rivières and Quebec. This
geographic diversity positions us to seize
varied real estate opportunities and adapt
to the dynamics of regional markets.
22.5%
Quebec City
12 properties ($214.3M)
1.4M sq. ft.
85.2% occupancy rate (Quebec City)
74.1% occupancy rate (Trois-Rivières)
2020: 25.9%
12 properties ($246.7M)
1.4M sq. ft.
89.1% occupancy rate
13.2%
Ottawa
11 properties ($164.2M)
0.8M sq. ft.
98.8% occupancy rate
2020: 20.6%
13 properties ($141.5M)
1.1M sq. ft.
93.3% occupancy rate
54.0%
Montréal
40 properties ($702.4M)
3.3M sq. ft.
96.2% occupancy rate
2020: 53.5%
40 properties ($515.8M)
2.9M sq. ft.
93.3% occupancy rate
6.6%
Edmonton
10 properties ($82.1M)
0.4M sq. ft.
100% occupancy rate
2020: N/A
3.7%
Saskatoon
4 properties ($44.6M)
0.2M sq. ft.
100% occupancy rate
2020: N/A
Percentages on this page are presented based on property value.
Percentages on this page are presented based on total leasable area.
2023 Annual ReportBalancing Growth and ResponsibilityCreated by Bence Bezeredyfrom the Noun Project
20
21
Our
Portfolio
2023 Annual ReportBalancing Growth and Responsibility 22
23
Our Properties
We closed the year with a total
of 77 properties and 6.1 million
square feet of leasable area
across Canada in the regions
of Montréal, Quebec City,
Trois-Rivières, Ottawa,
Edmonton and Saskatoon.
Industrial
1325 Hymus Blvd, Dorval
4105 Sartelon Street,
St-Laurent
208-244 Migneron Street
& 3400-3410 Griffith
Street, St-Laurent
7777 Transcanada
Highway, St-Laurent
6000 Kieran Street,
St-Laurent
2005 Le Chatelier Street,
Laval
4535 Louis B. Mayer
Street, Laval
3695 des Laurentides
(Highway-15), Laval
2175 des Entreprises
Blvd, Terrebonne
2205-2225 des
Entreprises Blvd,
Terrebonne
3190 F.-X. Tessier Street,
Vaudreuil-Dorion
9900 Irénée-Vachon
Street, Mirabel
2350 Chemin du Lac,
Longueuil
191 D’Amsterdam Street,
St-Augustin-de-
Desmaures
175 De Rotterdam Street,
St-Augustin-de-
Desmaures
340-360, 370-380, 375
and 377-383 Sir-Wilfrid-
Laurier Blvd, Mont-Saint-
Hilaire
80 Aberdeen Street,
Ottawa
245 Menten Place,
Ottawa
2200 Walkley Street,
Ottawa(1)
2204 Walkley Street,
Ottawa(1)
Necessity-based
retail
3761-3781 des Sources
Blvd, Dollard-des-
Ormeaux
11590-11800 de Salaberry
Blvd, Dollard-des-
Ormeaux
2665-2673 and 2681,
Côte Saint-Charles,
Saint-Lazare
2611 Queensview Drive,
Ottawa(3)
2900 Jacques-Bureau
Street, Laval
979(3) & 1031 Bank Street,
Ottawa
5791 Laurier Blvd,
Terrebonne
7 and 9 Montclair Blvd,
Gatineau(1)
6655 Pierre-Bertrand
Blvd, Quebec City(1)
6700 Pierre-Bertrand
Blvd, Quebec City(1)
825 Lebourgneuf Blvd,
Quebec City
815 Lebourgneuf Blvd,
Quebec City(1)
1170 Lebourgneuf Blvd,
Quebec City(1)
505 Des Forges Street,
Trois-Rivières(1)
1500 Royale Street,
Trois-Rivières(1)
1921 - 91 Street,
Edmonton
1465-1495 and 1011-1191
Saint-Bruno Blvd and 800
de l’Étang Street, Saint-
Bruno-de-Montarville
2111 Fernand-Lafontaine
Blvd, Longueuil
1939-1979 F.-X. Sabourin
Street, St-Hubert
1000 Du Séminaire Blvd
North, St-Jean-sur-
Richelieu
909-915 Pierre-Bertrand
Blvd, Quebec City
625-675 De la Concorde
Street, Lévis
1200-1252 De la
Concorde Street, Lévis
1-9 & 10 Brewer Hunt Way
& 1260-1280
Teron Rd, Ottawa
Off-downtown core
office
400 Hunt Club Rd,
Ottawa
1100 Algoma Road,
Ottawa
6909 - 42 Street, Leduc
18410 - 118A Avenue NW,
Edmonton
18028 - 114 Avenue NW,
Edmonton
28765 Acheson Road,
Acheson
25616 - 117 Avenue NW,
Acheson
3905 Allard Avenue,
Edmonton
8743 50 Avenue NW,
Edmonton
8810 (8818-8846) 48
Avenue NW, Edmonton
8810 (8856) 48 Avenue
NW, Edmonton
3542 Millar Avenue,
Saskatoon
318 - 68th Street,
Saskatoon
3911 Millar Avenue,
Saskatoon
3927 and 3931
Wanuskewin Road,
Saskatoon
5810 Sherbrooke Street
East, Montréal(1)
2101 Sainte-Catherine
Street West, Montréal
2250 Alfred-Nobel Blvd,
St-Laurent
2600 Alfred-Nobel Blvd,
St-Laurent(1)(3)
2344 Alfred-Nobel Blvd,
St-Laurent(1)
7150 Alexander-Fleming
Street, St-Laurent
2425 Pitfield Blvd,
St-Laurent
3111 Saint-Martin Blvd
West, Laval(2)(3)
3131 Saint-Martin Blvd
West, Laval(2)
204 De Montarville Blvd,
Boucherville(1)
32 Saint-Charles Street
West, Longueuil
50 Saint-Charles Street
West, Longueuil
85 Saint-Charles Street
West, Longueuil
1327-1333 Ste-Catherine
Street West and 1405-1411
Crescent Street, Montréal
4890-4898 Taschereau
Blvd, Brossard
145 Saint-Joseph Blvd,
St-Jean-sur-Richelieu
315-325 MacDonald
Street, St-Jean-sur-
Richelieu(2)
(1) BOMA BEST certified property
(2) BOMA BEST certification in progress
(3) LEED certified property
2023 Annual ReportBalancing Growth and Responsibility 24
25
In 2023, we acquired three industrial properties,
bringing our total industrial properties to 36.4% of
our portfolio, an improvement of 10.9% since our
strategic repositioning to the industrial sector in 2021.
8810 48 Avenue NW, Edmonton, AB
On May 3, 2023, we finalized the acquisition of these industrial
properties located in the heart of the McIntyre Industrial Park in
Edmonton, Alberta. Built in 1978, these properties are currently
leased to four tenants, including Redco Equipment Sales Group.
Purchase price: $7.35M*
Property type: industrial
Total leasable area: 83,292 sq.ft.
Our 2023
Acquisitions
19.5%
9900 Irénée-Vachon Street, Mirabel, QC
On February 2, 2023, we finalized the acquisition of
this Class A industrial property, which is fully leased to
Lion Electric, an innovative manufacturer of electric
school buses, minibuses and commercial trucks.
Purchase price: $28M*
Property type: industrial
Total leasable area: 176,819 sq.ft.
*Purchase price excluding transaction costs and adjustments.
2023 Annual ReportBalancing Growth and Responsibility 26
27
Our
Clients
2023 Annual ReportBalancing Growth and Responsibility 28
29
Client Portrait:
Amylior
Amylior is a manufacturer
of power wheelchairs and a
distributor of mobility aid
products. Our mission is to
improve the mobility and
quality of life of our customers
by developing superior
products and providing
exceptional service, adapted
to the specific needs of users.
Can you summarize the history of your company
for us?
Our company started modestly in 1997 with only 4
employees in the Canadian market. Over the years,
we progressed, expanding our operations to the
United States a few years later, then to Australia,
New Zealand and Europe in 2016. Through the
development of several innovative products,
we were able to boost our sales and conquer
different international markets. At the same time,
we consolidated our operations by operating four
different factories, expanding our facilities at each
stage. Today, our company continues to grow and
prosper thanks to our constant commitment to
innovation, quality and strategic expansion into
global markets.
What are your principal markets?
Canada, United States, Australia/New Zealand, and
Europe.
What are you most proud of accomplishing as a
business?
As a company, we are most proud of our exceptional
team at Amylior, which is the driving force behind
our continued growth and success.
What are the main challenges you face as a
business?
Our main challenges relate to effectively managing
our rapid and continued growth. This involves
maintaining the quality of our products and
services, responding to changing market needs,
strengthening our infrastructure and human
resources, as well as remaining competitive while
preserving our corporate culture and core values.
Does your business have environmental and/or
social implications?
Our social impact is significant because we operate
in the medical mobility aid industry, thus directly
responding to an essential social need.
What are the next steps or projects for your
business?
Next steps for our company include expanding our
operations in the United States. We are actively
working on this project to expand our presence and
increase our impact in this key market.
Can you tell us what you appreciate about BTB?
What I appreciate most about BTB is the ability to
offer a personalized strategy that perfectly meets
the specific needs of each partner.
Learn more about Amylior: amylior.com
Amylior building and team
3190 FX Tessier Street, Vaudreuil-Dorion, QC
2023 Annual ReportBalancing Growth and Responsibility 30
31
Top 10 Clients
Our top 10 clients make up 23.5% of our
total revenue and 22.9% of our total leased
area, equaling 1,400,416 square feet.
The Lion Electric Company
9900 Irénée Vachon Street, Mirabel, QC
Government of Canada
2204 Walkley Road, Ottawa, ON
Government of Québec
5810 Sherbrooke Street East, Montréal, QC
Bristol-Meyers Squibb Canada Co
2344 Alfred-Nobel Blvd, St-Laurent, QC
WSP Canada Inc.
2611 Queensview Drive, Ottawa, ON
Groupe BBA Inc.
375 Sir-Wilfrid-Laurier Blvd, Mont-Saint-Hilaire, QC
Mouvement Desjardins
3111 Saint-Martin Blvd West, Laval, QC
Strongco
175 De Rotterdam Street, St-Augustin-de-Desmaures, QC
Walmart Canada Inc.
Méga Centre Rive-Sud, Lévis, Québec
Haivision
2600 Alfred-Nobel Blvd, St-Laurent, QC
2023 Annual ReportBalancing Growth and Responsibility 32
33
Committed to
Responsible Growth
Our inaugural ESG report
discloses information about
our ESG management approach
and performance, establishes
our ambition, describes our
approach to managing ESG
across the business, highlights
our accomplishments, and
communicates our future plans.
To learn more about our
environmental, social, and
governance initiatives,
visit our Impact page at
btbreit.com/impact.
2023 Annual ReportBalancing Growth and Responsibility 34
35
Management Discussion
and Analysis
Year ended December 31, 2023
36
36
37
37
38
39
41
42
43
44
45
46
47
50
Introduction
Forward-Looking Statements – Caveat
Non-IFRS Financial Measures
The Trust
Objectives and Business Strategies
Highlights of the Fourth Quarter Ended
December 31, 2023
Selected Financial Information
Selected Annual Information
Selected Quarterly Information
Segmented Information
Operating Performance Indicators
Real Estate Portfolio
Real Estate Operations
Operating Results
56
Adjusted Earnings Before Interest, Taxes,
57
58
59
60
61
62
66
73
73
74
74
75
76
78
Depreciation and Amortization (EBITDA)
Operating Results – Same-Property Portfolio
Distributions
Funds from Operations (FFO)
Adjusted Funds from Operations (AFFO)
Cash Flows
Assets
Capital Resources
Income Taxes
Taxation of unitholders
Accounting Policies and Estimates
Risks and Uncertainties
Disclosure Controls and Procedures
and Internal Control Over Financial Reporting
Appendix 1 – Definitions
Appendix 2 – Non-IFRS Financial Measures –
Quarterly Reconciliation
2023 Annual ReportBalancing Growth and Responsibility
36
Introduction
The purpose of this Management Discussion and Analysis (“MD&A”) is to communicate the operating results
of BTB Real Estate Investment Trust (“BTB” or the “Trust”) for the year ended December 31, 2023, as well as its
financial position on that date. The report presents a summary of some of the Trust’s business strategies, and
the business risks it faces. This MD&A, dated February 21, 2024, should be read together with the consolidated
financial statements and accompanying notes for the year ended December 31, 2023. It discusses significant
information available up to the said date of this MD&A. The Trust’s consolidated annual financial statements were
prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board (“IASB”). Unless otherwise indicated, all amounts are in thousands of Canadian
dollars, except for per unit and per square foot amounts. Additional information about the Trust is available on the
Canadian Security Administrators (“CSA”) website at www.sedarplus.ca and on our website at www.btbreit.com.
The Audit Committee reviewed the contents of this Management Discussion and Analysis and the consolidated
financial statements and the Trust’s Board of Trustees has approved them.
Forward-Looking Statements – Caveat
From time to time, written or oral forward-looking statements are made within the meaning of applicable
Canadian securities legislation. Forward-looking statements in this MD&A are made, in other filings with
Canadian regulators, in reports to unitholders and in other communications. These forward-looking statements
may include statements regarding the Trust’s future objectives, strategies to achieve the Trust’s objectives,
as well as statements with respect to the Trust’s beliefs, outlooks, plans, objectives, expectations, forecasts,
estimates and intentions. The words “may,” “could,” “should,” “outlook,” “believe,” “plan,” “forecast,” “estimate,”
“expect,” “propose,” and the use of the conditional and similar words and expressions are intended to identify
forward-looking statements.
By their very nature, forward-looking statements involve numerous factors and assumptions, and are subject
to inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions,
forecasts, projections, and other forward-looking statements will not be achieved. Readers must be warned not
to place undue reliance on these statements as several important factors could cause the Trust’s actual results
to differ materially from the expectations expressed in such forwardlooking statements. These factors include
general economic conditions in Canada and elsewhere, the effects of competition in the markets where we
operate, the impact of changes in laws and regulations, including tax laws, successful execution of the Trust’s
strategy, the ability to complete and integrate strategic acquisitions successfully, potential dilution, the ability
to attract and retain key employees and executives, the financial position of lessees, the ability to refinance
our debts upon maturity, the ability to renew leases coming to maturity, and to lease vacant space, the ability to
complete developments on plan and on schedule and to raise capital to finance the Trust’s growth, as well as
changes in interest rates. The foregoing list of important factors likely to affect future results is not exhaustive.
When relying on forward-looking statements to make decisions with respect to the Trust, investors and others
should carefully consider these factors and other facts and uncertainties. Additional information about these
factors can be found in the “Risks and Uncertainties” section.
The Trust cannot assure investors that actual results will be consistent with any forward-looking statements and
the Trust assumes no obligation to update or revise such forward-looking statements to reflect new events or
circumstances, except as required under applicable securities regulations.
37
Non-IFRS Financial Measures
Certain terms and measures used in this MD&A are listed and defined in the non-IFRS financial measures table
on page 2 of this report, including any per unit information if applicable, are non-IFRS performance measures
and do not have standardized meanings prescribed by IFRS. Explanations on how these non-IFRS financial
measures provide useful information to investors and the additional purposes, if any, for which the Trust uses
these non-IFRS financial measures, are also included in the table on page 2. IFRS are International Financial
Reporting Standards defined and issued by the IASB, in effect as at the date of this MD&A.
Securities regulations require that non-IFRS financial measures be clearly defined and that they not be assigned
greater weight than IFRS measures. The referred non-IFRS financial measures, which are reconciled to the most
similar IFRS measure in the table on page 2 if applicable, do not have a standardized meaning prescribed by
IFRS and these measures cannot be compared to similar measures used by other issuers.
The Trust
The Trust is an unincorporated open-ended real estate trust formed under and governed by the laws of the
province of Québec pursuant to a trust agreement (as amended). The Trust began its real estate operations on
October 3, 2006, and as of December 31, 2023, it owned 77 properties, being industrial, off-downtown core office
and necessity-based retail properties located in primary markets of the provinces of Québec, Ontario, Alberta,
and Saskatchewan. Since its inception, the Trust has become an important property owner in the province of
Québec, in Eastern Ontario and in Western Canada. The units and Series G and H convertible debentures are
traded on the Toronto Stock Exchange under the symbols “BTB.UN”, “BTB.DB. G” and “BTB.DB.H”, respectively.
The Trust’s management is entirely internalized, and no service agreements or asset management agreements
are in force between the Trust and its officers. The Trust therefore ensures that the interests of management
and of its employees are aligned with those of the unitholders. Only two properties are managed by third party
managers dealing at arm’s length with the Trust. Management’s objective is, when favourable circumstances
will prevail, to directly manage the Trust’s remaining properties to possibly achieve savings in management and
operating fees through centralized and improved property management operations.
The following table provides a summary of the real estate portfolio:
Number of
properties
Leasable area
(sq. ft.)
Fair value
(thousands of $)
As at December 31, 2023
1,207,522
These figures include a 50% interest in a 17,114 square-foot property in a Montréal suburb and a 50% interest in one property totalling 74,940 square feet in
Gatineau, Québec and total leasable area includes a 55,849 square-foot property in Edmonton reclassified as a finance lease and not included in fair value.
6,120,686
77
2023 Annual ReportBalancing Growth and Responsibility 38
39
Objectives and Business Strategies
The Trust’s primary objective is to maximize total return to unitholders. Total return includes distributions and
long-term appreciation of the trading value of its units. More specifically, the objectives are as follows:
(i) Generate stable monthly cash distributions that are reliable and fiscally beneficial to unitholders.
(ii) Grow the Trust’s assets through internal growth and accretive acquisitions.
(iii) Optimize the value of its assets through dynamic management of its properties to maximize their long-term
value.
Strategically, the Trust seeks to acquire properties with high occupancy rates, good tenant quality, superior
locations or low potential lease turnover and properties that are well maintained and may require less capital
expenditures.
The Trust’s management regularly performs strategic portfolio reviews to determine whether it is financially
advisable to dispose of certain investment properties. The Trust may dispose of certain assets if their size,
location and/or profitability no longer meet the Trust’s investment criteria.
In such cases, the Trust expects to use the proceeds from the sale of assets to reduce debt thereon and/or
redeploy capital in property acquisitions.
Highlights of the Fourth Quarter and Year Ended
December 31, 2023
Rental revenue: Stood at $31.9 million for the current quarter, which represents an increase of 1.4% compared to
the same quarter of 2022. For the year 2023, rental revenue totalled $127.8 million which represents an increase
of 7.0% compared to the same period in 2022.
Net operating income (NOI): Totalled $19.3 million for the current quarter, which represents an increase of 3.4%
compared to the same quarter of 2022. For the year 2023, the NOI totalled $75.4 million which represents an
increase of 7.0% compared to the same period in 2022.
Net income and comprehensive income: Totalled $1.7 million for the quarter compared to $1.8 million for the
same period in 2022. For the year 2023, Net income and comprehensive income totalled $36.6 million compared
to $38.2 million for the same period in 2022, representing a decrease of $1.6 million. The decrease for the year
2023 is primarily driven by an increase in net financial expenses of $18.9 million offset by an increase in NOI of
$5.0 million; an increase in financial income of $1.2 million and a positive variance of $10.2 million driven by net
change in fair value of investment properties (Gain of $2.0 million for the year 2023 compared to a loss of $8.2
million for the year 2022).
Same-property NOI(1): For the quarter the same-property NOI increased by 6.6% compared to the same period in
2022, and for the year 2023 increased by 2.1% compared to the same period last year. The increase is primarily
due to increase in renewal rates of 21.4% for the year in the necessity-based retail segment, an increase in rental
spreads for in-place leases in the industrial segment and recent strong leasing efforts for the off-downtown core
office segment with a same-property NOI increase of 7.7% for the quarter.
FFO adjusted per unit(1): Was 11.1¢ per unit for the quarter compared to 11.8¢ per unit for the same period in 2022,
representing a decrease of 0.7¢ per unit. For the year 2023, the FFO adjusted was 45.1¢ per unit compared to
45.4¢ per unit for the same period in 2022, representing a decrease of 0.3¢ per unit. The $1.1 million increase of
FFO adjusted for the year is driven by an NOI increase of $2.7 million due to acquisitions net of dispositions; NOI
increase of $1.4 million due to leasing efforts and stability of occupancy rates offset by an increase in financial
expenses net of financial income of $3.0 million. Despite the increase of FFO adjusted for the year 2023, the
FFO adjusted per unit has decreased by 0.3¢ due to 3.2 million additional weighted average number of units
outstanding reducing the per unit value compared to the same period in 2022.
FFO adjusted payout ratio(1): Was 67.2% for the quarter compared to 63.6% for the same period in 2022. For the
year 2023, the FFO adjusted payout ratio was 66.5% compared to 66.1% for the same period in 2022.
AFFO adjusted per unit(1): Was 10.3¢ per unit for the quarter compared to 10.0¢ per unit for the same period in
2022, representing an increase of 0.3¢ per unit. For the year 2023, the AFFO adjusted per unit was 40.5¢ per unit
compared to 40.9¢ per unit for the same period in 2022, representing a decrease of 0.4¢ per unit compared to
the same period in 2022. Despite an increase of AFFO adjusted for the year of $0.8 million the FFO adjusted per
unit has decreased due to an increase of 3.2 million in weighted average number of units outstanding reducing
the per unit value.
AFFO adjusted payout ratio(1): Was 72.6% for the quarter compared to 74.9% for the same period in 2022. For the
year 2023, the AFFO adjusted payout ratio was 74.1% compared to 73.3% for the same period in 2022.
Leasing activity: The Trust completed a total of 158,790 square feet of lease renewals and 78,340 square feet of
new leases for the quarter. Due to strong leasing efforts, the occupancy rate increased to 94.2%, representing
a 49 basis points increase compared to the prior quarter and a 99 basis points increase compared to the same
period in 2022. The increase in the average renewal rate for the quarter was 14.3% and 9.2% for the year. The
Trust completed a total of 485,751 square feet of lease renewals and 296,240 square feet of new leases for the
year.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
2023 Annual ReportBalancing Growth and Responsibility 40
41
Liquidity position: The Trust held $0.9 million of cash at the end of the quarter and $21.6 million is available under
its credit facilities. The Trust has the option to increase its capacity under credit facilities by $10.0 million.
Selected Financial Information
Debt metrics: The Trust ended the quarter with a total debt ratio(1) of 58.6%, recording an increase of 8 basis
points compared to December 31, 2022. The Trust ended the quarter with a mortgage debt ratio(1) of 52.2%, a
decrease of 202 basis points compared to December 31, 2022.
The following table presents highlights and selected financial information for the periods ended December 31,
2023, and December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars, except for ratios and per unit data)
Reference (page)
Summary of significant items as at December 31, 2023
•
•
•
Total number of properties: 77
Total leasable area: 6.1 million square feet
Total asset value: $1,228 million
• Market capitalization: $254 million (unit price of $2.93 as at December 31, 2023)
Financial information
Rental revenue
Net operating income (NOI)
Net income and comprehensive income
Adjusted net income(1)
Adjusted EBITDA(1)
NOI from the same-property portfolio(1)
Distributions
FFO Adjusted(1)
AFFO Adjusted(1)
Cash flow from operating activities
Total assets
Investment properties
Mortgage loans
Convertible debentures
Mortgage debt ratio(2)
Total debt ratio(1)
Weighted average interest rate on mortgage debt
Market capitalization
Financial information per unit
Units outstanding (000)
Class B LP units outstanding (000)
Weighted average number of units outstanding (000)
Weighted average number of units and Class B LP units
outstanding (000)
Net income and comprehensive income
Adjusted net income(1)
Distributions
FFO Adjusted(1)
Payout ratio on FFO Adjusted(1)
AFFO Adjusted(1)
Payout ratio on AFFO Adjusted(1)
Market price of units
Tax on distributions
Tax deferral
Operational information
Number of properties
Leasable area (thousands of sq. ft.)
Occupancy rate
Increase in average lease renewal rate
Quarter
2023
$
31,922
19,255
1,734
8,605
18,065
17,636
6,547
9,688
8,966
21,560
2022
$
31,486
18,624
1,769
8,366
16,347
16,552
6,413
10,059
8,550
18,961
Year
2023
$
127,826
75,379
36,598
34,937
69,719
66,533
26,003
38,946
34,956
70,852
2022
$
119,495
70,430
38,154
33,601
64,409
65,152
25,032
37,879
34,137
66,240
1,227,648
1,179,340
1,207,522
1,164,881
638,080
42,460
52.2%
58.6%
4.37%
254,048
636,111
41,942
54.2%
58.5%
4.09%
311,120
86,706
85,238
697
347
86,591
85,158
85,858
83,091
87,288
85,506
86,289
83,439
2.0¢
9.9¢
7.5¢
11.1¢
67.2%
10.3¢
72.6%
2.1¢
9.8¢
7.5¢
11.8¢
63.6%
10.0¢
74.9%
42.4¢
40.5¢
30.0¢
45.1¢
66.5%
40.5¢
74.1%
2.93
45.7¢
40.3¢
30.0¢
45.4¢
66.1%
40.9¢
73.3%
3.65
51
50
50
55
56
57
58
59
60
61
63
62
66
68
68
68
52
71
70
71
71
50
55
58
59
59
60
60
73
100.0%
100.0%
100.0%
100.0%
37
37
46
48
77
6,121
94.2%
9.2%
74
5,857
93.2%
12.2%
14.3%
8.8%
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) This is a non-IFRS financial measure. The mortgage debt ratio is calculated by dividing the mortgage loans outstanding by the total gross value of the
assets of the Trust less cash and cash equivalents.
2023 Annual ReportBalancing Growth and Responsibility 42
43
Selected Annual Information
Selected Quarterly Information
The following table summarizes the Trust’s selected financial information for the last three years:
The following table summarizes the Trust’s selected financial information for the last eight quarters:
Periods ended December 31
(in thousands of dollars, except for ratios and per unit data)
Financial information
Rental revenue
Net operating income
Fair value adjustment on investment properties
Net income (loss) and comprehensive income (loss)
Net cash from operating activities
FFO Adjusted(1)
AFFO Adjusted(1)
Distributions
Total assets
Long-term debt
Financial information per unit
Net income and comprehensive income
FFO Adjusted (2)
AFFO Adjusted (3)
Distributions
2023
$
127,826
75,379
2,001
36,598
70,852
38,946
34,956
26,003
2022
$
119,495
70,430
(8,201)
38,154
66,240
37,879
34,137
25,032
2021
$
100,343
56,336
19,571
41,568
56,538
30,144
27,568
21,464
1,227,648
1,179,340
1,129,901
680,540
678,053
648,029
42.4¢
45.1¢
40.5¢
30.0¢
45.7¢
45.4¢
40.9¢
30.0¢
58.1¢
42.1¢
38.5¢
30.0¢
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) This is a non-IFRS financial measure. The FFO Adjusted per unit ratio is calculated by dividing the FFO Adjusted(1) by the Trust’s unit outstanding at the end
of the period (including the Class B LP units at outstanding at the end of the period).
(3) This is a non-IFRS financial measure. The AFFO Adjusted per unit ratio is calculated by dividing the AFFO Adjusted(1) by the Trust’s unit outstanding at the
end of the period (including the Class B LP units at outstanding at the end of the period).
(in thousands of dollars except for per unit data)
Rental revenue
Net operating income
2023
Q-4
$
2023
2023
2023
2022
2022
2022
2022
Q-3
Q-2
$
$
Q-1
$
Q-4
Q-3
Q-2
$
$
$
Q-1
$
31,922
31,285
31,708
32,911
31,486 29,962 28,979
29,068
19,255
18,075
19,041
19,008
18,624
17,974
17,598
16,234
Net income and comprehensive income
Net income and comprehensive income per unit
1,734
2.0¢
15,216
10,846
8,802
1,769
11,693
18,243
6,449
17.5¢
12.5¢
10.2¢
2.1¢
13.7¢
21.5¢
8.3¢
Cash from operating activities
FFO Adjusted(1)
FFO Adjusted per unit(1)(2)
AFFO Adjusted(1)
AFFO Adjusted per unit(1)(3)
Distributions(4)
Distributions per unit(4)
21,560
16,317
17,320
15,657
18,961
20,359
15,516
11,404
9,688
9,030
10,195
10,033
10,059
9,785
9,718
11.1¢
10.4¢
11.8¢
11.7¢
11.8¢
11.5¢
8,966
10.3¢
6,547
7.5¢
7,675
9,433
8,882
8,550
8,674
8.8¢
10.9¢
10.3¢
10.0¢
10.2¢
6,524
6,489
6,443
6,413
6,394
6,374
5,851
7.5¢
7.5¢
7.5¢
7.5¢
7.5¢
7.5¢
7.5¢
8,317
10.7¢
7,602
9.7¢
11.4¢
9,311
11.0¢
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) The FFO Adjusted per unit ratio is calculated by dividing the FFO Adjusted(1) by the Trust’s unit outstanding at the end of the period (including the Class B
LP units outstanding at the end of the period).
(3) The AFFO Adjusted per unit ratio is calculated by dividing the AFFO Adjusted(1) by the Trust’s unit outstanding at the end of the period (including the Class
B LP units outstanding at the end of the period).
(4) Includes distributions on Class B LP units.
2023 Annual ReportBalancing Growth and Responsibility 44
Segmented Information
The Trust’s operations are generated from three segments of properties located in the provinces of Québec,
Ontario, Alberta and Saskatchewan. The following tables summarize each operating segment’s contribution to
revenues and to net operating income (NOI) for the periods ended December 31, 2023, and December 31, 2022:
Periods ended December 31
(in thousands of dollars)
Quarter ended December 31, 2023
Investment properties
Rental revenue from properties
Net operating income (NOI)
Quarter ended December 31, 2022
Investment properties
Rental revenue from properties
Net operating income (NOI)
Periods ended December 31
(in thousands of dollars)
Year ended December 31, 2023
Rental revenue from properties
Net operating income (NOI)
Year ended December 31, 2022
Rental revenue from properties
Net operating income (NOI)
Industrial performance
Industrial
$
%
Off-downtown
core office
$
%
Necessity-based
retail
$
%
Total
$
440,120
8,470
6,130
344,998
6,612
5,045
36.4
26.5
31.8
29.6
21.0
27.1
518,345
16,226
8,739
570,527
17,598
9,104
43.0
50.9
45.4
49.0
55.9
48.9
249,057
7,226
4,386
249,356
7,276
4,475
20.6
22.6
22.8
21.4
23.1
24.0
Industrial
Off-downtown
core office
Necessity-based
retail
$
%
$
%
$
%
32,682
23,837
22,910
17,565
25.6
31.6
19.2
24.9
65,943
34,209
68,794
36,863
51.6
45.4
57.7
52.3
29,201
17,333
27,791
16,002
22.8
23.0
23.3
22.7
1,207,522
31,922
19,255
1,164,881
31,486
18,624
Total
$
127,826
75,379
119,495
70,430
In line with the Trust’s strategy to increase it’s industrial footprint, the proportional fair value of industrial
properties increased from 29.6% to 36.4% compared to the same period last year, due to the acquisitions of
industrial properties totalling $36.3 million concluded since the said period, a net increase of $32.5 million from
fair value adjustments in 2023, and the reclassification of 2 office properties (both flex industrial properties with
higher industrial footprint) in the industrial segment representing a total of $26.3 million. The acquired properties
are all fully occupied and have a positive impact on the occupancy rate, which stood at 99.9% at the end of the
quarter, a 0.1% increase compared to the same period last year. The proportional rental revenue from industrial
properties increased by 5.5% compared to the same period last year, which is explained by a combination of
the higher occupancy rate and previously mentioned acquisitions increasing the proportional share of revenue
from the industrial segment. For the quarter, the proportional net operating income for the industrial segment
increased by 4.7% and for the year 2023 increased by 6.7% compared to the same periods last year.
45
Off-downtown core office performance
The proportional fair value of the off-downtown core office properties decreased from 49.0% to 43.0%
compared to the same period last year as the proportional faire value of industrial properties increased in line
with the Fund’s strategic plan. The variance is due to the reclassification of 2 properties ($26.3 million), and a net
decrease of $27.5 million from fair value adjustments in 2023. The rental revenue for the quarter generated by
the off-downtown core office segment decreased by $1.4 million compared to the same period last year which is
explained by the previously mentioned reclassifications. Despite the decrease in rental revenue, the properties in
this segment are supported by quality tenants (the Trust’s top two tenants are Federal and Québec government
agencies) and strong leasing activities (the Trust concluded for the year 2023 lease renewals for a total of
324,832 square feet in the office segment with an average rent increase of 5.3% and concluded for the year new
leases for a total of 155,184 square feet).
Necessity-based retail performance
The necessity-based retail segment continues to show good performance as most of the properties are
anchored by necessity-based tenants. The occupancy rate in the necessity-based retail segment at the
end of the fourth quarter 2023 stood at 97.8%. For the year 2023, the Trust concluded lease renewals for a
total of 150,087 square feet in the necessity-based retail segment with an average rent increase of 21.4%.
The proportional share of the net operating income (NOI) generated by the necessity-based retail segment
decreased by 1.2% compared to the same period last year mainly due to the Trust not concluding any
acquisitions within the necessity-based retail segment while acquiring properties in the industrial segment which
increased the proportion of net operating income (NOI) of that respective segment.
Operating Performance Indicators
The following performance indicators are used to measure the Trust’s operating performance:
Committed occupancy rate: provides an indication of the optimization of rental space and the potential revenue
gain from the Trust’s property portfolio. This rate considers occupied leasable area and the leasable area of
leases that have been signed as of the end of the quarter but where the term of the lease has not yet begun.
In-place occupancy rate: shows the percentage of occupied leasable area at the end of the period.
Renewal rate: is used to record the Trust’s tenant retention with lease renewals.
Average rate of renewed leases: measures organic growth and the Trust’s ability to increase or decrease its
rental revenue for a given period.
2023 Annual ReportBalancing Growth and Responsibility 46
Real Estate Portfolio
At the end of the fourth quarter of 2023, BTB owned 77 properties, representing a total fair value of $1.2 billion
and a total leasable area of approximately 6.1 million square feet. A description of all the properties owned
by the Trust can be found in the Trust’s Annual Information Form available at www.sedar.com.
Summaries of investment properties held as at December 31, 2023
Operating segment
Industrial
Off-downtown core office
Necessity-based retail
Total portfolio
Geographic sector
Montreal
Québec City
Trois-Rivières
Ottawa
Edmonton
Saskatoon
Total portfolio
Number of
properties
Leasable area (sq. ft.)
Committed
occupancy rate (%)
In Place occupancy
rate (%)
32
34
11
77
2,085,319
2,643,192
1,392,175
6,120,686
99.9
87.7
97.8
94.2
99.1
85.2
97.8
92.8
Number of
properties
Leasable area (sq. ft.)
Committed
occupancy rate (%)
In Place occupancy
rate (%)
40
10
2
11
10
4
77
3,302,715
1,231,069
149,076
809,115
405,239
223,472
6,120,686
96.2
85.2
74.6
98.8
100.0
100.0
94.2
95.8
83.6
54.4
96.7
100.0
100.0
92.8
Acquisitions of investment properties
In 2023, the Trust did not dispose of any properties.
On February 2, 2023, the Trust acquired a class A industrial property located at 9900, Irénée Vachon Street in the
industrial sector of the Mirabel airport, Québec, for a total consideration of $28.0 million, excluding transaction
costs and adjustments. Following the acquisition of the property, the Trust’s total leasable area increased by
176,819 square feet.
On May 1, 2023, the Trust acquired two fully leased industrial properties located at 8856 48th avenue NW and
8818-8846 48th avenue NW, in Edmonton, Alberta, for a total consideration of $7.4 million, excluding transaction
costs and adjustments. As part of the transaction the Trust satisfied a portion of the purchase price through the
issuance to the vendor of 550,000 Class B LP units at a price of $4.50 per unit and the balance of the purchase
price was funded with a mortgage. Following the acquisition of the properties, the Trust’s total leasable area
increased by 83,292 square feet.
On August 22, 2023, the industrial tenant Tirecraft (55,849 square feet) that leased the entirety of the property
18028, 114th Avenue NW, in Edmonton, Alberta, exercised the option to purchase the property with a closing date
of December 1, 2026, for a purchase price of $10.3 million. Consequently, the Trust derecognized the property
from investment properties to classify it as a finance lease.
47
Real Estate Operations
Portfolio occupancy
The following table summarizes the changes in occupied area for the periods ended December 31, 2023, and
December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in sq. ft.)
Quarter
Year
2023
2022
2023
2022
Occupied area at the beginning of the period(1)
5,729,119
5,520,092
5,455,798
5,639,778
Purchased (sold) assets
Signed new leases
Tenant departures
Other(2)
-
78,340
(30,821)
49,568
260,111
(118,022)
296,240
167,602
(45,839)
(83,041)
(250,529)
(231,718)
1,032
-
1,032
(1,842)
Occupied leasable area at the end of the period(1)
5,762,652
5,455,798
5,762,652
5,455,798
Vacant leasable area at the end of the period
358,034
400,819
358,034
400,819
Total leasable area at the end of the period
6,120,686
5,856,617
6,120,686
5,856,617
(1) The occupied area includes in place and committed agreements.
(2) Other adjustments on the occupied area represent mainly area remeasurements.
Compared to the same period last year, the Trust increased its committed occupancy rate 99 basis points from
93.2% to 94.2%.
Leasing activities
The following table summarizes the percentage rate of lease renewals for the periods ended December 31, 2023,
and December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in sq. ft.)
Leases expired at term
Renewed leases at term
Renewal rate
Quarter
Year
2023
172,266
126,427
73.4%
2022
165,034
87,399
53.0%
2023
616,746
384,558
62.4%
2022
566,217
356,454
63.0%
The Trust renewed 73.4% or 126,427 square feet out of the 172,266 square feet expiring during this quarter.
The most significant renewal during the quarter is a lease representing 68,003 square feet to a Government of
Québec integrated health center in the retail segment with a rent increase of 51.5%.
For the year, the Trust renewed 62.4% or 384,558 square feet out of the 616,746 square feet expiring during the
year.
In addition to the renewed leases at the expiration of their term, the Trust renewed, prior to the end of their
respective term, 32,363 square feet during the quarter and a total of 101,193 square feet for the year with existing
tenants where their lease were to expire in the year 2024 or thereafter.
Therefore, the Trust’s lease renewal activity totaled 158,790 square feet for this quarter and totaled 485,751
square feet for the year 2023.
2023 Annual ReportBalancing Growth and Responsibility 48
Average lease renewal rate
The following table summarizes the average increase of rental rates for each operating segment for the periods
ended December 31, 2023:
Operating segment
Industrial
Off-downtown core office
Necessity-based retail
Total
Quarter
Year
Renewals
(Sq. ft.)
Increase
(%)
Renewals
(Sq. ft.)
Increase
(%)
-
89,032
69,758
158,790
-
10,831
3.6%
43.3%
14.3%
324,832
150,087
485,750
15.7%
5.3%
21.4%
9.2%
Since the beginning of the year, the Trust achieved a cumulative average rent increase of 9.2% in the lease
renewal rates across its three business segments. The increases in all three segments are essentially
attributable to leases that were below market rent.
New leases
During the quarter, the Trust leased a total of 78,340 square feet to new tenants, mainly attributed to a major
Québec based accounting firm (“in place” 28,000 square feet) in the office segment in Trois-Rivières, Bouthillette
Parizeau Inc. (an increase of 5,053 square feet for a total of 20,000 square feet) in the office segment in Québec
City; Jabil Canada Corporation (an increase of 16,763 square feet for a total of 42,744 square feet) in the industrial
segment in Ottawa and the grocery store Val-Mont (7,433 square feet) in a mixed-use office/retail property in
Montreal, classified in the office segment. The remaining 10,058 square feet represent a combination of new “in
place” tenants and “committed” tenants, thereby leaving 358,034 square feet of leasable area available for lease
at the end of the quarter.
For the year 2023, the Trust leased a total of 296,240 square feet to new tenants. Leases representing 155,184
square feet or 52.4% of the leasing activity, were concluded in the off-downtown core office segment with new
tenants, 99,798 square feet or 33.7% of the new leases were concluded in the industrial segment and 41,258
square feet or 13.9% in the necessity-based retail segment.
Occupancy rates
The following tables detail the Trust’s committed occupancy rates by operational segments and geographic
sector, including committed lease agreements:
Operating segment
Industrial
Off-downtown core office
Necessity-based retail
Total portfolio
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
%
99.9
87.7
97.8
94.2
%
99.7
86.6
97.8
93.7
%
99.7
87.4
98.3
94.1
%
100.0
87.5
95.9
93.2
%
100.0
86.7
98.2
93.2
49
Geographic sector
Montréal
Québec City
Trois-Rivières
Ottawa
Edmonton
Saskatoon
Total portfolio
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
%
96.2
85.2
74.6
98.8
100.0
100.0
94.2
%
96.3
84.6
58.6
98.4
100.0
100.0
93.7
%
96.3
85.8
62.5
99.0
100.0
100.0
94.1
%
95.1
86.0
62.2
97.5
100.0
100.0
93.2
%
95.8
86.9
60.1
94.4
99.1
100.0
93.2
The committed occupancy rate at the end of the fourth quarter of 2023 stood at 94.2%, representing a 49 basis
points increase compared to the prior quarter, and a 99 basis points increase compared to the same period
in 2022. Furthermore, the in-place occupancy rate at the end of the quarter stood at 92.8%, representing a
decrease of 46 basis points compared to the prior quarter, and an increase of 6 basis points compared to the
same period in 2022.
Lease maturities
The following table summarizes the Trust’s lease maturity profile for the next five years:
2024
2025
2026
2027
2028
Industrial
Leasable area (sq. ft.)
Average lease rate/square foot ($)(1)
% of industrial portfolio
Off-downtown core office
Leasable area (sq. ft.)
Average lease rate/square foot ($)(1)
% of office portfolio
Necessity-based retail
Leasable area (sq. ft.)
Average lease rate/square foot ($)(1)
% of retail portfolio
Total portfolio
78,427
$11.38
3.76%
267,751
$14.16
10.13%
170,586
$10.44
8.18%
291,116
$16.32
11.01%
287,168
$9.73
13.77%
86,304
201,763
$10.14
4.14%
$16.97
9.68%
456,799
305,494
185,762
$14.93
17.28%
$17.75
11.56%
229,169
148,870
106,697
134,750
$11.73
16.46%
$17.39
10.69%
$16.59
7.66%
$16.02
9.68%
$16.65
7.03%
37,644
$20.16
2.70%
Leasable area (sq. ft.)
575,347
610,573
850,664
526,548
425,169
Average lease rate/square foot ($)(1)
% of total portfolio
$12.81
9.40%
$14.94
9.98%
$13.38
13.90%
$16.06
8.60%
$17.11
6.95%
(1) This is a non-IFRS financial measure. The average lease rate / square foot ($) ratio is calculated by dividing the annual rental revenues related to leases
maturing within a specific year divided by the total leasable area (square feet) of the leases maturing within a specific year.
Weighted average lease term
For the quarter ended December 31, 2023, the weighted average lease term is 5.94 years, an increase compared
to 5.87 years for the same period in 2022. In addition to securing future revenues for the Trust and solidifying
its tenant base, the Trust’s lease renewal strategy is also focused on ensuring longevity in the lease terms when
appropriate.
2023 Annual ReportBalancing Growth and Responsibility 50
Top 10 tenants
The Trust’s three largest tenants remain the Government of Québec (off-downtown core office segment), the
Government of Canada (off-downtown core office segment), and Walmart Canada inc. (necessity-based retail
segment), representing respectively 5.7%, 5.1%, and 2.0% of rental revenue. The Trust’s rental revenues are
generated by multiple leases with these tenants whose maturities are spread over time.
Rental revenue
For the quarter, rental revenue increased by $0.4 million or 1.4% compared to the same period last year, with
an increase of $1.0 million related to acquisitions made in 2023 net of dispositions made in 2022; a decrease
in straight line rent of $0.9 million and the remaining $0.3 million increase related to operating improvements
mainly consisting of higher lease renewal rates, stability of its occupancy rate and higher average lease rates.
51
45.42% of the Trust’s total revenue is generated by leases signed with government agencies (federal, provincial,
and municipal) and public companies, thus generating stable and high-quality cash flow for the Trust’s operating
activities.
For the year 2023, rental revenue increased by $8.3 million or 7.0% compared to the same period last year,
which is predominantly due to the cumulative impact of acquisitions made in 2023 and important leasing efforts
throughout the year.
Operating expenses
The following table summarizes the Trust’s operating expenses for the periods ended December 31, 2023, and
December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars)
Operating expenses
Maintenance, repairs and other operating costs
Energy
Property taxes and insurance
Total operating expenses
% of rental revenue
Quarter
2023
$
4,252
1,146
7,269
12,667
39.7%
2022
$
4,857
1,511
6,494
12,862
40.8%
Year
2023
$
18,025
5,868
28,554
52,447
41.0%
2022
$
17,160
5,660
26,245
49,065
41.1%
Operating expenses increased mainly due to the new acquisitions and the property taxes that were affected by
an increase in property values. The operating expenses as a percentage of revenues decreased by 0.1% for the
year compared to the same period last year, the decrease is mainly due to the Trust increasing its investment in
industrial properties, which are in most cases triple net leases.
The following table shows the contribution of the Trust’s top 10 tenants as a percentage of revenue as at
December 31, 2023. Their contribution accounts for 23.5% of rental revenue for the year 2023 and 22.9%
of leased area:
Client
Government of Québec
Government of Canada
Walmart Canada inc.
The Lion Electric Company
Bristol-Myers Squibb Canada Co
Groupe BBA Inc.
Strongco
WSP Canada Inc.
Mouvement Desjardins
ICU Medical Canada Inc.
Operating Results
% of revenue % of leased area
Leased area (sq. ft.)
5.7
5.1
2.0
2.0
1.9
1.6
1.6
1.4
1.3
1.2
4.9
4.1
4.3
1.9
1.0
1.1
2.9
1.0
0.8
0.8
299,578
251,850
264,550
118,585
61,034
69,270
176,819
61,576
48,478
48,676
23.5
22.9
1,400,416
The following table summarizes the financial results for the periods ended December 31, 2023, and December
31, 2022, as well as the years ended 2023 and 2022. This table should be read in conjunction with the
consolidated financial statements and the accompanying notes:
Periods ended December 31
(in thousands of dollars)
Rental revenue
Operating expenses
Net operating income (NOI)
Net financial expenses and financial income
Administration expenses
Transaction costs
Fair value adjustment on investment properties
Net income and comprehensive income
Quarter
Year
2023
$
31,922
12,667
19,255
10,894
2,110
37
4,480
1,734
2022
$
31,486
12,862
18,624
6,347
2,331
396
7,781
1,769
2023
$
127,826
52,447
75,379
33,203
7,496
83
(2,001)
36,598
2022
$
119,495
49,065
70,430
15,542
7,437
1,096
8,201
38,154
2023 Annual ReportBalancing Growth and Responsibility 52
53
Financial expenses and income
Administration expenses
The following table summarizes financial expenses for the periods ended December 31, 2023, and December 31,
2022, as well as the years ended 2023 and 2022:
The following table summarizes the Trust’s administration expenses for the periods ended December 31, 2023,
and December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars)
Financial income
Interest on mortgage loans
Interest on convertible debentures
Interest on credit facilities
Other interest expense
Interest expense net of financial income
Distributions on Class B LP units
Mortgage early repayment fees
Net financial expenses before non-monetary items
Accretion of effective interest on mortgage loans and
convertible debentures
Accretion of non-derivative liability component of
convertible debentures
Net financial expenses before the following items:
Fair value adjustment on derivative financial instruments
Fair value adjustment on Class B LP units
Net financial expenses net of financial income
Quarter
Year
2023
$
(611)
7,149
708
730
110
8,086
52
-
8,138
310
92
8,540
2,396
(42)
10,894
2022
$
(225)
6,515
606
519
66
7,481
26
231
7,738
336
84
8,158
(1,971)
160
6,347
2023
$
(1,833)
27,426
2,835
2,478
418
31,324
172
-
2022
$
(624)
23,947
2,796
1,421
286
27,826
104
515
31,496
28,445
1,095
355
32,946
1,233
(976)
33,203
1,127
335
29,907
(14,216)
(149)
15,542
Financial income consists of interest income generated from interest rate swap agreements on mortgages and
earned finance income from the finance lease triggered by the exercised purchase option of the property 18028,
114th Avenue NW, in Edmonton, Alberta.
Interest expense net of financial income increased by $0.6 million for the quarter and by $3.5 million for the year
compared with the same period last year. This is mainly due to the net increase in mortgage loans attributable
to acquisitions net of dispositions of investment properties, the increase in the prime lending rate impacting
floating interest rates of mortgages contracted in the year, and the interest paid on the revolving credit facility
impacted by the increase in the prime lending rate.
On December 31, 2023, the weighted average mortgage interest rate was 4.37%, 28 basis points higher than the
average rate as at December 31, 2022 (4.09%). This increase is mainly due to the variable interest on mortgage
loans for which the weighted average contractual rate increased by 53 basis points to 6.91% (6.38% as at
December 31, 2022). The cumulative balance of the Trust’s loans subject to a variable interest rate was $74.9
million. The weighted average for fixed interest rate mortgage loans increased by 30 basis points to 4.03%
(3.73% as at December 31, 2022). Interest rates on first-ranking mortgage loans ranged from 2.37% to 8.95% as
at December 31, 2023, (2.30% to 8.20% as at December 31, 2022).
The weighted average term of mortgage loans in place as at December 31, 2023, was 3.2 years (4.0 years as at
December 31, 2022).
Net financial expenses, net of financial income, described above, include non-monetary items. These non-
monetary items are the accretion of effective interest on mortgage loans and on convertible debentures, the
accretion of non-derivative liability component of convertible debentures and the fair value adjustment on
derivative financial instruments and on Class B LP units.
Periods ended December 31
(in thousands of dollars)
Corporate expenses
Expected credit losses
Unit-based compensation
Trust administration expenses
Quarter
Year
2023
$
2,038
(76)
148
2,110
2022
$
1,804
123
404
2,331
2023
$
6,832
219
445
7,496
2022
$
6,611
287
539
7,437
Corporate expenses increased by $0.2 million or 13% for the quarter and for the year 2023 compared to the
same period last year. The Trust managed to reduce the level of corporate expenses to 5.3% of rental revenue on
a cumulative 12-month period, a reduction of 0.2 % compared to the same period last year.
Expected credit losses decreased by $0.2 million for the quarter and decreased by $0.1 million for the year 2023
compared to the same period last year. The decrease in expected credit losses expense is due to an overall
reduction in accounts receivable balance which decreased by $1.5 million compared to the same period last year.
Unit-based compensation decreased by $0.3 million for the quarter and $0.1 million for the year 2023, the
decrease is due to a decrease in the Trust’s unit price. The unit price as of December 31, 2023 was $2.93
compared to $3.65 as of December 31, 2022.
Fair value adjustment of investment properties
Under IAS 40, the Trust accounts for its investment properties at fair value and recognizes the gain or loss arising
from a change in the fair value in profit or loss for the period in which it arises. Furthermore, upon a disposition
the Trust will revaluate the investment property at the disposition consideration.
On an annual basis, the Trust retains the services of independent external appraisers to evaluate the fair value
of a significant portion of its portfolio. Pursuant to its policy, the Trust annually appraises a minimum of 60% of
its portfolio, which includes the 15 most valuable properties, and the remaining ones are externally appraised
on three-year rotation basis. In addition, as part of acquisitions, financing, or refinancing transactions, or at the
request of lenders, other properties are also independently appraised during the year. As of December 31st 2023,
the Trust externally appraised 75% of its properties, for an aggregate amount of $905 million. For the year, a gain
of $2 million in net changes in fair value has been recorded reflecting an increase in capitalization rates across
the 3 asset classes netted by the updated cash flow assumptions which were impacted by an increase in market
rents for industrial assets and increased renewal rates for specific properties.
For the properties not independently appraised during a given year, the Trust receives quarterly market data
regarding capitalization rates and discount rates reflecting real estate market conditions from independent
external appraisers or independent experts. The capitalization rate reports provide a range of rates for various
geographic regions where the Trust operates and for various types and qualities of properties within each said
region. The Trust utilizes capitalization and discount rates within ranges provided by these external experts. To
the extent that the externally provided capitalization rate ranges change from one reporting period to the next or
should another rate within the provided ranges be more appropriate than the rate previously used, the fair value
of the investment properties would increase or decrease accordingly.
2023 Annual ReportBalancing Growth and Responsibility 54
55
The following tables summarize the changes in fair value of investment properties by segment for the periods
ended December 31, 2023, and December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars)
Industrial
Off-downtown core office
Necessity-based retail
Total change in fair value
Quarter
Year
2023
$
(7,427)
(1,208)
4,155
(4,480)
2022
$
11,477
(18,639)
(618)
(7,781)
2023
$
32,503
(27,508)
(2,994)
2,001
2022
$
29,854
(31,842)
(6,213)
(8,201)
The following tables summarize the significant assumptions used in the modelling process for both internal and
external appraisals for the years ended 2023 and 2022:
As at December 31, 2023
Capitalization rate
Terminal capitalization rate
Discount rate
Weighted average capitalization rate
As at December 31, 2022
Capitalization rate
Terminal capitalization rate
Discount rate
Industrial
Off-downtown
core office
Necessity-based
retail
5.25% - 7.75%
6.25% - 8.25%
5.75% - 7.75%
5.25% - 8.00% 6.25% - 8.50% 6.00% - 8.00%
6.00% - 8.50%
6.75% - 9.00%
6.50% - 8.75%
6.09%
7.01%
7.06%
4.75% -6.75%
5.75% - 8.25%
5.50% - 8.00%
4.75% - 7.50%
5.75% - 8.00%
5.50% - 8.00%
5.50% - 8.25%
6.25% - 8.75%
6.25% - 8.75%
Weighted average capitalization rate
5.75%
6.76%
6.84%
The weighted average capitalization rate for the entire portfolio as at December 31, 2023, was 6.67% (6.48% as
at December 31, 2022), 19 basis points higher compared to December 31, 2022.
As at December 31, 2023, the Trust has estimated that if an increase / decrease of 0.25% in the capitalization
rate were applied to the overall portfolio, this variation would affect the fair value of its investment properties
respectively by a reduction of $44.0 million or an increase of $47.5 million. The change in the capitalization rates
is an appropriate proxy of the changes for the discount and terminal capitalization rates.
Adjusted net income
Net income and comprehensive income fluctuate from one quarter to the next based on volatile non-monetary
items. The fair value of derivative financial instruments and the fair value of investment properties fluctuate
based on the stock market volatility of the Trust’s units, the forward interest rate curve and the discount and
capitalization rates of its real estate portfolio.
The following table summarizes the adjusted net income(1) before these volatile non-monetary items and
transaction costs for the periods ended December 31, 2023, and December 31, 2022, as well as the years ended
2023 and 2022:
Periods ended December 31
(in thousands of dollars, except for per unit)
Net income and comprehensive income
Transaction costs on acquisitions and dispositions of
investment properties and early repayment fees
Fair value adjustment on investment properties
Fair value adjustment on derivative financial instruments
Fair value adjustment on Class B LP units
Adjusted net income(1)
Per unit
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
Quarter
Year
2023
$
1,734
37
4,480
2,396
(42)
8,605
9.9¢
2022
$
1,769
627
7,781
(1,971)
160
8,366
9.8¢
2023
$
36,598
83
(2,001)
1,233
(976)
34,937
40.5¢
2022
$
38,154
1,611
8,201
(14,216)
(149)
33,601
40.3¢
Adjusted net income increased by $0.2 million for the quarter and $1.3 million for the year compared to the same
periods last year mainly due to a decrease in transaction costs and positive variance of $10.2 million driven by net
change in fair value of investment properties (gain of $2.0 million for the year 2023 compared to a loss of $8.2
million for the year 2022.)
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
2023 Annual ReportBalancing Growth and Responsibility 56
57
Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA)(1)
The following table provides a reconciliation of net income and comprehensive income established in
accordance with IFRS and Adjusted EBITDA(1) for the periods ended December 31, 2023, and December 31, 2022,
as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars, except for per unit)
Net income being total comprehensive income for the period
Interest expense
Accretion of effective interest on mortgage
loans and convertible debentures
Amortization of property and equipment
Lease incentive amortization
Fair value adjustment on investment properties
Fair value adjustment on derivative financial instruments
Fair value adjustment on Class B LP units
Unit-based compensation (Unit price remeasurement)
Transaction costs on acquisitions and dispositions of
investment properties and early repayment fees
Straight-line lease adjustment
Adjusted EBITDA(1)
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
Quarter
Year
2023
$
1,734
8,697
310
20
641
4,480
2,396
(42)
(11)
37
(197)
18,065
2022
$
1,769
7,706
336
31
787
7,781
(1,971)
160
198
627
(1,077)
16,347
2023
$
36,598
33,157
1,095
99
2,783
(2,001)
1,233
(976)
(389)
83
(1,963)
69,719
2022
$
38,154
28,450
1,127
122
3,113
8,201
(14,216)
(149)
(182)
1,611
(1,822)
64,409
For the quarter, the Adjusted EBITDA(1) increased to $18.1 million compared to $16.3 million for the same quarter
last year. For the year 2023, Adjusted EBITDA was $69.7 million compared to $64.4 million for the same period in
2022, representing an increase of 8.24%.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
Operating Results – Same-Property Portfolio
Same-property portfolio
The same-property portfolio includes all the properties owned by the Trust on January 1, 2022, and that are still
owned by the Trust on December 31, 2023. Therefore, it excludes all the acquired(2)(3) and disposed(2)(3) properties
during the years 2022 and 2023 and straight-line rent.
The following table summarizes the results of the same-property NOI(1) for the periods, as well as the years ended
2023 and 2022:
Periods ended December 31
(in thousands of dollars)
Quarter
Year
2023
2022
Δ %
2023
2022
Δ %
$
$
$
$
Net operating income (NOI) as reported in the financial statements
19,255
18,624
3.4% 75,379
70,430
7.0%
Straight line rent
NOI less straight line rent
NOI sourced from:
Acquisitions
Dispositions
Corporation
Non-cash adjustment related to a change in accounting
estimate and other specific items
Same Property NOI(1)
Same Property NOI(1) sourced from:
Industrial
Off-downtown core office
Necessity-based retail
Same Property NOI(1)
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
197
1,077
1,963
1,822
19,058
17,547
8.6% 73,416
68,608
7.0%
(1,343)
54
(133)
(296)
(166)
(263)
(5,685)
(1,670)
(12)
42
(1,336)
(27)
-
(270)
(1,229)
(423)
17,636
16,552
6.6% 66,533
65,152
2.1%
4,543
4,506
0.8% 16,757
16,385
2.3%
8,519
4,574
7,906
7.7% 32,503
33,219
-2.2%
4,138
10.5% 17,273
15,549
11.1%
17,636
16,550
6.6% 66,533
65,152
2.1%
Compared to the same quarter last year, same-property net operating income (NOI)(1) increased by 6.6% and for
the year, same-property net operating income (NOI)(1) increased by 2.1%.
For the quarter, the increase of 0.8% in the industrial segment compared to the same quarter last year is due to
an increase in rental spreads for in-place leases. For the year, the industrial segment increased by 2.3%.
For the quarter, the increase of 7.7% in the off-downtown core office segment compared to the same quarter last
year has been positively affected by the average lease renewal rate of 3.5% for the quarter. For the year, the off-
downtown core office segment decreased by -2.2% due to a reduction of 150 bps of the in-place occupancy rate
for the segment, mainly driven by a decrease in the in-place occupancy for the Quebec City office properties.
The Trust is actively increasing the leasing efforts and strategy for this geographic sector. During the quarter, due
to increased leasing efforts in the Québec city region, the Trust leased 28,000 square feet to a major Quebec
based accounting firm, increasing the Québec city region committed occupancy rate to 83.9%.
For the quarter, the increase of 10.5% in the necessity-based retail segment compared to the same quarter last
year is due to strong leasing efforts. For the year, the necessity-based retail segment increased by 11.1%. due to
an increase in renewal rates of 9.9% for the year.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) Refer to the Trust’s consolidated financial statements dated February 21, 2024, note 3, section a) for the acquired properties details.
(3) Refer to the audited consolidated financial statements and accompanying notes for the year ended December 31, 2022, for the acquisitions and
dispositions of the year 2022.
2023 Annual ReportBalancing Growth and Responsibility 58
Distributions
Distributions and per unit
The following table summarizes the distributions for the periods ended December 31, 2023, and December 31,
2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars, except for per unit data)
Distributions
Cash distributions
Cash distributions – Class B LP units
Distributions reinvested under the distribution reinvestment plan
Total distributions to unitholders
Percentage of reinvested distributions(1)(2)
Per unit(2)
Distributions
Quarter
Year
2023
$
5,610
49
885
6,547
13.5%
2022
$
2023
$
2022
$
5,535
22,376
21,700
26
852
6,413
13.3%
172
3,455
26,003
13.3%
104
3,228
25,032
12.9%
7.5¢
7.5¢
30.0¢
30.0¢
(1) This is a non-IFRS financial measure. The percentage of reinvested distributions ratio is calculated by dividing the distributions reinvested under the
distribution reinvestment plan by the total distributions to unitholders.
(2) Including Class B LP units.
For the quarter, the monthly distributions paid to unitholders totalled 2.5¢ per unit for the quarterly total of 7.5¢
per unit, unchanged from the same quarter of 2022.
For the year 2023, the monthly distributions paid to unitholders totalled 30.0¢ per unit, unchanged from last year.
Funds from Operations (FFO)(1)
The following table provides a reconciliation of net income and comprehensive income established in
accordance with IFRS and FFO(1) for the periods ended December 31, 2023, and December 31, 2022, as well as
the years ended 2023 and 2022:
59
Periods ended December 31
(in thousands of dollars, except for per unit)
Net income and comprehensive income (IFRS)
Fair value adjustment on investment properties
Fair value adjustment on Class B LP units
Amortization of lease incentives
Fair value adjustment on derivative financial instruments
Leasing payroll expenses(6)
Distributions - Class B LP units
Unit-based compensation (Unit price remeasurement)(5)
FFO(1)
Transaction costs on disposition of investment properties
and mortgage early repayment fees
FFO Adjusted(1)
FFO per unit(1)(2)(3)
FFO Adjusted per unit(1)(2)(4)
FFO payout ratio(1)
FFO Adjusted payout ratio(1)
Quarter
Year
2023
$
1,734
4,480
(42)
641
2,396
401
52
(11)
9,651
37
2022
$
1,769
7,781
160
787
(1,971)
682
26
198
2023
$
36,598
(2,001)
(976)
2,783
1,233
1,443
172
(389)
2022
$
38,154
8,201
(149)
3,113
(14,216)
1,243
104
(182)
9,432
38,863
36,268
627
83
9,688
10,059
38,946
11.1¢
11.1¢
67.5%
67.2%
11.0¢
11.8¢
67.9%
63.6%
45.0¢
45.1¢
66.6%
66.5%
1,611
37,879
43.5¢
45.4¢
69.0%
66.1%
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) Including Class B LP units.
(3) The FFO per unit ratio is calculated by dividing the FFO(1) by the Trust’s unit outstanding at the end of the period (including the Class B LP units at
outstanding at the end of the period).
(4) The FFO Adjusted per unit ratio is calculated by dividing the FFO Adjusted(1) by the Trust’s unit outstanding at the end of the period (including the Class B
LP units at outstanding at the end of the period).
(5) The impact of the unit price remeasurement on the deferred unit-based compensation plan has been considered in the calculation of the FFO Adjusted
and AFFO Adjusted starting Q2 2021.
(6) The impact of the CIO compensation, hired in Q2 2022, was added to the Leasing payroll expenses during Q4 2022 as his duties were mainly leasing
activities throughout the year.
For the quarter, FFO Adjusted(1) was 11.1¢ per unit, compared to 11.8¢ per unit for the same quarter last year
representing a decrease of 5.9%.
For the year, FFO Adjusted(1) was 45.1¢ per unit, compared to 45.4¢ per unit for the year 2022 representing a
decrease of 0.1%. FFO Adjusted increased by $1.1 million which was driven by an NOI increase of $2.7 million due
to acquisitions net of dispositions; NOI increase of $1.4 million due to leasing efforts and stability of occupancy
rates offset by an increase in financial expenses net of financial income of $3.0 million. Despite the increase of
FFO adjusted for the year 2023, the FFO adjusted per unit has decreased by 0.3¢ due to 3.2 million additional
weighted average number of units outstanding reducing the per unit value compared to the same period in 2022.
The FFO Adjusted payout ratio(1) for the quarter stood at 67.2%, compared to 63.6% for the same quarter in 2022.
For the year 2023, the FFO Adjusted(1) payout ratio(1) stood at 66.5%, compared to 66.1% for the year 2022.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
2023 Annual ReportBalancing Growth and Responsibility 60
61
Adjusted Funds from Operations (AFFO)(1)
The following table provides a reconciliation of FFO(1) and AFFO(1) for the periods ended December 31, 2023, and
December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars, except for per unit data)
FFO(1)
Straight-line rental revenue adjustment
Accretion of effective interest
Amortization of other property and equipment
Unit-based compensation expenses
Provision for non-recoverable capital expenditures(1)
Provision for unrecovered rental fees(1)
AFFO(1)
Transaction costs on disposition of investment properties
and mortgage early repayment fees
AFFO Adjusted(1)
AFFO per unit(1)(2)(3)
AFFO Adjusted per unit(1)(2)(4)
AFFO payout ratio(1)
AFFO Adjusted payout ratio(1)
Quarter
Year
2023
$
9,651
(197)
310
20
159
(639)
(375)
8,929
37
8,966
10.2¢
10.3¢
72.9%
72.6%
2022
$
9,432
(1,077)
336
31
206
(630)
(375)
7,923
627
8,550
9.3¢
10.0¢
80.8%
74.9%
2023
$
38,863
(1,963)
1,095
99
836
(2,557)
(1,500)
34,873
83
34,956
40.4¢
40.5¢
74.2%
74.1%
2022
$
36,268
(1,822)
1,127
122
721
(2,390)
(1,500)
32,526
1,611
34,137
39.0¢
40.9¢
77.0%
73.3%
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) Including Class B LP units.
(3) The AFFO per unit ratio is calculated by dividing the AFFO(1) by the Trust’s unit outstanding at the end of the period (including the Class B LP units at
outstanding at the end of the period).
(4) The AFFO Adjusted per unit ratio is calculated by dividing the AFFO Adjusted(1) by the Trust’s unit outstanding at the end of the period (including the Class
B LP units at outstanding at the end of the period).
For the quarter, AFFO Adjusted(1) was 10.3¢ per unit, compared to 10.0¢ per unit for the same quarter last year, an
increase of 2.7%
For the year 2023, the AFFO Adjusted(1) was 40.5¢ per unit, compared to 40.9¢ per unit, a decrease of 0.1%
compared to the year 2022. Despite an increase of AFFO adjusted for the year of 0.8$ million, the FFO Adjusted(1)
per unit has decreased due to an increase of 3.2 million in weighted average number of units outstanding
reducing the per unit value.
The AFFO Adjusted payout ratio(1) for the quarter stood at 72.6% compared to 74.9% for the same quarter last
year. For the year 2023, the AFFO Adjusted payout ratio(1) stood at 74.1% compared to 73.3% for the year 2022.
In calculating AFFO(1), the Trust deducts a provision for non-recoverable capital expenditures(2) to consider capital
expenditures invested to maintain the condition of its properties and to preserve rental revenue. The provision for
non-recoverable capital expenditures is calculated based on 2% of rental revenues. This provision is based on
management’s assessment of industry practices and its investment forecasts for the coming years.
The Trust also deducts a provision for unrecovered rental fees(1) in the amount of approximately 25¢ per square
feet on an annualized basis. Even though quarterly rental fee disbursements vary significantly from one quarter to
another, management considers that this provision fairly presents, in the long term, the average disbursements
not recovered directly in establishing the rent that the Trust will undertake. These disbursements consist of
inducements paid or granted when leases are signed that are generally amortized over the term of the lease and
are subject to an equivalent increase in rent per square foot, and of brokerage commissions and leasing payroll
expenses.
The following table compares the amount of the provision for non-recoverable capital investments to the amount
of investment made during the current comparative quarter and in the last few years:
Years ended December 31
(in thousands of dollars)
Provision for non-recoverable capital expenditures(1)
Non-recoverable capital expenditures
(1) This is a non-IFRS financial measure, refer to AFFO section for detailed explanations.
December 31,
2023
December 31,
2022
December 31,
2021
$
2,557
3,858
$
2,007
1,297
$
1,859
2,055
The Trust intends to achieve a balance between actual investment and the estimated provisions over the long
term. Management may change the calculation of the provision, as required.
Cash Flows
The following table shows the Trust’s net distributions to unitholders compared to net cash flows from operating
activities less interest paid for the years 2023, 2022 and 2021:
Years ended December 31
(in thousands of dollars)
Net cash flows from operating activities
Interest paid
Net cash flows from operating activities less interest paid
Net distributions to unitholders
Surplus of net cash flows from operating activities less interest paid
compared to net distributions to unitholders
2023
$
70,852
(31,324)
39,528
22,292
17,236
2022
$
66,240
(27,925)
38,315
21,573
16,742
2021
$
66,240
(27,925)
38,315
21,573
16,742
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) This is a non-IFRS financial measure as defined in this page.
(1) This is a non-IFRS financial measure as defined in this page.
2023 Annual ReportBalancing Growth and Responsibility 62
63
The following table summarizes the reconciliation of net cash from operating activities presented in the financial
statements, AFFO(1) and FFO(1) for the periods ended December 31, 2023, and December 31, 2022, as well as the
years ended 2023 and 2022:
The following table summarizes the changes in the fair value of investment properties for the periods ended
December 31, 2023, and December 31, 2022, as well as the years ended 2023 and 2022:
Quarter
Year
Periods ended December 31
(in thousands of dollars)
Periods ended December 31
(in thousands of dollars)
Cash flows from operating activities
Leasing payroll expenses
Transaction costs on purchase and disposition of
investment properties and early repayment fees
Adjustments for changes in other working capital items
Financial income
Interest expenses
Provision for non-recoverable capital expenditures(2)
Provision for non-recovered rental fees(2)
Accretion of non-derivative liability component
of convertible debentures
AFFO(1)
Provision for non-recoverable capital expenditures(2)
Provision for non-recovered rental fees(2)
Straight-line rental revenue adjustment
Unit-based compensation expenses
Accretion of effective interest
Amortization of property and equipment
FFO(1)
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) This is a non-IFRS financial measure, refer to AFFO section for detailed explanations.
Assets
Investment properties
2023
$
21,560
401
(37)
(3,803)
611
(8,697)
(639)
(375)
(92)
8,929
639
375
197
(159)
(310)
(20)
9,651
2022
$
18,961
682
(627)
(2,523)
225
(7,706)
(630)
(375)
(84)
7,923
630
375
1,077
(206)
(336)
(31)
9,432
2023
$
70,852
1,443
(83)
(1,605)
1,833
2022
$
66,240
1,243
(1,611)
(1,293)
624
(33,157)
(28,450)
(2,557)
(1,500)
(353)
34,873
2,557
1,500
1,963
(836)
(1,095)
(99)
38,863
(2,390)
(1,500)
(337)
32,526
2,390
1,500
1,822
(721)
(1,127)
(122)
36,268
The Trust has grown through the acquisitions of high-quality properties based on its selection criteria, while
maintaining an appropriate allocation among three operating segments: industrial, off-downtown core office,
and necessity-based retail.
The real estate portfolio consists of direct interests in wholly owned investment properties and the Trust’s share
of the assets, liabilities, revenues, and expenses of two jointly controlled investment properties.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
Balance, beginning of period
Additions:
Initial recognition of right-of-use assets
Acquisitions
Dispositions
Capital expenditures
Leasing fees and capitalized lease incentives
Fair value adjustment on investment properties
Net transfer to finance lease
Other non-monetary changes(1)
Quarter
2023
$
2022
$
Year
2023
$
2022
$
1,207,090
1,179,869
1,164,881
1,110,971
-
-
-
3,800
1,556
(4,480)
-
(444)
-
33
3,133
36,306
-
96,155
(10,502)
-
(42,679)
667
2,305
(7,780)
-
289
7,510
4,910
2,001
(10,399)
(820)
3,370
6,551
(8,199)
-
(1,288)
Balance, end of period
1,207,522
1,164,881
1,207,522
1,164,881
(1) The other non-monetary changes are composed of the lease incentives amortization and straight-line lease adjustments.
The fair value of investment properties stood at $1,208 million as at December 31, 2023, compared to $1,165
million as at December 31, 2022. The increase of $43 million is mainly explained by the previously mentioned
acquisitions for which the net impact increased the portfolio of investment properties by $39 million (acquisitions
of investment properties, including capitalized transactions cost, and initial recognition of right-of-use assets),
and by the $2 million net change in fair value. It is also attributable to $8 million of capital expenditures and
$4 million of leasing fees and capitalized lease incentives. The overall increase was partially offset by the net
transfer of a $10 million investment property to a finance lease.
Improvements in investment properties
The Trust invests capital to improve its properties to preserve the quality of their infrastructure and services
provided to tenants. These investments include value-added maintenance corresponding to expenditures
required to upkeep properties, as well as property improvement and redevelopment projects intended
to increase leasable area, occupancy rates or quality of space available for rent. In some cases, capital
expenditures are amortized and may be recovered from tenants.
The following table summarizes capital expenditures, incentives, and leasing fees, for the periods ended
December 31, 2023, and December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars)
Recoverable capital expenditures
Non-recoverable capital expenditures
Total capital expenditures
Leasing fees and leasehold improvements
Total
Quarter
Year
2023
$
1,672
1,076
2,748
1,556
4,304
2022
$
350
317
667
2,305
2,972
2023
$
2,600
3,858
6,458
4,910
11,368
2022
$
1,635
1,735
3,370
6,551
9,921
2023 Annual ReportBalancing Growth and Responsibility 64
65
Finance Lease Receivable
Receivables
In August 2023, a tenant exercised a purchase option of an industrial property in Edmonton, Alberta. The
purchase price is $10,250 and the closing date is December 1, 2026. The Trust derecognized the property from
investment properties to classify it as a finance lease receivable.
When the Trust classified the lease as a finance lease, it recognized the net investment in the lease as a finance
lease receivable on the balance sheet. The Trust subsequently recognizes financial income as earned.
The following table summarizes the finance lease for the period ended December 31, 2023, and sets out a
maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the
reporting date.
Finance lease
receivable
Undiscounted
finance lease
at inception
Unearned
finance income
at inception
Implicit
interest
rate
Interest
payments
Purchase option
Beginning balances
$
10,399
$
13,379
$
%
(2,980)
8.44
Monthly December 2026
As at December 31, 2023
Beginning balance undiscounted finance lease
Received lease payments
Beginning balance unearned finance income at inception
Earned finance income
Finance lease receivable
2024
2025
2026
Total
Unearned finance income
Finance lease receivable
13,379
382
12,997
(2,980)
439
(2,541)
10,456
Lease payments
$
916
916
11,165
12,997
2,541
10,456
The following table summarizes receivables for the years ended December 31, 2023 and December 31, 2022:
(in thousands of dollars)
Rent receivable
Allowance for expected credit losses
Net rent receivable
Unbilled recoveries
Other receivables
Receivables
December 31,
2023
December 31,
2022
$
2,201
(731)
1,470
1,572
230
3,272
$
3,431
(1,011)
2,420
1,142
1,254
4,816
Receivables decreased from $4.8 million as at December 31, 2022, to $3.3 million as at December 31, 2023.
The decrease in receivables is due to favorable collections, accounts receivables management and the positive
impact of the reduction of the allowance for expected credit losses.
Prepaid expenses, Deposits and Property and equipment
The following table summarizes the prepaid expenses, deposits and property and equipment for the years ended
December 31, 2023 and December 31, 2022:
(in thousands of dollars)
Property and equipment
Accumulated depreciation
Net property and equipment
Prepaid expenses
Deposits
Other assets
December 31,
2023
December 31,
2022
$
1,484
(1,213)
271
1,185
1,337
2,793
$
1,436
(1,114)
322
1,234
1,929
3,485
Prepaid expenses, deposits and property and equipment decreased from $3.5 million as at December 31, 2022,
to $2.8 million as at December 31, 2023, which is explained by a decrease in deposits related to future potential
acquisitions.
2023 Annual ReportBalancing Growth and Responsibility 66
Capital Resources
Long-term debt
The following table summarizes the balance of BTB’s indebtedness on December 31, 2023, including mortgage
loans and convertible debentures, based on the year of maturity and corresponding weighted average
contractual interest rates:
As at December 31, 2023
(in thousands of dollars)
Year of maturity
2024
2025
2026
2027
2028
2029 and thereafter
Total
(1) Gross amounts.
Balance of
convertible
debentures(1)
Balance of
mortgages
payable(1)
$
$
24,000
19,917
-
-
-
-
145,402
56,575
118,924
114,309
86,961
118,254
43,917
640,425
Weighted
average
contractual
interest rate
%
5.40
4.31
3.41
5.26
4.61
3.62
4.50
The Trust has $145.4 million of mortgages coming to maturity in the next twelve months. The Trust as of the date
of this report has commitment letters from financial institutions for the refinancing of $53.1 million and is in the
process of negotiating the remaining 2024 mortgages coming to maturity. Furthermore, the Trust has always
been able to refinance its existing mortgages and debentures. There is no indication that this would change.
Weighted average contractual interest rate
As at December 31, 2023, the weighted average contractual interest rate of the Trust’s long-term debt stood at
4.50% (4.37% for mortgage loans and 6.45% for convertible debentures), representing an increase of 26 basis
points compared to the same period last year. As at December 31, 2022, the weighted average contractual
interest rate of the Trust’s long-term debt stood at 4.24% (4.09% for mortgage loans and 6.45% for convertible
debentures).
Mortgage loans
As at December 31, 2023, the Trust’s total mortgage loans (excluding unamortized fair value adjustments and
unamortized financing expenses) amounted to $640.4 million compared to $638.4 million as at December 31,
2022. The net increase of $2.0 million includes $16.8 million that relates to contracted mortgages for previously
mentioned acquisitions, $3.4 million of additional capital on refinanced existing mortgages, netted by $18.2
million of monthly principal repayments.
67
The following table summarizes the changes in mortgage loans payable for the period ended December 31, 2023:
Periods ended December 31, 2023
(in thousands of dollars)
Balance at beginning(1)
Mortgage loans contracted or assumed(2)
Balance repaid at maturity or upon disposition(3)
Monthly principal repayments(4)
Quarter
$
644,147
13,500
(12,316)
(4,906)
Year
$
638,441
49,349
(27,940)
(19,425)
Balance as at December 31, 2023(1)
(1) Before unamortized financing expenses and fair value assumption adjustments.
(2) This is a non-IFRS measure. Mortgage loans contracted or assumed are included in the Consolidate Statements of Cash Flows within the Mortgage loans,
net of financing expenses.
(3) This is a non-IFRS measure. Balance repaid at maturity or upon disposition are included in the Consolidated Statements of Cash Flows within the
following: Repayment of mortgage loans and Net proceeds from disposition of investment properties.
(4) This is a non-IFRS measure. Principal monthly repayments are included in the Consolidated Statements of Cash Flows within Repayment of mortgage
loans.
640,425
640,425
As at December 31, 2023, the weighted average mortgage interest rate was 4.37% compared to 4.09% for the
same period last year, an increase of 28 basis points. This increase is mainly due to the increase in the average
weighted contractual rate of variable interest on mortgage loans outstanding, which increased by 53 basis points
to 6.91% (6.38% as at December 31, 2022). In comparison, the weighted average for fixed interest rate increased
by 30 basis point to 4.03% (3.73% as at December 31, 2022).
As at December 31, 2023, the majority of the Trust’s mortgages payable bear interest at fixed rates (cumulative
principal amount of $565.5 million) or are subject to floating-to-fixed interest rate swaps (cumulative principal
amount of $50.3 million). However, the Trust has four loans that bear interest at floating rates (cumulative
principal balance of $24.6 million).
The weighted average term of existing mortgage loans was 3.2 years as at December 31, 2023, compared to
3.97 years for the same period last year. The Trust attempts to spread the maturities of its mortgages over many
years to mitigate the risk associated with renewals.
The following table summarizes future mortgage loan repayments for the next few years:
As at December 31, 2023
(in thousands of dollars)
Maturity
2024
2025
2026
2027
2028
2029 and thereafter
Total
Unamortized fair value assumption adjustments
Unamortized financing expenses
Balance as at December 31, 2023
Principal
repayment
Balance at
maturity
Total
% of total
$
$
$
17,037
14,521
12,358
8,455
4,690
10,571
143,241
52,853
108,601
100,506
77,485
90,107
160,278
67,374
120,959
108,961
82,175
100,678
25.0
10.5
18.9
17.0
12.8
15.7
67,632
572,793
640,425
100.0
160
(2,505)
638,080
As at December 31, 2023, the Trust was in compliance with all the contractual mortgage covenants to which it is
subject.
2023 Annual ReportBalancing Growth and Responsibility 68
Convertible debentures
The following table summarizes the convertible debentures for the period ended December 31, 2023:
(in thousands of dollars)
Par value
Contractual interest rate
Effective interest rate
Date of issuance
Per-unit conversion price
Date of interest payment
Maturity date
Series G(1)(3)
24,000
6%
7%
Series H(2)(3)
19,917(4)
Total
43,917
7%
8%
October 2019
September 2020
5.42
3.64
April 30 and October 31 April 30 and October 31
October 2024
October 2025
Balance as at December 31, 2023
(1) Redeemable by the Trust, under certain conditions, as of October 31, 2022, but before October 31, 2023, at a redemption price equal to their initial
principal amount plus accrued, unpaid interest, provided that the unit market price is at least 125% of the Series G conversion price and, as of October 31,
2023, but before October 31, 2024, at a redemption price equal to their principal amount plus accrued and unpaid interest.
(2) Redeemable by the Trust, under certain conditions, as of October 31, 2023, but before October 31, 2024, at a redemption price equal to their initial
principal amount plus accrued, unpaid interest, provided that the unit market price is at least 125% of the Series H conversion price and, as of October 31,
2024, but before October 31, 2025, at a redemption price equal to their principal amount plus accrued and unpaid interest.
(3) The Trust may, at its option and under certain conditions, elect to satisfy its obligation to pay the principal amount of the Series G and H debentures by
issuing tradable units freely to Series G and H debenture holders.
(4) Conversion of $10,083 of the Series H debenture since issuance. Conversion of $383 during the year.
18,729
23,731
42,460
Debt ratio
Under the terms of its trust agreement, the Trust can’t contract a mortgage loan if, after having contracted
the said loan, the total mortgage debt would exceed 75% of the fair value of the total assets of the Trust. In
accordance with the Trust indenture, when establishing this calculation, the convertible debentures shouldn’t
be considered in the calculation of total indebtedness. Moreover, also under its trust indenture, in case of failure
to abide by this condition, the Trust benefits from a 12-month delay from the date of knowledge to remedy the
situation.
The following table summarizes the Trust’s debt ratios as at December 31, 2023, and 2022 and December 31 2022:
(in thousands of dollars)
Cash and cash equivalents
Mortgage loans outstanding(1)
Convertible debentures(1)
Credit facilities
Total long-term debt less cash and cash equivalents(2)(3)
Total gross value of the assets of the Trust less cash and cash equivalents(2)(4)
Mortgage debt ratio (excluding convertible debentures and credit facilities)(2)(5)
Debt ratio – convertible debentures(2)(6)
Debt ratio – credit facilities(2)(7)
December 31, 2023 December 31, 2022
$
(912)
640,425
43,185
36,359
719,057
1,227,949
52.2%
3.5%
3.0%
$
(2,404)
638,441
43,170
9,897
689,104
1,178,049
54.2%
3.7%
0.8%
Total debt ratio(2)
(1) Before unamortized financing expenses and fair value assumption adjustments.
(2) This is a non-IFRS financial measure, refer to page 2 and 37.
(3) Long-term debt less free cash flow is a non-IFRS financial measure, calculated as total of: (i) fixed rate mortgage loans payable; (ii) floating rate mortgage
loans payable; (iii) Series G debenture capital amount; (iv) Series F debenture capital adjusted with non-derivative component less conversion options
exercised by holders; and (v) credit facilities, less cash and cash equivalents. The most directly comparable IFRS measure to net debt is debt.
(4) Gross value of the assets of the Trust less cash and cash equivalent (“GVALC”) is a non-IFRS financial measure defined as the Trust total assets adding
the cumulated amortization property and equipment and removing the cash and cash equivalent. The most directly comparable IFRS measure to GVALC is
total assets.
(5) Mortgage debt ratio is calculated by dividing the mortgage loans outstanding by the GVALC.
(6) Debt ratio – convertible debentures is calculated by dividing the convertible debentures by GVALC.
(7) Debt ratio – credit facilities is calculated by dividing the credit facilities by the GVALC.
58.6%
58.5%
69
As of December 31, 2023, the mortgage debt ratio(1) excluding the convertible debentures and credit facilities
totalled 52.2%, a decrease of 202 basis points since December 31, 2022. As of December 31, 2023, the
total debt ratio(2), including the convertible debentures and credit facilities, net of cash and cash equivalents,
increased to 58.6%, an increase of 8 basis points since December 31, 2022, driven by property acquisitions
made throughout the year which increased the use of the credit facilities.
The Trust seeks to finance its acquisitions with a maximum mortgage debt ratio of 65% since the cost of
financing is lower than the capital cost of the Trust’s equity. Liquidity refers to the Trust having credit availability
under committed credit facilities and/or generating enough cash and cash equivalents to fund the ongoing
operational commitments including maintenance capital and development capital expenditures, distributions to
unitholders and planned growth in the business. The Trust maintains credit facilities to provide financial liquidity
which can be drawn or repaid on short notice, reducing the need to hold liquid resources in cash and deposits.
Management continues to believe the Trust is well positioned based on the improved balance sheet over the
years, short-term debt maturities that are under way to be refinanced, a pool of assets that can be used to
structure new lines of credit, and the liquidity of the portfolio in the event of an opportunistic asset sale.
Interest coverage ratio
The following table summarizes the interest coverage ratio for the periods ended December 31, 2023, and
December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in thousands of dollars, except for the ratios)
Adjusted EBITDA(1)
Interest expenses net of financial income(2)
Interest coverage ratio(3)
Quarter
Year
2023
$
18,065
8,086
2.23
2022
$
16,347
7,481
2.19
2023
$
69,719
31,324
2.23
2022
$
64,409
27,826
2.31
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) This is a non-IFRS financial measure. Interest expenses exclude early repayment fees, accretion of effective interest, distribution on Class B LP units,
accretion of non-derivative liability component of convertible debentures and the fair value adjustment on derivative financial instruments and Class B LP
units.
(3) This is a non-IFRS financial measure. Interest coverage ratio is calculated by dividing the Adjusted EBITDA(1) by Interest expenses net of financial income
(as previously defined).
For the year ended December 31, 2023, the interest coverage ratio stood at 2.23, a decrease of 8 basis points
from the same period last year.
(1) This is a non-IFRS financial measure as defined in this page.
(2) This is a non-IFRS financial measure, refer to page 2 and 37.
2023 Annual ReportBalancing Growth and Responsibility 70
71
Debt service coverage ratio
Units outstanding
The following table summarizes the debt service coverage ratio for the periods ended December 31, 2023,
and December 31, 2022, as well as the years ended 2023 and 2022:
The following table summarizes the total number of units outstanding and the weighted number of units
outstanding for the periods ended December 31, 2023, and December 31, 2022, as well as the years ended 2023
and 2022:
Periods ended December 31
(in thousands of dollars, except for the ratios)
Adjusted EBITDA(1)
Interest expenses net of financial income(2)
Principal repayments
Debt service requirements
Debt service coverage ratio(3)
Quarter
2023
$
18,065
8,086
4,906
12,992
1.39
2022
$
16,347
7,481
5,073
12,554
1.30
Year
2023
$
2022
$
69,719
64,409
31,324
19,425
50,749
1.37
27,826
20,210
48,036
1.34
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) This is a non-IFRS financial measure. Interest expenses exclude early repayment fees, accretion of effective interest, distribution on Class B LP units,
accretion of non-derivative liability component of convertible debentures and the fair value adjustment on derivative financial instruments and Class B LP
units.
(3) This is a non-IFRS financial measure. Debt service coverage ratio is calculated by dividing the Adjusted EBITDA(1) by Debt service requirements.
Periods ended December 31
(in number of units)
Units outstanding, beginning of the period
Units issued pursuant to a public issue
Distribution reinvestment plan
Issued - employee unit purchase plan
Issued - restricted unit compensation plan
Issued – deferred unit compensation plan
Class B LP units exchanged into Trust units
Issued – conversion of convertible debentures
Units outstanding, end of the period
Weighted average number of units outstanding
For year ended December 31, 2023, the debt service coverage ratio stood at 1.37, an increase of 3 basis points
from the same period last year.
Weighted average number of Class B LP units and units
outstanding
Quarter
Year
2023
2022
2023
2022
86,371,361
84,985,440
85,238,279
74,126,971
-
-
-
9,584,100
304,009
252,839
1,083,135
872,983
2,680
27,851
-
-
-
-
-
-
-
-
11,635
73,127
-
200,000
11,915
130,506
-
-
99,725
511,804
86,705,901
85,238,279
86,705,901
85,238,279
86,590,971
85,158,447
85,857,847
83,091,393
87,288,236
85,505,712
86,289,487
83,438,658
Class B LP units
The following table summarizes the Class B LP units for the period and the year ended December 31, 2023:
As of December 31, 2023, no units have been repurchased for cancellation under the normal course issuer bid
(“NCIB”) which expired on November 9, 2023.
Period ended December 31, 2023
(in number of units)
Class B LP units outstanding, beginning of period
Issuance of Class B LP Units - Acquisition
Exchange into Trust units
Fair value adjustment
Quarter
Year
Units
697,265
$
Units
2,085
347,265
-
-
-
-
-
(42)
2,043
550,000
(200,000)
-
697,265
$
1,268
2,475
(724)
(976)
2,043
Class B LP units outstanding, end of period
697,265
The Class B LP units are exchangeable at any time, at the option of the holder, for an equal number of units of
the Trust trading on the TSX. They’re entitled to receive the same distributions as declared on the Trust units. In
accordance with IFRS, distributions paid on Class B LP units are recorded as financial expenses when declared.
Distributions declared are adjusted in calculating FFO and AFFO.
On May 30, 2018, Class B LP units were issued in payment for the acquisition of a 25% equity portion in the
property located at 815 Boulevard Lebourgneuf in Québec City.
On February 14, 2023, the holders of the class B LP units converted 150,000 units into units of the Trust and on
August 18, 2023 the holders of the class B LP units converted 50,000 units into units of the Trust.
On May 1, 2023, 550,000 Class B LP units were issued as part of the payment for the acquisition of the property
located at 8810, 48th Avenue NW in Edmonton.
Deferred unit compensation plan
The Trust has implemented a deferred unit compensation plan for its trustees and certain executive officers.
Under this plan, beneficiaries may elect to receive their compensation in cash, deferred units or a combination
of both.
The following table summarizes deferred units outstanding for the periods ended December 31, 2023, and
December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in number of units)
Deferred units outstanding, beginning of the period
Trustees’ compensation
Distributions paid in units
Quarter
Year
2023
138,334
9,497
3,581
2022
111,717
5,133
4,877
2023
121,727
17,684
12,001
151,412
2022
103,116
9,558
9,053
121,727
Deferred units outstanding, end of the period
151,412
121,727
2023 Annual ReportBalancing Growth and Responsibility 72
73
Restricted unit compensation plan
Under this plan, beneficiaries are awarded restricted units that become fully vested over a maximum period
of three years. The purpose of the plan is to encourage senior officers and selected employees to support the
Trust’s growth objectives and align their interests with the interests of unitholders. The purpose of the plan is also
to serve as an executive retention tool.
The following table summarizes restricted units outstanding for the periods ended December 31, 2023, and
December 31, 2022, as well as the years ended 2023 and 2022:
Periods ended December 31
(in number of units)
Restricted units outstanding, beginning of the period
Granted
Cancelled
Settled
Restricted units outstanding, end of the period
Quarter
Year
2023
310,377
7,230
(2,914)
(27,851)
286,842
2022
163,169
1,272
-
(25,858)
138,583
2023
138,583
224,302
(2,914)
(73,129)
286,842
2022
161,536
93,576
-
(116,529)
138,583
Employee unit purchase plan
The Trust offers its employees an optional unit purchase plan. Under this plan, the employees may contribute,
each year, pursuant to a maximum of 7% to 10% of their base salary depending on their position occupied within
the Trust. Subject to the plan’s conditions, for each two units purchased by an employee, the Trust shall issue one
unit from treasury to the employee.
Off-balance sheet arrangements and contractual commitments
The Trust doesn’t have any other off-balance sheet arrangement or commitment that have or are likely to have an
impact on its operating results or financial position, specifically its cash position and sources of financing.
Income Taxes
The Trust is taxed as a mutual fund trust for Canadian income tax purposes. The Trust intends to distribute or
allocate all of the taxable income to its unitholders and to deduct these distributions for income tax purposes.
A special tax regime applies to trusts that are considered specified investment flow-through (SIFT) entities as
well as those individuals who invest in SIFT entities. Under this regime, SIFT entities must generally pay taxes on
their income at rates that are close to those of companies. In short, a SIFT entity is an entity (including a trust)
that resides in Canada, whose investments are listed on a stock exchange or other public market and that holds
one or more non-portfolio properties.
However, for a given taxation year, BTB isn’t considered a SIFT entity and is therefore not subject to SIFT rules if,
during that year, it constitutes a real estate investment trust (REIT).
Generally, to qualify as a REIT, a trust must be resident in Canada and meet the following conditions all year
long: (i) the total fair market value of all the ”non-portfolio properties“ that are “qualified REIT properties” held
by the trust is at least 90% of the total fair market value at that time of all the “nonportfolio assets” held by the
trust (ii) not less than 90% of its “gross REIT revenue” for the taxation year is from one or more of the following
sources: rent from “real or immovable properties,” interest, dispositions of “real or immovable properties” that
are capital properties, dividends, royalties and dispositions of “eligible resale properties” (iii) not less than 75%
of its “gross REIT revenue” for the taxation year comes from one or more of the following sources: rent from “real
or immovable properties,” interest from mortgages on “real or immovable properties,” and dispositions of “real
or immovable properties” that are capital properties (iv) at each time in the taxation year, an amount that is equal
to 75% or more of the equity value of the trust at that time, is the amount that is the total fair market value of all
properties held by the trust, each of which is “real or immovable property” which is a capital property, an “eligible
resale property,” the indebtedness of a Canadian corporation represented by a banker’s acceptance, cash or,
generally, an amount receivable from the Government of Canada or from certain other public agencies; and (v)
the investments that are made therein are, at any time in the taxation year, listed or traded on a stock exchange
or other public market.
As at December 31, 2023, BTB met all these conditions and qualified as a REIT. As a result, the SIFT trust tax rules
don’t apply to BTB. BTB’s management intends to take the necessary steps to meet the conditions for the REIT
Exception on an ongoing basis in the future.
Nonetheless, there is no guarantee that BTB will continue to meet all the required conditions to be eligible for the
REIT exception for 2023 or any other subsequent year.
Taxation of Unitholders
For Canadian unitholders, to the best of the Trust management’s knowledge, distributions are qualified as follows
for taxation purposes:
Years ended December 31
Taxable as other income
Tax deferred
Total
2023
2022
%
-
100
100
%
-
100
100
2023 Annual ReportBalancing Growth and Responsibility 74
75
Accounting Policies and Estimates
The preparation of consolidated financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates are based
on historical experience and other assumptions that are considered reasonable under given circumstances. The
result of the continual review of these estimates is the basis for exercising judgment on the carrying amounts of
assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ from these
estimates. Critical judgments made by BTB in applying significant accounting policies, the most significant of
which is the fair value of investment properties, are described in the annual consolidated financial statements as
at and for the years ended December 31, 2023, and 2022.
The Trust used the income approach to determine fair value. Fair value is estimated by capitalizing the cash flow
that a property can reasonably be expected to produce over its remaining economic life. The income approach is
based on two methods: the overall capitalization rate method, whereby net operating income is capitalized at the
requisite overall capitalization rate, or the discounted cash flow method, whereby cash flows are projected over
the expected term of the investment plus a terminal value discounted using an appropriate discount rate.
Inflation and Interest Rates
The increase of the Bank of Canada policy interest rate has created a heightened level of uncertainty on the
economy. The rise of the policy rate has not had a significant impact on the Trust’s operations and ability to
negotiate new or renew mortgages. Given the situation, there could be certain repercussions on the mortgage
refinancing activities, the fair value of the investment properties, certain investment decisions and the level
of transactions in the market. The Trust will continue to monitor the effects of the rise of the policy rate on its
investment activities and valuation of the investment properties.
Risks and Uncertainties
Numerous risks and uncertainties could cause BTB’s actual results to differ materially from those expressed,
implied or projected in the forward-looking statements, including those described in the “Risk Factors” section
of BTB’s 2023 Annual Information Form for the year ended December 31, 2022, which is hereby incorporated by
reference. Such risks and uncertainties include:
• Access to Capital and to Debt Financing
•
Interest Rate Increases
• Ownership of Immovable Property
• Competition and Rising Property Prices
• Availability of Immovable Property for Acquisition
• Development Programs
• Recruitment and Retention of Employees and Executives
• Government Regulation
•
•
Limit on Activities Under the Trust Agreement
Tax Regulations
•
Fluctuations in Cash Distributions
• Reliance on Single or Anchor Tenants
•
Potential Unitholder Liability
• Conflicts of Interest
• Market Price of Units
•
Legal Rights Relating to Units
• Dilution
•
•
Environmental Matters
Legal Risks
• General Uninsured Losses
• Retail Industry
• A possible economic recession
•
Long-term effect of a global pandemic
Disclosure Controls and Procedures and Internal Control
Over Financial Reporting
The President and Chief Executive Officer and the Executive Vice-President and Chief Operating & Financial
Officer of BTB are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”)
and internal control over financial reporting (“ICFR”), as those terms are defined in Canadian Securities
Administrators Multilateral Instrument 52-109.
Evaluations are performed regularly to assess the effectiveness of DC&P, including this MD&A and the
consolidated financial statements. Based on these evaluations, the President and Chief Executive Officer and
the Executive Vice-President and Chief Operating & Financial Officer concluded that the DC&P were effective as
at December 31, 2023, and that the current controls and procedures provide reasonable assurance that material
information about BTB is made known to them during the quarter in which these filings are being prepared.
Evaluations are also performed to assess the effectiveness of ICFR. Based on those evaluations, the President
and Chief Executive Officer and the Executive Vice-President and Chief Operating & Financial Officer of BTB
concluded that ICFR was effective as at December 31, 2023, and, more specifically, that the financial reporting
is reliable and that the consolidated financial statements have been prepared for financial reporting purposes in
accordance with IFRS.
During the fourth quarter of 2023, management made no changes to internal control over financial reporting that
materially affected, or are likely to materially affect, internal control over financial reporting.
2023 Annual ReportBalancing Growth and Responsibility 76
77
Appendix 1 – Definitions
Class B LP Units
Fair value adjustment on investment properties
Under IAS 40, the Trust accounts for its investment properties at fair value and recognizes the gain or loss arising
from a change in the fair value in profit or loss for the quarters in which it arises.
Class B LP units means the Class B LP limited partnership units of BTB LP, which are exchangeable for units, on a
one for one basis.
The fair value of investment properties is determined using the discounted cash flow method, the capitalized net
operating income (NOI) method or the comparable method, which are generally accepted valuation methods.
Management receives quarterly capitalization rate and discount rate data from external chartered valuators and
independent experts. The capitalization rate reports provide a range of rates for various geographic regions and
for various types and qualities of properties within each region. The Trust utilizes capitalization and discount
rates within ranges provided by external valuators. To the extent that the externally provided capitalization rate
ranges change from one reporting quarter to the next or should another rate within the provided ranges be more
appropriate than the rate previously used, the fair value of the investment properties would increase or decrease
accordingly.
Same-property portfolio
The same-property portfolio includes all the properties owned by the Trust as at January 1, 2022 and still
owned as at December 31, 2023, but does not include the financial impacts from dispositions, acquisitions and
developments completed in 2022 and 2023, as well as the results of subsequently sold properties.
Net operating income (NOI) from the same-property portfolio
Net operating income (NOI) from the same-property portfolio provides an indication of the profitability of existing
portfolio operations and the Trust’s ability to increase its revenues and reduce its costs. It is defined as rental
revenue from properties from the same-property portfolio, less operating expenses of the same portfolio.
Rental revenue
Rental revenue includes all amounts earned from tenants related to lease agreements, including basic rent and
additional rent from operating expense recoveries. It also includes other service charges for parking and storage,
lease termination revenues and straight-line rent adjustments.
Some of the Trust’s leases include clauses providing for the recovery of rental revenue based on amounts
that increase every few years. These increases are negotiated when the leases are signed. Under IFRS, these
increases must be recognized on a straight-line basis over the terms of the leases.
Operating expenses
Operating expenses are expenses directly related to real estate operations and are generally charged back
to tenants as provided for in the contractual terms of the leases. Operating expenses include property taxes
and public utilities, costs related to indoor and outdoor maintenance, heating, ventilation and air conditioning,
elevators, insurance, janitorial services and management and operating fees. The amount of operating expenses
that the Trust can recover from its tenants depends on the occupancy rate of the properties and the nature of the
existing leases containing clauses regarding the recovery of expenses. Most of the Trust’s leases are net rental
leases under which tenants are required to pay their share of the properties’ operating expenses. The Trust pays
particular attention to compliance with existing leases and the recovery of these operating expenses.
Net operating income (NOI)
NOI is used in the real estate industry to measure operational performance. The Trust defines it as rental revenue
from properties, less the combined operating expenses of investment properties. This definition may differ from
that of other issuers and accordingly, the Trust’s NOI may not be comparable to the NOI of other issuers.
Financial expenses
Financial expenses arise from the following loans and financing:
• Mortgage loans payable contracted or assumed totalling approximately $640.4 million as at December 31,
2023, compared to $619.6 million as December 31, 2022.
•
Series G and H convertible debentures for a total par value of $43.9 million as at December 31, 2023.
• Credit facilities used as needed.
•
Financing costs on mortgages, convertible debentures and other loans netted against the related debt and
amortized on an effective interest basis over the expected life of the debt.
Administration expenses
Administration expenses include corporate costs such as payroll expenses and professional fees associated
with executive and administrative staff of the Trust, the compensation plan for trustees, legal and auditing
services, expenses related to listed fund status, insurance costs, office expenses and expected credit losses
and related legal fees. Administration expenses include amortization of the head office building and property and
equipment, as well as unit-based compensation, a non-monetary item that affects the volatility of administrative
expenses from quarter to quarter.
2023 Annual ReportBalancing Growth and Responsibility 78
79
Appendix 2 – Non-IFRS Financial Measures –
Quarterly Reconciliation
Funds from Operations (FFO)(1)
The following table provides a reconciliation of net income and comprehensive income established in
accordance with IFRS and FFO(1) for the last eight quarters:
(in thousands of dollars, except for per unit)
Net income and comprehensive income
(IFRS)
Fair value adjustment on investment
properties
Fair value adjustment on Class B LP
units
Amortization of lease incentives
Fair value adjustment on derivative
financial instruments
Leasing payroll expenses(6)
Distributions – Class B LP units
Unit-based compensation (Unit price
remeasurement)(5)
2023
Q-4
$
2023
Q-3
$
2023
Q-2
$
2023
Q-1
$
2022
Q-4
$
2022
Q-3
$
2022
Q-2
$
2022
Q-1
$
1,734
15,216
10,846
8,802
1,769
11,693
18,243
6,449
4,480
(6,481)
-
7,781
1,230
197
(1,007)
(42)
641
(159)
(775)
664
750
728
160
787
(142)
(233)
773
818
2,396
(584)
(763)
184
(1,971)
(3,898)
(9,344)
401
52
(11)
359
56
327
42
(87)
(232)
356
22
(59)
682
26
182
26
158
26
198
(172)
(285)
66
735
997
221
26
77
-
-
FFO(1)
9,651
8,984
10,195
10,033
9,432
9,692
9,580
7,564
Transaction costs on disposition of
investment properties and mortgage
early repayment fees
FFO Adjusted(1)
FFO per unit(1)(2)(3)
FFO Adjusted per unit(1)(2)(4)
FFO payout ratio(1)
FFO Adjusted payout ratio(1)
37
46
-
-
627
93
138
753
9,688
9,030
10,195
10,033
10,059
9,785
9,718
8,317
11.1¢
11.1¢
10.3¢
10.4¢
11.8¢
11.8¢
11.7¢
11.7¢
11.0¢
11.8¢
11.4¢
11.5¢
11.3¢
11.4¢
9.7¢
10.7¢
67.5% 72.9% 63.8% 64.1% 67.9% 65.9% 66.4% 77.2%
67.2% 72.5% 63.8% 64.1% 63.6% 65.2% 65.5% 70.2%
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) Including Class B LP units.
(3) This is a non-IFRS financial measure. The FFO per unit ratio is calculated by dividing the FFO(1) by the Trust’s unit outstanding at the end of the period
(including the Class B LP units at outstanding at the end of the period).
(4) This is a non-IFRS financial measure. The FFO Adjusted per unit ratio is calculated by dividing the FFO Adjusted(1) by the Trust’s unit outstanding at the end
of the period (including the Class B LP units at outstanding at the end of the period).
(5) The impact of the unit price remeasurement on the deferred unit-based compensation plan has been considered in the calculation of the FFO Adjusted
and AFFO Adjusted starting Q2 2021.
(6) The impact of the CIO compensation, hired in Q2 2022, was added to the Leasing payroll expenses during Q4 2022 as his duties were mainly leasing
activities throughout the year.
Adjusted Funds from Operations (AFFO)(1)
The following table provides a reconciliation of FFO(1) and AFFO(1) for the last eight quarters:
(in thousands of dollars, except for per unit)
2023
Q-4
$
2023
Q-3
$
2023
Q-2
$
2023
Q-1
$
2022
Q-4
$
2022
Q-3
$
2022
Q-2
$
2022
Q-1
$
FFO(1)
9,651
8,984
10,195
10,033
9,432
9,692
9,580
7,564
Straight-line rental revenue adjustment
Accretion of effective interest
Amortization of other property and
equipment
Unit-based compensation expenses
Provision for non-recoverable capital
expenditures(1)
Provision for unrecovered rental fees(1)
AFFO(1)
Transaction costs on disposition of
investment properties and mortgage
early repayment fees
AFFO Adjusted(1)
AFFO per unit(1)(2)(3)
AFFO Adjusted per unit(1)(2)(4)
AFFO payout ratio(1)
AFFO Adjusted payout ratio(1)
(197)
310
20
159
(842)
271
33
184
(291)
278
(633)
(1,077)
236
336
23
23
31
237
256
206
(521)
219
35
130
(74)
284
26
312
(150)
288
30
73
(639)
(626)
(634)
(658)
(630)
(599)
(580)
(581)
(375)
8,929
(375)
(375)
(375)
(375)
(375)
(375)
(375)
7,629
9,433
8,882
7,923
8,581
9,173
6,849
37
46
-
-
627
93
138
753
8,966
10.2¢
10.3¢
7,675
9,433
8,882
8,550
8,674
9,311
7,602
8.8¢
8.8¢
10.9¢
10.9¢
10.3¢
10.3¢
9.3¢
10.1¢
10.8¢
10.0¢
10.2¢
11.0¢
8.8¢
9.7¢
72.9% 85.8% 69.0% 72.4% 80.8% 74.4% 69.4% 85.3%
72.6% 85.3% 69.0% 72.4% 74.9% 73.6% 68.3% 76.8%
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(2) Including Class B LP units.
(3) The AFFO per unit ratio is calculated by dividing the AFFO(1) by the Trust’s unit outstanding at the end of the period (including the Class B LP units at
outstanding at the end of the period).
(4) The AFFO adjusted per unit ratio is calculated by dividing the AFFO adjusted(1) by the Trust’s unit outstanding at the end of the period (including the Class
B LP units at outstanding at the end of the period).
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
(1) This is a non-IFRS financial measure, refer to page 2 and 37.
2023 Annual ReportBalancing Growth and Responsibility 80
81
Audited Consolidated
Financial Statements
Year ended December 31, 2023
86
87
88
89
90
Consolidated Statements of Financial Position
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Unitholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2023 Annual ReportBalancing Growth and Responsibility 82
83
Management’s Responsibility for Financial Reporting
The accompanying consolidated financial statements of BTB Real Estate Investment Trust (“BTB”) were prepared
by management, which is responsible for the integrity and fairness of the information presented, including the
many amounts that must of necessity be based on estimates and judgments. These consolidated financial
statements were prepared in accordance with IFRS Accounting Standards as issued by the International
Accounting Standards Board.
Financial information appearing throughout our MD&A is consistent with these consolidated financial
statements. In discharging our responsibility for the integrity and fairness of the consolidated financial
statements and for the accounting systems from which they are derived, we maintain the necessary system
of internal controls designed to ensure that transactions are authorized, assets are safeguarded, and proper
records are maintained.
As at December 31, 2023, the President and Chief Executive Officer and the Vice President and Chief Financial
Officer of BTB had an evaluation carried out, under their direct supervision, of the effectiveness of the controls
and procedures used for the preparation of filings, as defined in Multilateral Instrument 52-109 of the Canadian
Securities Administrators. Based on that evaluation, they concluded that the disclosure controls and procedures
were effective.
The Board of Trustees oversees management’s responsibility for financial reporting through an Audit Committee,
which is composed entirely of Trustees who are not members of BTB’s management or personnel. This
Committee reviews our consolidated financial statements and recommends them to the Board for approval.
Other key responsibilities of the Audit Committee include reviewing our existing internal control procedures and
planned revisions to those procedures and advising the trustees on auditing matters and financial reporting
issues.
KPMG LLP, independent auditors appointed by the unitholders of BTB upon the recommendation of the Board,
have performed an independent audit of the Consolidated Financial Statements as at December 31, 2023 and
2022 and their report follows. The auditors have full and unrestricted access to the Audit Committee to discuss
their audit and related findings.
Michel Léonard
President and Chief Executive Officer
Mathieu Bolté
Executive Vice President, Chief Operating Officer, and Chief Financial Officer
Montreal, February 21, 2024
KPMG LLP
Tour KPMG
600 de Maisonneuve Blvd West, Suite 1500
Montréal, QC H3A 0A3
Canada
Telephone 514 840 2100
Fax 514 840 2187
INDEPENDENT AUDITOR’S REPORT
To the Unitholders of BTB Real Estate Investment Trust
Opinion
We have audited the consolidated financial statements of BTB Real Estate Investment Trust (the «Entity»), which comprise:
•
•
•
•
•
the consolidated statements of financial position as at December 31, 2023 and 2022
the consolidated statements of comprehensive income for the years then ended
the consolidated statements of changes in unitholders’ equity for the years then ended
the consolidated statements of cash flows for the years then ended
and notes to the consolidated financial statements, including a summary of significant accounting policies
(Hereinafter referred to as the «financial statements»).
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity
as at December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are
further described in the «Auditor’s Responsibilities for the Audit of the Financial Statements» section of our auditor’s report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in
Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for
the year ended December 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matter described below to be the key audit matters to be communicated in our auditor’s report.
Evaluation of the fair value of investment properties
Description of the matter
We draw attention to Note 2(e)(ii) and Note 4 to the financial statements. Investment properties are stated at fair value at each reporting date.
The Entity has recorded investment properties at fair value for an amount of $1,207,522 thousand.
Fair value is determined by management using internally generated valuation models and by independent expert appraisers using
recognized valuation techniques. The determination of the fair value of investment properties requires the use of estimates such as future
cash flows from assets.
The significant inputs used to determine the fair value of investment properties are capitalization rate, terminal capitalization rate and
discount rate.
KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.
2023 Annual ReportBalancing Growth and Responsibility 84
Why the matter is a key audit matter
We identified the evaluation of the fair value of investment properties as a key audit matter. This matter represented an area of significant risk
of material misstatement given the magnitude of investment properties and the high degree of estimation uncertainty in determining the fair
value of investment properties. In addition, significant auditor judgment and specialized skills and knowledge were required in performing,
and evaluating the results of our audit procedures due to the sensitivity to the Entity’s determination fair value of investment properties to
minor changes to significant inputs.
How the matter was addressed in the audit
The primary procedures we performed to address this key audit matter included the following:
We evaluated the design and tested the operating effectiveness of certain controls over the Entity’s process for determining the fair values of
investment properties, including controls related to the development of the estimates of future cash flows from assets and significant inputs.
For a selection of investment properties, we compared the estimate of future cash flows from assets to the actual historical cash flows. We
assessed the adjustments, or lack of adjustments, made in arriving at the estimate of future cash flows from assets by taking into account
changes in conditions and events affecting the investment properties and the Entity.
85
In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to
liquidate the Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit.
For a selection of investment properties, we involved valuations professionals with specialized skills and knowledge, who assisted in
evaluating the capitalization rates, terminal capitalization rates and discount rates. These rates were evaluated by comparing them to
published reports of real estate industry commentators and considering the features of the specific investment property.
We also:
We evaluated the competence, capabilities and objectivity of the independent expert appraisers by:
•
•
•
•
Inspecting evidence that the appraisers are in good standing with the Appraisal Institute;
Considering whether the appraisers have appropriate knowledge in relation to the specific type
of investment properties; and
Reading the reports of the external independent appraisers which refers to their independence.
Other Information
Management is responsible for the other information. Other information comprises:
•
•
the information, other than the financial statements and the auditor’s report thereon, included in Management’s Discussion and Analysis
filed with the relevant Canadian Securities Commissions.
the information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled «Annual
Report».
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and
remain alert for indications that the other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as
at the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in the auditor’s report.
We have nothing to report in this regard.
The information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled «Annual
Report» is expected to be made available to us after the date of this auditor’s report. If, based on the work we will perform on this other
information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged
with governance.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting
Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
•
•
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this auditor’s report is Philippe Grubert.
Montréal, Canada
February 21, 2024
*CPA auditor, public accountancy permit No. A120220
2023 Annual ReportBalancing Growth and Responsibility 86
87
Consolidated Statements of Financial Position
Consolidated Statements of Comprehensive Income
As at December 31, 2023 and 2022 (in thousands of CAD dollars)
For the years ended December 31, 2023 and 2022 (in thousands of CAD dollars)
Notes
4
11
7
5
6
8
9
23
10
12
11
2023
$
2022
$
1,207,522
1,164,881
271
2,693
2,522
10,456
3,272
912
322
3,754
3,163
-
4,816
2,404
1,227,648
1,179,340
638,080
42,460
36,359
7,332
2,043
1,715
288
19,549
2,168
749,994
477,654
1,227,648
636,111
41,942
9,897
4,203
1,268
1,542
116
20,058
2,131
717,268
462,072
1,179,340
Assets
Investment properties
Property and equipment
Derivative financial instruments
Prepaid expenses and deposits
Finance lease receivable
Receivables
Cash and cash equivalents
Total assets
Liabilities and unitholders’ equity
Mortgage loans payable
Convertible debentures
Bank loans
Lease liabilities
Class B LP Units
Unit-based compensation
Derivative financial instruments
Trade and other payables
Distribution payable to unitholders
Total liabilities
Unitholders’ equity
See accompanying notes to consolidated financial statements.
Approved by the Board on February 21, 2024.
Michel Léonard, Trustee
Jocelyn Proteau, Trustee
Operating revenues
Rental revenue
Operating expenses
Public utilities and other operating expenses
Property taxes and insurance
Net operating income
Financial income
Expenses
Financial expenses
Distributions - Class B LP Units
Fair value adjustment – Class B LP Units
Net adjustment to fair value of derivative financial instruments
Net financial expenses
Administration expenses
Net change in fair value of investment properties and disposition expenses
Net income and comprehensive income for the year
See accompanying notes to consolidated financial statements.
10
10
15
4
Notes
2023
$
2022
$
14
127,826
119,495
23,893
28,554
52,447
75,379
22,820
26,245
49,065
70,430
1,833
624
34,607
30,427
172
(976)
1,233
35,036
7,496
(1,918)
104
(149)
(14,216)
16,166
7,437
9,297
36,598
38,154
2023 Annual ReportBalancing Growth and Responsibility
88
89
Consolidated Statements of Changes in Unitholders’ Equity
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and 2022 (in thousands of CAD dollars)
For the years ended December 31, 2023 and 2022 (in thousands of CAD dollars)
Balance as at January 1, 2023
Issuance of units, net of issuance expenses
Distribution to unitholders
Comprehensive income
Balance as at December 31, 2023
Balance as at January 1, 2022
Issuance of units, net of issuance expenses
Distribution to unitholders
Comprehensive income
Notes
Unitholders’
contributions
Cumulative
distribution
Cumulative
comprehensive
income
Total
13
13
13
13
395,960
(202,235)
268,347
462,072
4,814
-
-
(25,830)
-
-
4,814
(25,830)
400,774
(228,065)
268,347
441,056
-
-
36,598
36,598
400,774
(228,065)
304,945
477,654
351,540
(177,308)
230,193
404,425
44,420
-
-
(24,927)
-
-
44,420
(24,927)
395,960
(202,235)
230,193
423,918
-
-
38,154
38,154
Balance as at December 31, 2022
395,960
(202,235)
268,347
462,072
See accompanying notes to consolidated financial statements.
Operating activities
Net income for the year
Adjusted for:
Net change in fair value of investment properties and disposition expenses
Depreciation of property and equipment
Unit-based compensation
Straight-line lease adjustment
Lease incentive amortization
Financial income
Net financial expenses
Adjustment for changes in other working capital items
Net cash from operating activities
Investing activities
Acquisitions of investment properties net of mortgage loans assumed
Additions to investment properties
Net proceeds from dispositions of investment properties
Acquisition of property and equipment
Net cash (used in) from investing activities
Financing activities
Mortgage loans, net of financing expenses
Repayment of mortgage loans
Bank loans
Repayment of bank loans
Lease liability payments
Net proceeds from unit issue
Net distribution to unitholders
Net distribution – Class B LP units
Interest paid
Net cash (used in) from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See accompanying notes to consolidated financial statements.
Notes
2023
$
2022
$
4
12
14
14
15
4
4
4
10
36,598
38,154
(1,918)
9,297
99
445
(1,963)
2,783
(1,833)
35,036
69,247
1,605
70,852
122
541
(1,822)
3,113
(624)
16,166
64,947
1,293
66,240
(33,825)
(104,721)
(12,424)
(83)
(50)
(16,576)
30,787
2
(46,382)
(90,508)
48,866
(47,364)
26,352
-
(4)
(25)
(22,292)
(171)
102,560
(46,229)
23,961
(49,629)
(16)
38,436
(21,573)
(104)
(31,324)
(27,925)
(25,962)
(1,492)
2,404
912
19,481
(4,787)
7,191
2,404
2023 Annual ReportBalancing Growth and Responsibility 90
91
Notes to Consolidated Financial Statements
(e) Use of estimates and judgments
For the years ended December 31, 2023 and 2022
(in thousands of CAD dollars, except unit and per unit amounts)
1. Reporting Entity
BTB Real Estate Investment Trust (“BTB”) is an unincorporated open-ended real estate investment trust formed
and governed under the Civil code of Quebec pursuant to a trust agreement and is domiciled in Canada.
The address of BTB’s registered office is 1411 Crescent Street, Suite 300, Montreal, Quebec, Canada. The
consolidated financial statements of BTB for the years ended December 31, 2023 and 2022 comprise BTB and
its wholly-owned subsidiaries (together referred to as the “Trust”) and the Trust’s interest in joint operations.
2. Basis of Preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards
(“IFRS”) as issued by the International Accounting Standards Board.
These consolidated financial statements were approved by the Board of Trustees on February 21, 2024.
(b) Basis of presentation and measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following
material items in the statement of financial position which are measured at fair value:
•
Investment properties (including right-of-use assets);
• Derivative financial instruments;
• Unit-based compensation;
• Class B LP Units.
The Trust presents its consolidated statements of financial position based on the liquidity method, whereby all
assets and liabilities are presented in increasing order of liquidity.
(c) Risks and uncertainties related to the increase of the Bank of Canada policy interest rate
The increase of the Bank of Canada policy interest rate has created a heightened level of uncertainty on the
economy. The rise of the policy rate has not had a significant impact on the Trust’s operations and ability to
negotiate new or renew mortgages. Given the situation, there could be certain repercussions on the mortgage
refinancing activities, the fair value of the investment properties, certain investment decisions and the level
of transactions in the market. The Trust will continue to monitor the effects of the rise of the policy rate on its
investment activities and valuation of the investment properties.
(d) Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which is BTB’s functional currency.
All financial information has been rounded to the nearest thousand, except per unit amounts.
The preparation of consolidated financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the consolidated financial statements and reported amounts of revenues and expenses during the reporting
period. Estimates and assumptions are continuously evaluated and are based on management’s experience
and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. Revisions to accounting estimates are recognized in the period in which the estimates are
revised and in any future periods affected. Actual results may differ from these estimates, and the differences
may be material.
(i) Critical judgements in applying accounting policies
The following are critical judgements that management has made in the process of applying accounting policies
and that have the most significant effect on the amounts recognized in the consolidated financial statements:
Trust as lessor
The Trust enters into commercial property leases on its investment properties. The Trust has determined,
based on an evaluation of the terms and conditions of the arrangements, in particular for long-term leases in
single tenant properties, that it retains all the significant risks and rewards of ownership of these properties and
therefore accounts for those leases as operating leases.
The REIT has determined that all leases are operating leases except for one classified as a finance lease, where
the trust had determined that it had transferred substantially all the risks and rewards of ownership to the lessee.
(ii) Significant sources of estimation uncertainty
The following are significant assumptions concerning the future and other key sources of estimation uncertainty
that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities
within the next financial year:
Valuation of investment properties
Investment properties are stated at fair value at each reporting date. Gains or losses arising from changes in the
fair values are included in profit or loss in the period in which they arise. Fair value is determined by management
using internally generated valuation models and by independent external appraisers using recognized valuation
techniques. These models and techniques comprise the Discounted Cash Flow Method and the Direct
Capitalization method and, in some cases, the Comparable method.
The determination of the fair value of investment properties requires the use of estimates such as future cash
flows from assets (including lease income and costs, future revenue streams, capital expenditures of fixtures and
fittings, any environmental matters and the overall repair and condition of the property or stabilized net operating
income) and discount, capitalization and terminal capitalization rates applicable to those cash flows. These
estimates are based on local market conditions existing at the reporting date. The carrying value for the Trust’s
investment properties reflects its best estimate for the highest and best use as at December 31, 2023 (see Note 4).
The significant methods and assumptions used by management and the independent external appraisers
in estimating the fair value of investment properties are set out below:
2023 Annual ReportBalancing Growth and Responsibility 92
93
Techniques used for valuing investment properties
The Discounted Cash Flow method involves the projection of a series of periodic cash flows either to an
operating investment property or a development investment property. To this projected cash flow series, an
appropriate, market-derived discount rate is applied to establish an indication of the present value of the income
stream associated with the investment property. The calculated periodic cash flow is typically estimated as
gross income less vacancy and collection losses and less operating expenses/outgoings. A series of periodic
net operating income along with an estimate of the reversion/terminal/exit value anticipated at the end of the
projection period, are discounted to present value. The aggregate of the net present values equals the estimated
fair value of the investment property.
The Direct Capitalization method converts anticipated future cash flow benefits in the form of rental income into
present value. This approach requires estimation of normalized annual future cash inflows and application of
investor yield or return requirements in the form of capitalization rates.
The Comparable method involves the comparison of the Trust’s investment properties to similar investment
properties that have transacted within a recent time frame from which a fair value is estimated based on the
price per square foot of these comparable sales.
Derivative financial instruments
Derivative financial instruments, including embedded derivatives, are recognized on the consolidated statement
of financial position at fair value. Subsequent to initial recognition, these derivatives are measured at fair value.
The fair value of derivative instruments is based on forward rates considering the market price, rate of interest
and volatility and takes into account the credit risk of the financial instrument. Changes in estimated fair value at
each reporting date are included in profit and loss. Embedded derivatives are separated from the host contract
and accounted for separately if the economic characteristics and risks of the host contract and the embedded
derivative are not closely related and if the entire contract is not measured at fair value with changes in fair value
recognized in profit and loss.
3. Material Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Trust. Control exists when the Trust has the existing rights that
give it the current ability to direct the activities that significantly affect the entities’ returns. Subsidiaries are
consolidated from the date that control commences until the date that control ceases.
(ii) Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint
operators. The consolidated financial statements include the Trust’s proportionate share of the joint operations’
assets, liabilities, revenue and expenses with items of a similar nature on a line-by-line basis, from the date that
joint control commences until the date that joint control ceases.
(b) Financial instruments
(i) Recognition and initial measurement
Financial assets and liabilities are recognized when the Trust becomes party to the contractual provisions of
the financial instrument. Financial assets and financial liabilities are initially recognized at fair value, and their
subsequent measurement is dependent on their classification as described below. If a financial asset or liability
is not subsequently measured at fair value through profit or loss (FVTPL), the initial measurement includes
transaction costs that are directly attributable to its acquisition or issue.
Financial assets and liabilities are offset, and the net amount is reported in the statement of financial position
when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a
net basis or realize the asset and settle the liability simultaneously.
(ii) Classification and subsequent measurement
The Trust classifies its financial assets and financial liabilities in the following measurement categories:
•
•
those to be measured subsequently at FVTPL; and
those to be measured at amortized cost.
The classification of financial assets depends on the business model for managing the financial assets and
the contractual terms of the cash flows, and on the Trust’s designation of such instruments. Financial liabilities
are classified as those to be measured at amortized cost unless they are designated as those to be measured
subsequently at FVTPL.
Financial instruments are not reclassified subsequent to their initial recognition, unless the Trust identifies
changes in its business model in managing financial assets and would reassess the classification of financial
instruments.
The Trust’s business model objective is to collect contractual cash flows and the contractual cash flows are
solely payments of principal and/or interest, and as such financial assets are generally subsequently measured
at amortized cost using the effective interest method net of any impairment loss. All other financial assets,
including derivatives, are subsequently measured at FVTPL.
Financial assets measured at amortized cost comprise cash and cash equivalents, restricted cash, receivables
and deposits.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and term deposits with original maturities of three
months or less.
The Trust derecognizes a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred.
Financial liabilities are generally subsequently measured at amortized cost using the effective interest method
unless they are held for trading, they are derivatives, or they have been designated as those to be measured
subsequently at FVTPL.
Financial liabilities measured at amortized cost comprise mortgage loans payable, convertible debentures, bank
loans, trade and other payables and distributions payable to unitholders.
The Trust derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.
Derivative financial instruments are subsequently measured at fair value, and changes therein are recognized
immediately in profit or loss.
2023 Annual ReportBalancing Growth and Responsibility 94
95
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payments of principal and interest. Embedded derivatives in financial liabilities are treated
as separate derivatives when their risks and characteristics are not closely related to those of the host contract,
a separate instrument with the same terms as the embedded derivative meets the definition of a derivative,
and the combined instrument is not measured at fair value through profit or loss. Changes in the fair value of
separable embedded derivatives are recognized immediately in profit or loss.
The following table summarizes the classification under IFRS 9 Financial Instruments (‘’IFRS 9’’):
Asset/Liability
Cash and cash equivalents
Receivables
Mortgage loans payable
Convertible debentures
Bank loans
Trade and other payables
Distribution payable to unitholders
Derivative financial instruments
Class B LP Units
(iii) Impairment
Classification under IFRS 9
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Fair value through profit and loss
Fair value through profit and loss
The Trust uses the expected credit loss (ECL) model for calculating impairment and recognizes expected credit
losses as a loss allowance in the consolidated statement of financial position if they relate to a financial asset
measured at amortized cost. For trade receivables, the Trust applies the simplified approach as permitted by
IFRS 9 which requires lifetime expected credit losses be recognized from initial recognition of receivables. The
carrying amount of these assets in the consolidated statement of financial position is stated net of any loss
allowance.
Impairment losses are recorded in the Trust administration expenses in the consolidated statement of
comprehensive income with the carrying amount of the financial asset or group of financial assets reduced
through the use of impairment allowance accounts. In periods subsequent to the impairment where the
impairment loss has decreased, and such decrease can be related objectively to conditions and changes in
factors occurring after the impairment was initially recognized, the previously recognized impairment loss would
be reversed through the consolidated statement of comprehensive income. The impairment reversal would be
limited to the lesser of the decrease in impairment or the extent that the carrying amount of the financial asset
at the date the impairment is reversed does not exceed what the amortized cost would have been had the
impairment not been recognized, after the reversal.
(iv) Trust units
Trust units are redeemable at the option of the holder and, therefore, are considered puttable instruments.
Puttable instruments are required to be accounted for as financial liabilities, except where certain conditions
are met in accordance with lAS 32 Financial Instruments: Presentation (“IAS 32”), in which case, the puttable
instruments may be presented as equity.
(v) Convertible debentures
The convertible debentures, which are considered financial liabilities, are convertible into Trust units. Since
BTB’s trust units meet the definition of a financial liability, the conversion and redemption options are considered
embedded derivatives. As the conversion and redemption options are not considered closely related to the debt
contract host, the non-derivative and derivative components of the convertible debentures are separated upon
initial recognition using the residual fair value approach. Subsequently, the non-derivative liability component is
measured at amortized cost.
(vi) Class B LP Units
The Class B LP Units issued by one of the limited partnerships that the Trust controls, are classified as “financial
liabilities”, as they are exchangeable into Trust units on a one-for-one basis at any time at the option of the
holder. The Class B LP Units are measured at fair value and presented as part of the liabilities in the statement
of financial position, with changes in fair value recorded in the statement of comprehensive income. The fair
value of the Class B LP Units is determined with reference to the market price of the Trust units on the date of
measurement. Distributions on the Class B LP Units are recognized in the statement of comprehensive income
when declared.
(c) Investment properties
Investment properties are held either to earn rental income or for capital appreciation or for both, but not for
sale in the ordinary course of business, use in the production or supply of goods or services or for administrative
purposes. Investment properties are measured at cost on initial recognition and subsequently at fair value with
any change therein recognized in profit or loss. The Trust capitalizes the costs incurred to increase capacity,
replace certain components and make improvements after the acquisition date. The Trust also capitalizes major
maintenance and repair expenses providing benefits that will last far beyond the end of the reporting period.
Investment properties includes income properties, properties under development and land held for future
development if necessary.
Cost includes expenditures that are directly attributable to the acquisition of the investment properties.
The Trust makes payments to agents for services in connection with negotiating lease contracts with the Trust’s
lessees. These leasing fees are capitalized within the carrying amount of the related investment properties and
then considered in the fair value adjustment of the investment properties at the next reporting period.
Should the use of an investment property change and be reclassified as property and equipment, its fair value at
the date of reclassification would become its cost for subsequent accounting.
(d) Leases
At contract inception, the Trust assesses whether a contract is or contains a lease based on the definition of
a lease. Under IFRS 16 Leases (‘’IFRS 16’’), a contract is, or contains, a lease if the contract conveys a right to
control the use of an identified asset for a period of time in exchange for consideration.
At inception or on reassessment of a contract that contains a lease component, the Trust allocates the
consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone
prices.
BTB’s trust units meet the conditions of lAS 32 and are therefore presented as equity.
(i) As a lessor
The Trust leases out its investment properties, including right-of-use assets. These leases are classified by
the Trust as either operating or finance leases. For operating leasing, the Trust applies IFRS 15 Revenue from
Contracts with Customers to allocate consideration in the contract to each lease and non-lease component.
For finance leasing, the Trust applies IFRS 16 and recognized the net investment in the lease as a finance lease
receivable on the balance sheet. The Trust subsequently recognizes financial income as earned.
2023 Annual ReportBalancing Growth and Responsibility 96
(ii) As a lessee
The Trust recognizes a right-of-use asset and a lease liability at the lease commencement date. Right-of-use
assets that meet the definition of investment property are presented within investment properties. These right-
of-use assets are initially measured at cost, and subsequently measured at fair value, in accordance with the
Trust’s accounting policies.
However, the Trust has elected not to recognize right-of-use assets and lease liabilities for some leases of low-
value assets (e.g., equipment). The Trust recognizes the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Trust’s incremental borrowing rate for similar assets. Generally, the Trust uses its incremental
borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made. It is remeasured when there is a change in future lease payments arising from a change in an
index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or
as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be
exercised or a termination option is reasonably certain not to be exercised.
(e) Provisions
Provisions are recognized when the Trust has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. Where the Trust expects some
or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset. The expense relating
to any provision is presented in profit or loss, net of any reimbursement. If the effect of the time value of money
is material, provisions are discounted using a current rate that reflects the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
(f) Revenue recognition
(i) Rental revenue – lease components
Rental revenue for lease components is recognized when the service has been rendered and the amount of
expected consideration can be reliably estimated, which is over the term of the related lease.
In most cases, revenue recognition under a lease begins when the tenant takes possession of, or controls,
the physical use of the leased property. Generally, this occurs on the lease commencement date, or when the
Trust is required to make additions to the leased property in the form of tenant improvements, upon substantial
completion of the additions. Certain leases provide for tenant occupancy during periods for which no rent is
due (“free rent period”) or where minimum rent payments change during the term of the lease. Accordingly,
rental revenue is recognized in profit or loss on a straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in which user’s benefit derived from the leased asset
is diminished. Any deferred amounts related to straight-line lease adjustments are recognized within investment
properties. Lease incentives which are mostly leasehold improvements and payments of monetary allowances to
tenants, are amortized over the lease term as a reduction of rental revenue and are recognized as adjustments to
the carrying amount of investment properties. The lease term is the non-cancellable period of the lease together
with any further extension for which the tenant has the option to continue the lease, where, at the inception of the
lease, the Trust is reasonably certain that the tenant will exercise that option.
Cancellation fees or premiums received to terminate leases are recognized in profit and loss at the effective date
of the lease termination and when the Trust no longer has any performance obligations under the related lease.
97
(ii) Rental revenue – non-lease components
Leases generally provide for the tenants’ payment of maintenance expenses of common elements and other
operating costs. These services are considered to be a single performance obligation rendered to tenants over
time. These recoveries are accounted for as variable consideration and are recognized as operating revenues in
the periods in which the services are provided.
(g) Earnings per unit
The Trust presents basic earnings per unit data for its Trust units. Basic earnings per unit are calculated by
dividing the profit or loss attributable to unit holders of the Trust by the weighted average number of Trust units
outstanding during the period.
(h) Financial income and financial expenses
Financial income comprises interest income on funds invested and balance of sale. Interest income is
recognized as it accrues in profit or loss, using the effective interest method.
Financial expenses comprise interest on mortgage loans payable, convertible debentures, bank loans, lease
liabilities and other payables, as well as accretion of the non-derivative liability component of convertible
debentures, and accretion of effective interest on mortgage loans payable and convertible debentures.
Net financial expenses comprise financial expenses, distributions to Class B LP unitholders, fair value
adjustment on Class B LP Units and changes in the fair value of derivative financial instruments.
(i) Operating segment
An operating segment is a component of the Trust that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Trust’s other components. All operating segments’ operating results are reviewed regularly by the Trust’s Chief
Executive Officer (‘’CEO’’) to make decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available. Segment results that are reported to the
CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable
basis.
(j) Unit-based compensation
(i) Deferred unit compensation plan for trustees and certain executive officers
Compensation costs related to the deferred unit compensation plan for trustees and certain executive officers
are recognized at the time they are granted. These units are initially measured at fair value based on the trading
price of the Trust units and are revalued at the end of each reporting period, until settlement. Any changes in fair
value are recognized as compensation expense in profit or loss.
(ii) Employee unit purchase plan
Compensation costs related to the employee unit purchase plan are recognized at the time they are granted.
These units are initially measured at fair value based on the trading price of the Trust units and are revalued at
settlement date. Any changes in fair value are recognized as compensation expense in profit or loss.
2023 Annual ReportBalancing Growth and Responsibility 98
99
(iii) Restricted unit compensation plan
Compensation costs related to the restricted unit compensation plan are recognized at the time they are
granted. These units are initially measured at fair value based on the trading price of the Trust units and are
revalued at the end of each reporting period, until settlement. Any changes in fair value are recognized as
compensation expense in profit or loss. The compensation expense is amortized using the graded vesting
method.
(iv) Cash settled share-based retirement compensation plan
Compensation costs related to the RA Plan are recognized as the phantom units are granted and subsequently
remeasured at each reporting period date at fair value. The plan is considered cash-settled share-based
payments. The phantom units are recognized as a liability and remeasured at fair value based on the trading
price of the Trust units at each reporting date with the change in profit or loss.
(k) Income taxes
BTB is a mutual fund trust and a Real Estate Investment Trust (‘’REIT’’) pursuant to the Income Tax Act (Canada).
Under current tax legislation, a REIT is entitled to deduct distributions of taxable income such that, it is not
liable to pay income tax provided that its taxable income is fully distributed to unitholders. BTB has reviewed the
proscribed conditions under the Income Tax Act (Canada) and has determined that it qualifies as a REIT for the
year. BTB intends to continue to qualify as a REIT and to make distributions not less than the amount necessary
to ensure that BTB will not be liable to pay income taxes. Accordingly, no current or deferred income taxes have
been recorded in the consolidated financial statements.
(l) Fair value measurement
The Trust measures financial instruments, such as derivatives, and non-financial assets, such as investment
properties (including right-of-use assets), at fair value at each reporting date. Fair value is the price that would be
received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the
measurement date under current market conditions. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Trust. The fair value of an asset or a
liability is measured using the assumptions that market participants would use when pricing the asset or liability
assuming that market participants act in their economic best interests. A fair value measurement of a non-
financial asset takes into account a market participant’s ability to generate economic benefits by using the asset
in its highest and best use or by selling it to another market participant that would use the asset in its highest and
best use.
The Trust uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use
of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input
that is significant to the fair value measurement as a whole:
•
•
•
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable;
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Trust
determines whether transfers have occurred between Levels in the hierarchy by reassessing categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures, the Trust has determined classes of assets and liabilities on the basis
of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained
above.
4. Investment Properties
For the years ended December 31,
Balance beginning of year
Initial recognition of right-of-use assets
Acquisitions of investment properties (note 4(a))
Dispositions of investment properties (note 4(b))
Capital expenditures
Capitalized leasing fees
Capitalized lease incentives
Lease incentives amortization
Straight-line lease adjustment
Net transfer to finance lease
Net changes in fair value of investment properties
Balance end of year
2023
$
2022
$
1,164,881
1,110,971
3,133
36,306
-
7,510
2,247
2,663
(2,783)
1,963
(10,399)
2,001
1,207,522
-
96,155
(42,674)
3,370
1,531
5,020
(3,113)
1,822
-
(8,201)
1,164,881
The fair value of a subset of the Trust’s investment properties comprised of a selection of the most significant
investment properties and approximately 1/3 of the remaining investment properties is determined annually on
the basis of valuations made by independent external appraisers having appropriate professional qualifications,
using recognized valuation techniques, comprising the Discounted Cash Flow, the Direct Capitalization and
Comparable methods. The selection of investment properties subject to independent external valuation is
determined by management based on its assessment of circumstances that in its view, may impact the value of
a particular individual investment property. The fair value of the remaining investment properties is determined
by management using internally generated valuations based on the Direct Capitalization and Discounted Cash
Flow methods.
In determining the fair value of investment properties, the Trust has adjusted cash flow assumptions for its
estimate of near-term disruptions to cash flows to reflect collections, vacancy and assumptions on new leasing.
The Trust undertook a process to assess the appropriateness of the rates considering changes to property level
cash flows and any risk premium inherent in such cash flow changes. These considerations are reflected in the
fair value adjustments of investment properties.
At December 31, 2023, independent external appraisals were obtained for investment properties with an
aggregate fair value of $904,893 (December 31, 2022 - appraisals obtained for investment properties having a
total fair value of $821,315).
2023 Annual ReportBalancing Growth and Responsibility 100
The fair value of investment properties is based on Level 3 inputs. There have been no transfers during the year
between levels. The significant inputs used to determine the fair value of the Trust’s investment properties are as
follows:
As at December 31, 2023
Capitalization rate
Terminal capitalization rate
Discount rate
Industrial
Off-downtown
core office
Necessity-
based retail
5.25% - 7.75% 6.25% - 8.25% 5.75% - 7.75%
5.25% - 8.00% 6.25% - 8.50% 6.00% - 8.00%
6.00% - 8.50% 6.75% - 9.00% 6.50% - 8.75%
Weighted average capitalization rate
6.09%
7.01%
7.06%
As at December 31, 2022
Capitalization rate
Terminal capitalization rate
Discount rate
4.75% - 6.75% 5.75% - 8.25% 5.50% - 8.00%
4.75% - 7.50% 5.75% - 8.00% 5.50% - 8.00%
5.50% - 8.25% 6.25% - 8.75% 6.25% - 8.75%
Weighted average capitalization rate
5.75%
6.76%
6.84%
The following table provides a sensitivity analysis of the fair value of investment properties for changes in
the weighted average capitalization rate as at December 31, 2023, which is representative of the sensitivity
to changes in the discount rate and terminal capitalization rate as at December 31, 2023.
Capitalization rate sensitivity
Increase (decrease)
(0.50)%
(0.25)%
Base rate
0.25%
0.50%
(a) Acquisitions
Fair Value
$
1,306,588
1,255,076
1,207,522
1,163,481
1,122,572
Change in
fair value
$
99,066
47,554
-
(44,041)
(84,950)
The fair value of the assets and liabilities recognized in the consolidated statement of financial position on the
date of the acquisition during the year ended December 31, 2023, were as follows:
Fair value recognized on acquisition
Acquisition date
Property type
Location
February 2023
Industrial
Mirabel, QC
May 2023(1)
Industrial
Edmonton, AB
Interest
acquired
%
100
100
Total
Investment
properties,
including
acquisition
costs
$
28,920
7,386
36,306
Mortgage loan
assumed
Net
consideration
$
-
-
-
$
28,920
7,386
36,386
(1) The Trust satisfied a portion of the acquisition through the issuance of 550,000 Class B limited partnership units at a price of $4.50 per unit.
(b) Dispositions
There were no dispositions during the year ended December 31, 2023.
(c) Net changes in fair value of investment properties and disposition expenses
For the years ended December 31,
Net changes in fair value of investment properties
Disposition expenses
101
2022
$
(8,201)
(1,096)
(9,297)
2023
$
2,001
(83)
1,918
Net changes in fair value of investment properties includes the net changes in fair value of right-of-use assets
related to the investment properties to which a lease is attached.
The disposition expenses include mainly commissions and debt prepayment penalties on mortgage loans
related to disposed properties.
The following table summarizes the changes in fair value of investment properties by segment:
For the years ended December 31,
Industrial
Off-downtown core office
Necessity-based retail
Total change in fair value
5. Receivables
As at December 31,
Rents receivable
Allowance for expected credit losses
Net rents receivable
Unbilled recoveries
Other receivables
Total
Year
2023
$
32,503
(27,508)
(2,994)
2,001
2023
$
2,201
(731)
1,470
1,572
230
3,272
2022
$
29,854
(31,842)
(6,213)
(8,201)
2022
$
3,431
(1,011)
2,420
1,142
1,254
4,816
Credit risk arises from the possibility that tenants may experience financial difficulty and be unable to fulfill
their lease commitments. The Trust mitigates this risk by varying its tenant mix and staggering lease terms;
avoiding dependence on a single tenant for a significant portion of the Trust’s operating revenues and
conducting credit assessments for all major new tenants. The Trust analyzes its trade receivables on a regular
basis and establishes an allowance for expected credit losses that represents its estimate of lifetime expected
credit losses to be incurred in respect of its trade receivables. In assessing the adequacy of the allowance for
expected credit losses on tenant receivables, management has considered the likelihood of collection of current
receivables.
The Trust’s assessment of expected credit losses is inherently subjective due to the forward-looking nature
of the assessments. As a result, the value of the expected credit loss is subject to a degree of uncertainty and is
made on the basis of assumptions.
2023 Annual ReportBalancing Growth and Responsibility 102
6. Mortgage Loans Payable
Mortgage loans payable are secured by immovable hypothecs on investment properties having a fair value of
approximately $1,168,069 as at December 31, 2023 (December 31, 2022 – $1,140,753).
As at December 31,
Fixed rate mortgage loans payable
Floating rate mortgage loans payable
Unamortized fair value assumption adjustments
Unamortized financing expenses
Mortgage loans payable
Short-term portion
Weighted average interest rate
Weighted average term to maturity (years)
Range of annual rates
2023
$
565,519
74,906
160
(2,505)
638,080
160,278
4.37%
3.24
2022
$
552,275
86,166
564
(2,894)
636,111
86,094
4.09%
3.97
2.37% - 8.95%
2.30% - 8.20%
As at December 31, 2023, the mortgage loan scheduled repayments are as follows:
Scheduled
repayments
Principal
maturity
2024
2025
2026
2027
2028
Thereafter
Unamortized fair value assumption adjustments
Unamortized financing expenses
$
17,037
14,521
12,358
8,455
4,690
10,571
67,632
$
143,241
52,853
108,601
100,506
77,485
90,107
Total
$
160,278
67,374
120,959
108,961
82,175
100,678
572,793
640,425
160
(2,505)
638,080
103
The Trust may enter into floating-for-fixed interest rate swap agreements on floating interest rate mortgages
to hedge the variability in cash flows attributed to fluctuating interest rates. The Trust does not apply hedge
accounting to such cash flow hedging relationships (see Note 11). The following table presents relevant
information on interest rate swap agreements:
Transaction date
Original
principal
amount
Effective
fixed
interest rate
Settlement
basis
Maturity date
Outstanding amount
June 2016
November 2017
November 2017
Total
$
13,000
23,200
23,075
59,275
7. Finance Lease Receivable
%
3.45
3.88
3.90
Quarterly
June 2026
Monthly November 2027
Monthly December 2027
As at December
31, 2023
As at December
31, 2022
$
10,257
20,619
19,392
50,268
$
10,649
21,331
20,068
52,048
In August 2023, a tenant exercised a purchase option of an industrial property in Edmonton, Alberta. The
purchase price is $10,250 and the closing date is December 1, 2026. The Trust derecognized the property from
investment properties to classify it as a finance lease.
The Trust determined at the lease inception date that the lease was a finance lease as the lease transferred to
the lessee substantially all the risks and rewards of ownership of the underlying asset and it recognized the net
investment in the lease as a finance lease receivable on the balance sheet. The Trust subsequently recognizes
financial income as earned.
The following table summarizes the finance lease for the period ended December 31, 2023 and sets out a
maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the
reporting date.
Finance lease
receivable
Undiscounted
finance lease
at inception
Unearned
finance income
at inception
Implicit
interest rate
Interest
payments Purchase option
Beginning balances
$
10,399
$
13,379
$
%
(2,980)
8.44
Monthly December 2026
As at December 31, 2023
Beginning balance undiscounted finance lease
Received lease payments
Beginning balance unearned finance income at inception
Earned finance income
Finance lease receivable
13,379
382
12,997
(2,980)
439
(2,541)
10,456
2023 Annual ReportBalancing Growth and Responsibility 104
105
As at December 31, 2023, the undiscounted lease payments to be received are as follows:
Series G
Lease payments
As of December 31, 2023, no conversion options have been exercised by holders on debentures.
2024
2025
2026
Total
Unearned finance income
Finance lease receivable
8. Convertible Debentures
$
916
916
11,165
12,997
2,541
10,456
As at December 31, 2023, the Trust had two series of subordinated, convertible, redeemable debentures outstanding.
Interest rates
Capital
Coupon
Effective
24,000
19,917
%
6.00
7.00
%
7.30
8.28
Unit
conversion
price
$
Interest
payments
Maturity
5.42
Semi-annual
October 2024
3.64
Semi-annual
October 2025
Series G
Series H
As at December 31, 2023
Non-derivative liability component upon issuance
Accretion of non-derivative liability component
Conversion options exercised by holders
Unamortized financing expenses
Non-derivative liability component
Series G
Series H
$
$
24,000
-
24,000
-
24,000
(269)
23,731
27,309
1,055
28,364
(9,179)
19,185
(456)
18,729
Total
$
51,309
1,055
52,364
(9,179)
43,185
(725)
42,460
Conversion and redemption options liability (asset) component at fair value
-
288
288
As at December 31, 2022
Non-derivative liability component upon issuance
Accretion of non-derivative liability component
Conversion options exercised by holders
Unamortized financing expenses
Non-derivative liability component
Conversion and redemption options liability component at fair value
Series G
Series H
$
$
24,000
-
24,000
-
24,000
(557)
23,443
88
27,309
709
28,018
(8,848)
19,170
(671)
18,499
28
Total
$
51,309
709
52,018
(8,848)
43,170
(1,228)
41,942
116
Series H
As of December 31, 2023, conversion options have been exercised by holders on debentures representing a
nominal amount of $10,083 (December 31, 2022 – $9,720).
9. Bank Loans
The Trust has access to two credit facilities. The first is an acquisition line of credit in the amount of $8,000. This
line of credit bears interest at a rate of 1% above the prime rate. As at December 31, 2023, $950 was due under
the acquisition line of credit (December 31, 2022 – $900). The line of credit is secured by an immoveable second
rank hypothec on five properties having a fair value of $95,706.
The second is a revolving credit facility in the amount of $50,000 with an accordion option of up to an additional
$10,000. This revolving credit facility bears interest at a rate of 1% above the prime rate or 2.25% above the
Bankers’ Acceptance rate. As at December 31, 2023, $35,409 was due under the revolving credit facility
(December 31, 2022 - $8,997).
The revolving credit facility is secured by an immoveable first rank hypothec on two properties having a fair value
of $39,497 and by negative pledge of a selection of borrowing base properties having a fair value of $364,116.
10. Class B LP Units
Years ended
Units outstanding, beginning of year
Issuance of Class B LP units - Acquisition
Exchange into Trust units
Fair value adjustment
Units outstanding, end of year
December 31, 2023
December 31, 2022
Units
347,265
550,000
(200,000)
-
697,265
$
1,268
2,475
(724)
(976)
2,043
Units
347,265
-
-
-
347,265
$
1,417
-
-
(149)
1,268
The Class B LP Units are exchangeable into Trust units on a one-for-one basis at any time at the option of the
holder.
The Class B LP Units are entitled to distribution equal to distribution declared on Trust units, on a one-to-
one basis. Distributions on Class B LP Units are recognized in the statement of comprehensive income when
declared.
As at December 31,
Distribution to Class B LP unitholders
Distribution per Class B LP unit
2023
2022
$
171
$
78
0.300
0.300
2023 Annual ReportBalancing Growth and Responsibility 106
11. Fair Value Measurement
The following tables show the carrying amounts and fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy. They do not include the fair value of cash and cash equivalents,
restricted cash, receivables, balance of sale, trade and other payables and distribution payable to unitholders,
which approximated their carrying amount as at December 31, 2023 because of their short-term maturity or
because they bear interest at current market rates.
As at December 31, 2023
Measured at fair value
Conversion and redemption options of convertible debentures
(note 8)
Interest rate swap asset
Class B LP Units (note 10)
For which fair values are disclosed
Mortgage loans payable (note 6)
Convertible debentures, including their conversion and
redemption features (note 8)
Bank loans (note 9)
Carrying
amount
$
288
(2,693)
2,043
Fair value
Level 1
Level 2
Level 3
$
-
-
2,043
$
-
(2,693)
-
640,425
-
612,870
42,748
43,351
-
36,359
-
36,359
$
288
-
-
-
-
-
The fair value of mortgage loans payable was calculated by discounting cash flows from future payments of
principal and interest using the period end market rates for various loans with similar risk and credit profiles.
The period end market rates have been estimated by reference to published mortgage rates by major financial
institutions for similar maturities.
The fair value of convertible debentures, including their conversion and redemption features, was determined
with reference to the last quoted trading price preceding the period end.
The fair value of the Class B LP Units is determined with reference to the market price of the Trust units as at
period end.
The fair values of derivative financial instruments, which comprise the conversion and redemption options of
convertible debentures and an interest rate swap, are based respectively on the partial differential equation
method and the discounted future cash flows method. The assumptions used in the partial differential equation
method are estimated by reference to the market price of the Trust units and its volatility, and take into account
the credit risk of the financial instrument. The assumptions used in the discounted future cash flows method are
estimated by reference to the Canadian Dollar Offered Rate (“CDOR”) forward rates.
Such fair value estimates are not necessarily indicative of the amounts the Trust might pay or receive in actual
market transactions. Potential transaction costs have also not been considered in estimating fair value.
107
The following tables provide a reconciliation of Level 3 fair value measurements on the consolidated statements
of financial position:
Conversion and redemption options of convertible debentures
Year ended December 31, 2023
Balance beginning of period
Change for the period recognized in profit or loss under Net adjustment to fair value of derivative
financial instruments
Balance end of year
The following table provides a sensitivity analysis for the volatility applied in fair value measurement of the
conversion and redemption options of convertible debentures at December 31, 2023:
$
116
172
288
Volatility sensitivity
Increase (decrease)
(0.50)%
December 31, 2023
0.50%
Conversion and redemption
options of convertible
debentures
Volatility
$
%
268
288
308
19.24
19.74
20.24
As shown in the sensitivity analysis above, the fair value of the conversion and redemption options of convertible
debentures is impacted by a change in the volatility used in the valuation model. Generally, an increase in the
volatility, other things being equal, will result in an increase in fair value of the conversion and redemption options
of convertible debentures and vice-versa.
2023 Annual ReportBalancing Growth and Responsibility 108
109
12. Unit-based Compensation
(a) Deferred unit compensation plan for trustees and certain executive officers
The Trust offers a deferred unit compensation plan for its trustees and certain executive officers. Under this plan,
the trustees and certain executive officers may elect to receive as compensation either cash, deferred units, or a
combination of both.
The following table presents relevant information on changes in the number of deferred units:
For the years ended December 31,
Outstanding, beginning of year
Trustees’ compensation
Distributions paid in units
Outstanding, end of year
2023
2022
Deferred
units
Deferred
units
121,727
17,684
12,001
151,412
103,116
9,558
9,053
121,727
As at December 31, 2023, the liability related to the plan was $438 (December 31, 2022 - $446). The related figures
recorded in profit and loss amounted to a revenue of $8, for the year ended December 31, 2023 (for the year ended
December 31, 2022 – revenue of $36).
(b) Employee unit purchase plan
The Trust offers an optional employee unit purchase plan to all its employees. Under this plan, the employees
may contribute, each year, pursuant to a maximum of 7% to 10% of their base salary depending on their position
occupied within the Trust. For each two units purchased by an employee, the Trust issues one unit from treasury.
As at December 31, 2023, the liability related to the plan was $87 (December 31, 2022 - $54). The related
expenses recorded in profit and loss amounted to $67, for the year ended December 31, 2023 (for the year ended
December 31, 2022 - revenue of $41). The 11,635 units related to 2022 purchases were issued in 2023 (11,605
units related to 2021 purchases).
(c) Restricted unit compensation plan
The Trust offers a restricted unit compensation plan for all executive officers and key employees. Under this plan,
the executive officers and key employees are eligible to receive restricted units.
The following table presents relevant information on changes in the restricted units:
(d) Cash settled share-based retirement compensation plan
As at December 31, 2023, the long-term obligation related to the plan was $593 (December 31, 2022 - $596).
The related revenue recorded in profit and loss amounted to $4, for the year ended December 31, 2023 (for year
ended December 31, 2022 – expense of $107).
13. Trust Units Issued and Outstanding
BTB is authorized to issue an unlimited number of trust units. Each trust unit represents a single vote at any
meeting of unitholders and entitles the unitholder to receive a pro rata share of all distributions. The unitholders
have the right to require BTB to redeem their trust units on demand. Upon receipt of the redemption notice, all
rights to and under the trust units tendered for redemption are surrendered and the holder thereof is entitled
to receive a price per trust unit (“Redemption Price”), as determined by a market formula. The Redemption
Price is to be paid in accordance with the conditions provided for in the Declaration of Trust. BTB trust units are
considered liability instruments under IFRS because the trust units are redeemable at the option of the holder,
however they are presented as equity in accordance with IAS 32.
Trust units issued and outstanding are as follows:
For the years ended December 31,
Trust units outstanding, beginning of year
Issue pursuant to the distribution reinvestment plan (a)
Issue pursuant to the employee unit purchase plan (note 12 (b))
Issue pursuant to the restricted unit compensation plan (note 12 (c))
Class B LP units exchanged into Trust units
Issue pursuant to conversion of convertible debentures (note 8)
Units
2023
$
85,238,279
395,960
1,083,135
3,441
11,635
73,127
200,000
99,725
33
239
760
341
Trust units outstanding, end of year
86,705,901
400,774
(a) Distribution reinvestment plan
BTB offers a distribution reinvestment plan for its trust unitholders. Participation in the plan is optional and under
the terms of the plan, cash distributions on trust units are used to purchase additional trust units. The trust units
are issued from BTB’s treasury at a price based on the volume-weighted average of the trading prices on the
Toronto Stock Exchange for the last five trading days before the distribution date, less a 3% discount.
For the years ended December 31,
Outstanding, beginning of period
Granted
Cancelled
Settled
Outstanding, end of year
2023
2022
Restricted units
Restricted units
138,583
224,302
(2,914)
(73,129)
286,842
161,536
93,576
-
(116,529)
138,583
(b) Distributions
For the years ended December 31,
Distribution to unitholders
Distribution per Trust unit
(c) Normal course issuer bid (“NCIB”)
As of December 31, 2023, no units have been repurchased for cancellation.
2023
$
25,830
0.300
2022
$
24,927
0.300
As at December 31, 2023, the liability related to the plan was $597 (December 31, 2022 - $446). The related
expense recorded in profit and loss amounted to $390, for the year ended December 31, 2023 (for the year
ended December 31, 2022 – expense $357).
2023 Annual ReportBalancing Growth and Responsibility 110
14. Rental Revenues
For the years ended December 31,
Base rent and other lease generated revenues
Property tax and insurance recoveries
Operating expenses recoveries and other revenues
Lease incentive amortization
Straight-line lease adjustment
2023
$
80,322
25,449
105,771
22,875
(2,783)
1,963
2022
$
73,992
24,831
98,823
21,963
(3,113)
1,822
127,826
119,495
The Trust as lessor enters into leases on its investment properties. Initial lease terms are generally between three
and ten years and include clauses to enable periodic upward revision of the rental charge according to prevailing
market conditions. Some leases contain options to terminate before the end of the lease term. The Trust has
classified these leases as operating leases, because they do not transfer substantially all of the risks and
rewards incidental to the ownership of the assets.
Future minimum base rentals receivable under non-cancellable operating leases as at December 31, 2023 are as
follows:
Within one year
Beyond one year but within two years
Beyond two years but within three years
Beyond three years but within four years
Beyond four years but within five years
Beyond five years
15. Net Financial Expenses
For the years ended December 31,
Interest on mortgage loans payable
Interest on convertible debentures
Interest on bank loans
Interest on lease liabilities
Other interest expense
Accretion of non-derivative liability component of convertible debentures
Accretion of effective interest on mortgage loans payable and convertible debentures
Distributions - Class B LP Units
Fair value adjustment – Class B LP Units
Early repayment fees of a mortgage loan
Net adjustment to fair value of derivative financial instruments
2023
$
126,638
110,971
95,464
77,529
65,463
213,790
689,855
2022
$
23,947
2,796
1,421
211
75
335
1,127
104
(149)
515
(14,216)
16,166
2023
$
27,426
2,835
2,478
354
64
355
1,095
172
(976)
-
1,233
35,036
16. Expenses by Nature
For the years ended December 31,
Depreciation
Employee compensation and benefits expense
17. Earnings per Unit
111
2022
$
122
9,452
2023
$
99
9,516
BTB’s trust units being puttable financial instruments presented as equity in accordance with IAS 32, the Trust
is not required to report a profit or loss per trust unit figure on its consolidated statements of comprehensive
income. However, for disclosure purposes only, the Trust has determined basic earnings per unit using the same
basis that would apply in accordance with lAS 33, Earnings per Share.
Net earnings per unit are calculated based on the weighted average number of trust units outstanding as follows:
For the years ended December 31,
Net income
Weighted average number of trust units outstanding – basic
Earnings per unit – basic
18. Capital and Financial Risk Management
2023
$
36,598
2022
$
38,154
86,289,487
83,438,658
0.42
0.46
This note presents information about the Trust’s management of capital and the Trust’s exposure to financial risk
and its objectives, policies and processes for measuring and managing risk.
(a) Capital Management
The Trust’s capital consists of contributions by unitholders, convertible debentures, mortgage loans and bank
loans, excluding issuance costs. In managing its capital, the Trust’s objectives are to ensure that it has adequate
resources for its operations and development, while maximizing returns for unitholders and maintaining a
balance between debt and equity.
The Trust manages its capital structure based on changes in its operations, the economic climate
and the availability of capital.
The Trust’s capital is as follows:
As at December 31,
Cash and cash equivalents
Mortgage loans payable(1)
Convertible debentures(1)
Bank loans
Mortgage loans payables, Convertible debentures and Bank loans adjusted for Cash
and cash equivalents
Total assets
Accumulated depreciation on Property and equipment
Cash and cash equivalents
Total assets adjusted for accumulated depreciation and cash and cash equivalents
(1) Excluding issue costs
2023
$
(912)
2022
$
(2,404)
640,425
638,441
43,185
36,359
43,170
9,897
719,057
689,104
1,227,648
1,179,340
1,213
(912)
1,114
(2,404)
1,227,949
1,178,050
2023 Annual ReportBalancing Growth and Responsibility 113
(iii) Liquidity risk
Liquidity risk is the risk that the Trust will not be able to meet its financial obligations as they come due. Liquidity
risk is managed by:
• maximizing cash flows from operations;
•
•
•
adopting an investment property acquisition and improvement program that takes into account available
liquidity;
using credit facilities;
staggering mortgage loan maturities;
• maximizing the value of investment properties, thus increasing mortgage financing on renewal of loans; and
•
issuing debt securities or BTB’s units on the financial markets.
Management believes that the Trust will be able to obtain the financing required to make the payments coming
due in the next year. However, there is a risk that changes affecting market conditions and access to financing
may invalidate this assumption.
Some mortgage loans include subjective and restrictive covenant clauses under which the Trust must comply
with financial conditions and ratios. As at December 31, 2023, the Trust was in compliance with all the covenants
to which it was subject.
112
As at December 31,
Mortgage loans payable, Convertible debentures and Bank loans
adjusted for Cash and cash equivalents / total assets adjusted for accumulated
depreciation and cash and cash equivalents ratio
Mortgage loans payable / total assets adjusted for accumulated depreciation
and cash and cash equivalents ratio
(b) Financial Risk Management
The Trust has exposure to the following risks from its use of financial instruments:
•
•
•
•
credit risk
interest rate risk
liquidity risk
fair value risk (see note 11)
2023
%
2022
%
58.6
58.5
52.2
54.2
This note presents information about the Trust’s exposure to each of the above risks, the Trust’s objectives,
policies and processes for measuring and managing risk, and the Trust’s management of capital. Further
quantitative disclosures are included throughout these consolidated financial statements.
(i) Credit risk
Credit risk arises from the possibility that tenants may experience financial difficulty and be unable to fulfill their
lease commitments. The Trust mitigates this risk by varying its tenant mix and staggering lease terms; avoiding
dependence on a single tenant for a significant portion of the Trust’s operating revenues and conducting credit
assessments for all major new tenants. The Trust analyzes its trade receivable on a regular basis and establishes
an allowance for expected credit losses that represents its estimate of lifetime expected credit losses to be
incurred in respect of its trade receivables. As at December 31, 2023, overdue rent receivable amounted to $785
(December 31, 2022 - $962). An allowance for expected credit losses of $731 (December 31, 2022 - $1,011) has
been recorded. This allowance contains overdue rent receivable and other specific isolated trade receivable
provisions. Management expects to recover the amounts not provisioned as all lease agreements are signed,
and they are in continuous discussions for collections with the tenants.
The Trust places its cash and cash equivalents with Canadian financial institutions with high credit ratings. Credit
ratings are actively monitored and these financial institutions are expected to meet their obligations.
The Trust is also exposed to credit risk with respect to derivative financial instruments that are in an unrealized
gain position, for which the credit exposure is equal to the positive fair value of the outstanding contracts. The
Trust only enters into derivative financial instruments with Canadian financial institutions with high credit ratings.
(ii) Interest rate risk
Interest rate risk reflects the risk of changes in the fair value or future cash flows of a financial instrument
because of fluctuations in market interest rates.
Except for four mortgage loans outstanding of $24,636 as at December 31, 2023 bearing interest at variable
rates and three mortgages loans outstanding of $52,028 as at December 31, 2023 covered by a floating-to-fixed
interest rate swap agreement, all other mortgage loans payable and convertible debentures bear interest at
fixed rates. Accordingly a 100-basis point increase or decrease in the average interest rates for the fiscal year,
assuming that all other variables remain constant, would have an impact of approximately $749 on the Trust’s
comprehensive income for the year ended December 31, 2023.
2023 Annual ReportBalancing Growth and Responsibility 114
115
The Trust’s cash position is regularly monitored by management. The following are the contractual maturities of
financial liabilities, including estimated interest payments:
As at December 31, 2023
Estimated payment schedule
19. Subsidiaries and Joint Arrangements
(a) Subsidiaries
The principal wholly owned subsidiaries included in the Trust’s consolidated financial statements are as follows:
Trade and other
payables
Distributions payable to
unitholders
Lease liabilities
Bank loans
Mortgage loans
payable and convertible
debentures
As at December 31, 2022
Trade and other
payables
Distributions payable to
unitholders
Lease liabilities
Bank loans
Mortgage loans
payable and convertible
debentures
Carrying
amount
Total
contractual
cash flows
2024
2025
2026
2027
2028
2029 and
thereafter
$
$
$
19,549
20,374
19,732
2,168
7,332
2,168
2,168
17,475
372
36,359
36,359
36,359
$
63
-
378
-
$
56
-
384
-
$
-
-
387
-
$
-
-
$
-
-
404
15,550
-
-
680,540
765,338
208,818
106,269
136,032
119,776
87,242
107,201
Entity
BTB, Acquisition and operating Trust (“BTB A&OT”)
BTB Real Estate Management Inc.
Immeuble BTB Crescent Sainte-Catherine Inc
Cagim Real Estate Corporation (“CREC”)
BTB Real Estate Limited Partnership
Lombard
Place d’affaire Lebourgneuf Phase II (“PAL II”)
Société immobilière Cagim
745,948
841,714
267,449
106,710
136,472
120,163
87,646
122,751
(b) Joint arrangements
Type
Trust
Corporation
Corporation
Corporation
Limited Partnership
Limited Partnership
General Partnership
Limited Partnership
Estimated payment schedule
Carrying
amount
Total
contractual
cash flows
2023
2024
2025
2026
2027
2028 and
thereafter
$
$
$
20,058
20,581
20,279
2,131
4,203
9,897
2,131
2,131
9,882
9,897
228
9,897
$
183
-
231
-
$
63
-
236
-
$
56
-
242
-
$
-
-
245
-
$
-
-
8,700
-
678,053
775,870
112,205
140,300
106,623
150,914
124,496
141,332
714,342
818,361
144,740
140,714
106,922
151,212
124,741
150,032
The Trust has investments in joint arrangements whereby the parties that have joint control of the arrangements
have rights to the assets, and obligations for the liabilities, relating to the arrangements. Therefore, the joint
arrangements are classified as joint operations. The joint operations included in the Trust’s consolidated
financial statement are as follows:
As at December 31,
Property
Immeuble BTB/Laplaine
Huntington/BTB Montclair
Location
Terrebonne, QC
Gatineau, QC
2023
2022
%
50
50
%
50
50
The consolidated financial statements include the Trust’s proportionate share of the assets, liabilities, revenues
and expenses of these joint arrangements. Summarised financial information is as follows:
As at and for the years ended December 31,
Assets
Liabilities
Revenues
Expenses
Net change in fair value of investment properties
2023
$
22,038
(12,791)
2,021
2,120
289
2022
$
19,973
(9,276)
1,869
870
2,741
2023 Annual ReportBalancing Growth and Responsibility
116
20. Operating Segments
For investment properties, discrete financial information is provided to the CEO on an aggregated investment
property basis. The information provided is net rentals (including gross rent and property expenses), the change
in fair value of investment properties and fair value of investment properties. The individual investment properties
are aggregated into segments with similar economic characteristics. The CEO considers that this is best
achieved by aggregating into retail, office and industrial.
Consequently, the Trust is considered to have three operating segments, as follows:
•
Industrial
• Off-downtown core office
• Necessity-based retail
Year ended December 31, 2023
Investment properties
Rental revenue from properties
Net operating income
Year ended December 31, 2022
Investment properties
Rental revenue from properties
Net operating income
Industrial
Off-downtown
core office
Necessity-
based retail
$
$
$
Total
$
440,120
32,682
23,837
518,345
65,943
34,209
249,057
1,207,522
29,201
17,333
127,826
75,379
344,998
570,527
249,356
1,164,881
22,910
17,565
68,794
36,863
27,791
16,002
119,495
70,430
21. Supplemental Cash Flow Information
The following table provides a reconciliation of movements of liabilities to cash flows arising from financing
activities:
Convertible debentures Mortgage loans payable
Year ended December 31, 2023
Balance beginning of year
Mortgage loans, net of financing costs
Capitalized interest on mortgage loans
Repayment of mortgage loans
Asset acquisitions mortgage assumption
Asset dispositions mortgage assumption
Net proceeds from issuance of convertible debentures
Initial recognition of conversion and redemption options liability
component
Repayment of convertible debentures
Conversion of convertible debentures
Fair value assumption adjustments and financing costs
amortization
Accretion of non-derivative liability component
Balance end of year
$
41,942
-
-
-
-
-
-
-
-
(330)
502
346
$
636,111
48,755
-
(47,366)
-
-
-
-
-
-
580
-
42,460
638,080
22. Compensation of Key Management Personnel and Trustees
Key management personnel and trustees compensation is as follows:
For the years ended December 31,
Salaries and short-term benefits
Unit-based compensation
Total
Key management personnel are comprised of the Trust’s executive officers.
23. Leases Commitments and Contingencies
(a) Leases
Lease liabilities
As at December 31,
Maturity analysis - contractual undiscounted cash flows
Within one year
Beyond one year but within five years
Beyond five years
Total undiscounted lease liabilities
Lease liabilities included in the statement of financial position
Current
Non-current
117
2022
$
2,377
539
2,916
2022
$
228
954
8,700
9,882
4,203
19
4,184
2023
$
2,425
445
2,870
2023
$
372
1,553
15,550
17,475
7,332
6
7,326
Amounts recognised in profit and loss and statement of cashflows
As at December 31,
Profit and loss
Interest on lease liabilities (note 15)
Expenses relating to leases of low-value assets, excluding short-term leases of low-value
assets
Statement of cash flow
Total cash outflow for leases
(b) Litigation
2023
2022
$
354
443
801
$
211
491
717
The Trust is involved in litigation and claims which arise from time to time in the normal course of business.
These litigation and claims are generally covered by insurance. In the opinion of management, any liability that
may arise from such contingencies will not have a significant adverse effect on the Trust’s consolidated financial
statements.
2023 Annual ReportBalancing Growth and Responsibility
118
119
Board of Trustees
Unitholders Information
Michel Léonard
President, CEO & Trustee
Jocelyn Proteau
Chair of the Board & Trustee(2)
Jean-Pierre Janson
Vice-Chair of the Board & Trustee(2)
Lucie Ducharme
President, Human Resources
and Governance Committees
& Trustee(1)(2)
Luc Martin
President, Audit Committee
& Trustee(1)
Fernand Perreault
President, Investment
Committee & Trustee(3)
Armand Des Rosiers
Trustee
Sylvie Lachance
Trustee(3)
Christine Marchildon
Trustee(2)
(1) Member of the Audit Committee
(2) Member of the Human Resources and Governance Committee
(3) Member of the Investments Committee
Head office
BTB Real Estate Investment Trust
1411 Crescent Street, Suite 300
Montréal, Québec, H3G 2B3
T 514 286-0188
www.btbreit.com
Listing
The units and debentures of
BTB Real Estate Investment Trust
are listed on the Toronto Stock
Exchange under the trading
symbols: BTB.UN
BTB.DB.G
BTB.DB.H
Transfer agent
Computershare Investor Services
1500 Robert-Bourassa Blvd
7th floor, Montréal, Québec, H3A
3S8 Canada
T 514 982-7555
T Toll free: 1 800-564-6253
F 514 982-7850
service@computershare.com
Taxability of distributions
In 2023, for all Canadian
unitholders, the distributions were
fiscally treated as follow:
Other revenues: 0%
Fiscal Deferral: 100%
Auditors
KPMG LLP.
600 De Maisonneuve Blvd West
Suite 1500
Montréal, Québec, H3A 0A3
Legal counsel
De Grandpré Chait LLP.
800 Rene-Lévesque Blvd West
Suite 2600
Montréal, Québec, H3B 1X9
Annual General Meeting
June 18th, 2024
Location and time TBA
Unitholders distribution
reinvestment plan
BTB Real Estate Investment Trust
offers a distribution reinvestment
plan to unitholders whereby the
participants may elect to have
their monthly cash distribution
reinvested in additional units
of BTB at a price based on
the weighted average price for
BTB’s Units on the Toronto Stock
Exchange for the five trading
days immediately preceding the
distribution date, discounted by 3%.
For further information about
the Distribution Reinvestment
Plan, please refer to the Investor
relations section of our website
at www.btbreit.com or contact
the Plan agent: Computershare
Investor Services.
Cover illustration
by Romain Lasser
979 Bank Street, Ottawa, ON
2023 Annual ReportBalancing Growth and Responsibility 120
2023 Annual Report