Crombie REIT Annual Report 2023

Plain-text annual report

CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Cover R1.indd 1 2024-03-21 1:05 PM Crombie invests in real estate with a vision of enriching communities together by building spaces and value today that leave a positive impact on tomorrow. As one of the country’s leading owners, operators, and developers of quality real estate assets, Crombie’s portfolio primarily includes grocery-anchored retail, retail-related industrial, and mixed-use residential properties. About Crombie About the Cover The Village at Bronte Harbour, a 481-unit residential rental community nestled in Oakville’s most vibrant and sought-after neighbourhood, reached substantial completion in the first quarter of 2022. Aligned with Crombie’s focus on necessity-based properties, The Village at Bronte Harbour features a retail offering anchored by a Farm Boy grocery store and includes a Rexall pharmacy. Significant leasing progress was made in 2023, ending the year with committed occupancy at 91.9%. CRA028 4400112 -Crombie_Cover R1.indd 2 2024-03-21 1:05 PM Inside this Report Crombie at a Glance 2 4 Letter from the CEO Building Together Crombie’s Priorities 6 Own and Operate 10 Optimize 12 Partner 14 Financial Strength 16 ESG 18 People and Culture 20 Message from the Chair Financial Review 22 Table of Contents 23 Management’s Discussion and Analysis 87 Management’s Statement of Responsibility for Financial Reporting 88 Independent Auditor’s Report 92 Consolidated Financial Statements 96 Notes to the Consolidated Financial Statements 126 Property Portfolio 128 Unitholders’ Information Forward-Looking Statements & Non-GAAP Measures Forward-Looking Statements This document includes statements about our objectives, plans, goals, strategies, future growth, financial condition, results of operations, cash flows, performance, business prospects and opportunities. These statements are forward-looking because they are based on management’s expectations about the future – they are not historical facts. Forward-looking statements include statements regarding our development pipeline size, timing and costs, and statements containing words like anticipates, expects, believes, estimates, could, intends, may, plans, predicts, projects, will, would, foresees and other similar expressions, or the negative of these words. For more information and a caution about using forward-looking information, see the Forward-Looking Information section in the Management’s Discussion and Analysis on page 85. Non-GAAP Measures Certain financial measures in this document, including FFO, AFFO, SANOI, debt to trailing 12 months adjusted EBITDA, and D/GFV, are not defined terms under GAAP; therefore, they are not a reliable way to compare us to other companies. See the Non-GAAP Financial Measures section in the Management’s Discussion and Analysis on page 81. $5.6b fair value including properties held in joint ventures1 304 properties including properties under development and 4 properties owned in joint ventures 19.2m sq. ft. of GLA inclusive of joint ventures 10.6m sq. ft. of development GLA potential Portfolio Fair Value by Market Class (%) as at December 31, 2023 29% $5.6b fair value1 45% 26% (cid:81) VECTOM2 (cid:81) Major Markets3 (cid:81) Rest of Canada 1 Non-GAAP measure which includes fair value of properties held in joint ventures at Crombie’s share; for additional information please reference Non-GAAP Financial Measures section in the MD&A. 2 Vancouver, Edmonton, Calgary, Toronto, Ottawa-Gatineau, Montreal, as defined by Statistics Canada 2021 boundaries for census metropolitan areas and census agglomeration. 3 A Crombie-specific definition that includes Abbotsford-Mission, Barrie, Chilliwack, Halifax, Hamilton, Kitchener-Cambridge-Waterloo, Oshawa, Quebec City, Regina, Saskatoon, Victoria, and Winnipeg, as defined by Statistics Canada 2021 CMA/CA boundaries. CRA028 4400112 -Crombie_Text Proof R1.indd 1 1 2024-03-21 12:42 PM Letter from the CEO In the real estate industry, we have the privilege and honour of designing and building spaces that shape communities. Crombie’s strategy, called “Building Together”, is a recognition of this privilege and the important role we play in community-shaping across Canada. We remain deeply committed to collaboratively creating spaces that enrich communities, while delivering attractive returns to Unitholders. I am proud of our team’s results in 2023, amidst the macro-economic volatility. We stayed committed to our strategy and long-term goals, demonstrating our ability to deliver healthy and consistent operating and financial results, while advancing key strategic initiatives. Our strategy is built on two pillars: Value Creation and Solid Foundation. Value Creation At Crombie, we strive to consistently deliver solid operating and financial results across three value creation drivers of the strategy – Own and Operate, Optimize, and Partner. With a primarily grocery-anchored, necessity-based portfolio extending across the country, we are focused on operational excellence to enable same-asset property cash net operating income growth, healthy renewal spreads, and stable occupancy, while prudently allocating capital to both major and non-major development projects. Own and Operate Crombie is focused on the long-term ownership and operation of properties in the three most desirable asset classes in Canadian real estate: grocery-anchored retail; industrial; and residential. The strength of our grocery-anchored, necessity-based portfolio and our persistent pursuit of operational excellence resulted in stable committed occupancy at year-end of 96.5%, healthy same-asset property cash NOI growth of 3.0%, 1.3 million square feet of lease renewals with an increase of 5.9% over expiring rental rates, and a portfolio weighted average lease term of 8.8 years. Optimize Optimization of our portfolio comes from both major and non-major developments. Our primary focus during 2023 was on advancing the entitlement of select major development sites in our pipeline, commencing construction on our next major development, and adding new retail and industrial square footage through our non-major development projects. During the year, we were particularly proud of the progress on our major development project – The Marlstone in Halifax, Nova Scotia – one of Canada’s fastest-growing cities. The Marlstone is a 291-unit residential rental project that is underway with expected completion in the first half of 2026. It will be built to LEED Gold Standard with an operational net zero ready design and will be a Rick Hansen Foundation certified property. The Marlstone will be a valuable addition to the community and an important long-term contributor to portfolio value. CRA028 4400112 -Crombie_Text Proof R1.indd 2 2024-03-21 12:42 PM Partner Executive Committee One of Crombie’s key differentiators is its strategic partnership with Empire, one of Canada’s largest and most enduring grocers. Through alignment in our real estate strategies, Crombie is able to plan and deliver initiatives that enhance the quality of our portfolio, including acquisitions, modernizations, development management services, and construction of purpose-built projects. Crombie appreciates the importance of partnerships to generate growth, while maintaining a healthy balance sheet. We are focused on expanding our approach to partnerships to maximize our major development pipeline potential and extract the embedded value. Solid Foundation Our foundation is comprised of three focus areas: Financial Strength, Environmental, Social and Governance (“ESG”), and People and Culture. The common themes across our Solid Foundation are sustainability and stability – we are building an organization that our people can be proud to work for and our Unitholders can look to for stable, long-term results. Financial Strength From a financial standpoint, we continued to uphold a strong balance sheet and overall financial condition. We remain committed to prudent capital allocation and continuously monitor our debt maturity ladder, as well as maintaining ample liquidity and low leverage ratios. Entering 2024, we are well positioned, with access to multiple sources of capital, providing flexibility and optionality to meet our financing needs while pursuing strategic initiatives. ESG We are focused on achieving our ESG objectives to build stronger and more sustainable communities. In 2023, we renewed our ESG Report and set measurable targets, both in the near and long term. One of our environmental targets is our Climate Action Plan, including the validation and approval from the Science Based Targets initiative for our commitment to net zero carbon emissions by 2050. In addition to this, we were named a Green Lease Leader and further improved our GRESB results. People and Culture We are proud to be recognized with top employer awards in Nova Scotia, Atlantic Canada, and Canadian Small and Medium Enterprise categories, and continue to prioritize diversity, equity, and inclusion, as well as the safety and well-being of our teammates and tenants. Looking Ahead Our consistent and measured focus on our strategy and objectives, while remaining nimble and adaptable when economic conditions change will allow us to deliver stable and consistent results year in, year out. I am excited about the future we are building together at Crombie. Sincerely, Mark Holly President & Chief Executive Officer Mark Holly President & Chief Executive Officer Kara Cameron Interim Chief Financial Officer John Barnoski Executive Vice President, Corporate Development Arie Bitton Executive Vice President, Leasing & Operations Victor Settino Executive Vice President, Development & Construction Ashley Harrison Senior Vice President, People & Culture Fred Santini General Counsel & Corporate Secretary 3 Building Together 4 CRA028 4400112 -Crombie_Text Proof R1.indd 4 2024-03-21 12:42 PM Supported by a solid foundation, guided by our values, and focused on three core value creation pillars—own and operate, optimize, and partner—Crombie is positioned to deliver consistent results and generate long-term sustainable growth for Unitholders. Our Vision Enriching communities together. Our Purpose Building spaces and value today that leave a positive impact on tomorrow. Building Together l e u a V n o i t a e r C d i l o S n o i t a d n u o F Own and Operate Optimize Partner Financial Strength ESG People and Culture CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 5 5 2024-03-21 12:42 PM Le Duke, Montreal, Quebec Own and Operate 6 CRA028 4400112 -Crombie_Text Proof R1.indd 6 2024-03-21 12:42 PM Value Creation Number of Properties GLA Fair Value3 Retail Office Retail-related industrial Mixed-use residential Other4 Total 283 15,301,000 962,000 2,434,000 – 304 19,211,000 5 7 3 6 $4.3B $0.2B $0.5B $0.1B $5.6B 514,000 $0.5B Number of Properties GLA Fair Value3 VECTOM1 Major Markets2 Rest of Canada 94 68 142 6,480,000 4,843,000 7,888,000 $2.5B $1.5B $1.6B Total 304 19,211,000 $5.6B Our Portfolio Crombie owns properties in the country’s three most desirable asset classes: grocery- anchored retail, industrial, and residential. Our intentionally curated portfolio is comprised primarily of necessity-based tenants and spans coast to coast with assets in most cities, towns, and metro centres of Canada. Through strategic asset management and disciplined capital allocation, we are able to capitalize on emerging opportunities in Canada’s dynamic real estate market. Crombie’s portfolio is spread across three market classes: VECTOM1, Major Markets2, and Rest of Canada. Assets in VECTOM and Major Markets represent a fair value of $4.0 billion3, equivalent to 11.3 million square feet of GLA. The properties located in these markets offer stability given their largely necessity-based focus, but also optionality to be developed as mixed-use residential in select locations as the population grows and the demand for housing continues to increase. Our Rest of Canada assets are well located at main and main, representing $1.6 billion3 of fair value and 7.9 million square feet of GLA. 88% of our assets in these markets are grocery anchored and consist of primarily necessity-based retailers, highlighting the criticality of these properties as they serve the needs of communities across the country. e p y T t e s s A l s s a C t e k r a M (cid:81) West 6.3m sq. ft. (cid:81) Central 5.3m sq. ft. (cid:81) Atlantic 7.6m sq. ft. 1 Vancouver, Edmonton, Calgary, Toronto, Ottawa-Gatineau, Montreal, as defined by Statistics Canada 2021 boundaries for census metropolitan areas and census agglomeration. 2 A Crombie-specific definition that includes Abbotsford-Mission, Barrie, Chilliwack, Halifax, Hamilton, Kitchener-Cambridge-Waterloo, Oshawa, Quebec City, Regina, Saskatoon, Victoria, and Winnipeg, as defined by Statistics Canada 2021 CMA/CA boundaries. 3 Non-GAAP measure which includes fair value of properties held in joint ventures at Crombie’s share; for additional information please reference Non-GAAP Financial Measures section in the MD&A. 4 Other includes properties under development “PUD” and land. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 7 7 2024-03-21 12:42 PM 96.5% committed occupancy $441m property revenue 84% grocery-anchored properties 72% annual minimum rent (AMR) from essential service tenants +5.9% renewal leasing spread on 1.3m sq. ft. +3.0% same-asset property cash NOI1 81% annual minimum rent (AMR) from grocery-anchored properties, inclusive of retail-related industrial 8.8 years weighted average lease term 1 Non-GAAP measure; for additional information, please reference Non-GAAP Financial Measures section in the MD&A. 8 CRA028 4400112 -Crombie_Text Proof R1.indd 8 2024-03-21 12:42 PM Elevating our tenant experience and operational efficiency Tenant Proﬁle Value Creation Crombie is in persistent pursuit of operational excellence and delivering consistent results through stable occupancy, healthy renewal spreads, and same-asset property cash NOI growth. The retail landscape continues to evolve, as do the needs of the communities that we serve. Our leasing team is focused on optimizing the merchandise mix with these needs across our portfolio. Our necessity-based portfolio provides stability with predictable income and cash flows and is more resilient to changes in economic cycles. Our operations team ensures high standards and comprehensive programs are in place relating to safety, security, and property maintenance. We have implemented operational practices to drive performance, enhance tenant experience, and promote ESG awareness and engagement. Tenants by Industry (% of AMR) 81.3% Necessity-based Retailers1 5.5% Office & Hotel Tenants 3.6% Apparel & Accessories 2.6% Entertainment, Sporting Goods & Stationery Retailers 1.6% Restaurants – Full Service 1.4% Home Improvement, Furniture & Auto Supplies 1.4% Value-Focused Retailers 1.3% Fitness Facilities & Supplements Stores 1.3% Other s t n a n e T 0 1 p o T Tenant % of AMR GLA (sq. ft.) Morningstar DBRS Credit Rating Empire Company Limited2 58.5% 11,214,000 BBB Shoppers Drug Mart 2.4% 228,000 BBB(high) Dollarama 1.8% 386,000 BBB Province of Nova Scotia 1.5% 355,000 A (high) Bank of Nova Scotia Shell Canada 1.1% 1.1% 173,000 AA 19,000 AA (low) Cineplex 1.0% 207,000 GoodLife Fitness 0.9% 190,000 – – Canadian Imperial Bank of Commerce 0.9% 132,000 AA Government of Canada 0.9% 130,000 AAA 1 Necessity-based retailers include tenants that provide essential products and services, and predominantly fall into the following categories: grocery, pharmacy, liquor, cannabis, convenience store, gasoline, and pet supplies. 2 Includes Sobeys and all other subsidiaries of Empire Company Limited. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 9 9 2024-03-21 12:42 PM The Marlstone Rendering, Halifax, Nova Scotia Optimize 10 CRA028 4400112 -Crombie_Text Proof R1.indd 10 2024-03-21 12:42 PM Value Creation Major development pipeline: 26 1.1m 9.5m 11,291 development projects sq. ft. commercial GLA sq. ft. residential GLA residential units Developing and intensifying Canada’s leading properties The demand for high-density, mixed-use residential properties remains high. Crombie is uniquely situated with a highly coveted property development pipeline across the country. Our development program is divided into major development; projects with a total estimated cost greater than $50 million, and non-major development; projects with a total estimated cost below $50 million. Our major development pipeline includes 26 projects, with one active project, The Marlstone, under construction. Entitlements play a critical role in establishing a well-structured development ladder. Our team is focused on advancing projects through the approval process, providing optionality and flexibility for our development planning, and creating value with low capital investment. Non-major developments are projects with shorter-durations, typically 12 months or less, reduced risk, and lower capital requirements given their timelines and relative size. This category includes modernizations, land-use intensifications, the repurposing of existing space, and smaller new developments such as retail-related industrial and new retail centres. These developments contributed 83,000 square feet of new GLA across our portfolio in 2023. The Marlstone is a 291-unit residential rental project, in Halifax, Nova Scotia, with an estimated total cost of $134 million and an estimated yield on cost between 4.5% - 5.5%1. s t n e m e l t i t n E Number of projects Estimated total sq. ft. Residential units Zoned Rezoning application submitted Total 4 4 8 1,499,000 1,801 3,090,000 3,460 4,589,000 5,261 Foodland Mount Forest, Ontario Land-use intensification Dollarama Riverview, New Brunswick Land-use intensification 1 Please reference the development section of the MD&A for additional information on assumptions and risks. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 11 11 2024-03-21 12:42 PM Forest Lawn Sobeys, Calgary, Alberta Partner 12 CRA028 4400112 -Crombie_Text Proof R1.indd 12 2024-03-21 12:42 PM Value Creation Empire represents: 11.2m 58.5% 11.3 years sq. ft. of occupied portfolio GLA of annual minimum rent (AMR) weighted average remaining Empire lease term Aberdeen Sobeys Modernization Leveraging and unlocking value through our strategic partnerships Crombie actively evaluates partnerships and collaborative opportunities to enhance its portfolio and generate growth. Crombie has formed multiple joint venture partnerships across the country to unlock value embedded within its major development pipeline as assets are transformed to reflect highest and best use. Completed major development projects held in joint ventures include Zephyr-Davie Street Residential in Vancouver, British Columbia, The Village at Bronte Harbour in Oakville, Ontario, and Le Duke, in Montreal, Quebec. Our strategic partnership with Empire is a competitive advantage for Crombie and will continue to create value and drive growth for our Unitholders. The strategic alignment between Crombie and Empire enables us to plan and deliver mutually beneficial and accretive initiatives, such as: • Acquisition, modernization, and expansion of grocery stores; • Store conversions; • Land-use intensifications; • Network investments facilitating Empire’s build-out of their Voilà online grocery home delivery service; • Development management services; and • Major developments. In the fourth quarter of 2023, Empire completed the modernization, partially funded by Crombie, of the Aberdeen Sobeys in New Glasgow, Nova Scotia. The modernization included industry-leading energy- efficient and carbon reduction features, highlighting the ways Crombie and Empire can work together to achieve each of our Climate Action Plan objectives, while also improving the quality of our portfolio and enhancing our retail assets. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 13 13 2024-03-21 12:42 PM Zephyr – Davie Street, Vancouver, British Columbia Financial Strength 14 CRA028 4400112 -Crombie_Text Proof R1.indd 14 2024-03-21 12:42 PM Solid Foundation $584m 8.03x 3.16x 4.9 years available liquidity debt to adjusted EBITDA (TTM)1 interest coverage ratio1 weighted average term to debt maturity Debt characteristics2 11% 53% 47% 89% (cid:81) Secured debt (cid:81) Unsecured debt (cid:81) Floating rate (cid:81) Fixed rate 1 Non-GAAP measure; for additional information, please reference Non-GAAP Financial Measures section in the MD&A. 2 Inclusive of joint venture debt. 3 Excludes credit facilities: revolving credit facility, unsecured non-revolving credit facility, unsecured bilateral credit facility, and joint operation credit facility. Building from a strong ﬁnancial base Crombie’s financial strength is underpinned by a consistent focus on maintaining balance sheet health, including well-laddered debt maturities with balanced near-term expiries, and a low leverage profile. This commitment ensures financial stability and that Crombie remains well positioned to pursue growth opportunities that will deliver long term value amidst external pressures from higher interest rates and the inflationary environment. Flexibility is a key feature of financial strength. Crombie strives to maintain ample liquidity and access to multiple sources of capital to ensure that it is in a position to invest in opportunities aligned with its capital allocation framework. We have a BBB (low) stable trend credit rating from Morningstar DBRS. Crombie is committed to improving its investment grade credit rating. As mortgages mature over the next few years, we expect to reduce secured debt comfortably below 40% and maintain a solid debt to EBITDA ratio, which are anticipated to support an upgrade to BBB. Debt maturities2,3 s n o i l l i M $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2024 2025 2026 2027 2028 2029 2030 2031 2032 Mortgages Unsecured Notes Joint Ventures Weighted Average Interest Rate (right axis) CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 15 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 15 2024-03-21 12:42 PM Scotia Square, Halifax, Nova Scotia BOMA BEST Platinum ESG 16 CRA028 4400112 -Crombie_Text Proof R1.indd 16 2024-03-21 12:42 PM Solid Foundation Delivering on our ESG roadmap and targets We know that taking a sustainable approach to our business is vital to the short-, medium-, and long-term health and success of Crombie. We have embedded sustainability principles into the way we operate and in 2023, we continued to advance our ESG initiatives. Crombie’s ESG strategy focuses on eight material topics. Climate Action Design & Development Building & Attracting Talent Leasing & Operations Diversity, Equity, & Inclusion Health, Safety, & Well-being Board Composition & Governance Risk Management Environmental Spotlight Crombie developed a Climate Action Plan, committing to reducing the greenhouse gas (“GHG”) intensity of both our operations and supply chain. Our Climate Action Plan is a roadmap built on quality data, aligned with science-based standards, and designed to take climate action by decarbonizing our portfolio. Through this process, we measured our baseline carbon footprint which is the starting line for our net zero journey. We then analyzed the GHG profile to identify potential GHG emission reduction measures. We are committed to achieving net zero by 2050 for scopes 1, 2, and 3. In the near-term, we are committed to reducing scope 1 and 2 emissions by a minimum of 50% by 2030, using 2019 as a baseline year. In July 2023, SBTi independently validated and approved the near and long-term GHG emission targets contained in our Climate Action Plan. Social Spotlight We are focused on attracting, retaining, and developing talent at all levels of the organization who are committed to advancing our purpose, values, and business strategy. Crombie is proud of our high employee satisfaction, with 90% of employees reporting they are satisfied or extremely satisfied with Crombie as a great place to work, and voluntary turnover is low at 9% (including retirements). Once again, Crombie was selected in three categories of the 2023 Canada’s Top Employers Awards: Canada’s Top Small & Medium Employer, Atlantic Canada, and Nova Scotia. These awards recognize Canadian employers who lead their industries in offering exceptional places to work. Judges recognized Crombie’s holistic well-being framework focused on physical, psychological, professional, and personal wellness, as well as our internal career planning services including a mentorship and leadership development program. Governance Spotlight Crombie’s commitment to excellence and the highest standard of ethical behaviour guides our company and has built the trusted reputation we enjoy with our tenants, communities, and key stakeholders. A number of guiding policies and programs help us live up to these standards and values daily and include our Code of Business Conduct and Ethics, Declaration of Trust, and Board and Committee Mandates. These guiding policies and programs extend to our Board of Trustees, who bring a diverse mix of experience, skills, and backgrounds necessary to provide thoughtful oversight. Our Board of Trustees is comprised of both elected and Empire-appointed Trustees. The Declaration of Trust and Code of Business Conduct and Ethics policies contain conflict of interest provisions requiring Trustees to disclose their interests in certain contracts and transactions and to refrain from voting on those matters. To mitigate these potential conflicts, Crombie and Empire have set limits on the number of appointed Trustees, outlined how potential conflicts of interest will be addressed, and identified those matters requiring the approval of a majority of the independent elected trustees. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 17 17 2024-03-21 12:42 PM Crombie employees Natcha Wannaklang and Charlee Gerrior, Halifax, Nova Scotia People and Culture 18 CRA028 4400112 -Crombie_Text Proof R1.indd 18 2024-03-21 12:42 PM Our Guiding Values Solid Foundation Care Passionately Deliver Excellence Together Embody Integrity Empower One Another Outperform Expectations Attracting and enabling Canada’s top talent Our team is core to Crombie’s success. We are passionate about celebrating diversity, fostering an inclusive environment, and creating real connections between people to achieve our long-term vision of enriching communities together. We pride ourselves on our commitment to create positive and sustainable impact for our tenants, partners, team members, and the environment. Together, we approach our work with a view to continuous improvement, focused on achieving our objectives and fulfilling Crombie’s purpose. Fostering a safety culture that protects the physical and psychological health of employees. Crombie prioritizes employee well-being with a variety of programs and offerings, including: • Well-being days available annually for all employees • Mental health first aid training • Hybrid workplace • Funding for self-directed learning • Flexible holidays We build communities, and we build teams. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 19 19 2024-03-21 12:42 PM “Building Together” describes Crombie’s focus on creating value for Unitholders, Tenants, Partners, Employees, and the Communities in which we operate. 2023 was a year of significant change, with Don Clow retiring and Mark Holly taking over leadership. Mark has a very impressive background in all aspects of real estate and, importantly, his values align well with the Crombie culture. Over the course of the year, the Board of Trustees have come to rely on Mark’s open communication style, and the executive committee’s commitment to achieving well- defined measures of success. This past year has been a rollercoaster for the real estate industry, opening with unmet expectations of falling interest rates and speculation that caused volatility throughout the year. It has been disruptive to the entire industry, and I commend Crombie’s leadership for being agile, adjusting the business plan to adapt to the uncertainty of the macro- economic environment, and delivering consistent operational and financial results. The executive committee presented its strategy to the Board of Trustees, providing a growth-focused plan, with clearly defined measures of success for the business. The team remains focused on owning, operating, and optimizing a national real estate portfolio, while partnering with Empire and others to create long-term value. They understand that financial strength, ESG, and people and culture provide them with a solid foundation on which to build. Oversight of the strategy lies with Crombie’s Board, whose Trustees are diverse in their skillsets, experiences, and perspectives. All Trustees have an in-depth understanding of real estate, and almost all have executive-level experience in ESG. In addition, we have expertise in finance, human resources, and development. Meeting discourse is productive, and Trustees are highly engaged in all decision-making. Message from the Chair 20 CRA028 4400112 -Crombie_Text Proof R1.indd 20 2024-03-21 12:42 PM The Board of Trustees take seriously our commitment to good governance, with guiding policies and programs helping us live up to standards and corporate values in our work. We have comprehensive Board and Committee mandates, independent voting rules, and tenure policies in place to ensure ongoing commitment to ethical governance. At the upcoming Annual General Meeting in May 2024, Paul Sobey will be retiring. Paul has been a strong contributor at all levels and aspects of the work we do, and most recently, he was a valued member of the Audit and Human Resources Committees. On behalf of all Trustees, I want to thank Paul for his tremendous contributions to Crombie over the last 18 years and wish him all the best. I will also retire from the Board of Trustees, and a new Chair will be elected. During my tenure as a Trustee, Crombie has significantly expanded its portfolio from regional to national and its focus of owning and operating to also include developing major and non-major projects. I take great satisfaction and pride in the accomplishments of this Board and have thoroughly enjoyed the successes we have achieved together. Following a thorough process, Jason Shannon has been nominated for the role of Chair, and will be a tremendous leader. He brings a wealth of experience to the role, having joined the Board of Trustees in 2016, and served as Chair of the Investment Committee since 2019. He has a robust understanding of real estate, finance, risk management, talent management, and Crombie’s strategic relationship with Empire. The Board of Trustees and the business have strong stewards in Jason and Mark, and I look forward to witnessing the future they build together for Crombie. Sincerely, Board of Trustees *Empire appointed Trustee J. Michael Knowlton Independent Trustee & Chair Paul Beesley Independent Trustee Jane Craighead Independent Trustee Jim Dickson Independent Trustee* Heather Grey-Wolf Independent Trustee* Mark Holly Trustee Heidi Jamieson-Mills Independent Trustee* Jason Shannon Independent Trustee Paul Sobey Independent Trustee* Michael Vels Independent Trustee* Michael Waters Independent Trustee Karen Weaver Independent Trustee J. Michael Knowlton Chair CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 21 21 2024-03-21 12:42 PM Financial Review 23 MANAGEMENT’S DISCUSSION 54 Investment Grade Credit Rating AND ANALYSIS 23 Key Highlights 27 Glossary of Terms 28 Portfolio Review 28 Total Portfolio Review Inclusive of Joint Ventures 28 Market Class 29 Asset Type 30 Portfolio Review – Excluding Joint Ventures 30 Market Class 31 Asset Type 32 Non-Major Development – Completed 33 Tenant Profile 35 Same-Asset Properties 55 Strong Capital Structure 55 Debt Metrics 58 Debt Profile 60 Debt Maturities 60 Outstanding Unit Data 60 Cash Flows 62 Available Credit Line Liquidity 63 Off-Balance Sheet Commitments and Guarantees 63 Financial Instruments 64 Risk Management 64 Risk Management Framework 64 Risk Factors Related to the Business of Crombie 36 Strategic Acquisitions and Dispositions 68 Financial Risk Management 37 Operational Performance Review 37 Occupancy and Leasing Activity 38 New Leasing Activity 38 Renewal Activity 39 Lease Maturities 40 Financial Performance Review 41 Operating Income Attributable to Unitholders 41 Net Property Income 42 Same-Asset Property Cash NOI 43 Funds from Operations (FFO) 71 Risk Factors Related to the Units 72 Ownership of Senior Unsecured Notes 73 Joint Ventures 73 Joint Venture Summary 74 Occupancy Metrics 74 Financial Performance 75 Fair Value 76 Debt to Gross Fair Value 76 Debt Profile 77 Other Disclosures 44 Adjusted Funds from Operations (AFFO) 77 Related Party Transactions 44 Distributions to Unitholders 45 Amortization of Tenant Incentives 46 General and Administrative Expenses 46 Finance Costs – Operations 47 Depreciation, Amortization, and Impairment 47 Selected Balance Sheet Information 48 Development 48 Major Development Pipeline 48 Active Major Developments 54 Capital Management 54 Capital Management Framework 78 Use of Estimates and Judgments 79 Controls and Procedures 80 Quarterly Information 81 Non-GAAP Financial Measures 85 Forward-looking Information 87 Management’s Statement of Responsibility for Financial Reporting 88 Independent Auditor’s Report 92 Consolidated Financial Statements 96 Notes to the Consolidated Financial Statements 126 Property Portfolio 128 Unitholders’ Information * Non-GAAP Financial Measures Some of the financial measures we provide in this document are non-GAAP financial measures that have no standardized meaning under International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and therefore may not be comparable to similar measures presented by other companies. See “Non-GAAP Financial Measures”, starting on page 81, for more information on Crombie’s non- GAAP financial measures and reconciliations thereof. Forward-Looking Statements Some of the information we provide in this document is forward-looking and therefore could change over time to reflect changes in the environment in which we operate and compete. See “Forward-looking Information”, starting on page 85, for more information. The following Management’s Discussion and Analysis (“MD&A”) of the consolidated financial condition and financial performance of Crombie Real Estate Investment Trust (“Crombie”) should be read in conjunction with Crombie’s audited consolidated financial statements (“financial statements”) as at and for the years ended December 31, 2023 and 2022. Except for per unit, gross leasable area (“GLA”) and square footage (“sq. ft.”) amounts and where otherwise noted, all amounts in this MD&A are reported in thousands of Canadian dollars. The information contained in the MD&A, including forward-looking statements, is based on information available to management as of February 21, 2024, except as otherwise noted. Additional information relating to Crombie, including its latest Annual Information Form, can be found on the SEDAR+ website for Canadian regulatory filings at www.sedarplus.ca. For definitions of certain acronyms and specialized terms we use in this document, refer to the “Glossary of Terms” on page 27. 22 CRA028 4400112 -Crombie_Text Proof R1.indd 22 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS KEY HIGHLIGHTS We use financial and operational metrics to measure our performance. These key metrics are highlighted below: FINANCIAL METRICS (in thousands except GLA and per Unit amounts) Property revenue1 Q4 2023 Year 2023 $114,299 $440,939 Q4 2022 $110,061 +3.9% Year 2022 $428,079 +3.0% The increase in property revenue in the quarter was due primarily to higher revenue from completed developments, renewals, and new leasing activity, offset in part by reduced revenue related to dispositions in 2022. On an annual basis, property revenue increased due to factors discussed above as well as increased revenue from acquisitions, lease termination income, and modernizations. The increase was offset in part by reduced revenue related to dispositions in 2022 and higher tenant incentive amortization from modernizations and accelerated amortization. Operating income attributable to Unitholders Q4 2023 Year 2023 $26,295 $98,821 The reduction in operating income in the quarter resulted mainly from gain on disposal of investment properties in the fourth quarter of 2022, higher interest expense on floating rate debt and senior unsecured notes, reduced property revenue related to dispositions in 2022, and increased depreciation and amortization due to completed developments and acquisitions, and accelerated depreciation on properties scheduled for redevelopment. The decrease in operating income was offset in part by Q4 2022 $87,718 -70.0% Year 2022 $167,800 -41.1% growth in property revenue from completed developments, renewals, new leasing activity, reduced mortgage interest from the impact of mortgage repayments, and revenue from management and development services. On an annual basis, operating income variance was negatively impacted by gain on disposal of investment properties in 2022, higher general and administrative expenses resulting from employee transition costs in the second quarter of 2023, increased interest on floating rate debt and senior unsecured notes, reduced property revenue related to dispositions in 2022, and increased tenant incentive amortization. Gain on distribution from equity-accounted investments in 2022 further increased the variance in annual operating income. Offsetting this decrease, there were no impairments in 2023. Increased income from the sale of land within equity-accounted joint ventures, decreased mortgage interest from the impact of mortgage repayments and dispositions, growth in property revenue as discussed above, higher property revenue from acquisitions, lease termination income, modernizations, revenue from management and development services, and lower depreciation and amortization further offset the decrease in operating income in the year. Net property income increased during the quarter due to property revenue increases from development activity, renewals, and new leasing, offset in part by reduced property revenue related to dispositions in 2022. Higher property revenue from completed developments, renewals, new leasing, acquisitions, lease termination income, and modernizations positively impacted net property income on an annual basis. This was partially offset by reduced property revenue related to dispositions in 2022 and increased tenant incentive amortization primarily from modernizations and accelerated amortization. Net property income* Q4 2023 Year 2023 $75,869 $287,412 Q4 2022 $70,816 +7.1% Year 2022 $281,818 +2.0% Same-asset property cash NOI* Q4 2023 Year 2023 property revenue from renewals and new leasing. The increase in same-asset property cash NOI for the quarter was primarily driven by increased $77,519 $287,010 Q4 2022 $74,567 +4.0% Year 2022 $278,679 +3.0% In addition to the factors noted above, higher revenue from lease termination income, modernizations, and capital improvements contributed to the increase on an annual basis compared to the prior year. (1) Consistent with the current year presentation, property revenue for the three months and year ended December 31, 2022 has been increased by $2,122 and $8,488, respectively, to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. * See “Non-GAAP Financial Measures”, starting on page 81, for more information on Crombie’s non-GAAP ﬁnancial measures and reconciliations thereof. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 23 23 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS FFO* per Unit Q4 2023 $0.30 Year 2023 $1.17 Q4 2022 $0.29 +3.4% Year 2022 $1.16 +0.9% FFO* payout ratio Q4 2023 73.7% Year 2023 76.2% Q4 2022 76.2% -2.5% Year 2022 77.5%% -1.3% AFFO* per Unit Q4 2023 $0.26 Year 2023 $1.01 Q4 2022 $0.25 +4.0% Year 2022 $1.01 —% AFFO* payout ratio Q4 2023 87.3% Year 2023 88.4% Q4 2022 88.1% -0.8% Year 2022 89.0% -0.6% The increase in FFO on a dollar basis in the quarter was driven primarily by higher property revenue from development activity, renewals, and new leasing. Reduced mortgage interest expense and revenue from management and development services further contributed to FFO growth. This was offset in part by an increase in interest expense on floating rate debt and senior unsecured notes and reduced property revenue related to dispositions in 2022. On an annual basis, FFO was positively impacted by increased income from the sale of land within equity-accounted joint ventures, reduced mortgage interest, growth in property revenue as discussed above, and higher property revenue from acquisitions, lease termination income, and modernizations. FFO growth was partially offset by higher general and administrative expenses resulting from employee transition costs in the second quarter of 2023, increased interest on floating rate debt and senior unsecured notes, and reduced property revenue related to dispositions in 2022. FFO* per Unit excluding employee transition costs of $7,386 in 2023 was $1.21, a 4.3% increase over 2022. Items affecting FFO, as stated above, drove the improvement in FFO payout ratio in both the quarter and the year compared to the same periods in 2022. The improvement was offset in part by higher distributions due to an increase in Units outstanding. AFFO on a dollar basis increased in the quarter primarily due to higher property revenue from development activity, renewals, and new leasing, reduced mortgage interest expense, and revenue from management and development services. This was partially offset by increased interest on floating rate debt and senior unsecured notes, and reduced property revenue related to dispositions in 2022. On an annual basis, AFFO growth was primarily impacted by increased income from the sale of land within equity-accounted joint ventures, reduced mortgage interest, growth in property revenue as discussed above, higher property revenue from acquisitions, lease termination income, and modernizations. This was offset in part by higher general and administrative expenses resulting from employee transition costs in the second quarter of 2023, and increased interest on floating rate debt and senior unsecured notes. Reduced property revenue related to dispositions in 2022 and an increase in the maintenance capital expenditure charge for 2023 further offset the increase in AFFO. AFFO* per Unit excluding employee transition costs of $7,386 in 2023 was $1.05, a 4.0% increase over 2022. Items affecting AFFO, as stated above, drove the decrease in AFFO payout ratio in both the quarter and the year compared to the same periods in 2022. The improvement was offset in part by higher distributions due to an increase in Units outstanding. * See “Non-GAAP Financial Measures”, starting on page 81, for more information on Crombie’s non-GAAP ﬁnancial measures and reconciliations thereof. 24 CRA028 4400112 -Crombie_Text Proof R1.indd 24 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS OPERATIONAL METRICS Renewals (GLA sq. ft.) Q4 2023 Year 2023 Rest of Canada, and 53,000 square feet in Major Markets. Renewal activity in the quarter consisted of 115,000 square feet in VECTOM, 78,000 square feet in 246,000 1,269,000 Q4 2022 374,000 -34.2% Year 2022 1,056,000 +20.2% Full year renewal activity consisted of 642,000 square feet in Rest of Canada, 324,000 square feet in VECTOM, and 303,000 square feet in Major Markets. At December 31, 2023, 612,000 square feet of Empire Company Limited (“Empire”) renewals were completed. Renewal spreads Q4 2023 8.4% Year 2023 5.9% Q4 2022 12.9% -4.5% Year 2022 7.0% -1.1% The primary driver of renewal growth in the quarter and year was retail renewals at an increase of 8.5% and 6.4% over expiring rental rates, respectively. Committed occupancy Year 2023 96.5% Year 2022 96.9% -0.4% Economic occupancy Year 2023 96.0% Year 2022 94.8% +1.2% Strong committed occupancy of 96.5% included 97,000 square feet of space committed in the quarter. Approximately 42,000 square feet of committed space was in VECTOM and Major Markets, including 31,000 square feet in Burlington, Ontario. The slight decrease in committed occupancy compared to December 31, 2022 is due to natural lease expiries and attrition including early lease terminations and tenants downsizing. Crombie’s economic occupancy was primarily influenced by new leases of 477,000 square feet outpacing lease expiries and other changes by 305,000 square feet. Notable new leases included Empire’s Voilà CFC 3 in Calgary, Alberta, and two new Dollarama leases totalling 20,000 square feet. This was partially offset by natural lease expiries and attrition including early lease terminations and tenants downsizing. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 25 25 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS FINANCIAL CONDITION METRICS Interest coverage ratio* Q4 2023 3.06x Year 2023 3.16x Q4 2022 3.26x -0.20x Year 2022 3.28x -0.12x Debt to gross fair value* (D/GFV) Q4 2023 43.0% Q4 2022 41.8% +1.2% Q4 2022 41.8% Q4 2021 45.3% -3.5% The reduction in interest coverage ratio for both the quarter and the year was primarily due to higher finance costs from operations resulting from higher interest rates and the issuance of senior unsecured notes, offset in part by improved adjusted EBITDA. The increase in adjusted EBITDA resulted primarily from higher property revenue from development activity, renewals, new leasing, and revenue from management and development services. On an annual basis, in addition to the factors noted above, higher general and administrative expenses due to employee transition costs in the second quarter of 2023, and increased finance costs in equity-accounted joint ventures further contributed to the reduction in the ratio. This was partly offset by increased income from the sale of land within equity-accounted joint ventures. Higher outstanding debt, primarily from the issuance of senior unsecured notes in the first quarter of 2023, drove the increase in D/GFV since the fourth quarter of 2022. This was offset in part by an increase in gross fair value of investment properties compared to the fourth quarter of 2022. Debt to trailing 12 months adjusted EBITDA* (D/EBITDA) Q4 2023 8.03x Q4 2022 8.02x +0.01x Available liquidity – unutilized credit facilities Q4 2023 $583,770 Q4 2022 $583,003 +0.1% The increase in D/EBITDA ratio compared to the same period in 2022 was due to higher outstanding debt compared to the fourth quarter of 2022, primarily from the issuance of senior unsecured notes in the first quarter of 2023. This was offset by an increase in trailing adjusted EBITDA. The increase in available liquidity resulted from lower outstanding/drawn balances of credit facilities offset by a reduction in unrestricted cash compared to the fourth quarter of 2022. * See “Non-GAAP Financial Measures”, starting on page 81, for more information on Crombie’s non-GAAP ﬁnancial measures and reconciliations thereof. 26 CRA028 4400112 -Crombie_Text Proof R1.indd 26 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS GLOSSARY OF TERMS Adjusted debt* Adjusted EBITDA* Represents debt, including Crombie’s share of debt held in equity-accounted joint ventures, excluding transaction costs, which Crombie believes is a more relevant presentation of indebtedness. Adjusted debt is a non-GAAP measure that is used in the calculation of our debt to gross fair value and debt to trailing 12 months adjusted EBITDA. Represents earnings before interest, taxes, depreciation, and amortization, excluding certain items such as amortization of tenant incentives, impairment of investment properties, gain (loss) on disposal of investment properties, and gain on distribution from equity-accounted investments. It includes Crombie’s share of revenue, operating expenses, and general and administrative expenses from equity-accounted joint ventures. Adjusted EBITDA is a non-GAAP measure that is used as an input in several of our debt metrics. Adjusted interest expense* Represents finance costs from operations, including Crombie’s share of interest from equity-accounted joint ventures, excluding amortization of deferred financing costs. Adjusted interest expense is a non-GAAP measure that is used in the calculation of our interest coverage and debt service coverage ratios. AFFO* AMR CFC CMA Adjusted funds from operations. Crombie follows the recommendations of REALPAC’s January 2022 guidance in determining AFFO. Annual minimum rent. This represents annualized fixed minimum rent payable by the tenant pursuant to the terms of the lease. Customer fulfillment centre. Census metropolitan area. Committed occupancy Represents current economic occupancy plus future occupancy of currently vacant space for which lease contracts are currently in place (excludes space held in equity-accounted joint ventures). D/GFV* Debt to gross fair value. Economic occupancy Represents space currently occupied (excludes space held in equity-accounted joint ventures). ESG Fair value FFO* GHG GLA GRESB Environmental, social, and governance. The amount at which an asset or liability could be exchanged between two knowledgeable, willing, and unconnected parties in an arm’s length transaction. Funds from operations. Crombie follows the recommendations of REALPAC’s January 2022 guidance in determining FFO. Greenhouse gas emissions. Gross leasable area (excludes space held in equity-accounted joint ventures unless noted as proportionately consolidated). An industry-led organization which collects, validates, scores, and independently benchmarks ESG data for financial markets. IFRS Accounting Standards International Financial Reporting Standards as issued by the International Accounting Standards Board. Joint operations Joint ventures Properties in which Crombie owns partial interests. These co-owned properties are subject to proportionate consolidation, the results of which are reflected in Crombie’s operating and financial results, based on the proportionate interest in such joint operations. Entities over which Crombie shares joint control with other parties and where the joint venture parties have rights to the net assets of the joint venture. Crombie accounts for investments in joint ventures using the equity method. Lease termination income Revenue derived from the early termination of a lease. Lease termination occurs when a tenant desires to end occupancy prior to the lease end date. Major Markets Modernization A Crombie-specific definition that includes Abbotsford-Mission, Barrie, Chilliwack, Halifax, Hamilton, Kitchener-Cambridge-Waterloo, Oshawa, Quebec City, Regina, Saskatoon, Victoria, and Winnipeg, as defined by Statistics Canada 2021 boundaries for census metropolitan areas and census agglomeration. A capital investment to modernize/renovate Crombie-owned grocery store properties in exchange for a defined return and potential extended lease term. NAV* Net asset value. Net property income* Property revenue less property operating expenses. Net property income excludes revenue from management and development services and certain expenses such as interest expense and indirect operating expenses. Property cash NOI* Property NOI on a cash basis, excluding non-cash straight-line rent recognition and non-cash tenant incentive amortization. Proportionate ownership Represents Crombie’s proportionate interest in the financial position and results of operations of its entire portfolio, taking into account the difference in accounting for joint ventures using proportionate consolidation versus equity accounting as required under IFRS Accounting Standards. REALPAC Real Property Association of Canada. Rest of Canada (RoC) A Crombie-specific definition that includes all remaining geographies outside of VECTOM and Major Markets. Retail Includes our substantial retail portfolio, including certain additional properties that comprise both retail and office space. These properties have been consistently included in our retail category. Retail-related industrial Retail-related industrial includes retail distribution centres, customer fulfillment centres (“CFC”), and spokes. Revenue from management and development services Same-asset properties* Spokes Sq. ft. Represents revenue from co-owners, related parties, and third parties for development, construction, and property management services. Properties owned and operated throughout the current and comparative reporting periods, excluding any property that was designated for redevelopment or was subject to disposition of a portion of its GLA during either the current or comparative period. Spokes are cross-dock distribution facilities developed to support CFCs, the hubs of Empire’s hub-and-spoke network, by expediting the movement of merchandise to customers with minimal storage time. Square footage. Unencumbered assets Represents assets that have not been pledged as security or collateral under a secured credit agreement or mortgage. VECTOM WATM Vancouver, Edmonton, Calgary, Toronto, Ottawa-Gatineau, and Montreal, as defined by Statistics Canada 2021 boundaries for census metropolitan areas and census agglomeration. Weighted average term to maturity. Zoning applications submitted A formal municipal rezoning application has been submitted for the purpose of achieving a new land use (i.e. residential, mixed-use) and generally to obtain higher levels of density and building height. * See “Non-GAAP Financial Measures”, starting on page 81, for more information on Crombie’s non-GAAP ﬁnancial measures and reconciliations thereof. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 27 27 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS PORTFOLIO REVIEW TOTAL PORTFOLIO REVIEW INCLUSIVE OF JOINT VENTURES Crombie holds partial ownership interests in eight joint ventures, four of which currently hold property. These joint ventures are all subject to equity accounting. The results of these equity-accounted investments are not included in certain financial metrics, such as net property income*, property cash NOI*, or same-asset property cash NOI*, unless it is specifically indicated that such metrics are presented on a proportionate consolidation basis. Below are select operating metrics for the full portfolio presented on a proportionate consolidation basis. MARKET CLASS Crombie’s portfolio of GLA and fair value, inclusive of joint ventures at Crombie’s share, consisted of the following as at December 31, 2023: PORTFOLIO GLA BY MARKET CLASS (SQ. FT.) PORTFOLIO FAIR VALUE BY MARKET CLASS (%) as at December 31, 2023 as at December 31, 2023 41.1% 33.7% 44.6% 29.2% 25.2% 26.2% VECTOM Major Markets Rest of Canada VECTOM Major Markets Rest of Canada The table below provides details of the average capitalization rate (weighted by stabilized trailing NOI including joint ventures) by market class used by Crombie in assessing fair value. For an explanation of the determination of capitalization rates, see the “Other Disclosures” section of this MD&A, under “Investment Property Valuation” in the “Use of Estimates and Judgments” section, and the “Risk Management” section of this MD&A, under “Capitalization Rate Risk” in the “Risk Factors Related to the Business of Crombie” section. VECTOM Major Markets Rest of Canada Weighted average portfolio capitalization rate Crombie’s weighted average capitalization rate has increased compared to December 31, 2022. Since December 31, 2022, market capitalization rates in general have expanded despite solid fundamentals. The increase in capitalization rates is largely the result of tight financial conditions, including higher borrowing costs and uncertainty around monetary policy. December 31, 2023 December 31, 2022 5.10% 6.16% 6.93% 5.92% 4.75% 6.18% 6.94% 5.74% 28 CRA028 4400112 -Crombie_Text Proof R1.indd 28 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS VECTOM Major Markets Rest of Canada Total GLA (sq. ft.) December 31, 2023 December 31, 2022 6,480,000 4,843,000 7,888,000 6,470,000 4,810,000 7,695,000 19,211,000 18,975,000 When compared to December 31, 2022, Rest of Canada GLA increased by 193,000 square feet largely due to acquisition activity in the first two quarters of 2023 and non-major development. Major Markets and VECTOM increased by 33,000 square feet and 10,000 square feet, respectively, primarily driven by non-major development activity. ASSET TYPE Crombie’s portfolio of GLA and fair value, inclusive of joint ventures at Crombie’s share, consisted of the following as at December 31, 2023: PORTFOLIO GLA BY ASSET TYPE (SQ. FT.) PORTFOLIO FAIR VALUE BY ASSET TYPE (%) as at December 31, 2023 as at December 31, 2023 2.7% 12.7% 5.0% 79.6% 2.5% 8.4% 9.4% 2.8% 76.9% Retail Office Retail-related industrial Mixed-use residential Retail Office Retail-related industrial Mixed-use residential Other1 (1) Other includes properties under development (“PUD”) and land. Retail properties represent 79.6% of Crombie’s GLA at December 31, 2023, which remained constant from December 31, 2022. At December 31, 2023, retail properties represent 76.9% of Crombie’s fair value compared to 77.2% at December 31, 2022. Retail Office Retail-related industrial Mixed-use residential Total GLA (sq. ft.) December 31, 2023 December 31, 2022 15,301,000 15,093,000 962,000 2,434,000 514,000 954,000 2,414,000 514,000 19,211,000 18,975,000 When compared to December 31, 2022, retail increased 208,000 square feet largely due to acquisition activity in the first two quarters of 2023 and non-major development activity. Retail-related industrial increased 20,000 square feet due to the substantial completion of a warehouse in Burlington, Ontario in the third quarter of 2023. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 29 29 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS PORTFOLIO REVIEW – EXCLUDING JOINT VENTURES As at December 31, 2023, Crombie’s property portfolio consisted of full ownership interests in 233 investment properties, and partial ownership interests in 61 investment properties held in joint operations. In addition to investment properties, Crombie also has full ownership interests in four properties under development (“PUD”), and partial ownership in two properties under development held in joint operations. Together, Crombie’s share of these 294 investment properties contains approximately 18.7 million square feet of GLA in all 10 provinces. Partial ownership interests are reflected in our financial statements, based on our proportionate ownership in such joint operations. Below are select operating metrics for the full portfolio presented without inclusion of Crombie’s partial ownership interests in eight joint ventures, four of which currently hold property. MARKET CLASS Crombie’s portfolio of GLA and fair value consisted of the following as at December 31, 2023: PORTFOLIO GLA BY MARKET CLASS (SQ. FT.) PORTFOLIO FAIR VALUE BY MARKET CLASS (%) as at December 31, 2023 as at December 31, 2023 42.2% 31.9% 32.0% 39.5% 25.9% 28.5% VECTOM Major Markets Rest of Canada VECTOM Major Markets Rest of Canada The table below provides details of the average capitalization rate (weighted by stabilized trailing NOI) by market class used by Crombie in assessing fair value. For an explanation of the determination of capitalization rates, see the “Other Disclosures” section of this MD&A, under “Investment Property Valuation” in the “Use of Estimates and Judgments” section, and the “Risk Management” section of this MD&A, under “Capitalization Rate Risk” in the “Risk Factors Related to the Business of Crombie” section. VECTOM Major Markets Rest of Canada Weighted average portfolio capitalization rate Crombie’s weighted average capitalization rate has increased compared to December 31, 2022. Since December 31, 2022, market capitalization rates in general have expanded despite solid fundamentals. The increase in capitalization rates is largely the result of tight financial conditions, including higher borrowing costs and uncertainty around monetary policy. December 31, 2023 December 31, 2022 5.44% 6.16% 6.93% 6.12% 5.03% 6.18% 6.94% 5.94% 30 CRA028 4400112 -Crombie_Text Proof R1.indd 30 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Crombie’s portfolio diversification by market class of its investment properties as at December 31, 2023 and 2022 is as follows: GLA (sq. ft.) January 1, 2023 Net Acquisitions VECTOM 5,956,000 Major Markets 4,794,000 — — Rest of Canada 7,695,000 139,000 Other1 10,000 33,000 54,000 December 31, 2023 5,966,000 4,827,000 7,888,000 Total 18,445,000 139,000 97,000 18,681,000 GLA (sq. ft.) January 1, 2022 Net Acquisitions Other1 December 31, 2022 VECTOM 5,418,000 267,000 Major Markets 4,723,000 (157,000) 271,000 228,000 5,956,000 4,794,000 Rest of Canada 7,720,000 140,000 (165,000) 7,695,000 Total 17,861,000 250,000 334,000 18,445,000 Number of Investment Properties 88 64 142 294 Number of Investment Properties 88 63 138 289 % of AMR 35.1% 26.7% 38.2% % NOI2 33.8% 27.8% 38.4% 100.0% 100.0% Economic Occupancy Committed Occupancy 99.3% 96.2% 93.3% 96.0% 99.4% 97.0% 94.0% 96.5% % of AMR 34.0% 27.2% 38.8% % NOI2 33.5% 28.1% 38.4% 100.0% 100.0% Economic Occupancy Committed Occupancy 94.2% 96.1% 94.4% 94.8% 99.3% 97.5% 94.7% 96.9% (1) Changes in GLA include increases for completed developments and additions/expansions to GLA on existing properties and reclassiﬁcations within market class. (2) Property cash NOI for the year ended December 31. For the year ended December 31, 2023, three investment properties, at full interest totalling 139,000 square feet, were acquired in the Rest of Canada. Additionally, retail development expansions occurred at six properties adding 54,000 square feet of GLA to Rest of Canada, 5,000 square feet of GLA to VECTOM, and 4,000 square feet of GLA to Major Markets. Crombie completed the development of one retail-related industrial asset totalling 20,000 square feet in Major Markets. These additions to GLA are included in “Other” changes. When compared to December 31, 2022, the percentage of annual minimum rent (“AMR”) generated from VECTOM increased by 110 basis points, while Major Markets AMR decreased by 50 basis points and Rest of Canada AMR decreased by 60 basis points. The increase in VECTOM and the corresponding decrease in Major Markets and Rest of Canada is primarily due to new leasing and development activity over the last 12 months, including Voilà CFC 3 in Calgary, Alberta. Please see the “Operational Performance” section of this MD&A, under “Occupancy and Leasing Activity” for additional information on economic and committed occupancy. ASSET TYPE Retail properties represent 81.8% of Crombie’s GLA and 83.9% of fair value at December 31, 2023, compared to 81.7% of GLA and 84.0% of fair value at December 31, 2022. PORTFOLIO GLA BY ASSET TYPE (SQ. FT.) PORTFOLIO FAIR VALUE BY ASSET TYPE (%) as at December 31, 2023 as at December 31, 2023 13.0% 81.8% 5.2% 2.7% 10.3% 3.1% 83.9% Retail Office Retail-related industrial Retail Office Retail-related industrial Other1 (1) Other includes properties under development (“PUD”) and land. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 31 31 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Crombie’s portfolio diversification of its investment properties by asset type, as at December 31, 2023 and 2022, is as follows: GLA (sq. ft.) January 1, 2023 Net Acquisitions Other1 December 31, 2023 Number of Investment Properties Retail Office Retail-related industrial 15,077,000 139,000 69,000 15,285,000 282 954,000 2,414,000 — — 8,000 962,000 20,000 2,434,000 5 7 % of AMR % of NOI2 87.4% 3.8% 88.3% 4.0% 8.8% 7.7% Total 18,445,000 139,000 97,000 18,681,000 294 100.0% 100.0% GLA (sq. ft.) January 1, 2022 Net Acquisitions Other1 December 31, 2022 Number of Investment Properties 15,052,000 15,000 10,000 15,077,000 278 954,000 — — 954,000 % of AMR % of NOI2 89.5% 3.9% 89.5% 3.9% 6.6% 6.6% 5 6 1,855,000 17,861,000 235,000 250,000 324,000 2,414,000 334,000 18,445,000 289 100.0% 100.0% Retail Office Retail-related industrial Total Economic Occupancy Committed Occupancy 95.6% 90.9% 100.0% 96.0% 96.3% 91.0% 100.0% 96.5% Economic Occupancy Committed Occupancy 96.1% 92.1% 87.4% 94.8% 96.7% 92.5% 100.0% 96.9% (1) Changes in GLA include increases for completed developments and additions/expansions to GLA on existing properties and reclassiﬁcations within asset types. (2) Property cash NOI for the year ended December 31. For the year ended December 31, 2023, retail GLA increased by 139,000 square feet due to the acquisition of three investment properties at full interest. Crombie completed retail development expansions at grocery-anchored properties in Riverview and Moncton, both in New Brunswick, Timberlea, Nova Scotia, Mount Forest, Ontario, and Chestermere, Alberta, totalling 56,000 square feet. Crombie also completed retail development at a non-grocery-anchored site in Summerside, Prince Edward Island, totalling 7,000 square feet. Additionally, one retail-related industrial asset was completed in the third quarter of 2023 in Burlington, Ontario, totalling 20,000 square feet. These additions to GLA are included in “Other” changes. Crombie continues to enhance its portfolio asset mix with a balance of grocery-anchored retail and retail-related industrial, as well as large-scale mixed-use residential properties, creating long-term value for local communities and Unitholders. Grocery-anchored retail will continue to grow; however, as a result of our development strategy, we expect our residential and retail-related industrial asset types to make up a greater percentage of our total portfolio in the future. Please see the “Operational Performance” section of this MD&A, under “Occupancy and Leasing Activity” for additional information on economic and committed occupancy. As equity-accounted joint ventures are not reflected in this information, the applicable residential square footage, occupancy, and asset mix details of these joint ventures are reflected in the “Total Portfolio Review Inclusive of Joint Ventures” section of this MD&A on page 28 and the “Joint Ventures” section of the MD&A on page 73. NON-MAJOR DEVELOPMENT – COMPLETED Property development is a strategic priority for Crombie and included in that is non-major development projects with expected costs of less than $50,000. Non-major developments are accretive with shorter project durations and less overall risk than our major development projects. For the year ended December 31, 2023, Crombie added 83,000 square feet of GLA to its portfolio. Three months ended Property Name Location Market Class March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Total GLA Tenants Findlay Boulevard Riverview, NB Rest of Canada Elmwood Drive Moncton, NB Rest of Canada 10,000 12,000 Chestermere Station Way Chestermere, AB VECTOM Granville Street Summerside, PE Rest of Canada Marketway Lane Timberlea, NS Major Markets Harvester Road Burlington, ON Major Markets Mount Forest Mount Forest, ON Rest of Canada — — — — — — — 5,000 5,000 — — — — — — 2,000 4,000 20,000 — Total 22,000 10,000 26,000 — — — — — — 25,000 25,000 10,000 Dollarama 12,000 A&W and Pet Valu 5,000 7,000 McDonald’s Bank of Nova Scotia and Dairy Queen 4,000 Pet Valu 20,000 Empire 25,000 Empire 83,000 32 CRA028 4400112 -Crombie_Text Proof R1.indd 32 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS TENANT PROFILE We build and own a high-quality, resilient, and diversified portfolio, backed primarily by grocery tenants, which delivers consistent long- term earnings and cash flow stability. As at December 31, 2023, 81% of our AMR was generated from grocery-anchored properties, inclusive of retail-related industrial, compared to 80% at December 31, 2022. The increase is primarily due to the development of retail-related industrial assets, acquisition of grocery-anchored assets, contractual rent step- ups, and new leasing. These necessity-based tenants have stable underlying income and cash flows, are more resilient to changes in economic cycles and evolving retail trends, and form a solid foundation for organic same-asset property cash NOI* and AFFO* growth. TENANTS BY INDUSTRY (% OF AMR) 1.3% 1.3% 1.4% 1.4% 1.6% 2.6% 3.6% 5.5% 81.3% Necessity-based Retailers1 Office & Hotel Tenants Apparel & Accessories Entertainment, Sporting Goods, etc. Restaurants — Full Service Home Improvement, etc. Value-Focused Retailers Fitness Facilities & Supplement Stores Other (1) Necessity-based retailers include tenants that provide essential products and services, and predominantly fall into the following categories: grocery, pharmacy, liquor, dollar store, cannabis, convenience store, gasoline, pet supplies, grocery distribution centres, restaurants QSR, medical, professional and personal services, bank and ﬁnancial services. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 33 33 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS The following table illustrates the 20 largest tenants in Crombie’s portfolio of investment properties, as measured by their percentage contribution to total AMR, as at December 31, 2023. Tenant Empire Company Limited1 Shoppers Drug Mart Dollarama Province of Nova Scotia Bank of Nova Scotia Shell Canada Cineplex GoodLife Fitness Canadian Imperial Bank of Commerce Government of Canada Canadian Tire Corporation Restaurant Brands International Royal Bank of Canada Pet Valu SAQ/Province of Quebec Halifax Regional Municipality Metro Giant Tiger Toronto Dominion Bank BC Liquor/Province of British Columbia Total % of AMR 58.5% GLA (sq. ft.) 11,214,000 2.4% 1.8% 1.5% 1.1% 1.1% 1.0% 0.9% 0.9% 0.9% 0.8% 0.7% 0.5% 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 228,000 386,000 355,000 173,000 19,000 207,000 190,000 132,000 130,000 158,000 66,000 49,000 73,000 65,000 127,000 88,000 188,000 45,000 40,000 Weighted Average Remaining Lease Term Morningstar DBRS Credit Rating 11.3 years 5.2 years 5.2 years 6.4 years 2.5 years 12.4 years 7.2 years 4.7 years 12.9 years 4.0 years 3.1 years 4.6 years 3.3 years 4.8 years 5.7 years 7.0 years 5.4 years 3.0 years 2.8 years 1.9 years BBB BBB(high) BBB A(high) AA AA(low) — — AA AAA BBB — AA(high) — AA(low) — BBB(high) — AA(high) AA(high) 75.3% 13,933,000 10.2 years (1) Includes Sobeys and all other subsidiaries of Empire Company Limited. Other than Empire, which accounts for 58.5% of AMR, and Shoppers Drug Mart, which accounts for 2.4% of AMR, no other tenant accounts for more than 1.8% of Crombie’s AMR. Empire’s percent of AMR increased by 50 basis points compared to December 31, 2022 as a result of the acquisition of Empire properties over the last 12 months, the development of retail-related industrial assets, modernizations, renewals, and contractual rent step-ups. This is partially offset by Empire’s assignment to Crombie of Shell Canada retail fuel site subleases in Western Canada. For more information regarding this assignment, see the “Other Disclosures” section of this MD&A, starting on page 77. For the year ended December 31, 2023, Empire represents 54.1% of total property revenue. Total property revenue includes minimum rent, as well as operating and realty tax cost recovery income and percentage rent. These additional amounts can vary by property type, specific tenant leases, and where tenants may directly incur and pay operating costs. The weighted average remaining term of all Crombie leases is approximately 8.8 years, which decreased 0.2 years as compared to December 31, 2022. This remaining lease term is influenced by the weighted average Empire remaining lease term of 11.3 years, which decreased 0.3 years from December 31, 2022. 34 CRA028 4400112 -Crombie_Text Proof R1.indd 34 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS SAME-ASSET PROPERTIES Crombie measures certain performance and operating metrics on a same-asset basis to evaluate the period-over-period performance of those properties owned and operated by Crombie. “Same-asset” refers to those properties that were owned and operated by Crombie for the current and comparative reporting periods. Properties that will be undergoing a redevelopment in a future period and those for which planning activities are underway are also in this category until such development activities commence and/or tenant leasing/renewal activity is suspended. Same-asset property cash NOI* reflects Crombie’s proportionate ownership of jointly-operated properties (and excludes any properties held in joint ventures). Crombie-owned Properties Investment Properties (“IP”) Properties Under Development (“PUD”) Same-asset properties Non same-asset properties: Acquisitions – 2023 Other2 Active and completed major developments3 Total Properties 287 3 3 1 7 294 — — 5 1 6 6 Sub-total 287 3 8 2 13 300 Properties in Joint Ventures (“JV”) 2 — — 2 2 4 (1) Same-asset metrics throughout the MD&A do not include properties held in joint ventures. (2) Other includes investment properties that have been designated for repositioning, land parcels included in PUD, or non-active major developments within a joint venture. (3) Active and completed major developments include: Voilà CFC 3 (IP) The Marlstone (PUD) Le Duke (JV) Bronte Village (JV) The following table illustrates the movement in Crombie’s same-asset properties as at December 31, 2023. Same-asset properties December 31, 2022 Transfers from acquisitions2 Transfers to/from other non same-asset properties Transfers to/from active and completed major developments Total same-asset properties December 31, 2023 (1) Same-asset metrics throughout the MD&A do not include properties held in joint ventures. (2) Acquisitions transferred to same-asset were acquired in 2022 and have a full 12 months of comparative results. Investment Properties (“IP”) Properties in Joint Ventures (“JV”) 274 10 2 1 287 1 — 1 — 2 Total1 289 3 8 4 15 304 Total1 275 10 3 1 289 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 35 35 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS STRATEGIC ACQUISITIONS AND DISPOSITIONS As at December 31, 2023, GLA, at Crombie’s interest, of its investment properties was 18.7 million square feet compared to 18.4 million square feet as at December 31, 2022. The net increase in GLA is due to 139,000 square feet of acquisitions, and 97,000 square feet of other changes throughout the portfolio, primarily from non-major development activity. Strategic Acquisitions Through strategic and selective acquisitions of high-quality, primarily grocery-anchored assets, Crombie intends to continue to enhance overall portfolio quality. Crombie’s acquisitions are intended to add strategic value to the portfolio, while leading to strong AFFO* accretion and NAV* growth. During the year ended December 31, 2023, Crombie completed acquisitions of three income-producing properties, for a total aggregate purchase price of $26,482 excluding transaction and closing costs. All were acquired from Empire, our strategic partner, adding 139,000 square feet, located in Rest of Canada. Date Property Location Vendor Strategy 2023 First Quarter January 19, 2023 February 27, Main Street North Mount Forest, ON Related Party producing Income- Income- 2023 Port O’Call Red Deer, AB Related Party producing 2023 Second Quarter May 1, 2023 West Thunder Bay, ON Related Party producing Arthur Street Income- Total acquisitions for the year ended December 31, 2023 Total acquisitions for the year ended December 31, 20222 Ownership Number of Investment Properties Interest Sq. ft. Price1 1 1 2 1 3 11 100% 21,000 $ 2,122 100% 60,000 81,000 14,600 16,722 100% 58,000 9,760 139,000 589,000 $ $ 26,482 107,761 (1) Prices are stated before transaction and closing costs. (2) Includes acquisition of a parcel of retail land developed by Crombie and acquisition of the remaining 50% interest in a pre-existing retail-related industrial property. Strategic Dispositions From time to time, in line with Crombie’s strategy on capital recycling, Crombie will participate in strategic dispositions. Proceeds from dispositions can be used for debt reduction, to fund development projects, and to seize other higher-value opportunities. Some of these opportunities include supporting Empire’s growth and acceleration of e-commerce, and completion of major mixed-use developments. For the year ended December 31, 2023, Crombie did not dispose of any assets. Date Property Location Total dispositions for the year ended December 31, 2023 Total dispositions for the year ended December 31, 20221 Number of Investment Properties — 8 Interest — — Ownership Sq. ft. — 339,000 $ $ Net Property Income* — 6,1762 $ $ Price — 175,794 (1) Includes a parcel of land adjacent to existing retail properties disposed of to a joint venture. (2) Reﬂects actual net property income* earned on 2022 dispositions for the full year ended December 31, 2021. Total actual net property income* for the year ended December 31, 2022 for the disposed properties prior to disposition was $4,470, as reﬂected in our consolidated results. 36 CRA028 4400112 -Crombie_Text Proof R1.indd 36 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS OPERATIONAL PERFORMANCE REVIEW OCCUPANCY AND LEASING ACTIVITY The portfolio occupancy and committed space activity by market class and asset type for the year ended December 31, 2023 was as follows: Occupied Space (sq. ft.) January 1, 2023 Net Acquisitions New Leases1 VECTOM 5,611,000 Major Markets 4,606,000 — — Rest of Canada 7,267,000 139,000 320,000 111,000 46,000 Lease Expiries (2,000) (21,000) (33,000) Other2 December 31, 2023 Economic Occupancy Committed Space (sq. ft.)3 Total Committed Space (sq. ft.) Committed Occupancy (5,000) 5,924,000 (51,000) 4,645,000 (60,000) 7,359,000 99.3% 96.2% 93.3% 96.0% 4,000 5,928,000 38,000 55,000 4,683,000 7,414,000 97,000 18,025,000 99.4% 97.0% 94.0% 96.5% Total 17,484,000 139,000 477,000 (56,000) (116,000) 17,928,000 January 1, 2023 Net Acquisitions New Leases1 Occupied Space (sq. ft.) Lease Expiries (40,000) (16,000) Other2 December 31, 2023 Economic Occupancy Committed Space (sq. ft.)3 Total Committed Space (sq. ft.) Committed Occupancy Retail Office Retail-related industrial 14,495,000 139,000 879,000 2,110,000 — — 103,000 50,000 (78,000) 14,619,000 (38,000) 875,000 324,000 — — 2,434,000 Total 17,484,000 139,000 477,000 (56,000) (116,000) 17,928,000 95.6% 90.9% 100.0% 96.0% 96,000 14,715,000 1,000 876,000 — 2,434,000 97,000 18,025,000 96.3% 91.0% 100.0% 96.5% (1) New leases include new leases and expansions at existing properties. (2) Other includes amendments to existing leases; lease terminations and surrenders; bankruptcies; space certiﬁcations; and reclassiﬁcations within asset types. (3) Committed space represents lease contracts for future occupancy of currently vacant space. Management believes such reporting, along with reported lease maturities, provides more balanced reporting of overall vacant space. Committed occupancy has decreased from 96.9% at December 31, 2022 to 96.5% at December 31, 2023. For the year ended December 31, 2023, Crombie had an increase from acquisition activity of 139,000 square feet and had new leases outpace lease expiries by 421,000 square feet, primarily due to Voilà CFC 3 entering economic occupancy. Committed space in our retail properties portfolio was 96.3% at December 31, 2023, a decrease from 96.7% at December 31, 2022, primarily due to natural lease expiries and attrition including early lease terminations and tenants downsizing. Committed space in office properties was 91.0% at December 31, 2023, which decreased from 92.5% at December 31, 2022. This was primarily due to natural lease expiries and attrition including a tenant downsizing at our office properties. Committed space in retail-related industrial properties of 100.0% at December 31, 2023 remained constant from 100.0% at December 31, 2022. The portfolio average AMR per occupied square foot for our income-producing properties was $17.58 as at December 31, 2023, an increase of 3.0%, compared to $17.07 as at December 31, 2022. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 37 37 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS NEW LEASING ACTIVITY NEW LEASING BY MARKET CLASS (SQ. FT.) NEW LEASING BY ASSET TYPE (SQ. FT.) as at December 31, 2023 9.6% 23.3% 67.1% as at December 31, 2023 21.6% 67.9% 10.5% VECTOM Major Markets Rest of Canada Retail Office Retail-related industrial New leases increased occupancy by 477,000 square feet at December 31, 2023, at an average first year rate of $22.71 per square foot. For the year ended December 31, 2023, 90.4% of new leases, equivalent to 431,000 square feet, were completed in VECTOM and Major Markets. New leases of 46,000 square feet occurred in Rest of Canada markets during the year ended December 31, 2023. At December 31, 2023, 97,000 square feet of GLA at an average first year rate of $23.07 per square foot was committed, with tenants expected to take possession throughout 2024. VECTOM and Major Markets represent 42,000 square feet of committed space, including 31,000 square feet in Burlington, Ontario. RENEWAL ACTIVITY RENEWAL BY MARKET CLASS (SQ. FT.) as at December 31, 2023 RENEWAL BY ASSET TYPE (SQ. FT.) as at December 31, 2023 ) s 0 0 0 ’ ( . t f . q S 700 600 500 400 300 200 100 0 VECTOM Major Markets Rest of Canada ) s 0 0 0 ’ ( . t f . q S 1,200 1,000 800 600 400 200 0 Retail Office 2023 renewals Early renewals completed 2023 renewals Early renewals completed For the three months and year ended December 31, 2023, renewal activity for our portfolio was as follows: 2023 Renewals Future Year Renewals Total Three months ended December 31, 2023 Year ended December 31, 2023 Square Feet 73,000 173,000 246,000 Rate PSF $22.50 $18.46 $19.67 Growth % Square Feet 8.5% 8.3% 8.4% 582,000 687,000 1,269,000 Rate PSF $18.14 $18.14 $18.14 Growth % 5.9% 5.9% 5.9% Crombie’s renewal activity for the three months ended December 31, 2023 included retail renewals of 220,000 square feet with an increase of 8.5% over expiring rental rates. Renewal spreads are based on the first year rate and do not factor in any additional rent step-ups that may take place throughout the lease term. When comparing the expiring rental rates to the weighted average rental rate for the renewal term, Crombie achieved an increase of 8.9% for the three months ended December 31, 2023. 38 CRA028 4400112 -Crombie_Text Proof R1.indd 38 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended December 31, 2023, Crombie renewed 1,117,000 square feet of retail renewals with an increase of 6.4% over expiring rental rates. When comparing the expiring rental rates to the weighted average rental rate for the renewal term, Crombie achieved an increase of 7.3% for the year ended December 31, 2023. Major Markets saw renewals of 303,000 square feet, with an increase of 5.1% over expiring rental rates or an average first year rate of $18.09 per square foot. The remaining 642,000 square feet of renewals was in Rest of Canada at an average first year rate of $15.09, with an increase of 6.8% over expiring rental rates. Total renewal growth was positively impacted by the 324,000 square feet of renewals in VECTOM at an average first year rate of $24.22 per square foot, an increase of 5.4% over expiring rental rates. Crombie proactively manages its lease maturities, taking advantage of opportunities to renew tenants prior to expiration. During the year ended December 31, 2023, approximately 687,000 square feet of renewals related to future year expiries were completed. LEASE MATURITIES The following table sets out, as at December 31, 2023, the total number of leases maturing during the periods indicated, the renewal area, the percentage of the total GLA of the properties represented by such maturities, and the estimated average AMR per square foot at the time of expiry. Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Thereafter Total Number of Leases1 Renewal Area (sq. ft.) % of Total GLA 286 182 179 177 135 113 49 89 81 97 226 1,614 1,108,000 1,150,000 998,000 1,362,000 968,000 1,233,000 593,000 1,055,000 551,000 1,936,000 7,071,000 18,025,000 5.9% 6.2% 5.3% 7.3% 5.2% 6.6% 3.2% 5.6% 3.0% 10.4% 37.8% 96.5% Average AMR per sq. ft. at Expiry $ 16.39 15.99 17.45 18.53 18.77 18.80 16.83 19.76 21.36 24.11 20.18 $ 19.56 (1) Assuming tenants do not hold over on a month-to-month basis or exercise renewal options or termination rights. The following table sets out, as at December 31, 2023, the number of Empire leases maturing during the periods indicated, the renewal area, the percentage of the total GLA of the properties represented by such maturities, and the estimated average AMR per square foot at the time of expiry. Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Thereafter Total2 Number of Leases1 Renewal Area (sq. ft.) % of Total GLA 11 7 14 17 11 17 7 13 4 40 159 300 100,000 255,000 255,000 537,000 285,000 574,000 269,000 463,000 145,000 1,610,000 6,777,000 11,270,000 0.5% 1.4% 1.4% 2.9% 1.5% 3.1% 1.4% 2.5% 0.8% 8.6% 36.2% 60.3% Average AMR per sq. ft. at Expiry $ 10.71 13.34 14.05 13.41 15.67 15.71 13.68 16.67 18.91 22.77 19.81 $ 18.97 (1) Assuming tenants do not hold over on a month-to-month basis or exercise renewal options or termination rights. (2) Two Empire leases, totalling approximately 56,000 square feet, are included in committed occupancy. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 39 39 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS FINANCIAL PERFORMANCE REVIEW Property revenue $ 114,299 $ 110,061 $ 4,238 $ 440,939 $ 428,079 $ 12,860 $ 408,892 Three months ended December 31, Year ended December 31, 2023 20221 Variance 2023 20221 Variance 2021 Revenue from management and development services Property operating expenses Gain on disposal of investment properties Impairment of investment properties Depreciation and amortization General and administrative expenses Finance costs – operations Gain on distribution from equity-accounted investments Income (loss) from equity-accounted investments Operating income before taxes Taxes – current Operating income attributable to Unitholders Distributions to Unitholders Change in fair value of ﬁnancial instruments 1,087 (38,430) — — (20,087) (5,749) (23,839) — (980) 26,301 (6) 26,295 (40,237) (1,400) Increase (decrease) in net assets attributable to Unitholders $ (15,342) Operating income attributable to Unitholders per Unit, basic Basic weighted average Units outstanding (in 000’s) Distributions per Unit to Unitholders Other Non-GAAP Performance Metrics Same-asset property cash NOI* FFO* FFO* per Unit – basic FFO* payout ratio (%) AFFO* AFFO* per Unit – basic AFFO* payout ratio (%) $ $ $ $ $ $ $ 0.15 180,728 0.22 77,519 54,590 0.30 73.7% 46,111 0.26 87.3% $ $ $ $ $ $ $ $ 0.49 178,095 0.22 74,567 52,104 0.29 76.2% 45,061 0.25 88.1% $ $ $ $ $ $ $ 3,430 — (153,527) (146,261) — (39,245) 62,584 — (18,991) (6,063) (20,623) — (1) 1,087 815 (62,584) — (1,096) 314 (3,216) — (979) 5882 — (78,835) (27,644) (86,268) — 144 3,430 (7,266) (80,216) 10,400 1,001 (8,097) (3,254) — (125,861) 56,525 (2,539) (75,763) (25,484) (92,788) 80,804 (10,400) (79,836) (19,547) (83,014) 2,933 (2,933) 15,525 (4,954) 5,098 (2,941) 87,722 (61,421) 98,827 167,804 (68,977) 155,566 (4) 87,718 (39,697) (1,704) (2) (6) (4) (2) (165) (61,423) 98,821 167,800 (68,979) 155,401 (540) 304 (160,010) (157,840) 1,911 2,323 (2,170) (412) (144,559) (2,972) 46,317 $ (61,659) $ (59,278) 12,283 $ (71,561) (0.34) $ 0.55 2,633 179,684 — $ 0.89 $ $ $ 0.95 176,325 0.89 $ $ $ 7,870 0.96 162,130 0.89 (0.40) 3,359 — 2,952 2,486 0.01 (2.5)% 1,050 0.01 (0.8)% $ 287,010 $ 278,679 $ 210,003 $ 203,737 $ $ 1.17 76.2% 1.16 77.5% $ 181,100 $ 177,297 $ $ 1.01 88.4% 1.01 89.0% 8,331 6,266 0.01 (1.3)% $ 267,240 $ 185,032 $ 1.14 78.1% 3,803 $ 157,532 — $ (0.6)% 0.97 91.8% $ $ $ $ $ $ $ (1) Consistent with the current year presentation, property revenue and property operating expenses for the three months and year ended December 31, 2022 have been increased by $2,122 and $8,488, respectively, to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. (2) In the third quarter of 2022, Crombie sold land to a joint venture that resulted in a deferred gain. The deferred gain was realized in 2023 upon sale of that land to a third party. 40 CRA028 4400112 -Crombie_Text Proof R1.indd 40 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS OPERATING INCOME ATTRIBUTABLE TO UNITHOLDERS For the three months ended: Operating income attributable to Unitholders decreased by $61,423, or 70.0%, primarily due to a gain on disposal of investment properties of $62,584 in the fourth quarter of 2022. Higher interest rates combined with higher average loan balances compared to the same period in 2022 resulted in increased interest on floating rate debt of $2,421, and interest on senior unsecured notes increased by $1,800 from the issuance of Series K notes in the first quarter of 2023 and the redemption of Series D notes in the fourth quarter of 2022. Additionally, depreciation and amortization increased by $1,096 due to completed developments, acquisitions, and accelerated depreciation on properties scheduled for redevelopment. Property revenue was reduced by $1,031 related to dispositions in 2022. The decrease in operating income was offset in part by growth in property revenue of $2,257 from new developments, $1,597 from renewals and new leasing, and reduced mortgage interest expense of $1,208 from mortgage repayments. The decrease in operating income was further offset by revenue from management and development services of $1,087. For the year ended: Operating income attributable to Unitholders decreased by $68,979, or 41.1%, on an annual basis primarily due to lower gain on disposal of investment properties of $80,216, higher general and administrative expenses resulting from employee transition costs of $7,386 in the second quarter of 2023, increased interest on floating rate debt of $4,922 due to higher interest rates and higher average loan balances compared to 2022, reduced property revenue of $3,827 related to dispositions in 2022, and increased tenant incentive amortization of $3,527 primarily from modernizations and accelerated amortization related to lease amendments as a result of the assignment of subleases to Crombie from a subsidiary of Empire. Also contributing to the variance year over year was a gain on distribution from equity-accounted investments of $2,933 in 2022 as a result of cash distributions received from 1600 Davie Limited Partnership in excess of our investment in the joint venture. Interest on senior unsecured notes increased by $2,515 from the issuance of Series K notes in the first quarter of 2023 and the redemption of Series D notes in the fourth quarter of 2022. The decrease in operating income was offset in part by $10,400 in impairment of investment properties in 2022, and growth in income from equity-accounted investments of $5,098, of which the main driver was the sale of land at our Opal Ridge joint venture in Dartmouth, Nova Scotia in 2023. Further offsetting the decrease in operating income was a reduction in mortgage interest of $4,977 from mortgage repayments and dispositions, growth in property revenue from new developments of $4,864, renewals and new leasing of $3,966, higher property revenue of $2,003 from acquisitions, $1,394 from lease terminations, and $1,387 in supplemental rent from modernization investments. Revenue from management and development services of $3,430 also contributed to the offset. A reduction in depreciation and amortization of $1,001 was due to accelerated depreciation recorded in the third quarter of 2022 on a property that was demolished, net of depreciation on completed developments and acquisitions in 2023. Operating income attributable to Unitholders excluding employee transition costs* of $7,386 was $106,207 (December 31, 2022 – $169,011 excluding payment in respect of an executive retirement arrangement of $1,211). NET PROPERTY INCOME* Management uses net property income* as a measure of performance of properties period over period. Refer to the “Non-GAAP Financial Measures” section of this MD&A, starting on page 81, for a more detailed discussion on net property income*. Net property income*, which excludes revenue from management and development services and certain expenses such as interest expense and indirect operating expenses, is as follows: Property revenue Property operating expenses Net property income* Three months ended December 31, Year ended December 31, 2023 20221 Variance 2023 20221 Variance $ 114,299 $ 110,061 (38,430) (39,245) $ 75,869 $ 70,816 $ $ 4,238 $ 440,939 $ 428,079 815 (153,527) (146,261) 5,053 $ 287,412 $ 281,818 $ $ 12,860 (7,266) 5,594 Net property income* margin percentage 66.4% 64.3% 2.1% 65.2% 65.8% (0.6)% (1) Consistent with the current year presentation, property revenue and property operating expenses for the three months and year ended December 31, 2022 have been increased by $2,122 and $8,488, respectively, to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. For the three months ended: An increase in net property income of $5,053 was primarily due to growth in property revenue of $2,257 from new developments and $1,597 from renewals and new leasing. This was partially offset by reduced property revenue of $1,031 related to dispositions in 2022. For the year ended: An increase in net property income of $5,594, compared to the same period in 2022, was primarily due to higher property revenue of $4,864 from new developments, $3,966 from renewals and new leasing, $2,003 from acquisitions, $1,394 from lease terminations, and $1,387 in supplemental rent from modernization investments. The growth in net property income was partially offset by reduced property revenue of $3,827 related to dispositions in 2022 and increased tenant incentive amortization of $3,527 primarily from modernizations and accelerated amortization related to lease amendments as a result of the assignment of subleases to Crombie from a subsidiary of Empire. The increase in recoverable property operating expenses was offset by recoveries in property revenue. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 41 41 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS SAME-ASSET PROPERTY CASH NOI* Management uses net property income* on a cash basis (property cash NOI*) as a measure of performance as it reflects the cash generated by properties period over period. Refer to the “Non-GAAP Financial Measures” section of this MD&A, starting on page 81, for a more detailed discussion on property cash NOI*. Net property income on a cash basis*, which excludes non-cash straight-line rent recognition and amortization of tenant incentive amounts, is as follows: Net property income* Non-cash straight-line rent Non-cash tenant incentive amortization1 Property cash NOI* Acquisitions and dispositions property cash NOI* Development property cash NOI* Acquisitions, dispositions, and development property cash NOI* Same-asset property cash NOI* Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance $ 75,869 $ 70,816 $ 5,053 $ 287,412 $ 281,818 $ 5,594 (2,498) 6,529 79,900 530 1,851 2,381 $ 77,519 (1,648) 5,940 75,108 502 39 541 (850) 589 4,792 28 1,812 (5,415) 26,516 (5,432) 22,989 308,513 299,375 2,596 18,907 4,836 15,860 17 3,527 9,138 (2,240) 3,047 1,840 21,503 20,696 807 $ 74,567 $ 2,952 $ 287,010 $ 278,679 $ 8,331 (1) Refer to “Amortization of Tenant Incentives” on page 45 for a breakdown of tenant incentive amortization. Development properties include properties earning cash NOI that are currently being developed and/or have recently completed development. Change in cash NOI from development properties period over period is impacted by the timing of commencement and completion of each development project. The nature and extent of development projects results in operations being impacted minimally in some instances, and more significantly in others. Consequently, comparison of period-over-period development operating results may not be meaningful. Same-asset property cash NOI* by asset type and market class is as follows: Three months ended December 31, Year ended December 31, 2023 2022 Variance VECTOM Major Markets Rest of Canada $ 25,526 $ 24,894 21,815 30,178 20,763 28,910 Same-asset property cash NOI* $ 77,519 $ 74,567 $ $ 632 1,052 1,268 2,952 Retail1 Office Retail-related industrial Three months ended December 31, 2023 2022 Variance $ 69,314 $ 66,666 $ 2,648 3,171 5,034 2,968 4,933 203 101 Same-asset property cash NOI* $ 77,519 $ 74,567 $ 2,952 % 2.5% 5.1% 4.4% 4.0% % 4.0% 6.8% 2.0% 4.0% 2023 2022 Variance $ 100,115 $ 98,681 84,756 102,139 80,845 99,153 $ 287,010 $ 278,679 $ $ 1,434 3,911 2,986 8,331 Year ended December 31, 2023 2022 Variance $ 255,510 $ 247,866 $ 7,644 12,425 19,075 11,890 18,923 535 152 $ 287,010 $ 278,679 $ 8,331 % 1.5% 4.8% 3.0% 3.0% % 3.1% 4.5% 0.8% 3.0% (1) Retail includes our substantial retail portfolio and reﬂects certain additional properties which comprise both retail and office space. These properties have been consistently included in our retail category. For the three months ended: For the year ended: Same-asset property cash NOI increased by $2,952, or 4.0%, compared to the fourth quarter of 2022 primarily due to renewals, new leasing, and lease termination income. On an annual basis, same-asset property cash NOI increased by $8,331, or 3.0%, compared to the same period in 2022, primarily due to renewals, new leasing, increased lease termination income of $1,394, and higher supplemental rent of $1,364 from modernizations and capital improvements. 42 CRA028 4400112 -Crombie_Text Proof R1.indd 42 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS FUNDS FROM OPERATIONS (FFO)* Crombie follows the recommendations of the January 2022 guidance of the Real Property Association of Canada (“REALPAC”) in calculating FFO*. Refer to the “Non-GAAP Financial Measures” section of this MD&A, starting on page 81, for a more detailed discussion on FFO*. The reconciliation of FFO* for the three months and year ended December 31, 2023 and 2022 is as follows: Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance Increase (decrease) in net assets attributable to Unitholders $ (15,342) $ 46,317 $ (61,659) $ (59,278) $ 12,283 $ (71,561) Add (deduct): Amortization of tenant incentives Gain on disposal of investment properties Gain on distribution from equity-accounted investments Impairment of investment properties Depreciation and amortization of investment properties Adjustments for equity-accounted investments Principal payments on right-of-use assets Internal leasing costs 6,529 — — — 19,715 1,259 155 637 5,940 (62,584) — — 18,630 1,426 59 915 Finance costs – distributions to Unitholders 40,237 39,697 589 62,584 — — 1,085 (167) 96 (278) 540 26,516 (588)1 — — 77,352 4,774 330 2,798 22,989 (80,804) (2,933) 10,400 78,383 4,697 230 2,975 160,010 157,840 Finance costs (income) – change in fair value of ﬁnancial instruments2 1,400 1,704 (304) (1,911) (2,323) FFO* as calculated based on REALPAC recommendations $ 54,590 $ 52,104 Basic weighted average Units (in 000’s) FFO* per Unit – basic FFO* payout ratio (%) 180,728 178,095 $ $ 0.30 73.7% 0.29 76.2% $ $ 2,486 $ 210,003 $ 203,737 2,633 0.01 (2.5)% $ 179,684 176,325 $ 1.17 76.2% 1.16 77.5% (1) In the third quarter of 2022, Crombie sold land to a joint venture that resulted in a deferred gain. The deferred gain was realized in 2023 upon sale of that land to a third party. (2) Includes the fair value changes of Crombie’s deferred unit plan. 3,527 80,216 2,933 (10,400) (1,031) 77 100 (177) 2,170 $ $ 412 6,266 3,359 0.01 (1.3)% For the three months ended: For the year ended: The increase in FFO of $2,486 was primarily due to growth in property revenue of $2,257 from new developments, $1,597 from renewals and new leasing, reduced mortgage interest expense of $1,208 from mortgage repayments, and revenue from management and development services of $1,087. This was partially offset by increased interest on floating rate debt of $2,421 resulting from higher interest rates combined with higher average loan balances compared to the same period in 2022, and higher interest on senior unsecured notes of $1,800 from the issuance of Series K notes in the first quarter of 2023 and the redemption of Series D notes in the fourth quarter of 2022. The growth in FFO in the quarter was further offset by reduced property revenue of $1,031 related to dispositions in 2022. On an annual basis, FFO increased by $6,266 primarily driven by growth in income from equity-accounted investments of $5,098, of which the main driver was the sale of land at our Opal Ridge joint venture in Dartmouth, Nova Scotia in 2023, and a reduction in mortgage interest of $4,977 from mortgage repayments and dispositions. Growth in property revenue from new developments of $4,864, renewals and new leasing of $3,966, higher property revenue of $2,003 from acquisitions, $1,394 from lease terminations, and $1,387 in supplemental rent from modernization investments further contributed to the increase in FFO. Additionally, revenue from management and development services increased FFO by $3,430. FFO growth was offset in part by higher general and administrative expenses resulting from employee transition costs of $7,386 in the second quarter of 2023, increased interest on floating rate debt of $4,922 due to higher interest rates and higher average loan balances compared to 2022, and reduced property revenue of $3,827 related to dispositions in 2022. Further offsetting the increase in FFO year over year was an increase in interest on senior unsecured notes of $2,515 from the issuance of Series K notes in the first quarter of 2023 and the redemption of Series D notes in the fourth quarter of 2022. FFO excluding employee transition costs of $7,386 was $217,389 or $1.21 per Unit, with a payout ratio of 73.6% (December 31, 2022 – FFO of $204,948 or $1.16 per Unit, with a payout ratio of 77.0% excluding payment in respect of an executive retirement arrangement of $1,211). CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 43 43 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS ADJUSTED FUNDS FROM OPERATIONS (AFFO)* Crombie follows the recommendations of REALPAC’s January 2022 guidance in calculating AFFO* and has applied these recommendations to the AFFO* amounts included in this MD&A. Refer to the “Non-GAAP Financial Measures” section of this MD&A, starting on page 81, for a more detailed discussion. The reconciliation of AFFO* for the three months and year ended December 31, 2023 and 2022 is as follows: Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance FFO* as calculated based on REALPAC recommendations $ 54,590 $ 52,104 $ 2,486 $ 210,003 $ 203,737 $ 6,266 Add (deduct): Straight-line rent adjustment (2,498) (1,648) (850) (5,415) (5,432) 17 Straight-line rent adjustment included in income (loss) from equity-accounted investments Internal leasing costs (98) (637) 140 (915) Maintenance expenditures on a square footage basis (5,246) (4,620) AFFO* as calculated based on REALPAC recommendations $ 46,111 $ 45,061 Basic weighted average Units (in 000’s) AFFO* per Unit – basic AFFO* payout ratio (%) 180,728 178,095 $ $ 0.26 87.3% 0.25 88.1% (238) 278 (626) 67 (2,798) (20,757) 493 (2,975) (18,526) $ $ 1,050 $ 181,100 $ 177,297 2,633 0.01 (0.8)% $ 179,684 176,325 $ 1.01 88.4% 1.01 89.0% $ $ (426) 177 (2,231) 3,803 3,359 — (0.6)% For further details on Crombie’s maintenance expenditures, refer to the “Non-GAAP Financial Measures” section of this MD&A. For the three months and year ended: For the year ended: The increase in AFFO was primarily due to the same factors impacting FFO for the quarter. The growth in AFFO on an annual basis was driven primarily by the same factors impacting FFO. Additionally, it was offset in part by the increase in the maintenance expenditure charge for 2023, from $1.00 to $1.10 per square foot of weighted average GLA, an increased charge of $1,887 for the period. AFFO excluding employee transition costs of $7,386 was $188,486 or $1.05 per Unit, with a payout ratio of 84.9% (December 31, 2022 – AFFO of $178,508 or $1.01 per Unit, with a payout ratio of 88.4% excluding payment in respect of an executive retirement arrangement of $1,211). DISTRIBUTIONS TO UNITHOLDERS A trust that satisfies the criteria of a real estate investment trust (“REIT”) throughout its taxation year will not be subject to income tax in respect of distributions to its Unitholders that would otherwise apply to trusts classified as specified investment flow-through entities (“SIFTs”). Crombie has organized its assets and operations to satisfy the criteria contained in the Income Tax Act (Canada) in regard to the definition of a REIT. Crombie’s management and its advisors have completed an extensive review of Crombie’s organizational structure and operations to support Crombie’s assertion that it met the REIT criteria throughout 2023 and continues to do so. The relevant tests apply throughout the taxation year and, as such, the actual status of Crombie for any particular taxation year can only be ascertained at the end of the year. Pursuant to Crombie’s Declaration of Trust, cash distributions are to be determined by the trustees at their discretion. Subject to approval of the Board of Trustees, Crombie intends to make distributions to Unitholders of not less than the amount equal to the net income and net realized capital gains of Crombie, to ensure that we will not be liable for income taxes. Details of distributions to Unitholders are as follows: Distributions to Unitholders Distributions to Class B Voting Unitholder1 Total distributions FFO* payout ratio AFFO* payout ratio Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance $ 23,755 16,482 $ 40,237 $ $ 23,459 16,238 39,697 $ $ 73.7% 87.3% 76.2% 88.1% 296 244 540 (2.5)% (0.8)% $ 94,470 $ 93,190 65,540 64,650 $ 160,010 $ 157,840 $ $ 1,280 890 2,170 76.2% 88.4% 77.5% 89.0% (1.3)% (0.6)% (1) Crombie Limited Partnership, a subsidiary of Crombie, has also issued Class B LP Units. These Class B LP Units accompany the Special Voting Units, are the economic equivalent of a Unit, and are exchangeable for Units on a one-for-one basis. 44 CRA028 4400112 -Crombie_Text Proof R1.indd 44 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Pursuant to the requirement of National Policy 41-201, Income Trusts and Other Indirect Offerings, the tables below outline the differences between cash provided by operating activities and cash distributions, and operating income attributable to Unitholders and cash distributions, respectively, in accordance with the policy guidelines. Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance Cash provided by operating activities Monthly distributions paid and payable $ 69,095 $ 66,3381 $ 2,757 $ 239,915 $ 234,7761 $ 5,139 (40,237) (39,697) (540) (160,010) (157,840) (2,170) Cash provided by operating activities in excess of distributions paid and payable $ 28,858 $ 26,641 $ 2,217 $ 79,905 $ 76,936 $ 2,969 (1) Cash provided by operating activities for the three months and year ended December 31, 2022 was updated from the previously reported ﬁgures to show ﬁnance costs – operations net of non-cash items. Operating income attributable to Unitholders $ 26,295 $ 87,718 $ (61,423) $ 98,821 $ 167,800 $ (68,979) Monthly distributions paid and payable (40,237) (39,697) (540) (160,010) (157,840) (2,170) Operating income attributable to Unitholders in excess (shortfall) of distributions paid and payable $ (13,942) $ 48,021 $ (61,963) $ (61,189) $ 9,960 $ (71,149) Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance Monthly distributions paid for the three months and year ended December 31, 2023 and 2022 were funded with cash flows from operating activities and borrowing on the bank credit facilities. Operating income attributable to Unitholders includes depreciation and amortization, which does not directly impact the level of income Crombie generates that can be paid out in distributions. On January 15, 2024, Crombie declared distributions of 7.417 cents per Unit for the period from January 1, 2024 up to and including January 31, 2024. The distributions were paid on February 15, 2024, to Unitholders of record as at January 31, 2024. On February 15, 2024, Crombie declared distributions of 7.417 cents per Unit for the period from February 1, 2024 up to and including February 29, 2024. The distributions will be paid on March 15, 2024, to Unitholders of record as at February 29, 2024. AMORTIZATION OF TENANT INCENTIVES Tenant incentives are amortized on a straight-line basis over the term of existing leases and the amortization is shown as a reduction in property revenue. From time to time, Crombie invests in value-enhancing property modernizations that result in lease amendments. These investments are amortized over the lease term and reduce the associated increase in property revenue. Regular tenant incentive amortization Modernization tenant incentive amortization Total amortization of tenant incentives Three months ended December 31, Year ended December 31, 2023 3,325 3,204 6,529 $ $ 2022 3,196 2,744 5,940 $ $ Variance 2023 2022 Variance $ $ 129 460 589 $ 14,691 11,825 $ 26,516 $ $ 12,524 10,465 22,989 $ $ 2,167 1,360 3,527 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 45 45 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS GENERAL AND ADMINISTRATIVE EXPENSES The following table outlines the major categories of general and administrative expenses: Three months ended December 31, Year ended December 31, Salaries and beneﬁts Unit-based compensation1 Professional fees Public company costs Rent and occupancy Other $ $ 2023 2,535 1,282 579 343 148 862 $ 2022 2,656 1,447 365 303 173 1,119 General and administrative expenses $ 5,749 $ 6,063 $ Variance 2023 2022 Variance 121 165 (214) (40) 25 257 314 $ 13,549 $ 10,387 $ 6,854 2,223 1,577 632 2,809 2,888 1,494 1,461 619 2,698 (3,162) (3,966) (729) (116) (13) (111) $ 27,644 $ 19,547 $ (8,097) As a percentage of property revenue 5.0% 5.5%2 0.5% 6.3% 4.6%2 (1.7)% (1) Unit-based compensation includes both employees and trustees. (2) Consistent with the current year presentation, property revenue for the three months and year ended December 31, 2022 has been increased by $2,122 and $8,488, respectively, to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. For the three months ended: For the year ended: The lower general and administrative expenses in the quarter are primarily due to a decrease of $121 in salaries and benefits and lower Unit-based compensation costs of $165 due to a decrease in Crombie’s Unit price compared to the same period in 2022. Additionally, other costs decreased by $257 primarily as a result of costs in the fourth quarter of 2022 related to succession planning. On an annual basis, the increase in general and administrative expenses was driven by higher Unit-based compensation costs of $3,966 and higher salaries and benefits of $3,162. These increases resulted primarily from employee transition costs in the second quarter of 2023, contributing $4,625 to Unit-based compensation costs and $2,761 to salaries and benefits expense. General and administrative expenses excluding employee transition costs of $7,386 were 4.6% of property revenue (December 31, 2022 – 4.3% excluding payment in respect of an executive retirement arrangement of $1,211). FINANCE COSTS – OPERATIONS Fixed rate mortgages $ Floating rate term, revolving, and demand facilities Capitalized interest Senior unsecured notes Interest income on ﬁnance lease receivable Interest on lease liability Finance costs Amortization of deferred ﬁnancing charges Three months ended December 31, Year ended December 31, 2023 8,189 4,300 (1,273) 11,495 (132) 672 23,251 588 $ 2022 9,397 1,879 (1,389) 9,695 (139) 526 19,969 654 Variance 2023 2022 Variance $ 1,208 $ 34,206 $ 39,183 $ 4,977 (2,421) (116) (1,800) (7) (146) (3,282) 66 9,197 (4,433) 43,120 (537) 2,260 83,813 2,455 4,275 (5,264) 40,605 (562) 2,092 80,329 2,685 (4,922) (831) (2,515) (25) (168) (3,484) 230 Finance costs – operations $ 23,839 $ 20,623 $ (3,216) $ 86,268 $ 83,014 $ (3,254) For the three months ended: For the year ended: Finance costs increased by $3,282 primarily due to an increase of $2,421 on floating rate debt resulting from higher interest rates and higher average loan balances compared to the same period in 2022. Interest on senior unsecured notes increased by $1,800 due to the issuance of Series K notes in the first quarter of 2023 and the redemption of Series D notes in the fourth quarter of 2022. This was offset in part by reduced mortgage interest expense of $1,208 from the impact of mortgage repayments. On an annual basis, finance costs increased by $3,484 primarily due to an increase of $4,922 in interest on floating rate debt resulting from higher interest rates and higher average loan balances during the year. The issuance of Series K notes in the first quarter of 2023 and the redemption of Series D notes in the fourth quarter of 2022 resulted in an increase of $2,515 in interest on senior unsecured notes. A reduction of capitalized interest of $831 further contributed to the higher finance costs. This was partially offset by reduced mortgage interest expense of $4,977 from the impact of mortgage repayments and dispositions. 46 CRA028 4400112 -Crombie_Text Proof R1.indd 46 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS DEPRECIATION, AMORTIZATION, AND IMPAIRMENT Crombie’s total fair value of investment properties exceeds carrying value by $1,109,289 at December 31, 2023 (December 31, 2022 – $1,113,573). Crombie uses the cost method of accounting for investment properties, and increases in fair value over carrying value are not recognized until realized through disposition or derecognition of properties, while impairment, if any, is recognized on a property-by-property basis when circumstances indicate that the carrying value may not be recoverable. Three months ended December 31, Year ended December 31, 2023 2022 Variance 2023 2022 Variance Same-asset* depreciation and amortization $ 19,273 $ 18,793 Acquisitions, dispositions, and development depreciation/amortization Depreciation and amortization Impairment 814 20,087 — $ $ 198 18,991 — $ $ $ $ $ (480) $ 71,559 $ 71,101 (616) (1,096) — 7,276 78,835 — $ $ 8,735 79,836 10,400 $ $ $ $ $ (458) 1,459 1,001 10,400 For the three months ended: For the year ended: The increase in depreciation and amortization of $1,096 was due to completed developments, acquisitions, and accelerated depreciation on properties scheduled for redevelopment. The $1,001 decrease in depreciation and amortization on an annual basis was primarily due to accelerated depreciation recorded on a property that was demolished in 2022 and dispositions in 2022. This is offset in part by completed developments and acquisitions. SELECTED BALANCE SHEET INFORMATION Total Assets Investment properties, carrying value Investment properties, fair value Investment properties held in joint ventures, carrying value Investment properties held in joint ventures, fair value Total Debt1 Total non-current ﬁnancial liabilities Number of Units outstanding (in 000’s) As at December 31, 2023 2022 Variance 2021 $ $ $ $ $ $ $ 4,148,568 3,986,711 5,096,000 283,281 472,500 2,323,855 1,994,125 181,084 $ $ $ $ $ $ $ 4,078,398 3,936,427 5,050,000 286,077 454,000 2,227,858 1,861,702 178,377 $ $ $ $ $ $ $ 70,170 50,284 46,000 (2,796) 18,500 95,997 132,423 2,707 $ $ $ $ $ $ $ 4,023,041 3,875,442 5,026,000 288,153 387,000 2,425,549 1,960,143 164,803 (1) Total debt consists of total liabilities in Crombie’s ﬁnancial statements excluding the ﬁnancial liabilities to REIT Unitholders and to holders of Class B LP Units, shown on the balance sheet as net assets attributable to Unitholders. The higher total assets balance (a difference of $70,170 compared to the prior year) is driven primarily by additions to prepaid development costs arising from the payment of right-to-develop fees totalling $34,300 and acquisitions of investment properties of $31,642. The increase of $46,000 in fair value of investment properties resulted from acquisitions, completed developments, and the assignment of subleases to Crombie by a subsidiary of Empire, partially offset by increases in capitalization rates throughout the year. Investment properties held in joint ventures increased in fair value ($18,500 compared to the prior year) due to NOI nearing stabilization at Bronte Village. The increase in total debt of $95,997 is driven by the $200,000 issuance of Series K senior unsecured notes in the first quarter of 2023 and mortgage issuances of $120,660, offset in part by repayment of mortgages during the year of $199,973 and net repayments on credit facilities of $15,873. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 47 47 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS DEVELOPMENT Property development is a strategic priority for Crombie to improve NAV*, cash flow growth, and Unitholder value. With urban intensification an important reality across the country, Crombie is focused on evaluating and undertaking major and non-major developments at certain properties, where development may include residential, commercial, and/or retail-related industrial. This discussion of Crombie’s development activities contains forward-looking information. Refer to the “Forward-looking Information” section of this MD&A starting on page 85 for additional information regarding such statements and the related risks and uncertainties. Crombie has a strategic relationship with Empire. The majority of our development properties currently have Empire as an anchor tenant. Our strategic relationship enables us to unlock value and transition from existing operating properties to construction/development of these sites on mutually agreeable terms. In conjunction with our strategic partner, Crombie management continuously reviews and prioritizes development opportunities that drive NAV* and AFFO* growth, including high-density urban redevelopment, new grocery-anchored retail, retail-related industrial e-commerce facilities, and land- use intensification. MAJOR DEVELOPMENT PIPELINE Crombie has the potential to unlock significant value within its current pipeline of 26 major development projects as at December 31, 2023 (December 31, 2022 – 27). Crombie benefits from having solid income (NOI, FFO*, and AFFO*) generated by most of these properties while working through the various approvals, entitlements, and advance preparations required before each major development can commence. The pipeline count was reduced from 27 to 26 during the quarter as Crombie has determined it will not pursue its Broadview development opportunity in Toronto as it explores other options for the site, which could include future disposition. Our major development plans include the development of mixed-use properties with a focus on grocery-anchored retail and, wherever practical, primarily purpose-built residential rental accommodations that provide revenue, diversification, and growth to Crombie. We view this approach as the optimal way to drive both NAV* and AFFO* growth. From time to time, Crombie may enter into partnerships to complete developments to share knowledge, risk, and expertise. In certain cases, residential condominium uses may also be considered, as will certain other uses (e.g. retail-related industrial), to satisfy municipal requirements and/or market opportunities. Management uses current project assumptions to calculate the pipeline cost range, factoring in a degree of uncertainty that comes with a diverse pipeline that spans 15 years or longer. Uncertainty can come in the form of changing project scopes, moving certain properties in or out of the pipeline, variations in the entitlement process, the potential of engaging joint venture partners, dispositions of pipeline properties, and a variety of external factors that may affect project costing. Costs presented in Crombie’s pipeline are reflective of current construction cost estimates on a market-by-market basis. Crombie monitors inflationary pressures impacting construction costs and adjusts pipeline assumptions when necessary. Given that some of these projects may not reach the full potential of the original scope, management discloses a low and high range to reasonably estimate the pipeline costs. As at December 31, 2023, total project costs to develop the pipeline range from $5,000,000 to $6,800,000 (December 31, 2022 – $5,000,000 to $6,800,000). Year-over-year changes in the pipeline can be attributed to changing project scopes, changing project costs, the ongoing refinement of development assumptions, completions and removals of properties from the pipeline, and evolving opportunities in our pipeline. Crombie may enter joint ventures or other partnership arrangements for these properties to share cost, risk, and development expertise, depending upon the nature of each project. Each selected project remains subject to normal development approvals, achieving required economic hurdles, and Board of Trustees’ approval. Crombie divides its development pipeline into three timing-based segments. Near-term projects are either under active construction or indicate that a decision to commit financially is expected to be determined within the next two years. Medium-term projects have a timeline to commitment of two years to five years, and long-term projects are expected to be committed within five to 15 years. Many projects in the current pipeline are large, multi-phased endeavors where the project timeline could span several years. In these instances, Crombie recognizes the project in the time period where financial commitment to the initial phase is expected. ACTIVE MAJOR DEVELOPMENTS Crombie currently has one active major development underway, The Marlstone, located in downtown Halifax, which is Crombie’s first self-developed residential project. Key project metrics are summarized in the below table. Property CMA Use Ownership % Residential GLA on Completion Residential Units Estimated Substantial Completion Date The Marlstone Halifax Residential 100% 189,000 291 Q1/Q2 2026 Total Active Major Developments (1) Costs presented for The Marlstone are exclusive of land costs. 189,000 291 $ in millions Estimated Total Cost $ $ 1341 134 $ $ Estimated Cost to Complete Estimated Yield on Cost 115 4.5% – 5.5% 115 4.5% – 5.5% 48 CRA028 4400112 -Crombie_Text Proof R1.indd 48 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Total estimated costs include soft and hard construction costs, tenant inducements, external leasing costs, finance costs, and capitalized interest and other carrying costs, such as capitalized construction and development wages, and property taxes. These costs are determined by using internal knowledge and external professional resources, where applicable. Project capital cost uncertainty exists, and project cost estimates contain a contingency for capital cost exceedances in the ordinary course. Historically, capital cost exceedances in the 5%–10% range are reflective of such contingencies. These estimates and assumptions are reviewed and updated regularly and are subject to changes, which could be material. Estimated total costs are based on assumptions that are updated regularly, based on revised site plans, cost tendering processes, market studies, and continuing tenant negotiations. These assumptions are based on access to job sites, supply and labour availability, ability to attract tenants, estimated GLA, and tenant mix among rental, air rights sale, tenant rents, building sizes, and availability and cost of construction financing. Within specific projects, scheduling and/or completion timing uncertainty exists and project economics can handle reasonable delays in the range of 10%. Estimations included in the chart are believed to be reasonable, but there can be no assurance that actual results will be consistent with these projections. Estimated annual net operating income is calculated using first year stabilized annual rent for each tenant, assuming 100% occupancy. These estimates are established using market rents, Crombie’s market knowledge, and/or using externally generated market studies. The estimated yield on cost is derived from dividing the estimated annual net operating income by the estimated total project costs. Crombie determines the yield on cost range from the approved pro forma while factoring in a margin of uncertainty on both sides of the approved yield. Near-term Projects NEAR-TERM GLA BY CITY as at December 31, 2023 NEAR-TERM GLA BY ASSET TYPE (SQ. FT.) as at December 31, 2023 ) s 0 0 0 ’ ( . t f . q S 750 500 250 0 105,000 960,000 Victoria Vancouver Halifax Commercial Residential Commercial Residential The table below provides additional detail on Crombie’s near-term development opportunities. Property The Marlstone1 City Halifax 1780 East Broadway (Broadway and Commercial)2 Vancouver Belmont Market – Phase II Victoria Total Near-term Developments Full Project Density % Ownership Commercial GLA Residential GLA Residential Units 100% 50%3 100% — 105,000 — 105,000 189,000 626,000 145,000 960,000 291 970 200 1,461 (1) The Marlstone was previously referred to as Westhill on Duke. The Marlstone is an active construction project. (2) Square footage and units at 1780 East Broadway (Broadway and Commercial) were adjusted to reﬂect latest architectural design work in progress. Square footage is at 100%. (3) Crombie will own 100% of the commercial portion of this development. Full project density reflects estimated GLA upon completion. Estimated GLA on completion is based on applicable standards of area measurement determined through internal site plans and drawings, and using external massing studies, where applicable. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 49 49 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Near-term Project Update THE MARLSTONE, FORMERLY WESTHILL ON DUKE, HALIFAX, NOVA SCOTIA Type: Residential Ownership: 100% Project status: The Marlstone is a 291-unit residential rental project in the heart of downtown Halifax, located within the Scotia Square mixed-use retail, office, and hotel complex. Demolition and existing building upgrades commenced in May 2023 and construction continues to progress well. Completion is expected in the first half of 2026. 1780 EAST BROADWAY (BROADWAY AND COMMERCIAL), VANCOUVER, BRITISH COLUMBIA Type: Retail/Residential Ownership: 100% retail, 50% residential and office Project status: East Broadway is a proposed major mixed-use redevelopment on 2.43 acres of land located at the busiest transit node in Western Canada. A rezoning application is in process with the City of Vancouver that comprises a mix of grocery-anchored retail, rental residential, and office. If rezoning is completed in 2024 as expected, construction tendering could commence in 2025. BELMONT MARKET – PHASE II, VICTORIA, BRITISH COLUMBIA Type: Residential Ownership: 100% Project status: Belmont Market – Phase II envisions the development of approximately 200 residential units on the remaining 1.70 acres of land within the Belmont Market development area. The lands are fully entitled and could be ready for construction tendering in 2024. Total Development Pipeline In addition to near-term projects, Crombie is actively working on its pipeline to ensure a consistent inventory of projects. A number of potential major developments in Crombie’s pipeline are large, multi-phased projects spanning over a decade in total duration. For the charts and tables outlined throughout this section, Crombie has summarized total project costs and GLA data at the date of its financial commitment to Phase 1. The following chart and table detail total project cost estimates by category at December 31, 2023: CROMBIE DEVELOPMENT SPENDING BY PROJECT TIMELINE as at December 31, 2023 8.7% 49.3% 42.0% Project Timeline Near-term Medium-term Long-term Total Pipeline Near-term Medium-term Long-term At Crombie’s Share ($ in millions) Number of Projects Total Estimated Costs1 Total Spend to Date2 3 7 16 26 $ 500–600 2,200–2,900 2,300–3,300 $ 5,000–6,800 $ $ 50 90 160 300 Estimated Cost to Complete $ 450–550 2,110–2,810 2,140–3,140 $ 4,700–6,500 (1) Many projects in the pipeline are multi-phased. Project costs are shown to align with the ﬁrst phase of project commencement. Project timelines are subject to change. (2) Total spend to date includes Crombie’s total investment in land at these properties, with the exception of the Marlstone. Crombie continuously monitors and evaluates the potential pipeline to optimize value creation. With a strong commitment to portfolio growth, Crombie actively analyzes costs and market opportunities within the potential pipeline in order to maximize NAV and AFFO growth. Total estimated costs usually include land cost on the existing income-producing properties upon transfer to the development, soft and hard construction costs, tenant inducements, external leasing costs, finance costs, and capitalized interest and other carrying costs, such as capitalized construction and development wages, and property taxes. These costs are determined by using internal knowledge and external professional resources, where applicable. Project capital cost uncertainty exists, and project cost estimates contain a contingency for capital cost exceedances in the ordinary course. Historically, capital cost exceedances in the 5%–10% range are reflective of such contingencies. 50 CRA028 4400112 -Crombie_Text Proof R1.indd 50 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS For joint venture projects, our partners may provide estimates, which Crombie reviews and analyzes to determine final estimates. These estimates and assumptions are reviewed and updated regularly and are subject to changes that could be material. Estimated total costs are based on assumptions that are updated regularly, based on revised site plans, cost tendering processes, market studies, and continuing tenant negotiations. These assumptions are based on supply and labour availability, ability to attract tenants, estimated GLA, tenant rents, building sizes, and availability and cost of construction financing. Within specific projects, scheduling and/or completion timing uncertainty exists, and project economics can handle reasonable delays in the range of 10%. Estimations included in the chart are believed to be reasonable, but there can be no assurance that actual results will be consistent with these projections. Crombie’s current pipeline has the potential to add up to 1,144,000 square feet of commercial GLA, and up to 9,460,000 square feet (up to 11,291 units) of residential GLA (which may include a combination of rental or condominium units). TOTAL PIPELINE GLA BY CITY as at December 31, 2023 ) s 0 0 0 ’ ( . t f . q S 5,000 4,000 3,000 2,000 1,000 0 Project Timeline1 Near-term Medium-term Long-term Total Pipeline Victoria Vancouver Kelowna Calgary Edmonton Hamilton Toronto Halifax Total Pipeline Density by Project Timeline Commercial GLA Residential GLA Residential Units 105,000 259,000 780,000 1,144,000 960,000 4,407,000 4,093,000 9,460,000 1,461 5,080 4,750 11,291 (1) Many projects in the pipeline are multi-phased. GLA and units are shown to align with the ﬁrst phase. Project timelines are subject to change. An important part of creating a sustainable development program is a systematic approach to proactively moving potential development lands through the entitlement process to obtain zoning approvals. Crombie currently has eight of these 26 potential major projects either already zoned or identified for rezoning and is currently in various stages of entitlement pursuit as noted in the following chart: Zoned Application Submitted Future Total Crombie’s Entitled Projects Number of Projects 4 4 18 26 Estimated Commercial Sq. ft.1 55,000 197,000 892,000 1,144,000 Estimated Residential Sq. ft.1 1,444,000 2,893,000 5,123,000 9,460,000 Estimated Total Sq. ft.1 Residential Units1 1,499,000 3,090,000 6,015,000 10,604,000 1,801 3,460 6,030 11,291 (1) Square footage and unit information presented in the table are estimates only and are subject to change. Design, municipal approvals, and market conditions may inﬂuence estimates. Zoning is in place for the following development sites: The Marlstone, formerly Westhill on Duke (Halifax), Belmont Market – Phase II (Victoria), Barrington Residential, formerly Triangle Lands (Halifax), and Brunswick Place (Halifax). Rezoning applications have been submitted and are in process for Broadway and Commercial (Vancouver), McCowan and Ellesmere (Toronto), Park West (Halifax), and Toronto East. During the quarter, Broadview was removed from the application submitted count as the development will not be pursued, while a zoning application was submitted for the development opportunity at Toronto East. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 51 51 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS The following table lists the 26 identified potential major development locations and certain key features of each property. Potential developments in the following table are organized in order of potential construction commencement: Existing Property1 The Marlstone2 Belmont Market – Phase II Broadway and Commercial Brunswick Place 1 2 3 4 5 McCowan and Ellesmere 6 7 8 9 Lynn Valley Park West Toronto East Barrington Residential5 10 Fleetwood 11 1818 Centre Street 12 Port Coquitlam 13 Danforth 14 West Broadway 15 Centennial Parkway 16 King Edward 17 Elbow Drive 18 Robson Street 19 Kensington 20 Beltline 21 Kingsway and Tyne 22 East Hastings 23 Bernard Ave 24 Whyte Ave 25 New Westminster 26 Brampton Mall Major Development Pipeline CMA Halifax Victoria Vancouver Halifax Toronto Vancouver Halifax Toronto Halifax Vancouver Calgary Vancouver Toronto Vancouver Hamilton Vancouver Calgary Vancouver Calgary Calgary Vancouver Vancouver Kelowna Edmonton Vancouver Toronto Site Size (acres) 0.463 1.70 2.43 0.754 4.48 2.82 19.66 0.14 0.68 4.45 2.18 5.31 0.79 1.95 2.75 1.80 1.60 1.15 1.73 2.59 3.74 3.30 1.83 2.44 2.82 8.74 Existing Tenants N/A Land Safeway Office/Parkade FreshCo/Other Safeway Sobeys Land Land Safeway Safeway Safeway The Beer Store Safeway Retail Safeway Safeway Safeway Safeway Safeway Safeway/Other Safeway/Other Safeway Safeway/Other Safeway Office/Retail Potential Commercial Expansion No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Entitlement Status Zoned Zoned Application Submitted Project Timing Near-term Near-term Near-term Zoned Medium-term Application Submitted Medium-term Future Medium-term Application Submitted Application Submitted Zoned Future Future Future Future Future Future Future Future Future Future Future Future Future Future Future Future Future Medium-term Medium-term Medium-term Medium-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term Long-term (1) All projects in the pipeline are transit-oriented and have the potential for residential expansion. (2) The Marlstone was previously referred to as Westhill on Duke. (3) The Marlstone is being developed through densiﬁcation on 0.46 acres of the existing 9.05-acre Scotia Square site. (4) Brunswick Place can be developed through densiﬁcation on the existing 0.75-acre Brunswick Place Parkade. (5) Barrington Residential was formerly referred to as Triangle Lands. 52 CRA028 4400112 -Crombie_Text Proof R1.indd 52 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Non-major Developments Non-major developments, including land-use intensification, property redevelopments, and modernizations, include projects with a total estimated cost below $50,000 at Crombie’s share. Projects in the non-major category are shorter in duration and thus boast less overall risk as compared to our major development pipeline. Current non-major Type Land-use intensiﬁcation Modernizations1, Redevelopments, and Other Total Non-major Developments Yield on Cost Projections developments have a yield range of 5.3% to 7.0%. These projects have the ability to create value while enhancing the overall quality of the portfolio. The below table summarizes active non-major developments within Crombie’s portfolio at December 31, 2023. At Crombie’s Share ($ in millions) GLA on Completion Estimated Total Cost Estimated Cost to Complete 28,000 — 28,000 $ $ 5.3% – 7.0% 20 30 50 $ $ 8 2 10 (1) Modernizations are a capital investment to modernize/renovate Crombie-owned grocery store properties in exchange for a deﬁned return and potential extended lease term. Annual spend on modernizations totals $25,201 (December 31, 2022 – $14,932). Total estimated costs include land cost on the existing income-producing properties in certain occasions such as greenfield non-major developments, soft and hard construction costs, tenant inducements, external leasing costs, finance costs, and capitalized interest and other carrying costs, such as capitalized construction and development wages, and property taxes. These costs are determined by using internal knowledge and external professional resources, where applicable. Project capital cost uncertainty exists, and project cost estimates contain a contingency for capital cost exceedances in the ordinary course. Historically, capital cost exceedances in the 5%–10% range are reflective of such contingencies. These estimates and assumptions are reviewed and updated regularly and are subject to changes, which could be material. Estimated total costs are based on assumptions that are updated regularly, based on revised site plans, cost tendering processes, market studies, and continuing tenant negotiations. These assumptions are based on access to job sites, supply and labour availability, ability to attract tenants, estimated GLA, and tenant mix among rental, air rights sale, tenant rents, building sizes, and availability and cost of construction financing. Within specific projects, scheduling and/or completion timing uncertainty exists, and project economics can handle reasonable delays in the range of 10%. Estimations included in the chart are believed to be reasonable, but there can be no assurance that actual results will be consistent with these projections. Estimated annual net operating income is calculated using first year stabilized annual rent for each tenant, assuming 100% occupancy. These estimates are established using market rents, Crombie’s market knowledge, and/or using externally generated market studies. The estimated yield on cost range is derived from dividing the estimated annual NOI by the estimated total project costs, factoring in a margin for uncertainty. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 53 53 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS CAPITAL MANAGEMENT We continue to reduce risk and build financial strength by strategically managing our capital structure and optimizing capital allocation to generate long-term value for our stakeholders. Our continued success is underpinned by a strong balance sheet, more-than-adequate liquidity, and an investment-grade credit rating profile providing the company with a solid financial foundation and great financial flexibility. CAPITAL MANAGEMENT FRAMEWORK Crombie’s strategic capital management objectives consist of four main priorities: 1. to maintain multiple sources of both debt and equity financing; 2. to reduce risk by prefunding capital commitments; 3. to source capital with the lowest cost on a long-term basis and to maintain overall indebtedness at reasonable levels, utilize staggered debt maturities, minimize long-term exposure to excessive levels of floating rate debt; and 4. maintain conservative payout ratios. At a minimum, Crombie’s capital structure is managed to ensure that it complies with the limitations pursuant to its Declaration of Trust, the criteria contained in the Income Tax Act (Canada) in regard to the definition of a REIT, and existing debt covenants. Crombie’s Declaration of Trust sets out the investment guidelines for Crombie’s capital deployment. The Declaration of Trust outlines the minimum due diligence that must be completed prior to a project being approved by the Investment Committee and/or Board. Crombie’s Board Our guiding principles for managing capital are as follows: ensures continued compliance with the Declaration of Trust through the review and approval of the annual operating and capital budgets, annual confirmation of Crombie’s strategic plan, and approval of individual projects. The annual budget will detail the level of projected capital spend for a given year and how the required capital will be funded, as well as various key performance indicators and impacts on debt covenants. The Board monitors performance quarterly, or on a more frequent basis if needed. In addition, the Board and management regularly review unspent committed capital (i.e. unfunded capital requirements of partially completed projects), with a lens towards Crombie’s available liquidity, leverage metrics, and sources of financing. Crombie expects to be able to satisfy all of its financing requirements through the use of some or all of the following: • cash on hand; • cash flow generated from operating the property portfolio; • cash distributions from our joint ventures; • bank credit facilities; • proceeds from partial or full disposition of select non-core investment properties; • traditional construction financing; • CMHC-insured mortgages on residential properties; • secured mortgages and term debt on unencumbered properties; • issuance of senior unsecured notes; • issuance of new Units; and • issuance of Units under its distribution reinvestment plan (“DRIP”). Guiding Principles Current Status Reduce total leverage over the medium/long-term D/GFV* is 43.0% at December 31, 2023 compared to 41.8% at December 31, 2022. Maintain minimum of $250 million liquidity Increased liquidity to $583.8M, up $0.8M from 2022. Improve weighted average term to maturity Increase to 4.9 years at December 31, 2023 versus 4.7 years at December 31, 2022. Lower cost of capital through equity raises and/or innovative funding solutions, such as capital recycling No equity raises or capital recycling in 2023, other than reinvestment of distributions through Crombie’s DRIP. Maintain balance sheet strength during current period of rising interest rates Increase unencumbered asset pool Reduced mortgage debt outstanding by $79M from December 31, 2022. During 2023, Crombie issued, on a private placement basis, $200M of Series K senior unsecured notes maturing September 28, 2029. Expanded unencumbered asset pool by approximately 21% to $2.6B since December 31, 2022. INVESTMENT GRADE CREDIT RATING Crombie’s ability to raise debt financing and the cost associated with that debt financing depends on its ability to access the public debt capital markets, which are reliant on assigned credit ratings, as well as the bank credit market. A credit rating generally indicates the rating agency’s assessment of the relative risk that the borrower will not fulfill its obligations in a timely manner with respect to both interest and principal commitments. In 2013, Crombie successfully applied to Morningstar DBRS for a credit rating in order to access the unsecured note markets.1 (1) The credit ratings are not recommendations to buy, sell, or hold any of the securities referred to, and they may be revised or withdrawn at any time by the assigning rating agency. Ratings are determined by the rating agencies based on criteria established from time to time by them, and they do not comment on market price or suitability for a particular investor. Each credit rating should be evaluated independently of any other credit rating. 54 CRA028 4400112 -Crombie_Text Proof R1.indd 54 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS STRONG CAPITAL STRUCTURE CAPITAL STRUCTURE as at December 31, 2023 Net Assets Attributable to Unitholders 45.5% Mortgages 20.8% Bank Credit Facilities and Lease Liabilities 4.5% Unsecured Notes 29.2% Mortgages Bank Credit Facilities and Lease Liabilities Unsecured Notes Net Assets Attributable to Unitholders Crombie’s capital structure consists of the following carrying values, inclusive of deferred financing costs where applicable: Fixed rate mortgages1 Drawn credit facilities Senior unsecured notes1 Lease liabilities Net assets attributable to Crombie REIT Unitholders Net assets attributable to Special Voting Units and Class B Limited Partnership Unitholders Total capital structure (1) Net of deferred ﬁnancing charges. DEBT METRICS We monitor our debt by utilizing a number of key metrics, including the following: Unencumbered investment properties1 Unencumbered investment properties1 as a % of unsecured debt* Debt to gross fair value* Weighted average interest rate2 Debt to trailing 12 months adjusted EBITDA* Interest coverage ratio* (1) Represents fair value of unencumbered properties. (2) Calculated based on interest rates for all outstanding ﬁxed rate debt. December 31, 2023 December 31, 2022 $ 834,628 144,391 1,171,769 36,292 1,081,631 743,082 20.8% 3.6% 29.2% 0.9% 27.0% 18.5% $ 913,706 160,264 972,003 35,000 1,097,070 753,470 23.2% 4.1% 24.7% 0.9% 27.9% 19.2% $ 4,011,793 100.0% $ 3,931,513 100.0% December 31, 2023 December 31, 2022 $ 2,607,934 $ 2,154,468 205.6% 43.0% 4.1% 8.03x 3.06x 191.5% 41.8% 3.8% 8.02x 3.26x Crombie has continued to grow its unencumbered asset pool, increasing its fair value from $2,154,468 as at December 31, 2022 to $2,607,934 as at December 31, 2023. This increase is primarily due to mortgage maturities and development, offset in part by increases in capitalization rates throughout the year. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 55 55 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Debt to Gross Fair Value* When calculating debt to gross fair value*, debt is defined as obligations for borrowed money, including obligations incurred in connection with acquisitions, excluding trade payables and accruals in the ordinary course of business, and distributions payable. Debt includes Crombie’s share of debt held in equity-accounted joint ventures. Gross fair value includes investment properties measured at fair value, including Crombie’s share of those held within equity-accounted joint ventures. All other components of gross fair value are measured at the carrying value included in Crombie’s financial statements. Crombie’s methodology for determining the fair value of investment properties includes capitalization of trailing 12 months net property income* using biannual capitalization rates from external property valuators. The majority of investment properties are also subject to external, independent appraisals on a rotational basis over a period of not more than four years. Valuation techniques are more fully described in Crombie’s year-end audited financial statements. The fair value included in this calculation reflects the fair value of the properties as at December 31, 2023 and December 31, 2022, respectively, based on each property’s current use as a revenue- generating investment property. Additionally, as properties are prepared for redevelopment, Crombie considers each property’s progress through entitlement in determining the fair value of a property. As at Fixed rate mortgages Senior unsecured notes Unsecured non-revolving credit facility Revolving credit facility Joint operation credit facility Debt held in joint ventures, at Crombie’s share1,2 Lease liabilities Adjusted debt* Investment properties, fair value Investment properties held in joint ventures, fair value, at Crombie’s share2 Other assets, cost3 Other assets, cost, held in joint ventures, at Crombie’s share2,3,4 Cash and cash equivalents Cash and cash equivalents held in joint ventures, at Crombie’s share2 Deferred ﬁnancing charges Gross fair value Debt to gross fair value* December 31, 2023, Crombie’s weighted average capitalization rate used in the determination of the fair value of its investment properties was 6.12%, an increase of 18 basis points from December 31, 2022. Crombie’s weighted average capitalization rate used in the determination of the fair value of its share of investment properties held in equity-accounted joint ventures was 3.67% as at December 31, 2023, an increase of 20 basis points from December 31, 2022. For an explanation of how Crombie determines capitalization rates, see the “Other Disclosures” section of this MD&A, under “Investment Property Valuation” in the “Use of Estimates and Judgments” section. Debt to gross fair value* was 43.0% at December 31, 2023 compared to 41.8% at December 31, 2022. The increase in this leverage ratio during the year ended December 31, 2023 was due to an increase in outstanding debt of $109,297 from December 31, 2022, resulting primarily from the issuance of $200,000 of senior unsecured notes, offset in part by reduced balances of mortgages outstanding of $79,595, a decrease of $15,873 in outstanding balances of credit facilities, and an increase of $46,000 in gross fair value of investment properties. The increase in gross fair value of investment properties was primarily due to development, acquisitions, and the assignment of subleases to Crombie by a subsidiary of Empire, partially offset by increases in capitalization rates throughout the year. December 31, 2023 December 31, 2022 $ 838,957 $ 1,175,000 93,297 47,591 3,503 274,115 36,292 $ $ 2,468,755 5,096,000 $ $ 472,500 136,081 26,214 — 3,004 7,560 918,552 975,000 150,000 — 10,264 270,642 35,000 2,359,458 5,050,000 454,000 99,728 26,974 6,117 2,487 7,843 $ 5,741,359 $ 5,647,149 43.0% 41.8% (1) Includes Crombie’s share of ﬁxed and ﬂoating rate mortgages, construction loans, revolving credit facility, and lease liabilities held in joint ventures. (2) See the “Joint Ventures” section of this MD&A. (3) Excludes tenant incentives, accumulated amortization, and accrued straight-line rent receivable. (4) Includes deferred ﬁnancing charges. Debt to Adjusted EBITDA* and Interest Coverage* Ratios The following table presents a reconciliation of operating income attributable to Unitholders to adjusted EBITDA*. Adjusted EBITDA* is a non-GAAP measure and should not be considered an alternative to operating income attributable to Unitholders and may not be comparable to that used by other entities. Refer to the “Non-GAAP Financial Measures” section of this MD&A, starting on page 81, for more information. In calculating adjusted EBITDA*, Crombie includes its share of revenue, operating expenses, and general and administrative expenses in joint ventures. Interest coverage* and debt service coverage* calculations also include Crombie’s share of finance costs – operations and debt repayments in joint ventures. Crombie’s debt to adjusted EBITDA* increased to 8.03x for the trailing 12 months ended December 31, 2023 from 8.02x for the trailing 12 months ended December 31, 2022. The increase was due to higher outstanding debt of $109,297 resulting primarily from the issuance of $200,000 of senior unsecured notes, offset in part by reduced balances of mortgages outstanding of $79,595 and a decrease of $15,873 in outstanding balances of credit facilities. An increase of $13,097 in adjusted EBITDA over the trailing 12 months ended December 31, 2023 when compared to the trailing 12 months ended December 31, 2022 further offset the increase in the ratio. The increase in adjusted EBITDA resulted mainly from higher net property income* due to completed developments, renewals, new leasing, acquisitions, revenue from management and 56 CRA028 4400112 -Crombie_Text Proof R1.indd 56 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS development services, and increased income from the sale of land within equity-accounted joint ventures. The interest coverage* ratio for the quarter ended December 31, 2023 decreased to 3.06x compared to 3.26x for the quarter ended December 31, 2022 due to higher finance costs from operations, offset in part by increased adjusted EBITDA. Finance costs increased by $3,282 compared to the fourth quarter of 2022 primarily due to increased interest on floating rate debt resulting from higher interest rates and higher average loan balances, and increased interest on unsecured notes due to the issuance of Series K notes in the first quarter of 2023 and the redemption of Series D senior unsecured notes in the fourth quarter of 2022. These increases were partially offset by reduced mortgage interest from repayments and dispositions in the prior year. The increase of $6,386 in adjusted EBITDA compared to the fourth quarter of 2022 resulted primarily from higher net property income* due to completed developments, renewals, new leasing, and revenue from management and development services. Crombie’s debt service coverage* increased to 2.36x for the quarter ended December 31, 2023 from 2.31x for the quarter ended December 31, 2022 due primarily to improved adjusted EBITDA as described above, offset in part by higher interest expense. Operating income attributable to Unitholders $ 26,295 $ 27,796 $ 19,557 $ 25,173 $ 87,718 $ 26,410 $ 28,424 $ 25,248 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Three months ended Amortization of tenant incentives Gain on disposal of investment properties1 Gain on distribution from equity-accounted investments Impairment of investment properties Depreciation and amortization Finance costs – operations (Income) loss from equity- accounted investments Property revenue in joint 6,529 7,838 5,357 6,792 5,940 5,795 5,690 5,564 (111) (62,584) (13,357) (4,863) — — — — (477) — — — — — 20,087 23,839 19,834 20,665 19,494 21,000 19,420 20,764 18,991 20,623 — — — — (1,000) 10,400 22,744 20,884 — — 19,222 20,762 (1,933) — 18,879 20,745 980 (876) 1,425 (1,673) 1 1,787 1,627 1,539 ventures, at Crombie’s share 7,222 9,691 4,144 11,269 7,271 3,258 2,616 2,356 Property operating expenses in joint ventures, at Crombie’s share General and administrative expenses in joint ventures, at Crombie’s share Taxes – current (3,684) (4,270) (1,231) (5,170) (3,022) (1,296) (1,002) (903) (23) 6 (145) — (54) — (107) — (77) 4 (31) — (21) — (150) — Adjusted EBITDA* [1] $ 81,251 $ 80,056 $ 69,692 $ 76,357 $ 74,865 $ 75,594 $ 72,455 $ 71,345 Trailing 12 months adjusted EBITDA* [4] $ 307,356 $ 300,970 $ 296,508 $ 299,271 $ 294,259 $ 290,022 $ 286,024 $ 281,626 Finance costs – operations $ 23,839 $ 20,665 $ 21,000 $ 20,764 $ 20,623 $ 20,884 $ 20,762 $ 20,745 Finance costs – operations in joint ventures, at Crombie’s share Amortization of deferred ﬁnancing charges Adjusted interest expense* [2] Debt principal repayments Debt principal repayments in joint ventures, at Crombie’s share 3,279 3,428 3,293 3,430 2,961 2,564 2,157 1,776 (588) (604) (641) (622) (654) (675) (668) (688) $ $ 26,530 7,606 $ $ 23,489 7,703 $ $ 23,652 8,357 $ $ 23,572 9,041 $ $ 22,930 9,172 $ $ 22,773 9,349 $ $ 22,251 9,599 $ $ 21,833 9,979 317 315 312 1,738 307 305 306 2,864 Debt principal repayments [3] $ 7,923 $ 8,018 $ 8,669 $ 10,779 $ 9,479 $ 9,654 $ 9,905 $ 12,843 Debt outstanding (see Debt to Gross Fair Value*) [5]2 $2,468,755 $2,448,384 $2,421,240 $2,383,231 $2,359,458 $2,463,882 $2,502,845 $2,456,686 Interest coverage* ratio {[1]/[2]} Debt service coverage* ratio 3.06x 3.41x 2.95x 3.24x 3.26x 3.32x 3.26x 3.27x {[1]/([2]+[3])} 2.36x 2.54x 2.16x 2.22x 2.31x 2.33x 2.25x 2.06x Debt to trailing 12 months adjusted EBITDA* {[5]/[4]} 8.03x 8.13x 8.17x 7.96x 8.02x 8.50x 8.75x 8.72x (1) Gain on disposal of investment properties in 2023 consists of deferred gain on the sale of land sold to a joint venture in the third quarter of 2022, which has been subsequently sold to a third party. (2) Includes debt held in joint ventures, at Crombie’s share. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 57 57 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS DEBT PROFILE A continuity of Crombie’s fixed rate mortgages, senior unsecured notes, and credit facilities for the years ended December 31, 2023 and December 31, 2022 is as follows: Year ended December 31, 2023 Year ended December 31, 2022 Mortgages Senior Unsecured Notes Credit Facilities Mortgages Senior Unsecured Notes Credit Facilities Opening balance, beginning of year $ 918,321 $ 975,000 $ 160,264 $ 1,073,553 $ 1,125,000 $ 29,124 Additions to existing mortgages New borrowings or issuances Principal repayments Repayments on maturity Redemption Net (repayments) advances — 120,660 (32,707) (167,266) — — — 200,000 — — — — — — — — — (15,873) — 7,000 (38,099) (124,133) — — — — — — (150,000) — 150,000 — — — — (18,860) Closing balance, end of year $ 839,0081 $ 1,175,000 $ 144,391 $ 918,3211 $ 975,000 $ 160,264 (1) Excludes unamortized fair value debt adjustment of $(51) (December 31, 2022 – $231). Mortgages Crombie had outstanding fixed rate mortgages consisting of: Fixed rate mortgages1 Unamortized fair value debt adjustment and interest rate subsidy Deferred ﬁnancing charges on ﬁxed rate mortgages Total mortgage debt Long-term portion Current portion Weighted average interest rate Weighted average term to maturity (1) Includes ﬂoating rate mortgages that are ﬁxed under swap agreements. December 31, 2023 December 31, 2022 $ $ $ $ 839,008 $ (51) 838,957 (4,329) 834,628 617,717 216,911 4.30% 5.9 years $ $ $ 918,321 231 918,552 (4,846) 913,706 666,748 246,958 4.07% 4.6 years From time to time, Crombie has entered into interest rate swap agreements to manage the interest rate profile of its current or future debts without an exchange of the underlying principal amount (see “Interest Rate Risk”). Crombie currently has $83,398 of floating rate debt that is classified as fixed rate due to interest rate swap agreements in place. Senior Unsecured Notes (“Notes”) The following series of senior unsecured notes were outstanding as at December 31, 2023 and December 31, 2022: Series E Series F Series G Series H Series I Series J Series K Deferred ﬁnancing charges Total senior unsecured notes Long-term portion Weighted average interest rate Weighted average term to maturity Maturity Date Effective Interest Rate December 31, 2023 December 31, 2022 January 31, 2025 August 26, 2026 June 21, 2027 March 31, 2028 October 9, 2030 August 12, 2031 September 28, 2029 4.802% 3.677% 3.917% 2.686% 3.211% 3.133% 5.244% $ $ $ $ $ $ 175,000 200,000 150,000 150,000 150,000 150,000 200,000 (3,231) 1,171,769 1,171,769 3.89% 4.4 years 175,000 200,000 150,000 150,000 150,000 150,000 — (2,997) 972,003 972,003 3.61% 5.1 years On March 28, 2023, Crombie issued, on a private placement basis, $200,000 of Series K notes (senior unsecured) maturing September 28, 2029. The net proceeds were used to repay existing indebtedness, including repayment of outstanding credit facilities, and for general trust purposes. The Series K notes bear interest at a rate of 5.244% per annum and were priced at par. Interest is payable in equal semi-annual installments on March 28 and September 28. There are no required periodic principal payments, with the full face value of the notes due on their respective maturity dates. 58 CRA028 4400112 -Crombie_Text Proof R1.indd 58 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Credit Facilities The following floating rate credit facilities had balances drawn as at December 31, 2023 and December 31, 2022: Revolving credit facility Unsecured non-revolving credit facility Unsecured bilateral credit facility Joint operation credit facility I Joint operation credit facility II1,2 Total credit facilities Long-term portion Current portion Weighted average interest rate for drawn credit facilities Total Available Facility Weighted Average Term to Maturity December 31, 2023 December 31, 2022 $ $ 400,000 200,000 130,000 — 3,520 733,520 3.5 years $ 1.9 years 1.5 years — 0.8 years 2.4 years $ $ $ 47,591 93,297 — — 3,503 144,391 140,888 3,503 $ $ $ $ — 150,000 — 7,167 3,097 160,264 160,264 — 6.78% 6.06% (1) Availability is limited by mortgages held in the joint operations. (2) Includes the ﬁxed portion of the interest expense for credit facilities under swap agreements. REVOLVING CREDIT FACILITY UNSECURED BILATERAL CREDIT FACILITY Crombie has in place an authorized floating rate Revolving credit facility of up to $400,000 (the “Revolving credit facility”). It has been amended to extend the maturity date to June 30, 2027 and has a balance drawn of $47,591 at December 31, 2023 ($52,933 including outstanding letters of credit). The Revolving credit facility is secured by a pool of first mortgages on certain properties. Borrowings under the Revolving credit facility can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. The respective spread or margin may change depending on Crombie’s unsecured bond rating with Morningstar DBRS and whether the facility remains secured or migrates to an unsecured status. UNSECURED NON-REVOLVING CREDIT FACILITY The Unsecured non-revolving credit facility has been amended to reinstate the full $200,000 maximum principal amount. The facility has a maturity date of November 18, 2025, of which $93,297 was drawn at December 31, 2023. The facility is intended to be used for mortgage repayments. Borrowings under the Unsecured non-revolving credit facility can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. The respective spread or margin may change depending on Crombie’s unsecured bond rating with Morningstar DBRS. The Unsecured bilateral credit facility has a maximum principal amount of $130,000 and has been amended to extend the maturity date to June 30, 2025. No balance was drawn as at December 31, 2023. The facility is used by Crombie for working capital purposes and to provide temporary financing for acquisitions and development activity. Borrowings under the Unsecured bilateral credit facility can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. The respective spread or margin may change depending on Crombie’s unsecured bond rating with Morningstar DBRS. JOINT OPERATION CREDIT FACILITIES The Joint operation credit facility I, which consisted of term loan and revolving credit facilities, was repaid in the second quarter of 2023. Concurrently, the fixed-for-floating interest rate swap was also retired. The Joint operation credit facility II was entered into in conjunction with the 89% sale of a portfolio of assets in the fourth quarter of 2019. Crombie and its co-ownership partner entered into a credit agreement with a Canadian chartered bank for a $16,500 term loan facility and a $15,500 revolving credit facility. Both facilities are secured by first and second mortgages on select properties and have a term of five years maturing on October 7, 2024. Borrowings under both facilities can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. Concurrent with entering into the facility, Crombie and its co-ownership partner entered into a fixed-for-floating interest rate swap, effectively fixing the interest rate on both facilities at 3.27%. At December 31, 2023, Crombie’s portion of the term and revolving credit facilities was $1,815 and $1,688, respectively. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 59 59 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS DEBT MATURITIES Principal repayments of the fixed rate mortgages, unsecured notes, and credit facilities are scheduled as follows: 12 Months Ending December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 December 30, 2028 Thereafter Total1 Maturing Debt Balances Mortgages Senior Unsecured Notes Credit Facilities Total % of Total Payments of Mortgage Principal Total Required Payments % of Total $ 189,194 $ — $ 3,503 $ 192,697 9.7% $ 27,716 $ 220,413 30,596 12,401 111,759 19,372 304,953 175,000 200,000 150,000 150,000 500,000 93,297 — 47,591 — — 298,893 212,401 309,350 169,372 804,953 15.0% 10.7% 15.6% 8.5% 40.5% 23,068 21,401 18,160 16,435 63,952 321,961 233,802 327,510 185,807 868,905 10.2% 14.9% 10.8% 15.2% 8.6% 40.3% $ 668,275 $ 1,175,000 $ 144,391 $ 1,987,666 100.0% $ 170,732 $ 2,158,398 100.0% (1) Excludes fair value debt adjustment of $(51) and deferred ﬁnancing charges of $(4,329) on mortgages and $(3,231) on unsecured notes (December 31, 2022 – $231, $(4,846), and $(2,997), respectively). OUTSTANDING UNIT DATA REIT Units and Class B LP Units and the Attached Special Voting Units For the year ended December 31, 2023, Crombie issued 1,584,347 REIT Units and 1,122,338 Class B LP Units under its DRIP. Units issued under the DRIP are issued at a price equal to 97% of the volume-weighted average trading price of the REIT Units on the Toronto Stock Exchange for the five trading days immediately preceding the relevant distribution payment date. Total Units outstanding at January 31, 2024, were as follows: Units Special Voting Units1 107,045,712 74,277,668 (1) Crombie Limited Partnership, a subsidiary of Crombie, has issued 74,277,668 Class B LP Units. These Class B LP Units accompany the Special Voting Units, are the economic equivalent of a Unit, and are exchangeable for Units on a one-for-one basis. CASH FLOWS The following shows the major sources and uses of cash for the year ended December 31, 2023: $239,915 $6,117 $(122,119) MAJOR SOURCES AND USES OF CASH $120,660 $(81,817) $200,000 $(75,654) $(28,646) $11,743 $— $(33,562) $(12,305) $(8,486) $(199,973) $(15,873) Opening cash Operating cash ﬂow before distributions and ﬁnance costs Cash distributions Finance costs – operations Issue of mortgages Mortgage payments Credit facility net advances Issue of notes Acquisitions Additions to investment properties Predevelopment costs Distributions from joint ventures Deferred leasing costs Other, net Closing cash Source of cash Use of cash 60 CRA028 4400112 -Crombie_Text Proof R1.indd 60 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Cash provided by (used in): Operating activities Financing activities Investing activities Three months ended December 31, Year ended December 31, 2023 20221 Variance 2023 20221 Variance $ 69,095 $ 66,338 $ 2,757 $ 239,915 $ 234,776 $ 5,139 (30,165) (39,040) (152,720) 122,555 90,977 (130,017) (102,145) (143,887) (185,290) (47,284) 83,145 (96,603) Net change during the period $ (110) $ 4,595 $ (4,705) $ (6,117) $ 2,202 $ (8,319) (1) Cash provided by (used in) operating and ﬁnancing activities for the periods ended December 31, 2022 was updated from the previously reported ﬁgures to show ﬁnance costs – operations net of non-cash items. Operating Activities For the three months ended: The increase in cash provided by operating activities in the quarter was primarily due to higher property cash NOI* of $4,792 compared to the prior year, an increase in the net change in non-cash working capital items of $2,214, and revenue from management and development services of $1,087. This increase in cash was offset in part by higher additions to tenant incentives of $5,671. Financing Activities For the three months ended: The decrease in cash used in financing activities was due primarily to the $150,000 redemption of Series D unsecured notes in the fourth quarter of 2022 and $72,000 in new mortgage issuances in 2023. This was offset in part by net repayments on floating rate credit facilities of $21,329 compared to the net amount drawn of $69,011 in the same period in 2022. Additionally, mortgage repayments were $9,929 higher compared to the fourth quarter of 2022. Investing Activities For the three months ended: The increase in cash used in investing activities resulted primarily from lower proceeds from disposition of investment properties of $111,022, higher predevelopment costs of $19,701, and repayments of $10,100 from a related party in the fourth quarter of 2022. This was partially offset by a decrease in additions to investment properties of $7,487, and an increase in distributions from equity-accounted investments of $6,011. For the year ended: The increase in cash provided by operating activities on an annual basis was primarily due to higher property cash NOI* of $9,138 compared to 2022, an increase in the net change in non-cash working capital items of $8,434, and revenue from management and development services of $3,430. This was partially offset by higher additions to tenant incentives of $7,889 and higher general and administration expenses resulting from employee transition costs of $7,386 in the second quarter of 2023. For the year ended: The decrease in cash used in financing activities on an annual basis was primarily driven by the $200,000 issuance of Series K unsecured notes in the first quarter of 2023 and the $150,000 redemption of Series D unsecured notes in the fourth quarter of 2022. Additionally, new mortgage issuances were $113,660 higher compared to 2022. This was offset in part by the Unit issuance of $194,741 net of issue costs in the first quarter of 2022 and net repayments on floating rate credit facilities of $9,112 compared to the net amount drawn of $130,780 in the prior year. Mortgage repayments were $37,741 higher than in 2022 and net repayment of joint operation credit facilities was $7,121 higher due to the repayment of Joint operation credit facility I in the second quarter of 2023. For the year ended: The increase in cash used in investing activities was primarily due to lower proceeds from disposition of investment properties of $171,702 compared to 2022, higher predevelopment costs of $27,363, an increase in additions to deferred leasing costs of $11,032, and lower collections of notes receivable from related parties of $7,923. This was partially offset by a decrease in acquisitions of investment properties of $86,681, fewer additions to investment properties of $28,725, and an increase in distributions from equity-accounted investments of $6,350. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 61 61 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS AVAILABLE CREDIT LINE LIQUIDITY Available liquidity is the net amount available on Crombie’s credit facilities, excluding joint facilities with joint operation partners, calculated as follows: Revolving credit facility Amount drawn Outstanding letters of credit Available liquidity Unsecured revolving bilateral credit facility Amount drawn Available liquidity Unsecured non-revolving credit facility Amount drawn Available liquidity Unrestricted cash December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 $ 400,000 $ 400,000 $ 400,000 $ 400,000 $ 400,000 (47,591) (5,342) 347,067 130,000 — 130,000 200,000 (93,297) 106,703 — (84,820) (2,880) 312,300 130,000 — 130,000 200,000 (77,397) 122,603 — (52,491) (2,417) 345,092 130,000 — 130,000 200,000 (61,020) 138,980 — — (2,942) 397,058 130,000 — 130,000 200,000 — 200,000 8,819 — (2,883) 397,117 130,000 — 130,000 200,000 (150,000) 50,000 5,886 Total available liquidity1 $ 583,770 $ 564,903 $ 614,072 $ 735,877 $ 583,003 (1) Joint facilities with joint operation partners are excluded from the calculation of available liquidity since they can only be drawn upon as payments are made on the mortgages pertaining to the related properties. Under the amended terms governing the Revolving credit facility, Crombie is entitled to borrow a maximum of 70% of the fair market value of assets, subject to a first security position, and 60% of the excess of fair market value over first mortgage financing of assets, subject to a second security position or a negative pledge (the “borrowing base”). The Revolving credit facility provides Crombie with flexibility to add or remove properties from the borrowing base, subject to compliance with certain conditions. The terms of the Revolving credit facility also require that Crombie must maintain certain covenants: • annualized NOI for the prescribed properties must be a minimum of 1.3 times the coverage of the related annualized debt service requirements; • annualized NOI on all properties must be a minimum of 1.4 times the coverage of all annualized debt service requirements; and • cash distributions to Unitholders are limited to 100% of funds from operations. This covenant provides that the aggregate of amounts drawn under the Revolving credit facility, plus any outstanding letters of credit, may not exceed the “aggregate borrowing base”, which is based on a modified calculation of the borrowing base, as defined in the Revolving credit facility. As at December 31, 2023, the remaining amount available under the Revolving credit facility was approximately $352,409 (prior to reduction for standby letters of credit outstanding of $5,342) and was not limited by the aggregate borrowing base. Crombie has remained in compliance with all debt covenants. The terms of the Unsecured bilateral revolving credit facility and the Unsecured non-revolving credit facility also require annualized NOI on all properties to be a minimum of 1.4 times the coverage of all annualized debt service requirements and cash distributions to Unitholders to be limited to 100% of funds from operations as defined in the credit facilities. The Revolving credit facility also contains a covenant limiting the amount which may be utilized under the Revolving credit facility at any time. Our liquidity is impacted by contractual debt commitments. Our contractual debt commitments for the next five years are as follows: Contractual Cash Flows1 2024 2025 2026 2027 2028 Thereafter Twelve months ending December 31, Fixed rate mortgages – principal and interest2 $ 352,602 $ 60,150 $ 48,741 $ 44,930 $ 38,008 $ 33,817 $ 126,956 Fixed rate mortgages – maturities Senior unsecured notes Trade and other payables Lease liabilities Credit facilities2 668,275 1,369,889 113,715 151,345 2,655,826 167,877 189,194 45,664 92,749 3,135 390,892 13,251 30,596 212,964 4,138 4,725 301,164 102,156 12,401 234,708 2,748 2,936 297,723 3,253 111,759 176,810 2,477 2,676 331,730 49,217 19,372 171,012 2,477 2,457 304,953 528,731 9,126 135,416 229,135 1,105,182 — — Total estimated payments $ 2,823,703 $ 404,143 $ 403,320 $ 300,976 $ 380,947 $ 229,135 $1,105,182 (1) Includes principal and interest and excludes extension options. (2) Includes the ﬁxed portion of the interest expense for mortgages and credit facilities under swap agreements. Crombie’s contractual debt obligations and projected development expenditures can be funded from the following financing sources: • secured mortgage and term debt on unencumbered properties; • the issuance of additional senior unsecured notes; • secured and unsecured short-term financing subject to available • the issuance of new Units; and borrowing base; • recycling capital through the disposition of select investment properties; • entering into new joint arrangements. 62 CRA028 4400112 -Crombie_Text Proof R1.indd 62 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS OFF-BALANCE SHEET COMMITMENTS AND GUARANTEES There are claims and litigation in which Crombie is involved, arising out of the ordinary course of business operations. In the opinion of management, any liability that would arise from such contingencies would not have a significant adverse effect on these operating results. Crombie has agreed to indemnify its trustees and officers, and particular employees, in accordance with Crombie’s policies. Crombie maintains insurance policies that may provide coverage against certain claims. Crombie obtains standby letters of credit to support its obligations with respect to construction work on its investment properties and satisfying mortgage financing requirements. As at December 31, 2023, Crombie has a total of $5,342 (December 31, 2022 – $2,883) in outstanding letters of credit related to construction work being performed on investment properties. Crombie does not believe that any of these standby letters of credit are likely to be drawn upon. As at December 31, 2023, Crombie had signed construction contracts totalling $254,880, of which $168,407 has been paid. This includes contracts signed within joint ventures at Crombie’s ownership percentage. Crombie has committed to funding the next $37,926 in development costs at 1700 East Broadway Limited Partnership. FINANCIAL INSTRUMENTS The fair value of a financial instrument is the estimated amount that Crombie would receive to sell a financial asset or pay to transfer a financial liability in an orderly transaction between market participants at the measurement date. Fair value determination is classified within a three-level hierarchy, based on observability of significant inputs, as follows: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – unobservable inputs for the asset or liability. Financial liabilities Investment property debt Senior unsecured notes Total ﬁnancial liabilities Crombie has provided 100% guarantees on mortgages related to properties in which it has less than a 100% interest. The mortgages payable related to these guarantees are secured by specific charges against the properties. As at December 31, 2023, Crombie has provided guarantees of approximately $81,781 (December 31, 2022 – $111,022) on mortgages in excess of their ownership interest in the properties. Responsibility for ongoing payments of principal and interest on these mortgages remains with the joint owners of the properties. The mortgages have a weighted average term to maturity of 1.8 years. Under the terms of head leases with certain of Crombie’s joint operation partners, Crombie guarantees its joint operation partners their portion of any uncollected rent receivable from the sub-tenant. During the year ended December 31, 2023, 1600 Davie Limited Partnership entered into a credit agreement with a Canadian chartered bank. The revolving credit facility has a maximum principal amount of $4,000 and matures July 31, 2026. Crombie has guaranteed 100% of the loan. There were no transfers between levels of the fair value during the year ended December 31, 2023. Due to their short-term nature, the carrying value of the following financial instruments approximates their fair value at the balance sheet date: • Cash and cash equivalents • Accounts receivable • Trade and other payables The fair value of other financial instruments is based on discounted cash flows using discount rates that reflect current market conditions for instruments with similar terms and risks. The following table summarizes the estimated fair value of other financial instruments that have a fair value different from their carrying value: December 31, 2023 December 31, 2022 Fair Value Carrying Value Fair Value Carrying Value $ $ 956,601 1,108,474 2,065,075 $ $ 983,348 1,175,000 2,158,348 $ $ 1,035,216 877,058 1,912,274 $ $ 1,078,816 975,000 2,053,816 Financial assets are derecognized when the contractual rights to benefits from the financial asset expire. The fair values of investment property debt and senior unsecured notes are Level 2 measurements. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 63 63 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS RISK MANAGEMENT RISK MANAGEMENT FRAMEWORK Management of the REIT is vested in the Board of Trustees, subject to the provisions of applicable statutes and the Declaration of Trust. The Board of Trustees of the REIT shall have explicit responsibility for the stewardship of the REIT including the strategic planning process, approval of the strategic plan, the identification of principal risks and implementation of systems to manage these risks, succession planning, operations, communications and reporting, and the integrity of the REIT’s internal control and management information systems. The Board discharges certain of its responsibilities through delegation to its committees as more particularly set out in the committee mandates. RISK FACTORS RELATED TO THE BUSINESS OF CROMBIE In the normal course of business, Crombie is exposed to a number of risks that can affect its operating performance. The more significant risks, and the action taken to manage them, are as follows (please see the “Risks” section of Crombie’s 2022 Annual Information Form available at www.sedarplus.ca for additional information on risks related to Crombie): Enterprise Risk Management The impact on markets of the global pandemic, recent inflation, and rising interest rates, and the resulting effect on the available income of retail customers, may adversely impact our operations and development activities. Risks include, but are not limited to, increasing the credit risk associated with our receivables, limiting our ability to quickly respond to changes in credit risk, increased construction supply and labour costs, and extending the time to completion and occupancy of our major developments. There is also increased risk as to the extent of the impact of a possible economic recession on leasing, occupancy, tenant inducements, land-use intensification, market rents, and capital expenditures. The potential impact of this moderate economic uncertainty on Crombie’s future financial results and valuation of assets is difficult to reliably measure. Real Property Ownership and Tenant Risks All real property investments are subject to elements of risk. The value of real property and any improvements thereto depend on the credit and financial stability of tenants and upon the vacancy rates of the properties. In addition, certain significant expenditures, including property taxes, ground rent, mortgage payments, insurance costs, and related charges must be made throughout the period of ownership of real property regardless of whether a property is producing any income. Cash available for distribution will be adversely affected if a significant number of tenants are unable to meet their obligations under their lease or if a significant amount of available space in the properties becomes vacant and cannot be leased on economically favourable lease terms. Upon the expiry of any lease, there can be no assurance that the lease will be renewed, or the tenant replaced. The terms of any subsequent lease may be less favourable to Crombie than those of an existing lease. The ability to rent unleased space in the properties in which Crombie has an interest will be affected by many factors, including general economic conditions, local real estate markets, changing demographics, supply and demand for leased premises, competition from other available premises, and various other factors. Management utilizes staggered lease maturities so that Crombie is not required to lease unusually large amounts of space in any given year. In addition, the diversification of our property portfolio by geographic location, tenant mix, and asset type also helps to mitigate this risk. As technology and e-commerce continue to evolve and proliferate the daily business activities of certain of our tenants and resulting shopping options for their customers, tenants may need to alter the way they do business to remain relevant and successful. This could include reducing store footprints, rationalizing the number of properties they operate from and/or investing in a larger e-commerce presence to remain competitive in light of continued technology and e-commerce innovation. Any such changes could adversely affect tenant demand for our properties. Fixed Costs The failure to rent a material amount of unleased space on a timely basis, or at all, would likely have an adverse effect on Crombie’s financial condition and results of operation and decrease the amount of cash available for distribution. Certain significant expenditures, including property taxes, ground rent, maintenance costs, mortgage payments, insurance costs, and related charges must be made throughout the period of ownership of real property regardless of whether a property is producing any income. If Crombie is unable to meet mortgage payments on any property, losses could be sustained as a result of the mortgagee’s exercise of its rights of foreclosure or sale or the landlord’s exercise of remedies. Costs may also be incurred in making improvements or repairs to property required by a new tenant and income may be lost as a result of any prolonged delay in attracting suitable tenants to the vacant space. The timing and amount of capital expenditures by Crombie will affect the amount of cash available for distribution to Unitholders. Distributions may be reduced, or even eliminated, at times when Crombie deems it necessary to make significant capital or other expenditures. Liquidity of Real Estate Investments Real property investments tend to be relatively illiquid, with the degree of liquidity generally fluctuating in relation to demand for and the perceived desirability of such investments. Such illiquidity may limit Crombie’s ability to vary its portfolio promptly in response to changing economic or investment conditions. If Crombie were to be required to liquidate its real property investments, the proceeds might be significantly less than the aggregate carrying value of its properties, which could have an adverse effect on Crombie’s financial condition and results of operation and decrease the amount of cash available for distribution. 64 CRA028 4400112 -Crombie_Text Proof R1.indd 64 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Competition The real estate business is competitive. Numerous other developers, managers, and owners of properties compete with Crombie in seeking tenants. Some of the properties located in the same markets as Crombie’s properties may be newer, better located, less levered, or have stronger anchor tenants than Crombie’s properties. Some property owners with properties located in the same markets as Crombie’s properties may be better capitalized and may be stronger financially and hence better able to withstand an economic downturn. Competitive pressures in such markets could have a negative effect on Crombie’s ability to lease space in its properties and on the rents charged or concessions granted, which could have an adverse effect on Crombie’s financial condition and results of operations and decrease the amount of cash available for distribution. Competition for acquisitions of real properties can be intense and some competitors may have the ability or inclination to acquire properties at a higher price or on terms less favourable than those that Crombie may be prepared to accept. An increase in the availability of investment funds, an increase in interest in real property investments or a decrease in interest rates may tend to increase competition for real property investments thereby increasing purchase prices and reducing the yield on them. Development Risk Crombie owns a number of investment properties at varying stages of development as well as a significant pipeline of potential future development properties. Development risks associated with development projects underway include construction delays and their impact on financing and related costs as well as commitments from tenants for occupancy; cost overruns that could impact the profitability and/or financial viability of a project; and the inability to meet revenue projections upon completion, which could be impacted by unmet leasing assumptions on timing of tenant occupancy or rent per square foot. Management strives to mitigate these risks by undertaking certain projects with partners (see “Joint Arrangement Risk”); entering into fixed cost construction contracts with reputable contractors; entering into long-term financing at the most appropriate stage possible; and entering into long-term leases with reputable commercial tenants prior to construction wherever possible. Development risks associated with potential future development properties include all of the above as well as the risks associated with the ability to develop the property at all. This may include waiting for all current leases to expire or negotiating favourable terms with current tenants, which could include costs associated with lease interruptions to permit development, and inability to receive various required municipal/ provincial approvals for site plan, development, zoning, construction, etc. Joint Arrangement Risk Crombie has entered into joint arrangements or partnerships with other third party entities, including our mixed-use developments at Davie Street, Le Duke, Bronte Village, Opal Ridge, and Broadway and Commercial, where Crombie holds a 50% ownership. For more information on these developments, please see the “Development” section of this MD&A. Our joint arrangements also include ownership in joint operations, at varying percentages. As a result of these joint arrangements, Crombie may not have the same level of control over the operation or development of such properties that it ordinarily has, which may impact its ability to respond to conditions affecting such properties. Risks associated with these arrangements include risk of default by a partner on financing obligations or non-performance of a partner’s obligations on a project, which may include development, construction, management, or leasing. Crombie attempts to mitigate these risks by entering into arrangements with financially stable, reputable partners with a proven track record and by negotiating contractual rights in the event of a default. Capitalization Rate Risk Crombie values its investment properties using the capitalized net operating income method. Under this method, capitalization rates are applied to trailing stabilized net operating income (property revenue less property operating expenses). The key assumptions are the capitalization rates for each specific property and stabilized net income. Crombie is responsible for the reasonableness of the assumptions and for the accuracy of inputs that are used to determine our valuation disclosures. Crombie receives biannual capitalization rate reports (June and December) from external knowledgeable property valuators. The capitalization rate reports provide a range of rates for various geographic regions and for various types and qualities of properties within each region. Management selects the rate for each property from the range provided that management believes is most appropriate in its judgment. In addition to this, Crombie uses the market information obtained in external appraisals each quarter and makes relevant adjustments to our input assumptions. If these input assumptions are not correct, our valuation disclosures may not accurately describe the fair value of our properties. There has been upward pressure on capitalization rates for the past two years, largely in response to the dramatic increase in interest rates and bond yields, and the weakening Canadian economy. This, along with the lower level of comparable transactions in the market, has resulted in less reliable data for valuators, which may result in increased subjectivity in their capitalization rates provided to Crombie. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 65 65 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Retail and Geographic Concentration Crombie’s portfolio of properties is heavily weighted in retail properties. Consequently, changes in the retail environment and general consumer spending, including the growing trend in e-commerce, could adversely impact Crombie’s financial condition. Crombie’s portfolio of properties was historically heavily concentrated in Atlantic Canada. Through property acquisitions and dispositions over the last 10 years, Crombie has reduced its geographic concentration in Atlantic Canada, and thereby reduced the adverse impact an economic downturn in any one specific geographic region in Canada could have on Crombie’s financial condition. Environmental Matters Environmental matters can cover a broad range of topics, including energy usage, water conservation, pollution, waste management, or climate change, among many others. Each of these topics comes with their own specific risks including increased energy costs, the price of carbon, and pollution liability. To effectively manage environmental risk, it is critical to operate the business in a sustainable manner. This includes measuring, managing, and reporting on our sustainability performance through the lens of ESG deliverables. Our President and Chief Executive Officer (“CEO”) is responsible for developing Crombie’s sustainability strategy and the day-to-day oversight and implementation of ESG at Crombie. He also leads our Sustainability Committee, which is charged with developing a roadmap that expands our sustainability commitments and identifies key actions, milestones, and targets that will drive performance improvements. The Sustainability Committee meets quarterly and is responsible for Crombie’s analysis and response to the impacts of climate change on the company’s operations and portfolio of assets. Recently, Crombie completed updates to its Sustainable Development Policy, including a community engagement program that includes ESG specific issues, introduced portfolio-wide ESG risk assessments, and finalized ESG specific language in standard lease contracts. Crombie continues to improve its energy, water, and waste data coverage, having set internal targets, and is in the process of finalizing an inventory of its GHG emissions. In June 2023, Crombie made its third submission to GRESB for the Standing Investments and Development benchmarks, improving our score in both compared to the previous year, and was awarded GRESB’s Green Star for excellence in both areas. Crombie published its third annual Sustainability Report in the fourth quarter of 2023. Environmental legislation and regulations have become increasingly important in recent years. As an owner of interests in real property in Canada, Crombie is subject to various Canadian federal, provincial and municipal laws relating to environmental matters. Such laws provide that Crombie could become liable for environmental harm, damage or costs, including with respect to the release of hazardous, toxic or other regulated substances into the environment, and the removal or other remediation of hazardous, toxic or other regulated substances that may be present at or under its properties. Further liability may be incurred by Crombie with respect to the release of such substances from Crombie’s properties to properties owned by third parties, including properties adjacent to Crombie’s properties. The failure to remove or otherwise address such substances or properties, if any, may adversely affect Crombie’s ability to sell such property, realize the full value of such property or borrow using such property as collateral security, and could potentially result in claims against Crombie by public or private parties by way of civil action. Crombie’s operating policy is to obtain a Phase I environmental site assessment, conducted by an independent and experienced environmental consultant, prior to acquiring a property and to have Phase II environmental site assessment work completed where recommended in a Phase I environmental site assessment. Although such environmental site assessments provide Crombie with some level of assurance about the condition of property, Crombie may become subject to liability for undetected contamination or other environmental conditions at its properties against which it cannot insure, or against which Crombie may elect not to insure where insurance premium costs are considered to be disproportionate to the assessed risk, which could negatively impact Crombie’s financial condition and results of operations, and decrease the amount of cash available for distribution. Environmental laws can change and Crombie or its subsidiaries may become subject to even more stringent environmental laws in the future, with increased enforcement of laws by the government. Compliance with more stringent environmental laws, which may be more rigorously enforced, the identification of currently unknown environmental issues, or an increase in the costs required to address a currently known condition may have an adverse effect on Crombie’s business, financial condition and results of operation, and distributions. Crombie is not aware of any material non-compliance with environmental laws at any of its properties and is not aware of any material pending or threatened investigations or actions by environmental regulatory authorities in connection with any of its properties. Crombie has implemented policies and procedures to assess, manage, and monitor environmental conditions at its properties and developments to manage exposure to liability. Climate Change Risk Crombie has properties located in areas that are subject to natural disasters and severe weather conditions such as hurricanes, ice storms, floods, earthquakes, and fires, and the frequency of these natural disasters and severe weather conditions may increase due to climate change. The occurrence of natural disasters, severe weather conditions, and the effects of climate change can delay new development or redevelopment projects, increase investment costs to repair or replace damaged properties, increase operation costs, including the cost of energy at our properties, increase costs for future property insurance, impact the tenant demand for space, and cause substantial damages or losses to our properties which could exceed any applicable insurance coverage. The incurrence of any of these losses, costs, or business interruptions may adversely affect our financial condition, results of operations, and cash flows. In addition, changes in government legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties and could also require us to spend more on our development or redevelopment projects without a corresponding increase in revenues, which may adversely affect our financial condition, results of operations, and cash flows. 66 CRA028 4400112 -Crombie_Text Proof R1.indd 66 2024-03-21 12:42 PM Rent Control Risk Crombie has interests in equity-accounted investments which hold residential properties in locations where there is risk that municipalities have, or will, impose rent caps. Such rent control regulations will limit Crombie’s ability to charge market rents, which could adversely affect Crombie’s property revenue and net property income* from affected properties and adversely affect the fair value of properties subject to rent control regulations, and may negatively affect Crombie’s financial condition, results of operations, and cash flows. Significant Relationship As at December 31, 2023, Empire, through its wholly owned subsidiary ECL Developments Limited (“ECLD”), holds a 41.5% indirect interest in Crombie. Crombie’s anchor tenants are concentrated in a relatively small number of retail operators. Specifically, for the year ended December 31, 2023, 58.5% of the AMR and 54.1% of total property revenue generated from Crombie’s properties is derived from anchor tenants that are owned and/or operated by Empire (including Sobeys and all other subsidiaries of Empire). Therefore, Crombie is reliant on the sustainable operation by Empire in these locations. Cyber Security Risk A cyber security incident includes any material adverse event that threatens the confidentiality, integrity and/or availability of Crombie’s information resources. Such events, intentional or unintentional, could include malicious software attacks, unauthorized access to confidential data or information systems, or security breaches and could lead to a disruption of operations or unauthorized access to, and release of, confidential information. The organizational impact could include reputational damage with tenants and suppliers, financial costs, or a disruption to Crombie’s business. Cyber incidents are becoming more frequent and more sophisticated. Crombie has implemented processes, technologies, procedures, and controls to help mitigate these risks, and has made it a priority to better educate and train all Crombie team members on cyber security awareness. These measures, however, as well as Crombie’s enhanced awareness of risk of a cyber incident, do not guarantee that its financial results will not be negatively impacted by the occurrence of any such event. MANAGEMENT’S DISCUSSION AND ANALYSIS Potential Conflicts of Interest The trustees will, from time to time, in their individual capacities, deal with parties with whom Crombie may be dealing, or may be seeking investments similar to those desired by Crombie. The interests of these persons could conflict with those of Crombie. The Declaration of Trust and Code of Conduct contain conflict of interest provisions requiring the trustees to disclose their interests in certain contracts and transactions and to refrain from voting on those matters. In addition, certain decisions regarding matters that may give rise to a conflict of interest must be made by a majority of independent elected trustees only. Conflicts may exist due to the fact that certain trustees, senior officers, and employees of Crombie are directors and/or senior officers of Empire and/or its affiliates or will provide management or other services to Empire and its affiliates. Empire and its affiliates are engaged in a wide variety of real estate and other business activities. Crombie may become involved in transactions that conflict with the interests of the foregoing. The interests of these persons could conflict with those of Crombie. To mitigate these potential conflicts, Crombie and Empire have entered into a number of agreements to outline how potential conflicts of interest will be dealt with, including a Non-Competition Agreement, Management Agreement, and Development Agreement. As well, the Declaration of Trust contains a number of provisions to manage potential conflicts of interest including setting limits to the number of Empire appointees to the Board, “conflict of interest” guidelines, as well as outlining which matters require the approval of a majority of the independent elected trustees, such as any property acquisitions or dispositions between Crombie and Empire or another related party. Reliance on Key Personnel The management of Crombie depends on the services of certain key personnel. The loss of the services of any key personnel could have an adverse effect on Crombie and adversely impact Crombie’s financial condition. Crombie does not have key-person insurance on any of its key employees. Crombie has undergone a number of changes to its senior management team over the last 18 months, including the retirements of its Chief Executive Officer, Chief Operating Officer, and Chief Talent Officer, and the recently announced upcoming departure of its Chief Financial Officer, among others. While replacements for some of these roles have been identified and retained, there can be no assurance that Crombie will not experience adverse impact to its financial condition beyond the employee transition costs already disclosed. Reliance on Empire, Sobeys, and Other Empire Affiliates Crombie’s ability to acquire new properties is dependent in part upon Empire and Sobeys Developments Limited Partnership (“SDLP”) and the successful operation of the right of first offer agreement as described in the “Material Contracts” section of Crombie’s 2022 Annual Information Form. Also, a significant portion of Crombie’s rental income is received from tenants that are affiliates of Empire. In addition, Empire has obligations to indemnify Crombie in respect to the cost of environmental remediation of certain properties acquired by Crombie from Empire to a maximum permitted amount in relation to some properties and unlimited in relation to other properties. There is no certainty that Empire and SDLP will be able to perform their obligations to Crombie in connection with these agreements. Empire and specific subsidiaries have not provided any security to guarantee these obligations. If Empire, Sobeys, or such affiliates are unable or otherwise fail to fulfill their obligations to Crombie, such failure could adversely impact Crombie’s financial condition. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 67 67 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS FINANCIAL RISK MANAGEMENT The following table outlines our financial risks, how we manage these risks, and whether there was a change in risk exposure compared to the prior year. Credit Risk Risk Description Credit risk arises from the possibility that tenants may experience financial difficulty and be unable to fulfill their lease commitments. A provision for doubtful accounts and other adjustments to net property income* are taken for all anticipated collectability risks. Risk Management Crombie mitigates credit risk by geographical diversification, diversifying both its tenant mix and asset mix, and conducting credit assessments for new and renewing tenants. The residential component of Crombie’s investment in joint ventures further diversifies our portfolio. In measuring tenant concentration, Crombie considers both the AMR and total property revenue of major tenants. • Crombie’s largest tenant, Empire (including Sobeys and all other subsidiaries of Empire), represents 58.5% of AMR. No other tenant accounts for more than 2.4% of Crombie’s AMR; • total property revenue includes base rent as well as operating and realty tax cost recovery income, and percentage rent. These amounts can vary by property type, specific tenant leases, and where tenants may directly incur and pay operating costs. Crombie earned total property revenue of $238,607 for the year ended December 31, 2023 (December 31, 2022 – $230,752) from Sobeys and other subsidiaries of Empire; and • over the next five years, leases on no more than 7.3% of the gross leasable area of Crombie will expire in any one year. Receivables are substantially comprised of current balances due from tenants and past due receivables. The balance of accounts receivable past due is usually not significant. Historically low receivable balances increased significantly over the past few years as a result of the impacts of the COVID-19 pandemic but have since returned to their pre-pandemic collection rates. Generally, rents are due the first of each month and other tenant billings are due 30 days after invoicing, and balances over 30 days are considered past due. Crombie determines the expected credit loss in accordance with IFRS 9 “Financial Instruments” simplified approach for amounts receivable where its loss allowance is measured at initial recognition and throughout the life of the receivable. Trade receivables are written off when there is no reasonable expectation of recovery. Crombie assesses, on a forward-looking basis, the expected credit losses associated with its rent receivables. In determining the expected credit losses, Crombie takes into account, on a tenant-by-tenant basis, the payment history, future expectations, and knowledge gathered through discussions for rental concessions and ongoing discussions with tenants. During the year ended December 31, 2023, Crombie recorded bad debt recovery of $(104) (December 31, 2022 – recovery of $(136)). Our trade receivables and provision for doubtful accounts balances at December 31, 2023 were $18,605 and $(1,396), respectively (December 31, 2022 – $21,645 and $(2,328), respectively). Crombie manages its residual risk in its investment properties through an active capital expenditure program and actively leasing any vacant spaces. The residual risk throughout Crombie’s portfolio is not considered significant, although a prolonged state of economic shutdown can impact Crombie’s ability to execute on its capital expenditure program and leasing activity. Liquidity risk is the risk that Crombie may not have access to sufficient debt and equity capital to fund its growth program, refinance debt obligations as they mature, or meet its ongoing obligations as they arise. The real estate industry is capital intensive, and most assets are non-current in nature. These assets produce income through long-term leases, which funds current liabilities as they come due. While rents are contractually committed, they are not recognized as current assets, and this imbalance creates a working capital deficit, despite cash flows from contractually committed rents and credit facilities being more than adequate to satisfy current liabilities. Cash flow generated from operating the property portfolio represents the primary source of liquidity used to service the interest on debt, fund general and administrative expenses, reinvest in the portfolio through capital expenditures, as well as fund tenant incentive costs and make distributions to Unitholders. Debt repayment requirements are primarily funded from refinancing Crombie’s maturing debt obligations. Property acquisition funding requirements are funded through a combination of accessing the debt and equity capital markets and recycling capital from property dispositions. There is a risk that the debt capital markets may not refinance maturing fixed rate and floating rate debt on terms and conditions acceptable to Crombie, or at any terms at all. Crombie seeks to mitigate this risk by staggering its debt maturity dates. There is also a risk that the equity capital markets may not be receptive to a REIT Unit offering issuance from Crombie with financial terms acceptable to Crombie. Access to debt and equity capital markets may also be affected by national and international events, and economic conditions beyond Crombie’s control. Crombie mitigates its exposure to liquidity risk utilizing a disciplined approach to capital management. Liquidity Risk Risk Description Risk Management 68 CRA028 4400112 -Crombie_Text Proof R1.indd 68 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Liquidity Risk Risk Management (continued) There is a risk that credit ratings may change. No ratings agency has issued a credit rating with respect to the Units, and no credit rating of the Units will be sought or obtained by Crombie. As at December 31, 2023, Crombie’s credit rating on outstanding senior unsecured notes was “BBB(low)” with a “Stable” trend from Morningstar DBRS. Credit ratings may not reflect all risks associated with an investment in Crombie’s securities. Any credit ratings applied to the notes are an assessment of Crombie’s ability to pay its obligations generally. Consequently, real or anticipated changes in the credit ratings will generally affect the market value of the notes. The credit ratings, however, may not reflect the potential impact on the value of the notes of risks related to structure, market, or other factors discussed under the heading “Risk Factors” in Crombie’s 2022 Annual Information Form. Crombie is under no obligation to maintain any specified level of credit rating with credit rating agencies, and there is no assurance that any credit rating assigned to the notes will remain in effect for any given period of time or that any rating will not be lowered or withdrawn entirely by the relevant rating agency. A lowering, withdrawal, or failure to maintain any credit ratings applied to the notes may have an adverse effect on the market price or value and the liquidity of the notes. Credit ratings are not recommendations to purchase, hold, or sell the notes or other securities of Crombie. Any future lowering of Crombie’s ratings is likely to make it more difficult or more expensive for Crombie to obtain additional debt financing. Access to the $400,000 Revolving credit facility is limited by the amount utilized under the facility and the amount of any outstanding letters of credit, and it cannot exceed the borrowing base security provided by Crombie. Refer to the “Debt Maturities” section of this MD&A for a maturity analysis of our recognized financial liabilities and purchase obligations. Interest Rate Risk Risk Description Interest rate risk is the potential for financial loss arising from increases in interest rates. Risk Management Canadian prime interest rates have increased over the past year. Crombie mitigates this risk of rising interest rates by utilizing staggered debt maturities and limiting the use of permanent floating rate debt and, on occasion, utilizing interest rate swap agreements. The interest swap rates would be based on Canadian bond yields, plus a premium, called the swap spread, which reflects the risk of trading with a private counterparty as opposed to the Canadian government. Under interest rate swap arrangements, Crombie would agree to pay the counterparty an amount if market interest rates decline, in return for the counterparty’s agreement to pay Crombie an amount if market interest rates increase. As a result, the combined effect of variable interest rates on certain debt arrangements coupled with the payment obligations under interest rate swap agreements is to stabilize Crombie’s net interest expense, as increased interest payments are partially offset by the right to receive payments under the interest rate swap agreements, while decreased interest payments are partially offset by the obligation to make payments under the interest rate swap agreements. In the event that interest rates change by more than was anticipated in the interest rate swap agreements, payment obligations under interest rate swap agreements could adversely impact Crombie’s financial condition and results of operations and decrease the amount of cash available for distribution. Crombie does not enter into these interest rate swaps on a speculative basis. Crombie is prohibited by its Declaration of Trust in purchasing, selling, or trading in interest rate future contracts other than for hedging purposes. The tables below summarize Crombie’s financial instruments in which hedge accounting was applied: Hedge type Cash ﬂow hedge2 Cash ﬂow hedge2 Cash ﬂow hedge2 Cash ﬂow hedge3 (1) Amounts are shown at Crombie’s ownership percentage. (2) Included in other assets on Crombie’s audited consolidated balance sheets. (3) Included in investment in joint ventures on Crombie’s audited consolidated balance sheets. Maturity date Dec. 20, 2024 Mar. 18, 2025 Oct. 7, 2024 Mar. 1, 2029 Fixed interest rate 3.72% 3.52% 3.27% 3.15% As at December 31, 2023 Notional amount of the hedging instrument1 Fair value of hedging instrument1 $ 75,280 $ 1,983 4,614 3,503 52,000 140 96 2,908 $ 135,397 $ 5,127 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 69 69 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Interest Rate Risk Risk Management (continued) Hedge type Cash ﬂow hedge2 Cash ﬂow hedge2 Cash ﬂow hedge3 Cash ﬂow hedge2 Cash ﬂow hedge4 Three months ended December 31, 2023 Year ended December 31, 2023 Change in fair value gain (loss) recognized in other comprehensive income (loss)1 Hedge recognized in statements of comprehensive income (loss) Change in fair value gain (loss) recognized in other comprehensive income (loss)1 Hedge recognized in statements of comprehensive income (loss) $ (1,417) $ — $ (2,290) $ (78) — (47) (2,854) — — — — (82) (269) (76) (1,083) — — 199 — — $ (4,396) $ — $ (3,800) $ 199 Maturity date Dec. 20, 2024 Mar. 18, 2025 Apr. 25, 2024 Oct. 7, 2024 Mar. 1, 2029 Fixed interest rate 3.72% 3.52% 3.58% 3.27% 3.15% (1) Amounts are shown at Crombie’s ownership percentage. (2) Included in other assets on Crombie’s audited consolidated balance sheets. (3) Term loan, credit facility, and swap were settled on June 1, 2023, with the net settlement amount reducing ﬁnance costs. (4) Included in investment in joint ventures on Crombie’s audited consolidated balance sheets. As at December 31, 2023: • Crombie’s weighted average term to maturity of its fixed rate mortgages is 5.9 years; • Crombie’s weighted average term to maturity of its unsecured notes is 4.4 years; • Crombie has a floating rate Revolving credit facility available to a maximum of $400,000, subject to available borrowing base, with a balance of $47,591 outstanding; • Crombie has an Unsecured non-revolving credit facility available to a maximum of $200,000 with a balance of $93,297 outstanding; • Crombie has a floating rate Unsecured bilateral credit facility available to a maximum of $130,000 with no balance outstanding/drawn; • Crombie has a Joint operation credit facility available to a maximum of $3,520 at Crombie’s share with a balance of $3,503 outstanding; • Crombie has interest rate swap agreements in place on $83,398 of floating rate debt and an interest rate swap agreement in place held in equity-accounted investments on $52,000 of floating rate debt, at Crombie’s share; and • Crombie has floating rate credit facilities, included in debt held in equity-accounted investments, available to a maximum of $133,000 with a balance of $120,200 outstanding, at Crombie’s share. A fluctuation in interest rates would have an impact on Crombie’s operating and other comprehensive income related to the use of floating rate debt. The following tables look at the impacts of selected interest rate moves on operating and other comprehensive income: Impact on operating income attributable to Unitholders of interest rate changes on the Revolving credit facility Increase in rate Decrease in rate Increase in rate Decrease in rate Impact of a 0.5% interest rate change Impact of a 1.0% interest rate change Impact of a 1.5% interest rate change $ $ $ (206) (411) (618) $ $ $ 206 411 618 $ $ $ (701) (1,402) (2,104) $ $ $ 701 1,402 2,104 Three months ended December 31, 2023 Year ended December 31, 2023 Impact on other comprehensive income (loss) of interest rate changes on interest rate swap agreements at Crombie’s share Impact of a 0.5% interest rate change Impact of a 1.0% interest rate change Impact of a 1.5% interest rate change As at December 31, 2023 Increase in rate Decrease in rate $ 1,600 $ 3,200 $ 4,800 $ $ $ (1,600) (3,200) (4,800) 70 CRA028 4400112 -Crombie_Text Proof R1.indd 70 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS RISK FACTORS RELATED TO THE UNITS Cash Distributions Are Not Guaranteed There can be no assurance regarding the amount of income to be generated by Crombie’s properties. The ability of Crombie to make cash distributions and the actual amount distributed are entirely dependent on the operations and assets of Crombie and its subsidiaries, and are subject to various factors including financial performance, obligations under applicable credit facilities, the sustainability of income derived from anchor tenants, and capital expenditure requirements. Cash available to Crombie to fund distributions may be limited from time to time because of items such as principal repayments, tenant allowances, leasing commissions, capital expenditures, and redemptions of Units, if any. Crombie may be required to use part of its debt capacity or to reduce distributions in order to accommodate such items. The market value of the Units will deteriorate if Crombie is unable to maintain its distribution in the future, and that deterioration may be significant. In addition, the composition of cash distributions for tax purposes may change over time and may affect the after-tax return for investors. Restrictions on Redemptions It is anticipated that the redemption of Units will not be the primary mechanism for holders of Units to liquidate their investments. The entitlement of Unitholders to receive cash upon the redemption of their Units is subject to the following limitations: (i) the total amount payable by Crombie in respect of such Units and all other Units tendered for redemption in the same calendar month must not exceed $50 (provided that such limitation may be waived at the discretion of the trustees); (ii) at the time such Units are tendered for redemption, the outstanding Units must be listed for trading on a stock exchange or traded or quoted on another market which the trustees consider, in their sole discretion, provides fair market value prices for the Units; and (iii) the trading of Units is not suspended or halted on any stock exchange on which the Units are listed (or, if not listed on a stock exchange, on any market on which the Units are quoted for trading) on the redemption date for more than five trading days during the 10-day trading period commencing immediately after the redemption date. Potential Volatility of Unit Prices One of the factors that may influence the market price of the Units is the annual yield on the Units. An increase in market interest rates may lead purchasers of Units to demand a higher annual yield, which accordingly could adversely affect the market price of the Units. In addition, the market price of the Units may be affected by changes in general market conditions, fluctuations in the markets for equity securities, and numerous other factors beyond the control of Crombie. Tax-related Risk Factors Crombie intends to make distributions not less than the amount necessary to eliminate Crombie’s liability for tax under Part I of the Income Tax Act (Canada). Where the amount of net income and net realized capital gains of Crombie in a taxation year exceeds the cash distributions in the year, such excess net income and net realized capital gains will be distributed to Unitholders and such additional distributions may be in the form of cash and/or additional Units. Unitholders will generally be required to include an amount equal to the fair market value of any additional Units in their taxable income, notwithstanding that they do not directly receive a cash distribution. Certain properties have been acquired by Crombie on a tax deferred basis, whereby the tax cost of these properties is less than their fair market value. Accordingly, if one or more of such properties is disposed of, the gain for tax purposes recognized by Crombie will be in excess of that which it would have been if it had acquired the properties at a tax cost equal to their fair market values. Publicly traded income trusts, or specified investment flow-through entities (“SIFTs”), are subject to income taxation at corporate tax rates, subject to an exemption for real estate investment trusts (“REITs”). The exemption for REITs was provided to “recognize the unique history and role of collective real estate investment vehicles,” which are well- established structures throughout the world. A trust that satisfies the criteria of a REIT throughout its taxation year will not be subject to income tax in respect of distributions to its Unitholders or be subject to the restrictions on its growth that would apply to SIFTs. While REITs were exempted from the SIFT taxation, a number of technical tests apply to determine which entities would qualify as a REIT. These technical tests did not fully accommodate the business structures used by many Canadian REITs. Crombie and its advisors underwent an extensive review of Crombie’s organizational structure and operations to support Crombie’s assertion that it meets the REIT technical tests contained in the Act through the 2023 fiscal year. The relevant tests apply throughout the taxation year of Crombie and, as such, the actual status of Crombie for any particular taxation year can only be ascertained at the end of the year. Notwithstanding that Crombie may meet the criteria for a REIT and thus be exempt from the distribution tax, there can be no assurance that the Department of Finance (Canada) or other governmental authority will not undertake initiatives which have an adverse impact on Crombie or its Unitholders. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 71 71 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Indirect Ownership of Units by Empire Empire holds a 41.5% economic interest in Crombie through the ownership of REIT and Class B LP Units. Pursuant to the Exchange Agreement, each Class B LP Unit will be exchangeable at the option of the holder for one Unit of Crombie and will be attached to a Special Voting Unit of Crombie, providing for voting rights in Crombie. Furthermore, pursuant to the Declaration of Trust, Empire is entitled to appoint a certain number of trustees based on the percentage of Units held by it. Thus, Empire is in a position to exercise a certain influence with respect to the affairs of Crombie. If Empire sells substantial amounts of its Class B LP Units or exchanges such Units for Units and sells these Units in the public market, the market price of the Units could fall. The perception among the public that these sales will occur could also produce such effect. OWNERSHIP OF SENIOR UNSECURED NOTES There is no public market through which the notes may be sold. Crombie does not intend to list the notes on any securities exchange or include the notes in any automated quotation system. Therefore, an active market for the notes may not develop or be maintained, which would adversely affect the market price and liquidity of the notes. In such case, the holders of the notes may not be able to sell their notes at a particular time or at a favourable price. If a public trading market were to develop, future trading prices of the notes may be volatile and will depend on many factors, including: • the number of holders of notes; • prevailing interest rates; • Crombie’s operating performance and financial condition; • Crombie’s credit rating; • the interest of securities dealers in making a market for them; and • the market for similar securities. Even if an active trading market for the notes does develop, there is no guarantee that it will continue. The notes may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar notes, Crombie’s performance, and other factors. 72 CRA028 4400112 -Crombie_Text Proof R1.indd 72 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS JOINT VENTURES As at December 31, 2023, Crombie holds partial ownership interests in eight joint ventures, four of which currently hold property. These joint ventures are all subject to equity accounting. As such, the results of these equity-accounted investments are not included in certain financial metrics, such as net property income*, property cash NOI*, and same-asset property cash NOI*, or in operational metrics such as occupancy and GLA, unless specifically indicated that such metrics are presented on a proportionate consolidation basis. (See the “Total Portfolio Review Inclusive of Joint Ventures” section of this MD&A for select operating metrics presented in this manner.) The figures presented below represent only the results of these joint ventures, at 100%, with the exception of FFO*. JOINT VENTURE SUMMARY The following represents Crombie’s interest in joint venture investments: 1600 Davie Limited Partnership Bronte Village Limited Partnership The Duke Limited Partnership Penhorn Residential Holdings Limited Partnership 140 CPN Limited 1700 East Broadway Limited Partnership Lynn Valley Limited Partnership Kingsway & Tyne Property Development Limited Partnership 1600 Davie Limited Partnership Davie Street is a retail/residential mixed-used property consisting of 330 residential units and 54,000 square feet of retail GLA in Vancouver, British Columbia. Crombie maintains 100% ownership of the retail GLA, which is anchored by a 44,500 square foot Safeway. Stabilization of NOI was reached in September 2021 and the residential property is 95.5% leased at December 31, 2023. The joint venture retains ownership of the 330 residential units. Bronte Village Limited Partnership Bronte Village is a retail/residential mixed-used property located in Oakville, Ontario. It is comprised of two residential towers incorporating 481 residential rental units and 54,000 square feet of grocery-anchored retail GLA that is owned by the joint venture. Substantial completion was reached on tower one in the third quarter of 2021, with the remaining residential tower completed during the first quarter of 2022. The residential portion of the property is 91.9% leased at December 31, 2023. Full occupancy of both towers, and stabilization of NOI for the property, is expected in the first half of 2024. The Duke Limited Partnership Le Duke is a retail/residential mixed-use property in Montreal, Quebec, with an existing heritage building integrated into the ground floor of the property. The property incorporates 387 residential units, a 25,000 square foot IGA on the ground floor, and an additional 1,000 square feet of retail space that is owned by the joint venture. Stabilization of NOI was reached in December 2022 and the residential tower is 96.6% leased at December 31, 2023. Penhorn Residential Holdings Limited Partnership Opal Ridge (Penhorn), formerly referred to as Penhorn Lands, is a 26-acre parcel in Dartmouth, Nova Scotia, with zoning proposed for the development of multi-family parceled building lots. Entitlement CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 73 December 31, 2023 December 31, 2022 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% —% —% and development agreements were approved in June 2022. The sale of a 3-acre parcel occurred in the fourth quarter of 2022 with a further two parcels totalling 4.4 acres sold in the first quarter of 2023. The last parcel was sold in the third quarter of 2023, with the remaining land development activity completed at the end of 2023. 140 CPN Limited Centennial Parkway is a retail plaza in Hamilton, Ontario, consisting of 33,000 square feet of retail GLA, which is fully leased and owned by the joint venture. 1700 East Broadway Limited Partnership East Broadway (Broadway and Commercial) is a proposed major mixed-use redevelopment in Vancouver, British Columbia, located at the busiest transit node in Western Canada. It will include grocery- anchored retail, office, residential rental, and condominiums. The project is currently being rezoned and construction tendering could commence in 2025. The joint venture will own the residential and office components, with Crombie retaining 100% ownership of the retail. Lynn Valley Limited Partnership 1170 East 27 Street is a proposed mixed-use redevelopment in North Vancouver, British Columbia. The joint venture is advancing entitlement by working through public engagement in advance of submitting a formal rezoning application. Kingsway & Tyne Property Development Limited Partnership 3410 Kingsway is a proposed mixed-use redevelopment in Vancouver, British Columbia. The joint venture is currently working through early concept planning to support a policy inquiry submission which will allow municipal staff to provide early input on the redevelopment concept. 73 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS OCCUPANCY METRICS Stabilized properties1 Lease-up in progress: Bronte Village Total Retail Occupancy % as at December 31, 2023 Residential Occupancy % as at December 31, 20232 Residential GLA 100.0% 481,000 90.5% 95.8% 466,000 947,000 96.1% 91.9% 94.4% Retail GLA 59,000 54,000 113,000 Total GLA 540,000 520,000 1,060,000 Number of Residential Units Number of Committed Units 717 481 1,198 689 442 1,131 (1) Comprised of Davie Street Residential, Le Duke, and Centennial Parkway. (2) Committed occupancy Total average residential rent is $3.81 per square foot. FINANCIAL PERFORMANCE December 31, 2023 December 31, 2022 Three months ended Davie LP Bronte LP Duke LP Other Total Davie LP Bronte LP Duke LP Other Total Property revenue $ 3,074 $ 4,199 $ 2,656 $ 4,515 $ 14,444 $ 2,774 $ 2,321 $ 1,739 $ 7,708 $ 14,542 Property operating expenses (775) (1,852) (2,855) (1,886) (7,368) Net property income* 2,299 2,347 (199) 2,629 7,076 (685) 2,089 (814) 1,507 (495) (4,051) (6,045) 1,244 3,657 8,497 General and administrative expenses Depreciation and amortization Finance costs – operations Net income (loss) Contribution to Crombie’s FFO*1 42 (91) (13) 17 (45) (83) (1) (34) (35) (153) (733) (1,154) (476) (14) (2,377) (874) (1,342) (490) (18) (2,724) (1,553) (4,132) (825) (47) (6,557) (1,430) (3,572) $ $ 55 $ (3,030) $ (1,513) $ 2,585 $ (1,903) 367 $ (880) $ (506) $ 1,518 $ 499 $ $ (298) $ (3,408) 356 $ (899) (816) (96) 210 $ $ (105) (5,923) $ $ 3,499 1,758 $ $ (303) 1,425 (1) FFO is at Crombie’s share and is included in Crombie’s total FFO numbers. December 31, 2023 December 31, 2022 Year ended Property revenue $ 12,007 $ 13,153 $ 8,959 $ 30,532 $ 64,651 $ 10,826 $ 6,514 $ 5,466 $ 8,196 $ 31,002 Davie LP Bronte LP Duke LP Other Total Davie LP Bronte LP Duke LP Other Total Property operating expenses (2,915) (5,381) (4,456) (15,955) (28,707) (2,705) (3,699) (1,822) (4,219) (12,445) Net property income* 9,092 7,772 4,503 14,577 35,944 8,121 2,815 3,644 3,977 18,557 General and administrative expenses Depreciation and amortization Finance costs – operations (224) (220) (87) (126) (657) (115) (54) (69) (319) (557) (2,934) (4,492) (1,903) (55) (9,384) (3,493) (4,720) (1,957) (60) (10,230) (7,178) (16,188) (3,299) (194) (26,859) (5,750) (9,812) (3,137) (218) (18,917) Net income (loss) $ (1,244) $ (13,128) Contribution to Crombie’s FFO*1 $ 1,269 $ (4,088) $ $ (1) FFO is at Crombie’s share and is included in Crombie’s total FFO numbers. (786) $ 14,202 $ (956) $ (1,237) $ (11,771) $ (1,519) 608 $ 7,129 $ 4,918 $ 997 $ (3,243) $ 268 $ $ 3,380 $ (11,147) 1,721 $ (257) 74 CRA028 4400112 -Crombie_Text Proof R1.indd 74 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Net property income* Non-cash straight-line rent Non-cash tenant incentive amortization Three months ended December 31, 2023 December 31, 2022 Retail Residential Total Retail Residential Total $ 3,025 $ 4,051 $ 7,076 $ 3,826 $ 4,671 $ 8,497 (43) 142 (151) — (194) 142 (18) 290 297 — 279 290 Property cash NOI* $ 3,124 $ 3,900 $ 7,024 $ 4,098 $ 4,968 $ 9,066 Net property income* Non-cash straight-line rent Non-cash tenant incentive amortization December 31, 2023 December 31, 2022 Year ended Retail Residential Total Retail Residential Total $ 16,099 $ 19,845 $ 35,944 $ 5,358 $ 13,199 $ 18,557 (97) 560 231 — 134 560 (116) 662 1,102 — 986 662 Property cash NOI* $ 16,562 $ 20,076 $ 36,638 $ 5,904 $ 14,301 $ 20,205 FAIR VALUE The estimated fair value of the investment properties in Crombie’s equity-accounted joint ventures at 100% is as follows: December 31, 2023 December 31, 2022 Fair Value Carrying Value $ $ 945,000 908,000 $ $ 566,563 572,153 The fair value included in this summary reflects the fair value of the properties as at December 31, 2023 and December 31, 2022, respectively, based on each property’s current use as a revenue- generating property or property under development. Additionally, as properties are prepared for redevelopment, Crombie considers each property’s progress through entitlement in determining the fair value of a property. The fair value of properties under development is assumed to equal cost until the property is substantially completed. As at December 31, 2023, properties held within 1600 Davie Limited Partnership, Bronte Village Limited Partnership, The Duke Limited Partnership, Penhorn Residential Holdings Limited Partnership, and 140 CPN Limited are revenue-generating properties. Crombie has utilized the following weighted average capitalization rates for its joint venture properties: Weighted average capitalization rate Fair Value Sensitivity December 31, 2023 December 31, 2022 3.67 % 3.47 % Crombie has determined that a change in this applied capitalization rate and net operating income at December 31, 2023 would result in an (increase) decrease in the fair value of the investment properties as follows: Capitalization rate change (0.75)% (0.50)% (0.25)% —% 0.25% 0.50% 0.75% Net Operating Income Change $ $ $ $ $ $ $ $ (15,000) (168,719) (264,719) (344,719) (408,719) (472,719) (524,719) (570,719) $ $ $ $ $ $ $ $ (10,000) (32,480) (128,480) (208,480) (272,480) (336,480) (388,480) (434,480) $ $ $ $ $ $ $ $ (5,000) 103,760 7,760 (72,240) (136,240) (200,240) (252,240) (298,240) $ $ $ $ $ $ $ $ — 240,000 144,000 64,000 — (64,000) (116,000) (162,000) $ $ $ $ $ $ $ $ 5,000 376,240 280,240 200,240 136,240 72,240 20,240 (25,760) $ $ $ $ $ $ $ $ 10,000 512,480 416,480 336,480 272,480 208,480 156,480 110,480 $ $ $ $ $ $ $ $ 15,000 648,719 552,719 472,719 408,719 344,719 292,719 246,719 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 75 75 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS DEBT TO GROSS FAIR VALUE* Fixed and ﬂoating rate mortgages and construction loans Revolving credit facilities Partnership loans Lease liabilities Total debt outstanding Investment properties, fair value Other assets, cost1 Cash and cash equivalents Gross fair value Debt to gross fair value* December 31, 2023 December 31, 2022 $ $ $ $ 510,254 $ 21,400 10,664 5,912 548,230 945,000 52,429 6,008 1,003,437 54.6% $ $ $ 506,143 17,256 10,364 7,521 541,284 908,000 53,948 4,974 966,922 56.0% (1) Other assets include deferred ﬁnancing costs, and exclude tenant incentives and related accumulated amortization, and accrued straight-line rent receivable. DEBT PROFILE December 31, 2023 December 31, 2022 Mortgages1 Revolving Credit Facilities2 Partnership Loans Total Borrowings Mortgages1 Revolving Credit Facilities2 Partnership Loans Total Borrowings Opening balance, beginning of period $ 506,143 $ 17,256 $ 10,364 $ 533,763 $ 465,027 $ 1,200 $ 15,533 $ 481,760 Additions to existing mortgages Net advances Principal repayments 6,615 — (2,504) — 7,000 (2,856) — 300 — 6,615 7,300 (5,360) 43,511 — — 16,056 — — (2,395) — (5,169) 43,511 16,056 (7,564) Closing balance, end of period $ 510,254 $ 21,400 $ 10,664 $ 542,318 $ 506,143 $ 17,256 $ 10,364 $ 533,763 (1) Includes construction ﬁnancing. (2) The unsecured revolving term credit facility at Broadway and Commercial is used by the joint venture to ﬁnance development activity of the partnership during rezoning. Total borrowings Long-term portion Current portion Weighted average ﬁxed interest rate1 Weighted average ﬂoating interest rate2 Weighted average term to maturity of ﬁxed rate debt Weighted average term to maturity of ﬂoating rate debt2 December 31, 2023 December 31, 2022 $ $ $ 542,318 315,146 227,172 $ $ $ 3.27% 7.16% 4.2 years 1.3 years 533,763 314,875 218,888 3.17% 7.00% 5.4 years 0.3 years (1) Includes ﬂoating rate mortgages that are ﬁxed under swap agreements. (2) Includes construction ﬁnancing and credit facilities of $244,400 at December 31, 2023 (December 31, 2022 – $233,640). From time to time, our joint ventures have entered into interest rate swap agreements to manage the interest rate profile of their current or future debts without an exchange of the underlying principal amount. Our joint ventures currently have an interest rate swap agreement in place on $104,000 of floating rate debt. 76 CRA028 4400112 -Crombie_Text Proof R1.indd 76 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS OTHER DISCLOSURES RELATED PARTY TRANSACTIONS As at December 31, 2023, Empire, through its wholly owned subsidiary ECLD, holds a 41.5% indirect interest in Crombie. Related party transactions primarily include transactions with entities associated with Crombie through Empire’s indirect interest. Related party transactions also include transactions with joint venture entities in which Crombie has Crombie’s transactions with related parties are as follows: a 50% interest, as well as transactions with key management personnel and trustees, and post-employment benefit plans. Related party transactions are measured at the amount of consideration established and agreed to by the related parties. Property revenue Property revenue Head lease income Lease termination income Revenue from management and development services Property operating expenses General and administrative expenses Property management services recovered Other general and administrative expenses Finance costs – operations Interest rate subsidy Finance costs – distributions to Unitholders Three months ended December 31, Year ended December 31, 2023 2022 2023 2022 (a) (b) (c) (d) $ $ $ $ $ $ $ $ $ 60,782 580 $ $ — $ 771 (34) 39 (41) $ $ $ $ 58,2361 246 23 — (34) 152 (155) — $ — (16,684) $ (16,440) $ $ $ $ $ $ $ $ $ 238,607 1,275 $ $ — $ 3,114 (135) 208 (171) $ $ $ $ 230,7521 956 125 — (135) 398 (331) — $ 53 (66,349) $ (65,459) (1) Consistent with the current year presentation, property revenue for the three months and year ended December 31, 2022 has been increased by $2,122 and $8,488, respectively, to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. (a) Crombie earns property revenue from Empire (including Sobeys and all other subsidiaries of Empire). being amortized over the amended lease terms or the useful life of the projects, as applicable. (b) Crombie provides property management, development management, project management, leasing services, and environmental management to co-owners and to specific properties owned by certain subsidiaries of Empire on a fee-for-service basis pursuant to a Management Agreement, which is being recognized as revenue from management and development services. (c) Certain executive management individuals and other employees of Crombie provide general management, financial, leasing, administrative, and other administration support services to certain subsidiaries of Empire on a cost-sharing basis pursuant to a Management Agreement effective January 1, 2016. (d) Crombie earns administrative fees from co-owners for leases on specific properties. Included in the above, during the year ended December 31, 2023, Crombie issued 1,122,338 (December 31, 2022 – 860,958) Class B LP Units to ECLD under the DRIP. During the year ended December 31, 2023, Crombie purchased three retail properties from a subsidiary of Empire for a total purchase price of $26,482 before transaction costs. During the year ended December 31, 2023, Crombie invested $25,201 (December 31, 2022 – $14,932) in properties anchored by subsidiaries of Empire, which resulted in amended lease terms. These amounts have been included in tenant incentive additions or income property additions, depending on the nature of the work completed. The costs are CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 77 Crombie has a mortgage payable of $24,876 (December 31, 2022 – $25,207) due to 1600 Davie Limited Partnership that has interest at 3.22% and matures December 1, 2027. This mortgage relates to the commercial component of the Davie Street development, 100% of which is included in Crombie’s financial statements. Amounts due from related parties include $10,664 (December 31, 2022 – $10,364) in a 6% subordinated note receivable due from Bronte Village Limited Partnership. The subordinated note receivable is due on demand and is expected to be collected within the next year. During the year ended December 31, 2023, Crombie entered into two new joint ventures with a subsidiary of Empire. Amounts due from related parties include $801 (December 31, 2022 – $Nil) in amounts receivable due from Lynn Valley Limited Partnership related to development services completed during the year. During the year ended December 31, 2023, Crombie paid $16,361 to a subsidiary of Empire in connection with the assignment of 24 subleases to Crombie for retail sites in Western Canada. This payment was allocated to either deferred leasing costs or tenant incentive additions, based on each component’s relative fair value. During the year ended December 31, 2023, Crombie paid two initial right-to-develop fees totalling $34,300 to a subsidiary of Empire, which resulted in the existing leases being modified. The right to develop will allow Crombie flexibility as it works through the entitlement and future development of existing properties in which a subsidiary of Empire is currently a tenant. 77 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS USE OF ESTIMATES AND JUDGMENTS The preparation of consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets and liabilities, income, and expenses. Significant judgment, estimate, and assumption items include impairment, employee future benefits, investment properties, purchase price allocations, and fair value of financial instruments. These estimates are based on historical experience and management’s best knowledge of current events and actions that Crombie may undertake in the future. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revisions affect only that period, or in the period of the revision and future periods if the revision affects both current and future periods. INVESTMENT PROPERTIES Investment properties are properties which are held to earn rental income. Investment properties include land, buildings, and intangible assets. Investment properties are carried at cost less accumulated depreciation and are reviewed periodically for impairment. Properties under development are carried at cost until they are substantially complete, at which point depreciation begins. Depreciation of buildings is calculated using the straight-line method with reference to each property’s cost, the estimated useful life of the building (not exceeding 40 years) and its components, significant parts, and residual value. Repairs and maintenance improvements are expensed as incurred or, in the case of major items that constitute a capital asset, are capitalized to the building and amortized on a straight-line basis over the expected useful life of the improvement. Critical Accounting Estimates and Assumptions INVESTMENT PROPERTY VALUATION FAIR VALUE MEASUREMENT A number of assets and liabilities included in Crombie’s financial statements require measurement at, and/or disclosure of, fair value. In estimating the fair value of an asset or a liability, Crombie uses market-observable data to the extent it is available. Where market-observable data is not available, Crombie estimates the fair value based on discounted future cash flows using discount rates that reflect current market conditions for instruments with similar terms and risks. INVESTMENT PROPERTY ACQUISITIONS Upon acquisition, Crombie performs an assessment of the investment properties being acquired to determine whether the acquisition is to be accounted for as an asset acquisition or a business combination. A transaction is considered to be a business combination if the acquired property meets the definition of a business under IFRS 3 “Business Combinations”: being an integrated set of activities and assets that are capable of being managed for the purpose of providing a return to the Unitholders. Crombie performs an assessment of the fair value of the properties’ related tangible and intangible assets and liabilities and allocates the purchase price to the acquired assets and liabilities. Crombie assesses and considers fair value based on cash flow projections that take into account relevant discount and capitalization rates and any other relevant sources of market information available. Estimates of future cash flow are based on factors that include historical operating results, if available, and anticipated trends, local markets and underlying economic conditions. Crombie allocates the purchase price based on the following: • Land – The amount allocated to land is based on an appraisal estimate of its fair value. • Buildings – Buildings are recorded at the estimated fair value of the building and its components and significant parts. • Intangible Assets – Intangible assets are recorded for tenant relationships, based on estimated costs avoided should the respective tenants renew their leases at the end of the initial lease term, adjusted for the estimated probability of renewal. • Fair value of debt – Values ascribed to fair value of debt are determined based on the differential between contractual and market interest rates on long-term liabilities assumed at acquisition. External, independent valuation companies, having appropriate, recognized professional qualifications and recent experience in the location and category of properties being valued, value substantially all of Crombie’s investment property portfolio on a rotating basis over a maximum period of four years. On a periodic basis, Crombie obtains independent appraisals such that approximately 85% of our properties, by value, will be externally appraised over a four-year period. The fair values, based on the measurement date, represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Internal quarterly valuations are performed using the capitalized net operating income method, using internally generated valuation models prepared by considering the aggregate trailing annual net property income* recognized from leasing the property, which is stabilized for any major tenant movement. The key assumptions are the capitalization rates for each specific property and stabilized net property income*. Crombie is responsible for the reasonableness of the assumptions and for the accuracy of inputs that are used to determine our valuation disclosures. Crombie receives biannual capitalization rate reports (June and December) from an independent valuation company, which reflect the specific risks inherent in the net property income*, to arrive at property valuations. The capitalization rate reports provide a range of rates for various geographic regions and for various types and qualities of properties within each region. Management selects the rate for each property from the range provided that management believes is most appropriate in its judgment. In addition to this, Crombie uses the market information obtained in external appraisals each quarter and makes relevant adjustments to our input assumptions. As at December 31, 2023, management’s determination of fair value was updated for current market assumptions, including net property income*, market capitalization rates, and recent appraisals provided by independent appraisal professionals. For properties under development, fair value is assumed to equal cost until the property is substantially completed. CHANGE IN USEFUL LIFE OF INVESTMENT PROPERTIES The estimated useful lives of significant investment properties are reviewed whenever events or circumstances indicate a change in useful life. Estimated useful lives of significant investment properties are based on management’s best estimate and the actual useful lives may be different. Revisions to the estimated useful lives of investment properties constitute a change in accounting estimate and are accounted for prospectively by amortizing the cumulative changes over the remaining estimated useful life of the related assets. 78 CRA028 4400112 -Crombie_Text Proof R1.indd 78 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS REVENUE RECOGNITION FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of marketable financial instruments is the estimated amount for which an instrument could be exchanged, or a liability settled, by Crombie and a knowledgeable, willing party in an arm’s length transaction. The fair value of other financial instruments is based upon discounted future cash flows using discount rates that reflect current market conditions for instruments with similar terms and risks. CONTROLS AND PROCEDURES Crombie maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by Crombie in its annual filings, interim filings, or other reports filed or submitted by it under securities legislation is recorded, processed, summarized, and reported within the time periods specified in the securities legislation. Controls and procedures are designed to ensure that information required to be disclosed by Crombie is accumulated and communicated to Crombie’s management, including its President and CEO and Chief Financial Officer and Secretary (“CFO”), as appropriate, to allow timely decisions regarding disclosure. Our CEO and CFO have evaluated the design and effectiveness of our disclosure controls and procedures as at December 31, 2023. They have concluded that our current disclosure controls and procedures are effective. In addition, our CEO and CFO have designed, or caused to be designed under their supervision, internal controls over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes as defined in National Instrument 52-109. The control framework management used to design and assess the effectiveness of ICFR is Internal Control-Integrated Framework (2013) issued by The Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Further, our CEO and CFO have evaluated, or caused to be evaluated under their supervision, the effectiveness of the design and operation of ICFR as at December 31, 2023 and have concluded that our current ICFR are effective based on that evaluation. There have been no material changes to Crombie’s internal controls during the period. Revenue earned from tenants under lease agreements includes base rent, realty tax recoveries, percentage rent, and other incidental income. Certain leases have rental payments that change over their term due to changes in rates. Crombie records the rental revenue from leases on a straight-line basis over the term of the lease. Accordingly, an accrued rent receivable is recorded for the difference between the straight-line rent recorded as property revenue and the rent that is contractually due from the tenants. In addition, tenant incentives are amortized on a straight-line basis over the term of existing leases and the amortization is shown as a reduction in property revenue. Percentage rents are recognized when tenants are obligated to pay such rent under the terms of the related lease agreements. Realty tax and other incidental income are recognized on an accrual basis as they become due. EXPECTED CREDIT LOSS Crombie assesses, on a forward-looking basis, the expected credit losses associated with its rent receivables. In determining the expected credit losses, Crombie takes into account, on a tenant-by-tenant basis, the payment history, future expectations, and knowledge gathered through discussions for rental concessions and ongoing discussions with tenants. Critical Judgments Judgments made by management in the preparation of the financial statements that have significant effect and estimates with a significant risk of material adjustment to the carrying amount of assets and liabilities are as follows: IMPAIRMENT OF LONG-LIVED TANGIBLE AND DEFINITE LIFE INTANGIBLE ASSETS Long-lived tangible and definite life intangible assets are reviewed for impairment at each reporting period for events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any). The recoverable amount is the higher of fair value less costs to sell and value in use. Where the asset does not generate cash flows that are independent from other assets, Crombie estimates the recoverable amount of the cash generating unit(s) to which the asset belongs. When the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to the recoverable amount. An impairment loss is recognized as an expense immediately in operating income. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate but is limited to the carrying amount that would have been determined if no impairment loss had been recognized in prior periods. A reversal of impairment loss is recognized immediately in operating income. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 79 79 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS QUARTERLY INFORMATION Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Three months ended $ $ $ $ $ $ $ $ $ $ 75,869 26,295 $ $ 71,453 27,796 $ $ 71,442 19,557 $ $ 68,648 25,173 $ $ 70,816 87,718 $ $ 71,574 26,410 $ $ 70,097 28,424 $ $ 69,331 25,248 (40,237) (40,077) (39,921) (39,775) (39,697) (39,513) (39,394) (39,236) (1,400) 1,191 1,517 603 (1,704) 1,782 2,034 211 (15,342) 0.15 40,237 0.22 54,590 0.30 73.7% 46,111 0.26 87.3% $ $ $ $ $ $ $ $ (11,090) 0.15 40,077 0.22 56,510 0.31 70.9% 49,962 0.28 80.2% $ $ $ $ $ $ $ $ (18,847) 0.11 39,921 0.22 46,068 0.26 86.7% 39,118 0.22 102.1% $ $ $ $ $ $ $ $ (13,999) 0.14 39,775 0.22 52,835 0.30 75.3% 45,909 0.26 86.6% $ $ $ $ $ $ $ $ 46,317 0.49 39,697 0.22 52,104 0.29 76.2% 45,061 0.25 88.1% $ $ $ $ $ $ $ $ (11,321) 0.15 39,513 0.22 52,665 0.30 75.0% 46,787 0.26 84.5% $ $ $ $ $ $ $ $ (8,936) 0.16 39,394 0.22 49,877 0.28 79.0% 43,551 0.25 90.5% $ $ $ $ $ $ $ $ (13,777) 0.15 39,236 0.22 49,091 0.28 79.9% 41,898 0.24 93.6% Net property income* Operating income Finance costs – distributions to Unitholders Finance income (costs) – change in fair value of ﬁnancial instruments Increase (decrease) in net assets attributable to Unitholders Operating income per Unit – basic Distributions Distributions Per Unit FFO* Basic Per Unit – basic Payout ratio AFFO* Basic Per Unit – basic Payout ratio Operating information Number of investment properties 294 294 293 291 289 290 294 294 Gross leasable area 18,681,000 18,652,000 18,625,000 18,550,000 18,445,000 18,331,000 18,500,000 18,488,000 Economic occupancy Committed occupancy Debt metrics Unencumbered investment properties1 Available liquidity Debt to gross fair value* Weighted average interest rate2 Debt to trailing 12 months adjusted EBITDA* Interest coverage ratio* 96.0% 96.5% 96.0% 96.4% 95.9% 96.4% 94.5% 96.7% 94.8% 96.9% 96.2% 96.8% 95.9% 96.3% 95.5% 96.4% $ 2,607,934 $ 2,581,919 $ 2,488,359 $ 2,291,396 $ 2,154,468 $ 2,200,890 $ 2,155,326 $ 2,009,252 $ 583,770 $ 564,903 $ 614,072 $ 735,877 $ 583,003 $ 445,372 $ 444,262 $ 523,159 43.0% 4.1% 8.03x 3.06x 42.4% 4.0% 8.13x 3.41x 42.3% 4.0% 8.17x 2.95x 41.9% 4.0% 7.96x 3.24x 41.8% 3.8% 8.02x 3.26x 42.0% 3.8% 8.50x 3.32x 42.7% 3.8% 8.75x 3.26x 42.5% 3.8% 8.72x 3.27x (1) Represents fair value of unencumbered properties. (2) Weighted average interest rate is calculated based on interest rates for all outstanding ﬁxed rate debt. Variations in quarterly results over the past eight quarters have been influenced by the following specific transactions and ongoing events: and a parcel of land adjacent to existing retail properties for proceeds of $52,126; • Property acquisitions and dispositions (gross proceeds excluding closing and transaction costs) for each of the above three-month periods were: - December 31, 2023 – no acquisitions or dispositions; - September 30, 2023 – no acquisitions or dispositions; a payment of $16,361 was made to a subsidiary of Empire in connection with the assignment of 24 subleases to Crombie for retail sites in Western Canada; - June 30, 2023 – acquisition of one retail property for a total purchase price of $9,760; - March 31, 2023 – acquisition of two retail properties for a total purchase price of $16,722; - December 31, 2022 – disposition of two retail properties for proceeds of $113,418; - September 30, 2022 – acquisition of one retail property for a total purchase price of $1,350 and disposition of five retail properties - June 30, 2022 – acquisition of one retail property and one development property for a total purchase price of $15,939 and disposition of one retail property for proceeds of $10,250; and - March 31, 2022 – acquisition of nine retail properties, including a parcel of land subsequently developed by Crombie in the quarter, and acquisition of the remaining 50% interest in one retail-related industrial property for a total purchase price of $90,472. • Property revenue and property operating expenses – Crombie’s business is subject to seasonal fluctuations. Property operating expenses during winter months include particular expenses such as snow removal, which is a recoverable expense, thus increasing property revenue during these same periods. Property operating expenses during the summer and fall periods include particular expenses such as paving and roof repairs. • Per Unit amounts for FFO* and AFFO* are influenced by operating results as detailed above and by the timing of the issuance of REIT Units and Class B LP Units. 80 CRA028 4400112 -Crombie_Text Proof R1.indd 80 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS NON-GAAP FINANCIAL MEASURES There are financial measures included in this MD&A that do not have a standardized meaning under IFRS Accounting Standards. Management includes these measures as they represent key performance indicators to management, and it believes certain investors use these measures as a means of assessing relative financial performance. These measures, as computed by Crombie, may differ from similar computations as reported by other entities and, accordingly, may not be comparable to other such entities. These measures are defined below and are cross- referenced, as applicable, to a reconciliation elsewhere in this MD&A to the most comparable IFRS Accounting Standards measure. Non-GAAP Measure Description and Purpose Fair value of investment properties inclusive of joint ventures • The total of the fair value of investment properties and the fair value of investment properties held in joint ventures, at Crombie’s share. Operating income attributable to Unitholders excluding employee transition costs • Management believes that the removal of out of the ordinary expenditures, such as employee transition costs, from operating income attributable to Unitholders is a useful calculation in providing a comparable measure of Crombie’s financial performance period over period. Net property income • Property revenue less property operating expenses, excluding revenue from management and development services and certain expenses such as interest expense and indirect operating expenses. • Management believes that net property income is a useful measure of operating performance by the properties period over period. Reconciliation Investment properties, fair value $5,096,000 Investment properties held in joint ventures, fair value, at Crombie’s share 472,500 Fair value of investment properties inclusive of joint ventures $5,568,500 “Operating Income Attributable to Unitholders” starting on page 41 “Net Property Income*” starting on page 41 Property NOI on a cash basis • Property NOI on a cash basis, which excludes non-cash straight-line rent recognition and non-cash tenant incentive amortization. “Same-asset Property Cash NOI*” starting on page 42 Same-asset property cash NOI • Management believes that Property NOI on a cash basis is an important measure of operating performance as it reflects the cash generated by the properties period over period. • Same-asset properties are properties owned and operated by Crombie throughout the current and comparative reporting periods, excluding any property that was designated for redevelopment, or was subject to disposition, during either the current or comparative period. Same-asset property cash NOI includes Crombie’s proportionate ownership of jointly operated properties but currently excludes properties owned in joint ventures. • Management believes this is a useful measure in understanding period-over- period changes in property cash NOI before considering the changes in NOI that can be attributed to the certain transactions such as acquisitions and dispositions. • The number of same-asset properties was 287 as at December 31, 2023. “Same-asset Property Cash NOI*” starting on page 42 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 81 81 2024-03-21 12:42 PM Reconciliation “Funds from Operations (FFO)*” starting on page 43 MANAGEMENT’S DISCUSSION AND ANALYSIS Non-GAAP Measure Description and Purpose Funds from operations (“FFO”) • Crombie considers FFO to be a useful measure in evaluating the recurring economic performance of its operating results which will be used to support future distribution payments. • Crombie follows the recommendations of REALPAC’s January 2022 guidance in calculating FFO, and defines FFO as increase (decrease) in net assets attributable to Unitholders (computed in accordance with IFRS Accounting Standards), adjusted for the following applicable amounts: - gain or loss on disposal of investment properties and related income tax; - gain on distribution from equity-accounted investments; - impairment charges and recoveries; - depreciation and amortization expense of investment properties, including amortization of tenant incentives charged against property revenue; - adjustments for equity-accounted entities; - operational expenses from right-of-use assets; - incremental internal leasing expenses; - finance costs – distributions on Crombie’s REIT and Class B LP Units classified as financial liabilities; and - change in fair value of financial instruments. • REALPAC provides for other adjustments in determining FFO which are currently not applicable to Crombie and therefore not included in the above list. Crombie’s expenditures on tenant incentives are capital in nature and Crombie considers these costs comparable to other capital costs incurred to earn property revenue. As a result, where depreciation and amortization of other capital costs are added back in the calculation of FFO as recommended by REALPAC, Crombie also adds back the amortization of tenant incentives. • Crombie calculates FFO per Unit using the basic weighted average Units outstanding for the period. Management believes this is a useful measure in comparing period-over-period operating results. FFO payout ratio • FFO payout ratio shows the proportion of FFO paid to Unitholders in the form of distributions for the period, expressed as a percentage of FFO. • FFO payout ratio is calculated by dividing finance costs – distributions to Unitholders by FFO for “Funds from Operations (FFO)*” starting on page 43 the period. • Management uses this key metric in evaluating the sustainability of Crombie’s distribution payments to Unitholders. Adjusted funds from operations (“AFFO”) • Crombie considers AFFO to be a useful measure in evaluating the recurring economic performance of its operating results which will be used to support future distribution payments. • Crombie follows the recommendations of REALPAC’s January 2022 guidance in calculating AFFO. • AFFO reflects earnings after the adjustments in arriving at FFO (excluding internal leasing costs) and the provision for non-cash straight-line rent included in revenue, maintenance capital expenditures, and maintenance tenant incentives and leasing costs. • Crombie calculates AFFO per Unit using the basic weighted average Units outstanding for the period. Management believes this is a useful measure in comparing period-over-period operating results. AFFO payout ratio • AFFO payout ratio shows the proportion of AFFO paid to Unitholders in the form of distributions for the period, expressed as a percentage of AFFO. • AFFO payout ratio is calculated by dividing finance costs – distributions to Unitholders by AFFO for the period. • Management uses this key metric in evaluating the sustainability of Crombie’s distribution payments to Unitholders. Net asset value (“NAV”) • NAV represents total assets less total liabilities excluding net assets attributable to Unitholders. “Adjusted Funds from Operations (AFFO)*” starting on page 44 “Adjusted Funds from Operations (AFFO)*” starting on page 44 “Development” starting on page 48 82 CRA028 4400112 -Crombie_Text Proof R1.indd 82 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Non-GAAP Measure Description and Purpose Unencumbered investment properties as a percentage of unsecured debt • Unencumbered investment properties represent the fair value of investment properties that have not been pledged as security for any debt obligations. • Unsecured debt currently consists of Crombie’s senior unsecured notes and its Unsecured bilateral and Unsecured non-revolving credit facilities. • This ratio is used to assess the aggregate unencumbered investment properties currently available for secured financing to satisfy all outstanding unsecured debt obligations. Debt to gross fair value • Used to evaluate Crombie’s flexibility to incur additional financial leverage. Adjusted debt • Represents debt excluding transaction costs, which Crombie feels is a more relevant presentation of indebtedness. It includes Crombie’s share of debt held in equity-accounted joint ventures. • Adjusted debt is used in the calculation of our debt to gross fair value and debt to trailing 12 months adjusted EBITDA. Earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) • Represents earnings before interest, taxes, depreciation, and amortization adjusted for certain items such as amortization of tenant incentives, impairment of investment properties, gain (loss) on disposal of investment properties, and gain on distribution from equity-accounted investments. It includes Crombie’s share of revenue, operating expenses, and general and administrative expenses from equity-accounted joint ventures. Reconciliation “Debt Metrics” starting on page 55 “Debt Metrics” starting on page 55 “Debt Metrics” starting on page 55 “Debt Metrics” starting on page 55 • Adjusted EBITDA is used as an input in several of our debt metrics, providing information with respect to certain financial ratios that we use in measuring our debt profile and assessing our ability to satisfy obligations, including servicing our debt. • Crombie believes adjusted EBITDA is an indicative measure of its ability to service debt requirements, fund capital projects, and acquire properties. Debt to adjusted EBITDA • Used to assess Crombie’s financial leverage, to measure its ability to meet financial obligations and measure its balance sheet strength. Adjusted interest expense • Represents finance costs from operations, excluding amortization of deferred financing costs. It includes Crombie’s share of interest from equity-accounted joint ventures. • Adjusted interest expense is used in the calculation of our interest coverage and debt service coverage ratios. Interest coverage • These ratios are useful in determining Crombie’s ability to service the interest requirements of its Debt service coverage outstanding debt. “Debt Metrics” starting on page 55 “Debt Metrics” starting on page 55 “Debt Metrics” starting on page 55 Maintenance Capital Expenditures, Maintenance Tenant Incentives and Leasing Costs (“Maintenance Expenditures”) Maintenance expenditures represent costs incurred in sustaining and maintaining existing space and exclude expenditures that are revenue- enhancing. Crombie considers revenue-enhancing expenditures to be costs that expand the GLA of a property or otherwise enhance the property’s overall value. square foot is a proxy for actual historical costs, anticipated future costs, and any significant changes in the nature and age of the properties in the portfolio as it evolves over time. For 2023, Crombie has increased the normalized rate from $1.00 to $1.10 per square foot of weighted average GLA, based on the actual spend for the previous three years and for 2023. Additionally, Crombie combines maintenance capital expenditures with maintenance tenant incentive (“TI”) and deferred leasing costs in arriving at the normalized per square foot charge to AFFO*, based on the fact that in years where TI and leasing expenditures are reduced, spending on maintenance capital expenditures may be accelerated and vice versa. Crombie’s policy is to charge AFFO* with a reserve amount for maintenance expenditures based on a normalized rate per square foot applied to the weighted average GLA, as these expenditures are not generally incurred on a consistent basis during the year, or from year to year. Crombie excludes newly constructed and developed properties from its maintenance charge for the first year until a baseline of actual expenditures is obtained as little to no maintenance expense is incurred in the first year of operation. Crombie also discloses actual maintenance expenditures for comparative purposes. The rate per CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 83 83 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS Maintenance Expenditures – Actual Year ended Three months ended Year ended Three months ended Dec. 31, 2023 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 Dec. 31, 2022 Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Total additions to investment properties $ 75,654 $ 21,695 $ 13,337 $ 26,893 $ 13,729 $ 104,379 $ 29,182 $ 21,129 $ 18,435 $ 35,633 Total additions to investment properties held in joint ventures, at Crombie’s share Less: revenue-enhancing 125 125 — — — — — — — — expenditures (66,952) (19,577) (12,036) (25,367) (9,972) (95,032) (25,543) (19,726) (17,086) (32,677) Maintenance capital expenditures Total additions to TI and deferred leasing costs Less: revenue-enhancing 8,827 2,243 1,301 1,526 3,757 9,347 3,639 1,403 1,349 2,956 62,329 13,325 25,393 12,090 11,521 43,408 7,561 6,521 11,064 18,262 expenditures (32,248) (9,756) (6,025) (8,126) (8,341) (32,721) (6,738) (3,634) (8,018) (14,331) Maintenance TI and deferred leasing costs 30,081 3,569 19,368 3,964 3,180 10,687 823 2,887 3,046 3,931 Total maintenance expenditures – actual Reserve amount charged against AFFO* $ $ 38,908 20,757 $ $ 5,812 5,246 $ $ 20,669 5,186 $ $ 5,490 5,182 $ $ 6,937 5,143 $ $ 20,034 18,526 $ $ 4,462 4,620 $ $ 4,290 4,662 $ $ 4,395 4,659 $ $ 6,887 4,585 Revenue-enhancing expenditures are capitalized and depreciated or charged against revenue over their useful lives. Revenue-enhancing expenditures during the year ended December 31, 2023 consisted primarily of development work and modernization investments. Obligations for expenditures for TIs occur when renewing existing tenant leases or for new tenants occupying a space. Typically, leasing costs for existing tenants are lower on a per square foot basis than for new tenants. However, new tenants may provide more overall cash flow to Crombie through higher rents or improved traffic to a property. The timing of such expenditures fluctuates depending on the satisfaction of contractual terms contained in the leases. Maintenance TI and deferred leasing costs are the result of both lease renewals and new leases, and are reflective of the leasing activity during 2023 and 2022. In the third quarter of 2023, maintenance TI and deferred leasing costs included $16,361 paid to a subsidiary of Empire in connection with the assignment of 24 subleases to Crombie for retail sites in Western Canada. 84 CRA028 4400112 -Crombie_Text Proof R1.indd 84 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS FORWARD-LOOKING INFORMATION This MD&A contains forward-looking statements about expected future events and the financial and operating performance of Crombie. These statements, and the related estimates and assumptions used by management, can be found in several sections of the MD&A, including, but not limited to, “Portfolio Review – Strategic Acquisitions”, “Portfolio Review – Strategic Dispositions”, “Development”, “Capital Management”, “Joint Ventures”, and “Other Disclosures”. Forward-looking statements include, but are not limited to, statements concerning management’s beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical fact. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “estimate”, “anticipate”, “believe”, “expect”, “intend”, or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. All forward-looking information in this MD&A is qualified by the cautionary statements under “Risk Factors Related to the Business of Crombie”, as well as the additional statements in the “Risks” section of Crombie’s 2022 Annual Information Form available at www.crombie.ca. Forward-looking statements in this MD&A and the principal related risks include statements regarding: (i) opportunities with Empire for investments in the modernization, acquisition, expansion, and conversion of their grocery stores, customer fulfillment centres, or warehouses, which may be impacted by the development of Empire’s business and the resulting availability of suitable investment opportunities for Crombie; (ii) AFFO* accretion and NAV* growth from strategic acquisitions, which may be affected by future occupancy and rental performance, and/or redevelopment activity of acquired properties; (iii) disposition of properties and the anticipated reinvestment of net proceeds, which could be impacted by the availability of purchasers, the availability of accretive property acquisitions, the timing of property development activities or other accretive uses for net proceeds and real estate market conditions; (iv) anticipated growth in our total portfolio, which depends on successful execution of our current development strategy, our relationship with Empire, availability of suitable properties and development opportunities, and general economic conditions; (v) statements under the heading “Development”, including the locations identified, timing, cost, estimated yield on cost, development size and nature, and anticipated impact on portfolio quality and diversification, cash flow growth, Unitholder value, or other financial measures, all of which may be impacted by real estate market cycles, future capitalization rates, the availability of financing opportunities and labour, actual development costs, ability to achieve lease-up stabilization at current market rents, and general economic conditions and factors described under the “Development” section, and which assume obtaining required municipal zoning and development approvals and successful agreements with existing tenants and, where applicable, successful execution of development activities undertaken by related parties not under the direct control of Crombie; (vi) fair value of investment properties, which is based on trailing net operating income and capitalization rates, and estimates of future cash flows and anticipated trends and economic conditions; (vii) overall indebtedness levels and terms, and expectations relating to refinancing, which could be impacted by the level of acquisition and disposition activity that Crombie is able to achieve, levels of indebtedness, Crombie’s ability to maintain and strengthen its investment grade credit rating, future financing opportunities, future interest rates, creditworthiness of major tenants and joint arrangement partners, and market conditions; (viii) estimated GLA, estimated completion dates, estimated yield on cost, and estimated total costs for projects in Crombie’s development pipeline, which are subject to changes in site plans, cost tendering processes, and continuing tenant negotiations, as well as access to job sites, supply and labour availability, ability to attract tenants, tenant mix, building sizes, estimated future rents, and availability and cost of construction financing; (ix) asset growth and reinvesting to develop or otherwise make improvements to existing properties, which could be impacted by the availability of labour, capital resource availability and allocation decisions, as well as actual development costs; (x) generating improved rental income and occupancy levels, including anticipated replacement of expiring tenancies, which could be impacted by changes in demand for Crombie’s properties, tenant bankruptcies, the effects of general economic conditions, e-commerce, and supply of competitive locations in proximity to Crombie locations; (xi) estimated payments on derivative and non-derivative financial liabilities, which could be impacted by interest rates on floating rate debt and fluctuations in the settlement value and settlement timing of any derivative financial liabilities; (xii) investment in joint ventures and the income contributed by those investments, which could be impacted by the risk and uncertainty from dependence on partners that are not under Crombie’s control, including risk of default by a partner on financing obligations or non-performance of a partner’s obligations on a project, which may include development, construction, management, or leasing; (xiii) tax exempt status, which can be impacted by regulatory changes enacted by governmental authorities; (xiv) anticipated distributions and payout ratios, which could be impacted by results of operations and capital resource allocation decisions; and (xv) the effect that any contingencies or guarantees would have on Crombie’s financial statements, which could be impacted by their eventual outcome. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 85 85 2024-03-21 12:42 PM MANAGEMENT’S DISCUSSION AND ANALYSIS These forward-looking statements are presented for the purpose of assisting Crombie’s Unitholders and financial analysts in understanding Crombie’s operating environment and may or may not be appropriate for other purposes. These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on Crombie’s current estimates and assumptions. Crombie can give no assurance that actual results will be consistent with these forward-looking statements. A number of factors, including those discussed under “Risk Management”, could cause actual results, performance, achievements, prospects, or opportunities to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully, and a reader should not place undue reliance on the forward-looking statements. These forward-looking statements are made as at the date of the MD&A and Crombie assumes no obligation to update or revise them to reflect new or current events or circumstances unless otherwise required by applicable securities legislation. 86 CRA028 4400112 -Crombie_Text Proof R1.indd 86 2024-03-21 12:42 PM MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING The management of Crombie Real Estate Investment Trust (“Crombie”) is responsible for the preparation and fair presentation of the accompanying annual consolidated financial statements and Management’s Discussion and Analysis (“MD&A”). The annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The annual consolidated financial statements and information in the MD&A include amounts based on best estimates and judgments by management of the expected effects of current events and transactions. In preparing this financial information, we make determinations about the relevancy of information to be included, and estimates and assumptions that affect the reported information. The MD&A also includes information regarding the impact of current transactions and events, sources of liquidity and capital resources, operating trends, risks, and uncertainties. Actual results in the future may vary materially from our present assessment of this information as future events and circumstances may not occur as expected. In meeting our responsibility for the fair presentation of the annual consolidated financial statements and MD&A and for the accounting systems from which they are derived, management has established internal controls designed to ensure that our financial records are reliable for preparing consolidated financial statements and other financial information, transactions are properly authorized and recorded, and assets are safeguarded against unauthorized use or disposition. As at December 31, 2023, our Chief Executive Officer and Chief Financial Officer evaluated, or caused an evaluation under their direct supervision, the design and operation of our internal controls over financial reporting and, based on that assessment, determined that our internal controls over financial reporting were appropriately designed and operating effectively. The Board of Trustees oversees management’s responsibility for financial reporting through an Audit Committee. This committee reviews Crombie’s annual consolidated financial statements and MD&A with both management and the independent auditor before such statements are approved by the Board of Trustees. The Audit Committee also recommends the appointment of independent external auditors to the Unitholders. The Audit Committee meets regularly with senior management and the independent auditor to discuss internal controls, audit activities and financial reporting results. The independent auditor has full and free access to, and meets regularly with, the Audit Committee to discuss their audits and related matters. MARK HOLLY President and Chief Executive Officer February 21, 2024 CLINTON D. KEAY, CPA, CA Chief Financial Officer and Secretary February 21, 2024 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 87 87 2024-03-21 12:42 PM INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF CROMBIE REAL ESTATE INVESTMENT TRUST OUR OPINION BASIS FOR OPINION In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Crombie Real Estate Investment Trust and its subsidiaries (together, the Trust) as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards). 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 consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Trust in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. What we have audited The Trust’s consolidated financial statements comprise: • the consolidated balance sheets as at December 31, 2023 and 2022; • the consolidated statements of comprehensive income (loss) for the years then ended; • the consolidated statements of changes in net assets attributable to unitholders for the years then ended; • the consolidated statements of cash flows for the years then ended; and • the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information. 88 CRA028 4400112 -Crombie_Text Proof R1.indd 88 2024-03-21 12:42 PM INDEPENDENT AUDITOR’S REPORT KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Our approach to addressing the matter included the following procedures, among others: • For a sample of investment properties, tested how management determined the fair value, which included the following: - Evaluated the appropriateness of the method. - Tested the underlying data used in the method. - Professionals with specialized skill and knowledge in the field of real estate valuations assisted us in assessing the capitalization rates used by management by (i) comparing them to externally available market data and (ii) evaluating whether the allocation of capitalization rates to investment properties is reasonable based on location, current leases in place and the type and quality of investment property. - Agreed NOI used in the method to accounting records and evaluated as applicable whether stabilization is reasonable considering (i) the current and past leasing activity of the investment properties; (ii) the comparability with external market and industry data; and (iii) whether these assumptions were aligned with evidence obtained in other areas of the audit. Fair value of investment properties Refer to note 2 – Summary of material accounting policies and note 3 – Investment properties to the consolidated financial statements to the consolidated financial statements. The Trust’s total investment properties as at December 31, 2023 were $3.987 billion. The investment properties are carried at cost less accumulated depreciation, with their fair value disclosed at each reporting period. The Trust disclosed a total fair value of $5.096 billion as at December 31, 2023. In determining the fair value of investment properties to be disclosed, management generally used an internally generated capitalized net operating income method (the method) by applying capitalization rates to trailing stabilized net operating income (NOI) of each investment property. To determine the capitalization rate, management receives bi-annual capitalization rate reports from external, knowledgeable property valuators that provide a range of rates for various geographic regions and for various types and qualities of properties within each region. Management selected the appropriate capitalization rate for each property from the range provided. The method requires certain key assumptions and estimates, which include the capitalization rates for each specific property and stabilized NOI. Significant judgments were made by management in respect of these key assumptions and estimates. We considered this a key audit matter due to the significant judgments made by management when determining the fair values of the investment properties for disclosure purposes and the high degree of complexity in assessing audit evidence related to the key assumptions and estimates made by management. In addition, the audit effort involved the use of professionals with specialized skill and knowledge in the field of real estate valuations. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 89 89 2024-03-21 12:42 PM INDEPENDENT AUDITOR’S REPORT OTHER INFORMATION Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report, which is expected to be made available to us after that date. Our opinion on the consolidated 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 consolidated 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 consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Trust’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 Trust or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Trust’s financial reporting process. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated 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 these consolidated 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. We also: • Identify and assess the risks of material misstatement of the consolidated 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 Trust’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 Trust’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 consolidated 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 Trust to cease to continue as a going concern. 90 CRA028 4400112 -Crombie_Text Proof R1.indd 90 2024-03-21 12:42 PM INDEPENDENT AUDITOR’S REPORT • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Trust to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We 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. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated 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 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 independent auditor’s report is Maxime Lessard. Chartered Professional Accountants Halifax, Nova Scotia February 21, 2024 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 91 91 2024-03-21 12:42 PM CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS (In thousands of Canadian dollars) Assets Non-current assets Investment properties Investment in joint ventures Other assets Current assets Cash and cash equivalents Other assets Total assets Liabilities Non-current liabilities Fixed rate mortgages Credit facilities Senior unsecured notes Employee future beneﬁts obligation Trade and other payables Lease liabilities Current liabilities Fixed rate mortgages Credit facilities Employee future beneﬁts obligation Trade and other payables Lease liabilities Total liabilities excluding net assets attributable to Unitholders Net assets attributable to Unitholders Net assets attributable to Unitholders represented by: Crombie REIT Unitholders Special Voting Units and Class B Limited Partnership Unitholders Commitments, contingencies and guarantees Subsequent events See accompanying notes to the consolidated ﬁnancial statements. Approved on behalf of the Board of Trustees signed (Michael Knowlton) Michael Knowlton Chair Note December 31, 2023 December 31, 2022 $ 3,624,457 $ 3,590,211 30,778 444,173 4,099,408 — 49,160 49,160 40,397 394,148 4,024,756 6,117 47,525 53,642 4,148,568 4,078,398 617,717 140,888 1,171,769 7,434 20,966 35,351 666,748 160,264 972,003 6,819 21,811 34,057 1,994,125 1,861,702 216,911 3,503 327 108,048 941 329,730 2,323,855 1,824,713 1,081,631 743,082 1,824,713 $ $ $ 246,958 — 271 117,984 943 366,156 2,227,858 1,850,540 1,097,070 753,470 1,850,540 $ $ $ 3 4 5 17 5 6 6 7 8 9 21 6 6 8 9 21 22 23 signed (Paul Beesley) Paul Beesley Audit Committee Chair 92 CRA028 4400112 -Crombie_Text Proof R1.indd 92 2024-03-21 12:42 PM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands of Canadian dollars) Property revenue Revenue from management and development services Property operating expenses Gain on disposal of investment properties Impairment of investment properties Depreciation and amortization General and administrative expenses Finance costs – operations Gain on distribution from equity-accounted investments Income (loss) from equity-accounted investments Operating income before taxes Taxes – current Operating income attributable to Unitholders Distributions to Unitholders Change in fair value of ﬁnancial instruments Increase (decrease) in net assets attributable to Unitholders Other comprehensive income (loss) Items that will be subsequently reclassiﬁed to net assets attributable to Unitholders: Share of net change in derivatives designated as cash ﬂow hedges of equity-accounted investments Net change in derivatives designated as cash ﬂow hedges Unamortized actuarial gains in employee future beneﬁts obligation Other comprehensive income (loss) Year ended December 31, Note 2023 10 11 12 3 3 3,5 14 15 4 4 14 19 19 $ 440,939 $ 3,430 (153,527) 588 — (78,835) (27,644) (86,268) — 144 98,827 (6) 98,821 (160,010) 1,911 (158,099) (59,278) (1,083) (2,717) (440) (4,240) 20221 428,079 — (146,261) 80,804 (10,400) (79,836) (19,547) (83,014) 2,933 (4,954) 167,804 (4) 167,800 (157,840) 2,323 (155,517) 12,283 3,992 5,571 1,643 11,206 Comprehensive income (loss) $ (63,518) $ 23,489 (1) Consistent with the current year presentation, property revenue and property operating expenses for the year ended December 31, 2022 have been increased by $8,488 to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. See accompanying notes to the consolidated ﬁnancial statements. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 93 93 2024-03-21 12:42 PM CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (In thousands of Canadian dollars) REIT Units, Special Voting Units and Class B LP Units (Note 16) Net Assets Attributable to Unitholders Accumulated Other Comprehensive Income (Loss) Attributable to Total REIT Units Class B LP Units Balance, January 1, 2023 $ 2,196,040 $ (356,148) $ 10,648 $ 1,850,540 $ 1,097,070 $ 753,470 Comprehensive loss Units issued under Distribution Reinvestment Plan (“DRIP”) — (59,278) (4,240) (63,518) (37,501) (26,017) 37,691 — — 37,691 22,062 15,629 Balance, December 31, 2023 $ 2,233,731 $ (415,426) $ 6,408 $ 1,824,713 $ 1,081,631 $ 743,082 (In thousands of Canadian dollars) REIT Units, Special Voting Units and Class B LP Units (Note 16) Net Assets Attributable to Unitholders Accumulated Other Comprehensive Income (Loss) Attributable to Total REIT Units Class B LP Units Balance, January 1, 2022 $ 1,966,481 $ (368,431) $ (558) $ 1,597,492 $ 950,271 $ 647,221 Adjustments related to Employee Unit Purchase Plan (“EUPP”) Comprehensive income Units issued under DRIP Units issued under Unit-based compensation plan Unit issue proceeds, net of costs 1,172 — 33,120 526 194,741 — 12,283 — — — — 11,206 — — — 1,172 23,489 33,120 526 194,741 1,172 13,844 19,385 526 111,872 — 9,645 13,735 — 82,869 Balance, December 31, 2022 $ 2,196,040 $ (356,148) $ 10,648 $ 1,850,540 $ 1,097,070 $ 753,470 See accompanying notes to the consolidated ﬁnancial statements. 94 CRA028 4400112 -Crombie_Text Proof R1.indd 94 2024-03-21 12:42 PM CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of Canadian dollars) Cash ﬂows provided by (used in) Operating Activities Year ended December 31, Note 2023 20221 (Decrease) increase in net assets attributable to Unitholders $ (59,278) $ Additions to tenant incentives Items not affecting operating cash Change in other non-cash operating items Income taxes paid Finance costs – operations Distributions to Unitholders Cash provided by operating activities Financing Activities Issuance of mortgages Financing – other Repayment of mortgages – principal Repayment of mortgages – maturity Finance costs – operations Advance (repayment) of ﬂoating rate credit facilities Advance (repayment) of joint operation credit facilities Issuance of senior unsecured notes Redemption of senior unsecured notes Cash distributions to Unitholders REIT Units and Class B LP Units issued REIT Units and Class B LP Units issue costs Payments of lease liabilities Cash (used in) ﬁnancing activities Investing Activities Acquisition of investment properties and intangible assets Additions to investment properties Additions to predevelopment costs Proceeds on disposal of investment properties Contributions to joint ventures Distributions from joint ventures Additions to ﬁxtures and computer equipment Additions to deferred leasing costs (Advances) collections on related party receivables Cash (used in) investing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period 17 17 15 6 6 15 6 7 7 16 16 3 4 4 5 (50,024) 97,299 5,646 (6) 86,268 160,010 239,915 120,660 (2,174) (32,707) (167,266) (81,817) (9,112) (6,761) 200,000 — (122,119) — — (849) (102,145) (28,646) (75,654) (33,562) — (2,468) 11,743 (204) (12,305) (2,791) (143,887) (6,117) 6,117 $ — $ 12,283 (42,135) 26,566 (2,788) (4) 83,014 157,840 234,776 7,000 380 (38,099) (124,133) (81,670) 130,780 360 — (150,000) (123,713) 200,002 (5,261) (936) (185,290) (115,327) (104,379) (6,199) 171,702 (2,077) 5,393 (256) (1,273) 5,132 (47,284) 2,202 3,915 6,117 (1) Cash provided by (used in) operating and ﬁnancing activities for the year ended December 31, 2022 was updated from the previously reported ﬁgures to show Finance costs – operations net of non-cash items. See accompanying notes to the consolidated ﬁnancial statements. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 95 95 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In thousands of Canadian dollars) 1) GENERAL INFORMATION AND NATURE OF OPERATIONS Crombie Real Estate Investment Trust (“Crombie”) is an unincorporated “open-ended” real estate investment trust created pursuant to the Declaration of Trust dated January 1, 2006, as amended. The principal business of Crombie is investing in income-producing retail, retail-related industrial, mixed-use, and office properties in Canada. Crombie is registered in Canada and the address of its registered office is 610 East River Road, Suite 200, New Glasgow, Nova Scotia, Canada, B2H 3S2. The consolidated financial statements for the years ended December 31, 2023 and December 31, 2022 include the accounts of Crombie and all of its subsidiary entities. The Units of Crombie are traded on the Toronto Stock Exchange (“TSX”) under the symbol “CRR.UN”. The consolidated financial statements were authorized for issue by the Board of Trustees on February 21, 2024. 2) SUMMARY OF MATERIAL ACCOUNTING POLICIES (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). (b) Basis of presentation These consolidated financial statements are presented in Canadian dollars (“CAD”), Crombie’s functional and reporting currency, rounded to the nearest thousand. (c) Basis of consolidation (i) Subsidiaries Crombie’s financial statements consolidate those of Crombie and all of its subsidiary entities at December 31, 2023. Subsidiaries are all entities over which Crombie has control. All subsidiaries have a reporting date of December 31, 2023. All intercompany transactions, balances, income, and expenses are eliminated in preparing the consolidated financial statements. Where unrealized losses on intercompany asset sales are reversed on consolidation, the underlying asset is also tested for impairment from an entity perspective. Operating income (loss) and other comprehensive income (loss) of subsidiaries acquired or disposed of during the period are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable. (ii) Joint arrangements Joint arrangements are business arrangements whereby two or more parties have joint control. Joint control is based on the contractual sharing of control over the decisions related to the relevant activities. Joint arrangements are classified as either joint operations or joint ventures depending on the contractual arrangements related to the rights and obligations of the parties to the arrangement. Joint operations A joint operation is an arrangement wherein the parties to the arrangement have rights to the assets and obligations for the liabilities related to the arrangement. For joint operations, Crombie recognizes its share of the assets, liabilities, revenues, and expenses of the joint operation in the relevant categories of Crombie’s financial statements. Joint ventures A joint venture is an entity over which Crombie shares joint control with other parties and where the joint venture parties have rights to the net assets of the joint venture. Joint control exists where there is a contractual agreement for shared control and wherein decisions about the significant relevant activities of the arrangement require unanimous consent of the parties sharing control. Investment in joint ventures is accounted for using the equity method. Under the equity method, the investment is initially recorded at cost with subsequent adjustments for Crombie’s share of the results of operations and any change in net assets. Crombie’s joint venture entities have the same reporting period as Crombie and adjustments, if any, are made to bring the accounting policies of joint venture entities in line with the policies of Crombie. 96 CRA028 4400112 -Crombie_Text Proof R1.indd 96 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (d) Investment properties Investment properties are properties which are held to earn rental income. Investment properties include land, buildings, and intangible assets. Investment properties are carried at cost less accumulated depreciation and are reviewed for impairment as described in Note 2(t). Properties under development are carried at cost until they are substantially complete, at which point depreciation begins. Depreciation of buildings is calculated using the straight-line method with reference to each property’s cost, the estimated useful life of the building (not exceeding 40 years) and its components, significant parts, and residual value. Amortization of intangible assets is calculated using the straight-line method over the term of the tenant lease. Repairs and maintenance items are expensed as incurred or, in the case of major items that constitute a capital asset, are capitalized to the building and amortized on a straight-line basis over the estimated useful life of the improvement. Upon acquisition, Crombie performs an assessment of investment properties being acquired to determine whether the acquisition is to be accounted for as an asset acquisition or a business combination. A transaction is considered to be a business combination if the acquired property meets the definition of a business under IFRS 3 “Business Combinations”: being an integrated set of activities and assets that are capable of being managed for the purpose of providing a return to the Unitholders. For asset acquisitions, the total cost is allocated to the identifiable assets and liabilities on the basis of their relative fair values on the acquisition date. Asset acquisitions do not give rise to goodwill. Fair value of such assets and liabilities is determined based on the following: Land – the amount allocated to land is based on an appraisal estimate of its fair value. Buildings – are recorded at the estimated fair value of the building and its components and significant parts. Intangible assets – are recorded for tenant relationships, based on estimated costs avoided should the respective tenants renew their leases at the end of the initial lease term, adjusted for the estimated probability of renewal. Fair value of debt – values ascribed are determined based on the differential between contractual and market interest rates on long-term liabilities assumed at acquisition. For business combinations, the acquisition method is used wherein the components of the business combination (assets acquired, liabilities assumed, consideration transferred and any goodwill or bargain purchase) are recognized and measured. The assets acquired and liabilities assumed from the acquiree are measured at their fair value on the acquisition date. Change in useful life of investment properties The estimated useful lives of significant investment properties are reviewed whenever events or circumstances indicate a change in useful life. Estimated useful lives of significant investment properties are based on management’s best estimate and the actual useful lives may be different. Revisions to the estimated useful lives of investment properties constitute a change in accounting estimate and are accounted for prospectively by amortizing the cumulative changes over the remaining estimated useful life of the related assets. (e) Cash and cash equivalents Cash and cash equivalents are defined as cash on hand, restricted cash, and cash in bank. (f) Assets held for sale and discontinued operations A non-current asset is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than continuing use. A property is classified as held for sale at the point in time when it is available for immediate sale, management has committed to a plan to sell the property and is actively locating a purchaser for the property at a sales price that is reasonable in relation to the current estimated fair value of the property, and the sale is expected to be completed within a one year period. Properties held for sale are carried at the lower of their carrying values and estimated fair value less costs to sell. In addition, assets classified as held for sale are not depreciated and amortized. A property that is subsequently reclassified as held and in use is measured at the lower of its carrying value amount before it was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had it been continuously classified as held and in use, and its estimated fair value at the date of the subsequent decision not to sell. Assets that are classified as held for sale and that constitute a component of Crombie are presented as discontinued operations and their operating results are presented separately in the consolidated statements of comprehensive income (loss). A component of Crombie includes a property type or geographic area of operations. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 97 97 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (g) Employee future benefits obligation The cost of Crombie’s pension benefits for defined contribution plans is expensed for employees in respect of the period in which they render services. The cost of defined benefit pension plans and other benefit plans is accrued based on estimates, using actuarial techniques, of the amount of benefits employees have earned in return for their services in the current and prior periods. The present value of the defined benefit obligation and current service cost is determined by discounting the estimated benefits using the projected unit credit method to determine the fair value of the plan assets and total actuarial gains and losses and the proportion thereof which will be recognized. Other factors considered for other benefit plans include assumptions regarding salary escalation, retirement ages and expected growth rate of health care costs. The fair value of any plan assets is based on current market values. The present value of the defined benefit obligation is based on the discount rate determined by reference to the yield of high-quality corporate bonds of similar currency, having terms of maturity which align closely with the period of maturity of the obligation. The defined benefit plan and post-employment benefit plan are unfunded. The impact of changes in plan provisions will be recognized in benefit costs on a straight-line basis over a period not exceeding the average period until the benefit becomes vested. To the extent that the benefits are already vested the past service cost will be recognized immediately. In measuring its defined benefit liability, Crombie recognizes actuarial gains and losses directly to other comprehensive income (loss). (h) Unit based compensation plans (i) Deferred Unit Plan (“DU Plan”) Crombie provides a voluntary DU Plan whereby eligible trustees, officers, and employees (the “Participants”) may elect to receive all or a portion of their eligible compensation in deferred units (“DUs”). The Board (or its designated Committee) may determine that special compensation will be provided in the form of DUs. Unless otherwise determined by the Board (or its designated Committee), DUs are fully vested at the time they are allocated, with the value of the award recorded as a liability and expensed as general and administrative expenses. DUs are not Crombie REIT Units and do not entitle a Participant to any Unitholder rights, including voting rights, distribution entitlements (other than those noted below) or rights on liquidation. During the time that a Participant has outstanding DUs, whenever cash distributions are paid on REIT Units, additional DUs will be credited to the Participant’s DU account, determined by multiplying the number of DUs in the Participant’s DU account on the REIT distribution record date by the distribution paid per REIT Unit, and dividing the result by the market value of a Unit as determined in accordance with the DU Plan. Additional DUs issued as a result of distributions vest on the same basis as noted above and the value of the additional DUs credited is expensed to general and administrative expenses on allocation. A redemption will occur as the result of specific events such as the retirement of a Participant. Upon redemption, a Participant will receive the net value of the vested DUs being redeemed, with the net value determined by multiplying the number of DUs redeemed by the REIT Unit’s market price on redemption date, less applicable withholding taxes. The Participant may elect to receive this net amount as a cash payment or instead receive Crombie REIT Units for redeemed DU’s after deducting applicable withholding taxes. For fair value measurement purposes, each DU is measured based on the market value of a REIT Unit with changes in fair value reflected as a decrease (increase) in fair value of financial instruments. (ii) Restricted Unit Plan (“RU Plan”) Crombie has a RU Plan for certain eligible executives and employees (“RU Participants”), whereby the RU Participants will receive all or a portion of their annual long-term incentive plan awards in restricted units (“RUs”). The RUs are accounted for under IAS 19 “Employee benefits” and the liability and expense are recognized over the service period which ends on the vesting date. The RUs are subject to vesting conditions including being actively employed. The number of RUs which fully vest is determined by: (a) the dollar amount of the award divided by the market value of a REIT Unit on the award grant date, plus (b) deemed distributions on RUs during the vesting period at a rate equivalent to the number of REIT Units that would have been issued had the vested RUs been treated as a REIT Unit. The value of these additional RUs from deemed distributions are expensed to general and administrative expenses at the time of allocation. On the vesting date, each participant shall be entitled to receive a cash amount (net of any applicable withholding taxes) equal to the number of vested RUs held by the RU Participant multiplied by the market value on the vesting date, as determined by the market value of a REIT Unit. Alternatively, a RU Participant who is an eligible employee on the vesting date may elect to convert their vested RUs to DUs under Crombie’s DU Plan. No REIT Units or other securities of Crombie will be issued from treasury as settlement of any obligation under the RU Plan. (iii) Performance Unit Plan (“PU Plan”) Crombie has a PU Plan for certain eligible executives and employees (“PU Participants”), whereby the PU Participants may elect each year to participate in the PU Plan and receive all or a portion of their eligible remuneration in the form of an allocation of performance units (“PUs”). The PUs are accounted for under IAS 19 “Employee benefits” and the liability and expense are recognized over the service period which ends on the vesting date. The PUs are subject to vesting conditions including being actively employed. The number of PUs which vest for each participant shall be determined by: (a) multiplying the number of PUs granted under the award by an adjustment factor applicable to the performance level achieved, and (b) adding the number of PUs or fractions thereof that would be credited to such participant upon the payment of distributions by Crombie on the REIT Units, based on the number of additional REIT Units a participant would have received had the vested PUs been treated as REIT Units under a distribution reinvestment plan during the PU term. Alternatively, a PU Participant who is an eligible employee on the vesting date may elect to convert their vested PUs to DUs under Crombie’s DU Plan. A PU is not considered to be a REIT Unit and does not entitle any participant to exercise voting rights, or any other rights or entitlements associated with a REIT Unit. No REIT Units or other securities of Crombie will be issued from treasury as settlement of any obligation under the PU Plan. 98 CRA028 4400112 -Crombie_Text Proof R1.indd 98 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (i) Distribution reinvestment plan (“DRIP”) Crombie has a DRIP which is described in Note 16. (j) Revenue recognition (i) Lease revenue Revenue earned from tenants under lease agreements includes base rent, realty tax recoveries, percentage rent, and other incidental income. Certain leases have rental payments that change over their term due to changes in rates. Crombie records the rental revenue from leases on a straight-line basis over the term of the lease. Accordingly, an accrued rent receivable is recorded for the difference between the straight-line rent recorded as property revenue and the rent that is contractually due from the tenants. In addition, tenant incentives are amortized on a straight-line basis over the term of existing leases and the amortization is shown as a reduction in property revenue. Percentage rents are recognized when tenants are obligated to pay such rent under the terms of the related lease agreements. Realty tax recoveries and other incidental income are recognized on an accrual basis as they become due. (ii) Revenue from contracts with customers Crombie recognizes revenue in accordance with IFRS 15 “Revenue from Contracts with Customers” which includes revenue from management and development services. Crombie recognizes revenue from customers that reflects the consideration to which it expects to be exchanged for. This involves identifying the contract with its customers, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when the entity satisfies its performance obligations. Where a contract contains elements of variable consideration, Crombie estimates the amount of variable consideration to which it will be entitled under the contract. Variable consideration can arise from discounts, refunds, credits, and price concessions. This consideration is allocated to all performance obligations in a contract based on their relative standalone selling prices. (k) Leases Crombie as lessor Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Crombie has determined that most of its leases with its tenants are operating leases of which revenue is recorded in accordance with Crombie’s revenue recognition policy. In some instances, Crombie may classify a lease as a finance lease if it transfers substantially all of the risks and rewards of the underlying asset. For these leases a finance lease receivable is established and interest income is recognized over the term of the lease. Crombie as lessee Crombie leases include land, office, equipment, and vehicles. Crombie assesses whether a contract is or contains a lease at the inception of the contract. Leases are recognized as a right-of-use asset with a corresponding liability at the date at which the leased asset is available for use by Crombie, except for short-term leases of 12 months or less or low value leases which are expensed in the consolidated statements of comprehensive income (loss) 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 not determinable, the lessee’s incremental borrowing rate, specific to the term of the lease. Lease payments can include fixed payments; variable payments based on an index, or a rate known at the commencement date; and extension option payments or purchase options, if Crombie is reasonably certain to exercise. The lease liability is subsequently measured at amortized cost using the effective interest rate method and remeasured (with a corresponding adjustment to the related right-of-use asset) when there is a change in future lease payments in case of renegotiation, changes of an index or rate or in case of reassessment of options. At inception of the lease, the right-of-use asset is measured at cost, comprising initial lease liability, initial direct costs, and any future restoration or refurbishment costs, less any incentives granted by the lessors. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term of the underlying asset on a straight-line basis. The right-of-use asset is subject to testing for impairment if there is an indicator for impairment. Right-of-use assets are included in investment property and other assets and the lease liabilities are presented separately. (l) Finance costs – operations Finance costs – operations primarily comprise interest on Crombie’s borrowings. Finance costs directly attributable to the acquisition, redevelopment, construction, or production of a qualifying asset are capitalized as a component of the cost of the asset to which it is related. All other finance costs – operations are expensed in the period in which they are incurred using the effective interest rate method. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 99 99 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (m) Distributions to Unitholders The determination to declare and make payable distributions from Crombie is at the discretion of the Board of Trustees and, until declared payable by the trustees, Crombie has no contractual obligation to pay cash distributions to Unitholders. (n) Income taxes Crombie is taxed as a “mutual fund trust” for income tax purposes. It is the intention of Crombie, subject to approval of the trustees, to make distributions not less than the amount necessary to ensure that Crombie will not be liable to pay income tax, except for the amounts incurred in its incorporated subsidiaries. (o) Hedges Crombie may use cash flow hedges to manage exposures to increases in variable interest rates. Cash flow hedges are recognized on the consolidated balance sheets at fair value with the effective portion of the hedging relationship recognized in other comprehensive income (loss). Any ineffective portion of the cash flow hedge is recognized in operating income. Amounts recognized in accumulated other comprehensive income (loss) are reclassified to operating income in the same periods in which the hedged item is recognized in operating income. Fair value hedges and the related hedged items are recognized on the consolidated balance sheets at fair value with any changes in fair value recognized in operating income. To the extent the fair value hedge is effective, the changes in the fair value of the hedge and the hedged item will offset each other. Crombie assesses on an ongoing basis whether any existing derivative financial instrument continues to be effective in offsetting changes in interest rates on the hedged items. Crombie currently hedges five variable mortgages, the joint operation credit facility II, and a variable mortgage in a joint venture. (p) Consolidated statement of comprehensive income (loss) Consolidated statement of comprehensive income (loss) is the change in net assets attributable to Unitholders during a period from transactions and other events and circumstances from non-Unitholder sources. Crombie reports a consolidated statement of comprehensive income (loss) comprising changes in net assets attributable to Unitholders and other comprehensive income (loss) for the year. Accumulated other comprehensive income (loss) has been included in the consolidated statements of changes in net assets attributable to Unitholders. (q) Provisions Provisions are recognized when: Crombie has a present obligation (legal or constructive) as a result of a past event; it is probable that Crombie will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, where the time value of money is material. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Provisions reflect Crombie’s best estimate at the reporting date. Environmental liabilities are recognized when Crombie has an obligation relating to site closure or rehabilitation. The extent of the work required and the associated costs are dependent on the requirements of the relevant authorities and Crombie’s environmental policies. Provisions for the cost of each closure and rehabilitation program are recognized at the time of occurrence and when Crombie has a reliable estimate of the obligation. Changes in the provision are recognized in the period of the change. (r) Financial instruments Crombie classifies financial assets and liabilities according to their characteristics and management’s choices and intentions related thereto for the purpose of ongoing measurement. Classification choices for financial assets include: a) Amortized cost – recorded at amortized cost with gains and losses recognized in increase (decrease) in net assets attributable to Unitholders in the period that the asset is derecognized or impaired; b) Fair value, with two options: (i) FVTOCI – measured at fair value with changes in fair value recognized in other comprehensive income (loss) for the current period until realized through disposal or impairment; and (ii) FVTPL – measured at fair value with changes in fair value recognized in increase (decrease) in net assets attributable to Unitholders for the period. Classification choices for financial liabilities include: a) Amortized cost – recorded at amortized cost with gains and losses recognized in increase (decrease) in net assets attributable to Unitholders in the period that the asset is derecognized or impaired; and b) FVTPL – measured at fair value with changes in fair value recognized in increase (decrease) in net assets attributable to Unitholders for the period. Subsequent measurement for these assets and liabilities is based on either fair value or amortized cost using the effective interest method, depending upon their classification. 100 CRA028 4400112 -Crombie_Text Proof R1.indd 100 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Crombie’s financial assets and liabilities are generally classified and measured as follows: Financial Asset/Liability Cash and cash equivalents Trade receivables Restricted cash Long-term receivables Derivative ﬁnancial assets and liabilities Derivatives designated in a hedging relationship Category Assets at amortized cost Assets at amortized cost Assets at amortized cost Assets at amortized cost FVTPL FVTOCI Accounts payable and other liabilities (excluding interest rate swaps) Financial liabilities at amortized cost Investment property debt Senior unsecured notes Financial liabilities at amortized cost Financial liabilities at amortized cost Measurement Amortized cost Amortized cost Amortized cost Amortized cost Fair value Fair value Amortized cost Amortized cost Amortized cost Other balance sheet accounts, including, but not limited to, prepaid expenses, accrued straight-line rent receivable, tenant incentives, investment properties, and employee future benefits obligation are not financial instruments. Transaction costs, other than those related to financial instruments classified as FVTPL that are expensed as incurred, are added to the fair value of the financial asset or financial liability on initial recognition and amortized using the effective interest method. In the event any debt is extinguished, the associated unamortized financing costs are expensed immediately. Financial assets are derecognized when the contractual rights to benefits from the financial asset expires. The difference between the asset’s carrying value and the consideration received or receivable is recognized as a charge to the consolidated statement of comprehensive income (loss). On a continual basis, Crombie assesses whether any of its financial assets that are measured at amortized costs are impaired under an expected credit loss model. For trade and long-term receivables, Crombie utilizes a provision matrix that uses aging categories as well as tenant specific history and the current economic environment to determine expected credit losses. Crombie’s financial assets are reported net of any expected credit loss on the consolidated balance sheets. Crombie determines the expected credit loss in accordance with IFRS 9 “Financial Instruments” simplified approach for amounts receivable where its loss allowance is measured at initial recognition and throughout the life of the receivable. Trade and lease receivables are written off when there is no reasonable expectation of recovery. (s) Fair value measurement The fair value of financial instruments is the estimated amount that Crombie would receive to sell a financial asset or pay to transfer a financial liability in an orderly transaction between market participants at the measurement date. 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 Crombie. 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 interest. Crombie 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. The fair value of any interest rate swap is estimated by discounting net cash flows of the swaps using forward interest rates for swaps of the same remaining maturities. 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. When determining the highest and best use of non-financial assets Crombie takes into account the following: • use of the asset that is physically possible – Crombie assesses the physical characteristics of the asset that market participants would take into account when pricing the asset; • use that is legally permissible – Crombie assesses any legal restrictions on the use of the asset that market participants would take into account when pricing the asset; and • use that is financially feasible – Crombie assesses whether a use of the asset that is physically possible and legally permissible generates adequate income or cash flows to produce an investment return that market participants would require from an investment in that asset put to that use. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 101 101 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (t) Impairment of long-lived tangible and definite life intangible assets Long-lived tangible and definite life intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. When such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any). The recoverable amount is the higher of fair value less costs to sell and value in use. Where the asset does not generate cash flows that are independent from other assets, Crombie estimates the recoverable amount of the cash generating unit(s) to which the asset belongs. When the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to the recoverable amount. An impairment loss is recognized as an expense immediately in operating income. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate but is limited to the carrying amount that would have been determined if no impairment loss had been recognized in prior periods. A reversal of impairment loss is recognized immediately in operating income. (u) Net assets attributable to Unitholders (i) Balance sheet presentation In accordance with International Accounting Standard (“IAS”) 32, “Financial Instruments: Presentation”, puttable instruments are generally classified as financial liabilities. Crombie’s REIT Units and Class B LP Units with attached Special Voting Units (“SVU”) are both puttable instruments, meeting the definition of financial liabilities in IAS 32. There are exception tests within IAS 32 which could result in classification as equity; however, Crombie’s units do not meet the exception requirements. Therefore, Crombie has no instrument qualifying for equity classification on the consolidated balance sheets pursuant to IFRS Accounting Standards. The classification of all units as financial liabilities with presentation as net assets attributable to Unitholders does not alter the underlying economic interest of the Unitholders in the net assets and net operating results attributable to Unitholders. (ii) Balance sheet measurement REIT Units and Class B LP Units with attached SVUs are carried on the consolidated balance sheets at net asset value. Although puttable instruments classified as financial liabilities are generally required to be remeasured to fair value at each reporting period, the alternative presentation as net assets attributable to Unitholders reflects that, in total, the interests of the Unitholders are limited to the net assets of Crombie. (iii) Statement of comprehensive income presentation As a result of the classification of all units as financial liabilities, the consolidated statement of comprehensive income (loss) recognizes distributions to Unitholders as a finance cost. In addition, terminology such as net income has been replaced by Increase (decrease) in net assets attributable to Unitholders to reflect the absence of an equity component on the consolidated balance sheets. (iv) Presentation of per unit measures As a result of the classification of all units as financial liabilities, Crombie has no equity instrument; therefore, in accordance with IAS 33 “Earnings per Share”, there is no denominator for purposes of calculation of per unit measures. (v) Allocation of comprehensive income (loss) The components of comprehensive income (loss) are allocated between REIT Units and Class B LP Units as follows: • Operating income – based on the weighted average number of units outstanding during the reporting period. • Distributions to Unitholders – based on the actual distributions paid to each separate unit class. • Accumulated other comprehensive income (loss) – increases are allocated based on the weighted average number of units outstanding during the reporting period, decreases in previously accumulated amounts are drawn down based on the average accumulation allocation rate. (v) Critical judgments in applying accounting policies The following are the critical judgments that have been made in applying Crombie’s accounting policies and that have the most significant effect on the consolidated financial statements: (i) Investment properties Crombie’s accounting policies relating to investment properties are described in Note 2(d). In applying these policies, judgment is applied in determining whether certain costs are additions to the carrying amount of an investment property and whether properties acquired are considered to be asset acquisitions or business combinations. Crombie has determined that all properties acquired to date are asset acquisitions. (ii) Investment in joint ventures Crombie makes judgments in determining the appropriate accounting for investments in other entities. Such judgments include: determining the significant relevant activities and assessing the level of influence Crombie has over such activities through agreements and contractual arrangements. (iii) Classifications of Units as liabilities Crombie’s accounting policies relating to the classification of Units as liabilities are described in Note 2(u). The critical judgments inherent in this policy relate to applying the criteria set out in IAS 32, “Financial Instruments: Presentation”, relating to the puttable instrument exception. 102 CRA028 4400112 -Crombie_Text Proof R1.indd 102 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (iv) Investment in joint arrangements Crombie makes judgments in determining the appropriate accounting for investments in other entities. Such judgments include: determining the significant relevant activities and assessing the level of control or influence Crombie has over such activities through agreements and contractual arrangements; and determining whether Crombie’s rights and obligations are directly related to the assets and liabilities of the arrangement or to the net assets of the joint arrangement. (v) Impairment Crombie’s accounting policies relating to impairment are described in Note 2(t). In applying these policies, judgment is applied in identifying impairment indicators. (w) Critical accounting estimates and assumptions The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates and assumptions that are critical to the determination of the amounts reported in the consolidated financial statements relate to the following: (i) Fair value measurement A number of assets and liabilities included in Crombie’s consolidated financial statements require measurement at, and/or disclosure of, fair value. In estimating the fair value of an asset or a liability, Crombie uses market-observable data to the extent it is available. Where market-observable data is not available, Crombie estimates the fair value based on discounted future cash flows using discount rates that reflect current market conditions for instruments with similar terms and risks. (ii) Investment properties Investment properties are carried at cost less accumulated depreciation. Crombie estimates the residual value and useful lives of investment properties and the significant components thereof to calculate depreciation and amortization. (iii) Investment property valuation External, independent valuation companies, having appropriate, recognized professional qualifications and recent experience in the location and category of properties being valued, value substantially all of Crombie’s investment property portfolio on a rotating basis over a maximum period of four years. The fair values, based on the measurement date, represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Internal quarterly valuations are performed using internally generated valuation models prepared by considering the aggregate trailing annual net operating income (property revenue less property operating expenses) recognized from leasing the property, that is stabilized for any major tenant movement. Biannual capitalization rates are obtained from an independent valuation company, which reflect the specific risks inherent in the net operating income, to arrive at property valuations. As at December 31, 2023, management’s determination of fair value was updated for current market assumptions, including net operating income, market capitalization rates, and recent appraisals provided by independent appraisal professionals. (iv) Purchase price allocation Investment properties are properties which are held to earn rental income. Investment properties include land, buildings, and intangible assets. Upon acquisition, management allocates the purchase price of the acquisition. This allocation contains a number of estimates and underlying assumptions including, but not limited to, highest and best use and fair value of the properties, estimated cash flows, discount rates, lease-up rates, inflation rates, renewal rates, tenant incentive allowances, cost recoveries, and leasing costs and termination costs. (x) Future changes in accounting standards The International Accounting Standards Board (“IASB”) has issued a number of standards and interpretations with an effective date after the date of these consolidated financial statements. Set out below are only those standards that may have a material impact on the consolidated financial statements in future periods. Management is currently evaluating the impact of these future policies on the consolidated financial statements. (i) IAS 1 – Presentation of financial statements The IASB has issued amendments to IAS 1, “Presentation of Financial Statements” (“IAS 1”). The amendments clarify how to classify debt and other liabilities as current or non-current. The amendments to IAS 1 apply to annual reporting periods beginning on or after January 1, 2024. (ii) IFRS 16 – Leases The IASB has issued amendments to IFRS 16 “Leases” (“IFRS 16”). The amendments clarify how a seller-lessee subsequently measures sale and lease- back transactions. The amendments to IFRS 16 apply to annual reporting periods beginning on or after January 1, 2024. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 103 103 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3) INVESTMENT PROPERTIES Income properties Properties under development Total investment properties Income properties Cost December 31, 2023 December 31, 2022 $ $ 3,529,969 94,488 3,624,457 $ $ 3,523,067 67,144 3,590,211 Land Buildings Intangibles Deferred Leasing Costs Total Opening balance, January 1, 2023 $ 1,148,829 $ 3,043,096 $ 75,945 $ 10,703 $ 4,278,573 Acquisitions Additions Write-off of fully depreciated assets Reclassiﬁcation from properties under development 5,715 2,743 — 13 23,722 25,108 (4,628) 12,657 Balance, December 31, 2023 1,157,300 3,099,955 Accumulated depreciation, amortization, and impairment Opening balance, January 1, 2023 Depreciation and amortization Write-off of fully depreciated assets Balance, December 31, 2023 10,422 316 — 10,738 705,420 70,495 (4,628) 771,287 2,205 — (2,830) — 75,320 35,076 4,887 (2,830) 37,133 — 12,091 (413) — 31,642 39,942 (7,871) 12,670 22,381 4,354,956 4,588 1,654 (413) 5,829 755,506 77,352 (7,871) 824,987 Net carrying value, December 31, 2023 $ 1,146,562 $ 2,328,668 $ 38,187 $ 16,552 $ 3,529,969 Included in land are right-of-use assets of $16,757 net of accumulated depreciation of $1,582 for land held under lease. Cost Opening balance, January 1, 2022 $ 1,129,645 $ 2,912,068 $ 71,758 $ 10,329 $ 4,123,800 Land Buildings Intangibles Deferred Leasing Costs Total Acquisitions Additions Disposals Write-off of fully depreciated assets Transfer to investment properties held for sale (Note 6) Reclassiﬁcation from properties under development 30,021 1,902 (9,241) — (19,536) 16,038 75,573 33,325 (32,851) (4,247) (27,652) 86,880 Balance, December 31, 2022 1,148,829 3,043,096 Accumulated depreciation, amortization, and impairment Opening balance, January 1, 2022 Depreciation and amortization Dispositions Impairment Write-off of fully depreciated assets Transfer to investment properties held for sale (Note 6) 7,906 316 — 2,200 — — 642,311 72,158 (7,815) 8,200 (4,247) (5,187) Balance, December 31, 2022 10,422 705,420 7,136 — (821) (1,322) (806) — 75,945 32,307 4,870 (551) — (1,322) (228) 35,076 — 1,170 — (736) (60) — 112,730 36,397 (42,913) (6,305) (48,054) 102,918 10,703 4,278,573 4,311 1,039 — — (736) (26) 4,588 686,835 78,383 (8,366) 10,400 (6,305) (5,441) 755,506 Net carrying value, December 31, 2022 $ 1,138,407 $ 2,337,676 $ 40,869 $ 6,115 $ 3,523,067 Included in land are right-of-use assets of $15,456 net of accumulated depreciation of $1,266 for land held under lease. During the year ended December 31, 2022, Crombie recorded impairments totalling $10,400 on three properties. These impairments were the result of continuing high vacancy at one property, the upcoming scheduled demolition of a vacant building, and a recent redevelopment that included a partial demolition. Impairment was measured on a per property basis and was determined as the amount by which the carrying value, using the cost method, exceeded the recoverable amount for each property. The recoverable amount is the higher of the economic benefit of the continued use of the asset and the selling price less costs to sell. In all three cases, the recoverable amount was determined to be the economic benefit of the continued use of the asset. To calculate the benefit of the continued use of the asset, Crombie utilizes the present value of the estimated future cash flows, discounted using a discount rate based on the risk associated with the property. 104 CRA028 4400112 -Crombie_Text Proof R1.indd 104 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Properties under development Opening balance, January 1, 2023 Additions Reclassiﬁcation to income-producing properties Balance, December 31, 2023 Opening balance, January 1, 2022 Acquisitions Additions Dispositions Reclassiﬁcation to income-producing properties Balance, December 31, 2022 $ $ $ Land Buildings 52,852 $ 3,798 (13) $ 14,292 36,216 (12,657) Total 67,144 40,014 (12,670) 56,637 $ 37,851 $ 94,488 Land Buildings Total 67,063 $ 42,724 $ 109,787 5,007 2,889 (6,069) (16,038) — 58,448 — (86,880) 5,007 61,337 (6,069) (102,918) $ 52,852 $ 14,292 $ 67,144 Fair value Crombie’s total fair value of investment properties exceeds carrying value by $1,109,289 at December 31, 2023 (December 31, 2022 – $1,113,573). Crombie uses the cost method of accounting for investment properties and increases in fair value over carrying value are not recognized until realized through disposition or derecognition of properties, while impairment, if any, is recognized on a property-by-property basis when circumstances indicate that the carrying value may not be recoverable. The estimated fair values of Crombie’s investment properties are as follows: December 31, 2023 December 31, 2022 Carrying value consists of the net carrying value of: Income properties Properties under development Accrued straight-line rent receivable Tenant incentives Total carrying value Fair Value 5,096,000 5,050,000 $ $ Carrying Value 3,986,711 3,936,427 $ $ Note December 31, 2023 December 31, 2022 3 3 5 5 $ $ 3,529,969 $ 3,523,067 94,488 103,753 258,501 67,144 98,338 247,878 3,986,711 $ 3,936,427 The fair value of investment properties is a Level 3 fair value measurement. The fair value represents the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value included in this summary reflects the fair value of the properties as at December 31, 2023 and 2022, respectively, based on each property’s current use as a revenue-generating investment property. Additionally, as properties are prepared for redevelopment, Crombie considers each property’s progress through entitlement in determining the fair value of a property. The fair value of properties under development is assumed to equal cost until the property is substantially completed, and at that point in time, the property is moved to income producing and valued according to Crombie’s policies described below. The valuation techniques and significant unobservable inputs used in determining the fair value of investment properties are set out below: (i) (ii) The capitalized net operating income method – Under this method, capitalization rates are applied to trailing stabilized net operating income (property revenue less property operating expenses). The key assumptions are the capitalization rates for each specific property and stabilized net income. Crombie receives biannual capitalization rate reports from external knowledgeable property valuators. The capitalization rate reports provide a range of rates for various geographic regions and for various types and qualities of properties within each region. Management selects the appropriate rate for each property from the range provided. Crombie employs this method to determine fair value. The discounted cash flow method – Under this method, discount rates are applied to the forecasted cash flows reflecting the initial terms of the lease or leases for that specific property and assumptions as to renewal and new leasing activity. The key assumptions are the discount rate applied over the initial term of the lease, as well as lease renewals and new leasing activity. Crombie employs this method when the capitalized net operating income method indicates a risk of impairment or when a property is, or will be, undergoing redevelopment. (iii) External appraisals – Crombie has external, independent appraisals performed on all significant properties on a rotational basis over a maximum period of four years. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 105 105 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS On a periodic basis, Crombie obtains independent appraisals such that approximately 85% of its properties, by value, will be externally appraised over a four year period. Crombie has utilized the following weighted average capitalization rate on its income properties. Crombie reports the weighted average capitalization rate excluding properties under development. Once development is completed on these properties and they become income producing, Crombie includes them in the calculation of its weighted average capitalization rate. Weighted average capitalization rate December 31, 2023 December 31, 2022 6.12% 5.94% Fair value sensitivity Crombie has determined that a change in this applied capitalization rate and net operating income at December 31, 2023 would result in an (increase) decrease in the fair value of the investment properties as follows: Capitalization rate change (0.75)% (0.50)% (0.25)% —% 0.25% 0.50% 0.75% Net operating income change $ $ $ $ $ $ $ $ (15,000) 452,902 198,902 (33,098) (245,098) (440,098) (619,098) (785,098) $ $ $ $ $ $ $ $ (10,000) 534,601 280,601 48,601 (163,399) (358,399) (537,399) (703,399) $ $ $ $ $ $ $ $ (5,000) 616,301 362,301 130,301 (81,699) (276,699) (455,699) (621,699) $ $ $ $ $ $ $ $ — 698,000 444,000 212,000 — (195,000) (374,000) (540,000) $ $ $ $ $ $ $ $ 5,000 779,699 525,699 293,699 81,699 (113,301) (292,301) (458,301) $ $ $ $ $ $ $ $ 10,000 861,399 607,399 375,399 163,399 (31,601) (210,601) (376,601) $ $ $ $ $ $ $ $ 15,000 943,098 689,098 457,098 245,098 50,098 (128,902) (294,902) Property acquisitions and dispositions The operating results of acquired properties are included from the respective date of acquisition and for disposed properties up to the date of disposition. 2023 Transaction Date January 19, 2023 February 27, 2023 May 1, 2023 (1) The initial acquisition prices exclude closing and transaction costs. 2022 Transaction Date January 6, 2022 January 7, 20222 January 25, 20223 January 27, 2022 January 28, 2022 March 24, 2022 May 3, 2022 May 30, 2022 June 14, 2022 July 7, 2022 August 8, 2022 August 10, 2022 August 22, 2022 August 26, 2022 September 8, 2022 September 15, 2022 November 1, 2022 November 16, 2022 Vendor/Purchaser Properties Acquired Approximate Square Footage Initial Acquisition Price1 Related Party Related Party Related Party 1 1 1 21,000 60,000 58,000 Vendor/Purchaser Properties Acquired (Disposed) Approximate Square Footage Related Party Related Party Related Party Related Party Third Party Related Party Related Party Third Party Third Party Third Party Third Party Third Party Third Party Joint Venture Third Party Third Party Third Party Third Party 1 1 — 5 1 1 1 — (1) 1 (1) (1) (1) — (1) (1) (1) (1) 31,000 — 235,000 183,000 31,000 38,000 67,000 — (19,000) 4,000 (74,000) (6,000) (9,000) — (11,000) (29,000) (62,000) (191,000) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,122 14,600 9,760 Initial Acquisition (Disposition) Price1 3,300 2,567 38,050 34,035 2,000 10,520 11,000 4,939 (10,250) 1,350 (26,500) (1,125) (1,900) (7,701) (7,600) (7,300) (87,087) (26,331) (1) The initial acquisition (disposition) prices exclude closing and transaction costs. (2) Acquisition of a parcel of retail land developed by Crombie. (3) Acquisition of the remaining 50% interest in one retail-related industrial property from a related party. 106 CRA028 4400112 -Crombie_Text Proof R1.indd 106 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Investment property disposals Gross proceeds Selling costs Carrying values derecognized: Land Buildings Intangibles Deferred leasing costs Tenant incentives Accrued straight-line rent Development costs Recognition of deferred gain1 Provisions Total gain on disposal $ Year ended December 31, 2023 December 31, 2022 $ — — — — — — — — — — 594 (6) 175,794 (2,021) 173,773 (34,846) (53,265) (848) (34) (1,110) (1,982) (284) — (600) $ 588 $ 80,804 (1) Deferred gain on the sale of land sold to a joint venture in the third quarter of 2022, which has been subsequently sold to a third party. Co-owned properties Crombie owns partial interests in a number of properties. These co-owned properties are subject to proportionate consolidation, the results of which are reflected in Crombie’s consolidated financial statements, based on the proportionate interest in such joint operations. Retail Retail-related industrial Total co-owned properties December 31, 2023 December 31, 2022 Year ended Number of co-owned properties 60 3 63 Ownership 11%–50% 50% Number of co-owned properties 61 2 63 Ownership 11%–50% 50% 4) INVESTMENT IN JOINT VENTURES The following represents Crombie’s interest in equity-accounted investments: 1600 Davie Limited Partnership Bronte Village Limited Partnership The Duke Limited Partnership Penhorn Residential Holdings Limited Partnership 140 CPN Limited 1700 East Broadway Limited Partnership Lynn Valley Limited Partnership Kingsway & Tyne Property Development Limited Partnership December 31, 2023 December 31, 2022 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% —% —% CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 107 107 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following tables represent 100% of the financial position and financial results of the equity-accounted entities: December 31, 2023 December 31, 2022 Davie LP Bronte LP Duke LP Other Total Davie LP Bronte LP Duke LP Other Total Non-current assets $ 184,015 $ 256,271 $ 112,446 $ 39,220 $ 591,952 $ 181,820 $ 257,765 $ 114,288 $ 35,223 $ 589,096 Current assets 13,610 2,650 10,932 4,719 31,911 15,707 2,032 11,369 10,306 39,414 Non-current liabilities (206,275) — (104,000) (26,477) (336,752) (204,313) — (104,000) (25,183) (333,496) Current liabilities (3,864) (241,208) (3,033) (3,329) (251,434) (4,484) (230,157) (560) (3,492) (238,693) Net assets (12,514) 17,713 16,345 14,133 Crombie’s share at 50% (6,257) 8,856 8,172 7,067 35,677 17,838 (11,270) (5,635) 29,640 14,820 21,097 10,549 16,854 8,427 Reconciling items: Deferred gain Partnership loans Gain Unrecognized losses Crombie’s investment in joint ventures (7,441) (6,000) 18,458 1,240 — 5,332 — — — 1,685 — — (334) (7,775) — — — 1,017 18,458 1,240 (7,441) (6,000) 18,458 618 — 5,182 — — — 2,585 — — (595) (571) — — $ — $ 14,188 $ 9,857 $ 6,733 $ 30,778 $ — $ 20,002 $ 13,134 $ 7,261 $ 40,397 56,321 28,161 (8,036) 1,196 18,458 618 December 31, 2023 December 31, 2022 Year ended Davie LP Bronte LP Duke LP Other Total Davie LP Bronte LP Duke LP Other Total Revenue $ 12,007 $ 13,153 $ 8,959 $ 30,532 $ 64,651 $ 10,826 $ 6,514 $ 5,466 $ 8,196 $ 31,002 Property operating expenses (2,915) (5,381) (4,456) (15,955) (28,707) (2,705) (3,699) (1,822) (4,219) (12,445) General and administrative expenses Depreciation and amortization Finance costs – operations (224) (220) (87) (126) (657) (115) (54) (69) (319) (557) (2,934) (7,178) (4,492) (16,188) (1,903) (3,299) (55) (194) (9,384) (26,859) (3,493) (5,750) (4,720) (9,812) (1,957) (3,137) (60) (218) (10,230) (18,917) Net income (loss) $ (1,244) $ (13,128) $ (786) $ 14,202 $ (956) $ (1,237) $ (11,771) $ (1,519) $ 3,380 $ (11,147) Crombie’s income (loss) from equity-accounted investments $ — $ (6,564) $ (393) $ 7,101 $ 144 $ — $ (5,885) $ (759) $ 1,690 $ (4,954) The following table shows the changes in the total carrying value of Crombie’s investment in joint ventures for the year ended: Opening balance Contributions Distributions Dispositions Deferred gain Gain on distribution from equity-accounted investments Share of income (loss) Share of other comprehensive income Closing balance December 31, 2023 December 31, 2022 $ 40,397 $ 2,468 (11,743) — 595 — 144 (1,083) $ 30,778 $ 44,210 2,077 (5,393) (1,873) (595) 2,933 (4,954) 3,992 40,397 Fair Value The estimated fair value of the investment properties in Crombie’s equity-accounted joint ventures at 100% is as follows: December 31, 2023 December 31, 2022 $ $ Fair Value 945,000 908,000 $ $ Carrying Value 566,563 572,153 108 CRA028 4400112 -Crombie_Text Proof R1.indd 108 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Carrying value consists of the net carrying value at 100% of: Income properties Properties under development Accrued straight-line rent receivable Tenant incentives Total carrying value December 31, 2023 December 31, 2022 $ $ 528,754 $ 32,537 862 4,410 566,563 $ 529,520 37,330 690 4,613 572,153 The fair value of joint venture properties is a Level 3 fair value measurement. The fair value represents the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value included in this summary reflects the fair value of the properties as at December 31, 2023 and December 31, 2022, respectively, based on each property’s current use as a revenue-generating property or property under development. Additionally, as properties are prepared for redevelopment, Crombie considers each property’s progress through entitlement in determining the fair value of the property. The fair value of properties under development is assumed to equal cost until the property is substantially completed. As at December 31, 2023, 1600 Davie Limited Partnership, Bronte Village Limited Partnership, The Duke Limited Partnership, Penhorn Residential Holdings Limited Partnership, and 140 CPN Limited are revenue-generating properties. Crombie has utilized the following weighted average capitalization rates for its joint venture properties: Weighted average capitalization rate December 31, 2023 December 31, 2022 3.67 % 3.47% Fair value sensitivity Crombie has determined that a change in this applied capitalization rate and net operating income at December 31, 2023 would result in an (increase) decrease in the fair value of the investment properties as follows: Capitalization rate change (0.75)% (0.50)% (0.25)% —% 0.25% 0.50% 0.75% Net operating income change $ $ $ $ $ $ $ $ (15,000) (168,719) (264,719) (344,719) (408,719) (472,719) (524,719) (570,719) $ $ $ $ $ $ $ $ (10,000) (32,480) (128,480) (208,480) (272,480) (336,480) (388,480) (434,480) $ $ $ $ $ $ $ $ (5,000) 103,760 7,760 (72,240) (136,240) (200,240) (252,240) (298,240) $ $ $ $ $ $ $ $ — $ 240,000 144,000 64,000 $ $ $ — $ (64,000) (116,000) (162,000) $ $ $ 5,000 376,240 280,240 200,240 136,240 72,240 20,240 (25,760) $ $ $ $ $ $ $ $ 10,000 512,480 416,480 336,480 272,480 208,480 156,480 110,480 $ $ $ $ $ $ $ $ 15,000 648,719 552,719 472,719 408,719 344,719 292,719 246,719 5) OTHER ASSETS Trade receivables Provision for doubtful accounts Net trade receivables Prepaid expenses and deposits Fair value of interest rate swap agreements Other ﬁxed assets1,2 Finance lease receivable Accrued straight-line rent receivable Tenant incentives Amounts receivable from related parties December 31, 2023 December 31, 2022 Current Non-current Total Current Non-current Total $ 18,605 $ — $ 18,605 $ 21,645 $ (1,396) 17,209 11,107 2,219 — 631 — — 17,994 — — 48,910 — 9,629 11,309 103,753 258,501 12,071 (1,396) (2,328) 17,209 60,017 2,219 9,629 11,940 103,753 258,501 30,065 19,317 10,346 4,936 — 605 — — 12,321 — — — 15,329 — 10,365 11,940 98,338 247,878 10,298 $ 21,645 (2,328) 19,317 25,675 4,936 10,365 12,545 98,338 247,878 22,619 Total other assets $ 49,160 $ 444,173 $ 493,333 $ 47,525 $ 394,148 $ 441,673 (1) For the year ended December 31, 2023, depreciation of other ﬁxed assets was $1,483 (December 31, 2022 – $1,453). (2) Other ﬁxed assets include right-of-use assets of $2,234 (December 31, 2022 – $2,306) net of accumulated depreciation of $1,372 (December 31, 2022 – $1,331) relating to office and vehicle leases. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 109 109 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Tenant Incentives Balance, January 1, 2023 Additions Amortization Write-off of fully depreciated assets Balance, December 31, 2023 Tenant incentives Balance, January 1, 2022 Additions Amortization Disposition Write-off of fully depreciated assets Transfer to investment properties held for sale Balance, December 31, 2022 6) INVESTMENT PROPERTY DEBT Cost Accumulated Amortization Net Carrying Value $ 342,305 $ 94,427 $ 247,878 37,139 — (4,976) — 26,516 (4,976) 37,139 (26,516) — $ 374,468 $ 115,967 $ 258,501 Cost Accumulated Amortization Net Carrying Value $ 326,056 $ 92,262 $ 233,794 38,183 — (44) (19,216) (2,674) — 22,989 (37) (19,216) (1,571) 38,183 (22,989) (7) — (1,103) $ 342,305 $ 94,427 $ 247,878 Range Weighted Average Interest Rate Weighted Average Term to Maturity December 31, 2023 December 31, 2022 Fixed rate mortgages 2.70%–6.44% 4.30% 5.9 years $ 838,957 $ Unsecured non-revolving credit facility Revolving credit facility Joint operation credit facility I Joint operation credit facility II Deferred ﬁnancing charges on ﬁxed rate mortgages Total investment property debt Mortgages Non-current Current Credit facilities Non-current Current Weighted average interest rate for drawn credit facilities 1.9 years 3.5 years — 0.8 years $ $ $ 93,297 47,591 — 3,503 (4,329) 979,019 617,717 216,911 140,888 3,503 $ $ 918,552 150,000 — 7,167 3,097 (4,846) 1,073,970 666,748 246,958 160,264 — 979,019 $ 1,073,970 6.78% 6.06% Specific investment properties with a carrying value of $2,047,666 as at December 31, 2023 (December 31, 2022 – $2,255,470) are currently pledged as security for mortgages or provided as security for the Revolving credit facility. Carrying value includes investment properties, as well as accrued straight-line rent receivable and tenant incentives, which are included in other assets. Mortgage activity For the year ended: December 31, 2023 For the year ended: December 31, 2022 110 Type New Repaid Type New Repaid Number of Mortgages 3 22 Number of Mortgages 1 16 Weighted Average Rate Terms in Years Amortization Period in Years 5.27% 4.18% 9.5 29.8 Weighted Average Rate Terms in Years Amortization Period in Years 4.79% 3.78% 10.0 30.0 Proceeds (Repayments) 120,660 (167,266) Proceeds (Repayments) 7,000 (124,133) $ $ $ $ CRA028 4400112 -Crombie_Text Proof R1.indd 110 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Joint Operation Credit Facilities The Joint operation credit facility I, which consisted of a term loan facility and a revolving credit facility, was repaid in the second quarter of 2023. Concurrently, the fixed-for-floating rate swap was also retired. The joint operation credit facility II was entered into in conjunction with the 89% sale of a portfolio of assets in the fourth quarter of 2019. Crombie and its co-ownership partner entered into a credit agreement with a Canadian chartered bank for a $16,500 term loan facility and a $15,500 revolving credit facility. Both facilities are secured by first and second mortgages on select properties and have a term of five years of maturing on October 7, 2024. Borrowings under both facilities can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. Concurrent with entering into the facility, Crombie and its co-ownership partner entered into a fixed-for-floating interest rate swap, effectively fixing the interest rate on both facilities at 3.27%. At December 31, 2023, Crombie’s portion of the term and revolving credit facilities was $1,815 and $1,688, respectively. Revolving Credit Facility The revolving credit facility was extended in the third quarter of 2023. The revolving credit facility has a maximum principal amount of $400,000 and matures June 30, 2027. The facility is used by Crombie for working capital purposes and to provide temporary financing for acquisitions and development activity. It is secured by a pool of first mortgages on certain properties and the maximum principal amount is subject to an available borrowing base (December 31, 2023 – borrowing base of $400,000). Borrowings under the revolving credit facility can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. The respective spread or margin may change depending on Crombie’s unsecured bond rating with Morningstar DBRS and whether the facility remains secured or migrates to an unsecured status. Unsecured Bilateral Credit Facility The unsecured bilateral credit facility agreement was extended in the third quarter of 2023. The unsecured bilateral credit facility has a maximum principal amount of $130,000 and matures June 30, 2025. The facility is used by Crombie for working capital purposes and to provide temporary financing for acquisitions and development activity. Borrowings under the unsecured bilateral credit facility can be by way of Bankers’ Acceptance or prime rate advance and the floating interest rate is contingent on the type of advance, plus the applicable spread or margin. The respective spread or margin may change depending on Crombie’s unsecured bond rating with Morningstar DBRS. Unsecured non-revolving credit facility The Unsecured non-revolving credit facility was amended in the first quarter of 2023. The amendment reinstated the maximum principal amount of $200,000 and matures November 18, 2025. The facility is intended to be used for mortgage repayments. Borrowings under the Unsecured non-revolving credit facility can be by way of Bankers’ Acceptance or prime rate advance, and the floating interest rate is contingent on the type of advance plus the applicable spread or margin. 7) SENIOR UNSECURED NOTES Series E Series F Series G Series H Series I Series J Series K Deferred ﬁnancing charges Total senior unsecured notes Non-current Weighted average interest rate Maturity Date1 January 31, 2025 August 26, 2026 June 21, 2027 March 31, 2028 October 9, 2030 August 12, 2031 September 28, 2029 Contractual Interest Rate December 31, 2023 December 31, 2022 4.800% 3.677% 3.917% 2.686% 3.211% 3.133% 5.244% $ $ $ 175,000 200,000 150,000 150,000 150,000 150,000 200,000 (3,231) 1,171,769 1,171,769 3.89% $ $ $ 175,000 200,000 150,000 150,000 150,000 150,000 — (2,997) 972,003 972,003 3.61% (1) The weighted average term to maturity as at December 31, 2023 was 4.4 years (December 31, 2022 – 5.1 years). On March 28, 2023, Crombie issued, on a private placement basis, $200,000 of Series K notes (senior unsecured) maturing September 28, 2029. The net proceeds were used to repay existing indebtedness, including repayment of outstanding credit facilities, and for general trust purposes. The notes were priced with a contractual interest rate of 5.244%. Interest is payable in equal semi-annual installments on September 28 and March 28. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 111 111 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A continuity of Crombie’s senior unsecured notes is as follows: Opening balance, January 1, 2023 Net borrowing or issuances Balance, December 31, 2023 Opening balance, January 1, 2022 Redemption Balance, December 31, 2022 Senior Unsecured Notes $ $ 975,000 200,000 1,175,000 Senior Unsecured Notes $ $ 1,125,000 (150,000) 975,000 8) EMPLOYEE FUTURE BENEFITS Crombie has a number of defined benefit and defined contribution plans providing pension and other retirement benefits to most of its employees. Defined contribution pension plans The contributions required by the employee and the employer are specified. The employee’s pension depends on what level of retirement income (for example, annuity purchase) can be achieved with the combined total of employee and employer contributions and investment returns over the period of plan membership, and the annuity purchase rates at the time of the employee’s retirement. Defined benefit plans The Senior Management Pension Plan provides pension benefits to members designated in writing by the Board of Trustees based on a formula recognizing length of service and final average earnings. The annual pension payable at age 65 is equal to 2% of the final average base earnings multiplied by years of credited service (to a maximum of 30 years), offset by the deemed retirement income provided under the defined contribution pension plan and deferred profit-sharing plan. For the purpose of calculating the deemed retirement income provided under the defined contribution pension plan and deferred profit-sharing plan, the assumptions stipulated in the Supplementary Executive Retirement Plan text are used, including an assumed annuity conversion discount rate of 7.0%. The final average earnings are 12 times the average of the 60 highest months of eligible earnings. Employee contributions, if required, pay for part of the cost of the benefit, and the employer contributions fund the balance. The employer contributions are not specified or defined within the plan text; they are based on the result of actuarial valuations which determine the level of funding required to meet the total obligation as estimated at the time of the valuation. Crombie’s defined benefit plans are unfunded. Once participants attain age 55 and 5 years of continuous service, they can retire. The total pension payable is reduced by 5/12% for each month by which the early retirement precedes age 60 (62 for a member who was designated as a member on or after June 25, 2009). The normal form of pension payment is a 60% joint and survivor pension. The post-employment benefits program offered to Crombie employees and retirees in Canada is an open plan that provides life and medical benefits for grandfathered employees and employees retired prior to May 1, 2011 as well as critical illness coverage for other employees. Full-time employees must be over age 55 to be eligible for the post-employment benefits program. The total defined benefit cost related to pension plans and post-employment benefit plans for the year ended December 31, 2023 was $502 (year ended December 31, 2022 – $602). The plans typically expose Crombie to actuarial risks such as: interest rate risk, mortality risk, and salary risk. (i) Interest rate risk – The present value of the defined benefit liability is calculated using discount rates that reflect the average yield, as at the measurement date, on high quality corporate bonds of similar duration to the plans’ liabilities. A decrease in the market yield on high quality corporate bonds will increase Crombie’s defined benefit liability. (ii) Mortality risk – The present value of the defined benefit plans is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans’ liability. (iii) Salary risk – The present value of the defined benefit plans liability is calculated by reference to the anticipated future salary of the plan participants. As such, an increase in the salary of plan participants over that anticipated will increase the plans’ liability. Senior Management Pension Plan Post-Employment Beneﬁt Plans Most recent valuation date Next required valuation date December 31, 2023 January 1, 2022 December 31, 2024 January 1, 2025 112 CRA028 4400112 -Crombie_Text Proof R1.indd 112 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations and pension costs are as follows: Discount rate – accrued benefit obligation Rate of compensation increase 4.60% 3.00% 4.60% N/A 5.10% 3.00% 5.10% N/A December 31, 2023 December 31, 2022 Senior Management Pension Plan Post-employment Beneﬁt Plans Senior Management Pension Plan Post-employment Beneﬁt Plans For measurement purposes, a 4.50% (2022 – 4.50%) annual rate increase in the per capita cost of covered health care benefits was assumed. These assumptions were developed by management with the assistance of independent actuaries. Discount factors are determined close to year end by reference to market yields of high-quality corporate bonds that have a maturity approximating the terms of the related pension obligation. Other assumptions are based on current actuarial benchmarks and management’s historical experience. The projected Unit credit method is used to determine the present value of the defined benefit obligation and the related current service cost for all active members. Crombie uses December 31 as a measurement date for accounting purposes for its defined benefit pension plans. Information about Crombie’s defined benefit plans are as follows: December 31, 2023 December 31, 2022 Senior Management Pension Plan Post-employment Beneﬁt Plans Senior Management Pension Plan Post-employment Beneﬁt Plans Total Accrued beneﬁt obligation Balance, beginning of year $ 5,428 $ 1,662 $ 7,090 $ 6,021 $ 2,393 $ Current service cost Interest cost Actuarial losses (gains) Beneﬁts paid Termination beneﬁts Balance, end of year Plan assets Fair value, beginning of year Employer contributions Beneﬁts paid Fair value, end of year Funded status – deﬁcit Current portion Non-current portion Accrued beneﬁt obligation recorded as a liability Net expense Current service cost Termination beneﬁts Interest cost Net expense $ $ $ 130 278 336 (200) (6) 5,966 — 200 (200) — 5,966 248 5,718 5,966 130 (6) 278 402 $ $ $ 16 84 104 (71) — 1,795 — 71 (71) — 1,795 79 1,716 1,795 16 — 84 $ $ 100 $ 146 362 440 (271) (6) 7,761 — 271 (271) — 7,761 327 7,434 7,761 146 (6) 362 502 $ $ $ 193 177 (912) (200) 149 14 69 (730) (84) — 5,428 1,662 — 200 (200) — 5,428 200 5,228 5,428 193 149 177 519 $ $ $ — 84 (84) — 1,662 71 1,591 1,662 14 — 69 83 $ $ $ Total 8,414 207 246 (1,642) (284) 149 7,090 — 284 (284) — 7,090 271 6,819 7,090 207 149 246 602 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 113 113 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The table below outlines the sensitivity of the fiscal 2023 key economic assumptions used in measuring the accrued benefit plan obligations and related expenses of Crombie’s pension and other benefit plans. The sensitivity of each key assumption has been calculated independently. Changes to more than one assumption simultaneously may amplify or reduce the impact on the accrued benefit obligation or benefit plan expenses. There was no change to the method and assumptions used in preparing the sensitivity analysis from prior years. Discount Rate Impact of: Growth rate of health costs Impact of: 1% increase 1% decrease 1% increase 1% decrease (1) Reﬂects the impact of the current service costs and the interest cost. Senior Management Pension Plan Post-Employment Beneﬁt Plans Beneﬁt Obligations Beneﬁt Cost1 Beneﬁt Obligations Beneﬁt Cost1 4.60% (562) 668 4.60% 27 (34) 4.60% (191) 227 4.50% 73 (66) 4.60% 4 (6) 4.50% 3 (3) For the year ended December 31, 2023, the net defined contribution pension plans expense was $1,188 (year ended December 31, 2022 – $1,127). 9) TRADE AND OTHER PAYABLES December 31, 2023 December 31, 2022 Current Non-current Total Current Non-current Total Tenant incentives and capital expenditures $ 27,355 $ Property operating costs Prepaid rents Finance costs on investment property debt and notes Amounts payable to related party Distributions payable Unit-based compensation plans Deferred revenue 33,524 13,242 15,299 1,623 13,431 2,680 894 — — — — — — 16,846 4,120 $ 27,355 $ 42,723 $ 33,524 13,242 15,299 1,623 13,431 19,526 5,014 30,031 15,448 13,021 156 13,230 3,257 118 — — — — — — 17,672 4,139 $ 42,723 30,031 15,448 13,021 156 13,230 20,929 4,257 Total trade and other payables $ 108,048 $ 20,966 $ 129,014 $ 117,984 $ 21,811 $ 139,795 Deferred Revenue During 2014, Crombie completed a sale-leaseback of the land component of an investment property. The proceeds received in excess of fair value of the land have been deferred and are being recognized as a reduction in property operating expenses over the term of the land lease. In addition, Crombie received a prepayment, from a related party, of their future obligation under a land sub-lease. This prepayment has also been deferred and is being recognized as a reduction in property operating expenses over the term of the land lease. 114 CRA028 4400112 -Crombie_Text Proof R1.indd 114 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 10) PROPERTY REVENUE Operating lease revenue Rental revenue contractually due from tenants1 Contingent rental revenue Straight-line rent recognition Tenant incentive amortization Lease termination income Revenue from contracts with customers Common area cost recoveries Parking revenue Total property revenue Year ended December 31, 2023 December 31, 20222 $ 388,571 $ 3,484 5,415 (26,516) 1,672 62,852 5,461 $ 440,939 $ 380,159 3,917 5,432 (22,989) 278 56,778 4,504 428,079 (1) Includes reimbursement of Crombie’s property tax expense. (2) Consistent with the current year presentation, property revenue for the year ended December 31, 2022 has been increased by $8,488 to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. The following table sets out tenants that contributed in excess of 10% of total property revenue: Sobeys Inc. (including all subsidiaries of Empire Company Limited (“Empire”)) $ 238,607 54.1% $ 230,752 53.9% (1) Consistent with the current year presentation, property revenue for the year ended December 31, 2022 has been increased by $8,488 to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. Year ended December 31, 2023 December 31, 20221 11) REVENUE FROM MANAGEMENT AND DEVELOPMENT SERVICES Crombie provides development and property management services to co-owners, related parties and third parties. Crombie’s revenue from development, construction and other fees are as follows: Development fees Management fees Total revenue from management and development services 12) PROPERTY OPERATING EXPENSES Recoverable property taxes Recoverable operating expenses Other operating costs Total property operating expenses Year ended December 31, 2023 December 31, 2022 2,951 479 3,430 $ $ — — — Year ended December 31, 2023 December 31, 20221 83,590 64,182 5,755 153,527 $ $ 82,536 58,061 5,664 146,261 $ $ $ $ (1) Consistent with the current year presentation, property operating expenses for the year ended December 31, 2022 has been increased by $8,488 to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 115 115 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 13) OPERATING LEASES Crombie as a lessor Crombie’s operations include leasing commercial real estate. Future minimum rental income under non-cancellable tenant leases as at December 31, 2023, is as follows: Future minimum rental income $ 298,511 $ 285,776 $ 272,091 $ 255,690 $ 236,531 $1,604,537 $2,953,136 Year ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Crombie manages its residual risk in its investment properties through an active capital expenditure program and actively leasing any vacant spaces. The residual risk throughout Crombie’s portfolio is not considered significant. 14) GENERAL AND ADMINISTRATIVE EXPENSES AND CHANGE IN FAIR VALUE OF FINANCIAL INSTRUMENTS (a) General and administrative expenses Salaries and beneﬁts Professional and public company costs Occupancy and other Total general and administrative expenses Year ended December 31, 2023 December 31, 2022 $ $ 19,592 4,611 3,441 27,644 $ $ 12,590 3,640 3,317 19,547 General and administrative expenses for the year ended December 31, 2023 includes employee transition costs of $7,386. (b) Decrease in fair value of financial instruments Deferred Unit Plan 15) FINANCE COSTS – OPERATIONS Fixed rate mortgages Floating rate term, revolving, and demand facilities Capitalized interest1 Senior unsecured notes Interest income on ﬁnance lease receivable Interest on lease liability Finance costs – operations, expense Amortization of fair value debt adjustment and accretion income Change in accrued ﬁnance costs Amortization of deferred ﬁnancing charges Finance costs – operations, paid Year ended December 31, 2023 December 31, 2022 $ 1,911 $ 2,323 Year ended December 31, 2023 December 31, 2022 $ 35,384 $ 9,747 (4,433) 43,847 (537) 2,260 86,268 282 (2,278) (2,455) $ 81,817 $ 40,546 4,804 (5,264) 41,398 (562) 2,092 83,014 111 1,230 (2,685) 81,670 (1) For the year ended December 31, 2023, interest was capitalized for qualifying development projects based on a weighted average interest rate of 3.87% (December 31, 2022 – 3.52%). 116 CRA028 4400112 -Crombie_Text Proof R1.indd 116 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16) UNITS OUTSTANDING Balance, January 1, 2023 Units issued under DRIP Balance, December 31, 2023 Crombie REIT Units Class B LP Units and Attached Special Voting Units Total Number of Units Amount Number of Units Amount Number of Units 105,321,000 1,584,347 106,905,347 $ $ 1,295,077 73,055,896 22,062 1,122,338 1,317,139 74,178,234 $ $ 900,963 178,376,896 15,629 2,706,685 916,592 181,083,581 $ $ Amount 2,196,040 37,691 2,233,731 Crombie REIT Units Class B LP Units and Attached Special Voting Units Total Number of Units Amount Number of Units Amount Number of Units Amount Balance, January 1, 2022 Net change in EUPP loans receivable Units issued under DRIP Units issued under Unit-based compensation plan Units issued (proceeds are net of issue costs) 97,364,481 $ 1,162,122 67,438,492 $ 804,359 164,802,973 $ 1,966,481 — 1,215,032 36,487 6,705,000 1,172 19,385 526 — 860,958 — — — 13,735 2,075,990 — 36,487 1,172 33,120 526 111,872 4,756,446 82,869 11,461,446 194,741 Balance, December 31, 2022 105,321,000 $ 1,295,077 73,055,896 $ 900,963 178,376,896 $ 2,196,040 Crombie REIT Units Crombie is authorized to issue an unlimited number of REIT Units and an unlimited number of SVU and Class B LP Units. Issued and outstanding REIT Units may be subdivided or consolidated from time to time by the trustees without the approval of the Unitholders. REIT Units are redeemable at any time on demand by the holders at a price per REIT Unit equal to the lesser of: (i) 90% of the weighted average price per Crombie REIT Unit during the period of the last ten days during which Crombie’s REIT Units traded; and (ii) an amount equal to the price of Crombie’s REIT Units on the date of redemption, as defined in the Declaration of Trust. The aggregate redemption price payable by Crombie in respect of any REIT Units surrendered for redemption during any calendar month will be satisfied by way of a cash payment in Canadian dollars within 30 days after the end of the calendar month in which the REIT Units were tendered for redemption, provided that the entitlement of Unitholders to receive cash upon the redemption of their REIT Units is subject to the limitation that: (i) (ii) (iii) the total amount payable by Crombie in respect of such REIT Units and all other REIT Units tendered for redemption, in the same calendar month must not exceed $50 (provided that such limitation may be waived at the discretion of the trustees); at the time such REIT Units are tendered for redemption, the outstanding REIT Units must be listed for trading on the TSX or traded or quoted on any other stock exchange or market which the trustees consider, in their sole discretion, provides representative fair market value prices for the REIT Units; and the normal trading of REIT Units is not suspended or halted on any stock exchange on which the REIT Units are listed (or if not listed on a stock exchange, in any market where the REIT Units are quoted for trading) on the redemption date or for more than five trading days during the 10- day trading period commencing immediately after the redemption date. On January 31, 2022, Crombie closed a public offering, on a bought deal basis, of 6,705,000 Units, at a price of $17.45 per Unit for proceeds of $111,872 net of issue costs. Crombie REIT Special Voting Units (“SVU”) and Class B LP Units The Declaration of Trust and the Exchange Agreement provide for the issuance of SVUs to the holders of Class B LP Units used solely for providing voting rights proportionate to the votes of Crombie’s REIT Units. The SVUs are not transferable separately from the Class B LP Units to which they are attached and will be automatically transferred upon the transfer of such Class B LP Unit. If the Class B LP Units are exchanged in accordance with the Exchange Agreement, a like number of SVUs will be redeemed and cancelled for no consideration by Crombie. The Class B LP Units issued by a subsidiary of Crombie to ECL Developments Limited (“ECLD”) are indirectly exchangeable on a one-for-one basis for Crombie’s REIT Units at the option of the holder, under the terms of the Exchange Agreement. Each Class B LP Unit entitles the holder to receive distributions from Crombie, pro rata with distributions made by Crombie on REIT Units. On January 31, 2022, concurrent with the issue of the REIT Units, in satisfaction of its pre-emptive right, ECLD purchased 4,756,446 Class B LP Units and the attached SVUs at a price of $17.45 per Unit, for proceeds of $82,869 net of issue costs, on a private placement basis. Distribution Reinvestment Plan (“DRIP”) Crombie has a DRIP whereby Canadian resident REIT Unitholders may elect to automatically have their distributions reinvested in additional REIT units. Units issued under the DRIP will be issued directly from the treasury of Crombie REIT at a price equal to 97% of the volume-weighted average trading price of the REIT units on the TSX for the five trading days immediately preceding the relevant distribution payment date, which is typically on or about the 15th day of the month following the declaration. Crombie recognizes the net proceeds in Net assets attributable to Unitholders. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 117 117 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 17) SUPPLEMENTARY CASH FLOW INFORMATION (a) Items not affecting operating cash Items not affecting operating cash: Straight-line rent recognition Amortization of tenant incentives Gain on disposal of investment properties Gain on distribution from equity-accounted investments Impairment of investment properties Depreciation and amortization (Income) loss from equity-accounted investments Income tax expense Non-cash lease termination income Change in fair value of ﬁnancial instruments (b) Change in other non-cash operating items Cash provided by (used in): Trade receivables Prepaid expenses and deposits and other assets Payables and other liabilities1 (1) Payables and other liabilities for the year ended December 31, 2022 was updated from the previously reported ﬁgure. (c) Cash and cash equivalents Restricted cash1 Cash Total cash and cash equivalents Year ended December 31, 2023 December 31, 2022 $ (5,415) $ 26,516 (588) — — 78,835 (144) 6 — (1,911) $ 97,299 $ (5,432) 22,989 (80,804) (2,933) 10,400 79,836 4,954 4 (125) (2,323) 26,566 Year ended December 31, 2023 December 31, 2022 2,108 (761) 4,299 5,646 $ $ 5,124 3,018 (10,930) (2,788) December 31, 2023 December 31, 2022 — — — $ $ 231 5,886 6,117 $ $ $ $ (1) In 2020, Crombie closed on a construction mortgage in which the proceeds were placed in escrow and drawn down as conditions are satisﬁed. 118 CRA028 4400112 -Crombie_Text Proof R1.indd 118 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 18) RELATED PARTY TRANSACTIONS As at December 31, 2023, Empire, through its wholly owned subsidiary ECL Developments Limited (“ECLD”), holds a 41.5% indirect interest in Crombie. Related party transactions primarily include transactions with entities associated with Crombie through Empire’s indirect interest. Related party transactions also include transactions with joint venture entities in which Crombie has a 50% interest, as well as transactions with key management personnel and post-employment benefit plans. Related party transactions are measured at the amount of consideration established and agreed by the related parties. Crombie’s revenue (expense) transactions with related parties are as follows: Property revenue Property revenue Head lease income Lease termination income Revenue from management and development services Property operating expenses General and administrative expenses Property management services recovered Other general and administrative expenses Finance costs – operations Interest rate subsidy Finance costs – distributions to Unitholders Year ended December 31, 2023 December 31, 2022 $ $ $ $ $ $ $ $ $ 238,607 1,275 — 3,114 (135) 208 (171) — (66,349) $ $ $ $ $ $ $ $ $ 230,7521 956 125 — (135) 398 (331) 53 (65,459) (1) Consistent with the current year presentation, property revenue for the year ended December 31, 2022 has been increased by $8,488 to reﬂect a change in the presentation of recoverable property taxes for certain properties where a tenant pays the property taxes on Crombie’s behalf. Crombie provides property management, development management, project management, leasing services, and environmental management to co-owners and to specific properties owned by certain subsidiaries of Empire on a fee-for-service basis pursuant to a Management Agreement which is being recognized as revenue from management and development services. During the year ended December 31, 2023, Crombie issued 1,122,338 (December 31, 2022 – 860,958) Class B LP Units to ECLD under the DRIP (Note 16). During the year ended December 31, 2023, Crombie acquired three retail properties from a subsidiary of Empire for a total purchase price of $26,482 before transaction costs. During the year ended December 31, 2023, Crombie invested $25,201 (December 31, 2022 – $14,932) in properties anchored by subsidiaries of Empire, which resulted in amended lease terms. These amounts have been included in tenant incentive additions or income property additions depending on the nature of the work completed. The costs are being amortized over the amended lease terms or the useful life of the projects, as applicable. During the year ended December 31, 2023, Crombie paid $16,361 to a subsidiary of Empire in connection with the assignment of 24 subleases to Crombie for retail sites in Western Canada. This payment was allocated to either deferred leasing costs or tenant incentive additions, based on each component’s relative fair value. Amounts due from related parties include $10,664 (December 31, 2022 – $10,364) in a 6% subordinated note receivable due from Bronte Village Limited Partnership. The subordinated note receivable is due on demand and is expected to be collected within the next year. During the year ended December 31, 2023, Crombie entered into two new joint ventures with a subsidiary of Empire. Amounts due from related parties include $801 (December 31, 2022 – $Nil) in a note receivable due from Lynn Valley Limited Partnership related to development services completed during the year. Crombie has a mortgage payable due to 1600 Davie Limited Partnership of $24,876 (December 31, 2022 – $25,207) that has interest at 3.22% and matures December 1, 2027. This mortgage relates to the commercial component of the Davie Street development, 100% of which is included in Crombie’s financial statements. During the year ended December 31, 2023, Crombie paid two initial right-to-develop fees totalling $34,300 to a subsidiary of Empire, which resulted in the existing leases being modified. The right to develop will allow Crombie flexibility as it works through the entitlement and future development of existing properties in which a subsidiary of Empire is currently a tenant. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 119 119 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Key management personnel and trustees compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of Crombie. The remuneration of the executive team and trustees of Crombie during the year was approximately as follows: Salary, bonus and other short-term employee beneﬁts Transition costs Total compensation paid to trustees Other long-term beneﬁts 19) FINANCIAL INSTRUMENTS Year ended December 31, 2023 December 31, 2022 $ $ $ 7,404 6,883 1,020 204 15,511 $ 7,343 1,211 1,026 191 9,771 (a) Fair value of financial instruments The fair value of a financial instrument is the estimated amount that Crombie would receive to sell a financial asset or pay to transfer a financial liability in an orderly transaction between market participants at the measurement date. Fair value determination is classified within a three-level hierarchy, based on observability of significant inputs, as follows: • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – unobservable inputs for the asset or liability. There were no transfers between levels of the fair value hierarchy during the period ended December 31, 2023. The fair value of other financial instruments is based on discounted cash flows using discount rates that reflect current market conditions for instruments with similar terms and risks. The following table summarizes the estimated fair value of other financial instruments that have a fair value different from their carrying value: Financial liabilities Investment property debt Senior unsecured notes Total ﬁnancial liabilities December 31, 2023 December 31, 2022 Fair Value Carrying Value Fair Value Carrying Value $ $ 956,601 1,108,474 2,065,075 $ $ 983,348 1,175,000 2,158,348 $ $ 1,035,216 877,058 1,912,274 $ $ 1,078,816 975,000 2,053,816 The fair values of investment property debt and senior unsecured notes are Level 2. Due to their short-term nature, the carrying value of the following financial instruments approximates their fair value at the balance sheet date: • Cash and cash equivalents • Accounts receivables • Trade and other payables. 120 CRA028 4400112 -Crombie_Text Proof R1.indd 120 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (b) Risk management In the normal course of business, Crombie is exposed to a number of financial risks that can affect its operating performance. The significant risks, and the actions taken to manage them, are as follows: Credit risk Credit risk arises from the possibility that tenants may experience financial difficulty and be unable to fulfill their lease commitments. A provision for doubtful accounts and other adjustments are taken for all anticipated collectability risks. Crombie mitigates credit risk by geographical diversification, diversifying both its tenant mix and asset mix, and conducting credit assessments for new and renewing tenants. In measuring tenant concentration, Crombie considers both the annual minimum rent and total property revenue of major tenants: • Crombie’s largest tenant, Empire (including Sobeys and all other subsidiaries of Empire), represents 58.5% of annual minimum rent; no other tenant accounts for more than 2.4% of Crombie’s minimum rent. • Total property revenue includes operating and realty tax cost recovery income and percentage rent. These amounts can vary by property type, specific tenant leases and where tenants may directly incur and pay operating and realty tax costs. For the year ended December 31, 2023, Empire (including Sobeys and all other subsidiaries of Empire) represents 54.1% of total property revenue. Excluding these tenants, no other tenant accounts for more than 2.3% of Crombie’s total property revenue. • Over the next five years, leases on no more than 7.3% of the gross leasable area of Crombie will expire in any one year. Receivables are substantially comprised of current balances due from tenants and past due receivables. The balance of accounts receivable past due is usually not significant. Historically low receivable balances increased significantly over the past few years as a result of the impacts of the COVID-19 pandemic but have since returned to their pre-pandemic collection rates. Generally, rents are due the first of each month and other tenant billings are due 30 days after invoicing, and balances over 30 days are considered past due. The total provision for doubtful accounts is reviewed at each balance sheet date and current and long-term accounts receivable are reviewed on a regular basis. Provision for doubtful accounts, beginning of year Additional provision Recoveries Write-offs Provision for doubtful accounts, end of year Year ended December 31, 2023 December 31, 2022 $ $ $ 2,328 1,035 (885) (1,082) 1,396 $ 3,031 1,635 (1,382) (956) 2,328 Crombie assesses, on a forward-looking basis, the expected credit losses associated with its rent receivables. In determining the expected credit losses, Crombie takes into account, on a tenant-by-tenant basis, the payment history, future expectations, and knowledge gathered through discussions for rental concessions and ongoing discussions with tenants. Interest rate risk Interest rate risk is the potential for financial loss arising from increasing interest rates. Canadian prime interest rates have increased from 6.45% at December 31, 2022 to 7.20% at December 31, 2023. Crombie mitigates this risk by utilizing staggered debt maturities and limiting the use of permanent floating rate debt and, on occasion, utilizing interest rate swap agreements. Crombie does not enter into interest rate swaps on a speculative basis. Hedge accounting applied on financial instruments The following tables summarize Crombie’s financial instruments in which hedge accounting was applied. Hedge type Cash ﬂow hedge2 Cash ﬂow hedge2 Cash ﬂow hedge2 Cash ﬂow hedge3 Maturity date Fixed interest rate Notional amount of the hedging instrument1 Fair value of hedging instrument1 As at December 31, 2023 December 20, 2024 March 18, 2025 October 7, 2024 March 1, 2029 3.72% 3.52% 3.27% 3.15% $ $ 75,280 $ 4,614 3,503 52,000 135,397 $ 1,983 140 96 2,908 5,127 (1) Amounts are shown at Crombie’s ownership percentage. (2) Included in Note 5 other assets in the consolidated balance sheets. (3) Included in Note 4 investment in joint ventures in the consolidated balance sheets. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 121 121 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Hedge type Cash ﬂow hedge2 Cash ﬂow hedge2 Cash ﬂow hedge3 Cash ﬂow hedge2 Cash ﬂow hedge4 Maturity date Fixed interest rate Year ended December 31, 2023 Change in fair value gain (loss) recognized in other comprehensive income (loss)1 Hedge recognized in statements of comprehensive income (loss) December 20, 2024 March 18, 2025 April 25, 2024 October 7, 2024 March 1, 2029 3.72% 3.52% 3.58% 3.27% 3.15% $ $ (2,290) $ (82) (269) (76) (1,083) (3,800) $ — — 199 — — 199 (1) Amounts are shown at Crombie’s ownership percentage. (2) Included in Note 5 other assets in the consolidated balance sheets. (3) Term loan, credit facility, and swap were settled on June 1, 2023, with the net settlement amount reducing ﬁnance costs. (4) Included in Note 4 investment in joint ventures in the consolidated balance sheets. As at December 31, 2023 • Crombie’s weighted average term to maturity of its fixed rate mortgages is 5.9 years; • Crombie’s weighted average term to maturity of its unsecured notes is 4.4 years; • Crombie has an Unsecured non-revolving credit facility available to a maximum of $200,000 with a balance of $93,297 outstanding; • Crombie has a floating rate Revolving credit facility available to a maximum of $400,000 subject to available borrowing base, with a balance of $47,591 outstanding; • Crombie has an Unsecured bilateral credit facility available to a maximum of $130,000 with no balance outstanding/drawn; • Crombie has a Joint operation credit facility available to a maximum of $3,520 at Crombie’s share with a balance of $3,503 outstanding; • Crombie has interest rate swap agreements in place on $83,398 of floating rate debt and an interest rate swap agreement in place held in equity-accounted investments on $52,000 of floating rate debt, at Crombie’s share; and • Crombie has floating rate credit facilities, included in debt held in equity-accounted investments, available to a maximum of $133,000 with a balance of $120,200 outstanding, at Crombie’s share. A fluctuation in interest rates would have an impact on Crombie’s operating and other comprehensive income related to the use of floating rate debt. The following tables look at the impacts of selected interest rate moves on operating and other comprehensive income: Impact on operating income attributable to Unitholders of interest rate changes on the revolving credit facility Impact of a 0.5% interest rate change Impact of a 1.0% interest rate change Impact of a 1.5% interest rate change Impact on other comprehensive income (loss) of interest rate changes on interest rate swap agreements at Crombie’s share Impact of a 0.5% interest rate change Impact of a 1.0% interest rate change Impact of a 1.5% interest rate change Year ended December 31, 2023 Increase in Rate Decrease in Rate (701) (1,402) (2,104) $ $ $ 701 1,402 2,104 As at December 31, 2023 Increase in Rate Decrease in Rate 1,600 3,200 4,800 $ $ $ (1,600) (3,200) (4,800) $ $ $ $ $ $ 122 CRA028 4400112 -Crombie_Text Proof R1.indd 122 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Liquidity risk The real estate industry is capital intensive, and most assets are non-current in nature. These assets produce income through long-term leases, which funds current liabilities as they come due. While rents are contractually committed, they are not recognized as current assets, and this imbalance creates a working capital deficit, despite cash flows from contractually committed rents and credit facilities being more than adequate to satisfy current liabilities. Liquidity risk is the risk that Crombie may not have access to sufficient debt and equity capital to fund its growth program, refinance debt obligations as they mature, or meet its ongoing obligations as they arise. Cash flow generated from operating the property portfolio represents the primary source of liquidity used to service the interest on debt, fund general and administrative expenses, reinvest in the portfolio through capital expenditures, as well as fund tenant incentive costs and make distributions to Unitholders. Debt repayment requirements are primarily funded from refinancing Crombie’s maturing debt obligations. Property acquisition funding requirements are funded through a combination of accessing the debt and equity capital markets and recycling capital from property dispositions. There is a risk that the debt capital markets may not refinance maturing fixed rate and floating rate debt on terms and conditions acceptable to Crombie or at any terms at all. Crombie seeks to mitigate this risk by staggering its debt maturity dates. There is also a risk that the equity capital markets may not be receptive to a REIT Unit offering issuance from Crombie with financial terms acceptable to Crombie. Access to the $400,000 Revolving credit facility is limited by the amount utilized under the facility and the amount of any outstanding letters of credit, and it cannot exceed the borrowing base security provided by Crombie. As at December 31, 2023, $347,067 was available on this facility. The estimated payments, including principal and interest, on financial liabilities to maturity date are as follows: Contractual Cash Flows1 2024 2025 2026 2027 2028 Thereafter Twelve months ending December 31, Fixed rate mortgages2 $ 1,020,877 $ 249,344 $ 79,337 $ 57,331 $ 149,767 $ 53,189 $ 431,909 Senior unsecured notes Trade and other payables Lease liabilities Credit facilities2 1,369,889 113,715 151,345 2,655,826 167,877 45,664 92,749 3,135 390,892 13,251 212,964 234,708 176,810 171,012 4,138 4,725 301,164 102,156 2,748 2,936 297,723 3,253 2,477 2,676 331,730 49,217 2,477 2,457 528,731 9,126 135,416 229,135 1,105,182 — — Total estimated payments $ 2,823,703 $ 404,143 $ 403,320 $ 300,976 $ 380,947 $ 229,135 $ 1,105,182 (1) Includes principal and interest and excludes extension options. (2) Includes the ﬁxed portion of the interest expense for mortgages and credit facilities under swap agreements. Crombie intends to finance near-term mortgage repayments using the Unsecured non-revolving credit facility. 20) CAPITAL MANAGEMENT Crombie’s objective when managing capital on a long-term basis is to maintain overall indebtedness, at reasonable levels, utilize staggered debt maturities, minimize long-term exposure to excessive levels of floating rate debt and maintain conservative payout ratios. Crombie’s capital structure consists of the following: Fixed rate mortgages1 Credit facilities Senior unsecured notes1 Crombie REIT Unitholders SVU and Class B LP Unitholders2 Lease liabilities (1) Net of deferred ﬁnancing charges. (2) Crombie REIT Special Voting Units (“SVU”) and Class B LP Units. December 31, 2023 December 31, 2022 $ $ 834,628 144,391 1,171,769 1,081,631 743,082 36,292 913,706 160,264 972,003 1,097,070 753,470 35,000 $ 4,011,793 $ 3,931,513 At a minimum, Crombie’s capital structure is managed to ensure that it complies with the limitations pursuant to Crombie’s Declaration of Trust, the criteria contained in the Income Tax Act (Canada) in regard to the definition of a REIT and existing debt covenants. One of the restrictions pursuant to Crombie’s Declaration of Trust would include, among other items, a restriction that Crombie shall not incur total indebtedness of more than 60% of gross book value. For the debt to gross book value calculation, Crombie does not include in total debt the financial liabilities to REIT Unitholders and to holders of Class B LP Units, as shown on the balance sheets as net assets attributable to Unitholders. Crombie’s debt to gross book value is defined as the total obligation for borrowed funds and lease liabilities, including the proportionate share of any borrowings held within joint ventures, divided by the gross book value of Crombie’s assets which includes its proportionate share of gross assets held within joint ventures. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 123 123 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Fixed rate mortgages Senior unsecured notes Unsecured non-revolving credit facility Revolving credit facility Joint operation credit facilities Debt held in joint ventures, at Crombie’s share1 Lease liabilities Total debt Income properties, cost2 Properties under development, cost Investment properties, held in joint ventures, cost, at Crombie’s share Below-market lease component, cost3 Other assets, cost4 Other assets, cost, held in joint ventures, at Crombie’s share Cash and cash equivalents Cash and cash equivalents held in joint ventures, at Crombie’s share Deferred ﬁnancing charges Gross book value Debt to gross book value – cost basis December 31, 2023 December 31, 2022 $ 838,957 $ $ $ $ $ 1,175,000 93,297 47,591 3,503 274,115 36,292 2,468,755 4,345,799 94,488 294,607 72,990 614,302 30,012 — 3,004 7,560 918,552 975,000 150,000 — 10,264 270,642 35,000 2,359,458 4,269,416 67,144 291,915 70,192 540,371 30,714 6,117 2,487 7,843 $ 5,462,762 $ 5,286,199 45.2% 44.6% (1) Includes Crombie’s share of ﬁxed and ﬂoating rate mortgages, construction loans, revolving credit facility, and lease liabilities held in joint ventures. (2) Includes cumulative impairments on land of $9,157 (December 31, 2022 – $9,157). (3) Below-market lease component is included in the carrying value of investment properties. (4) Excludes accumulated amortization of tenant incentives and other ﬁxed assets. Under the amended terms governing the Revolving credit facility, Crombie is entitled to borrow a maximum of 70% of the fair market value of assets, subject to a first security position, and 60% of the excess fair market value over first mortgage financing of assets subject to a second security position or a negative pledge. The terms of the Revolving credit facility also require that Crombie must maintain certain covenants: • annualized net operating income for the prescribed properties must be a minimum of 1.3 times the coverage of the related annualized debt service requirements; • annualized net operating income on all properties must be a minimum of 1.4 times the coverage of all annualized debt service requirements; • access to the Revolving credit facility is limited by the amount utilized under the facility and the amount of any outstanding letters of credit not to exceed the borrowing base security provided by Crombie; and • annual cash distributions to Unitholders are limited to 100% of funds from operations. As at December 31, 2023, Crombie is in compliance with all externally imposed capital requirements and all covenants relating to its debt facilities. 21) LEASE LIABILITIES Crombie’s future minimum lease payments as a lessee are as follows: Future minimum lease payments Finance charges Present value of lease payments Twelve months ending December 31, Total $ 151,345 (115,053) $ 36,292 2024 3,135 (2,194) 941 $ $ 2025 4,725 (2,061) 2,664 $ $ 2026 2,936 (2,026) 910 $ $ 2027 2,676 (1,998) 678 $ $ 2028 Thereafter 2,457 $ 135,416 (1,981) (104,793) 476 $ 30,623 $ $ Lease liabilities are presented on the consolidated balance sheets as follows: Non-current Current Total lease liabilities December 31, 2023 December 31, 2022 $ $ 35,351 941 36,292 $ $ 34,057 943 35,000 Some of Crombie’s lease agreements contain contingent rent clauses. Contingent rental payments are recognized in the consolidated statements of comprehensive income (loss) as required when contingent criteria are met. The lease agreements contain renewal options and purchase options, none of which are reflected in the minimum lease payments in the above table. For the year ended December 31, 2023, minimum lease payments of $3,109 were paid by Crombie. 124 CRA028 4400112 -Crombie_Text Proof R1.indd 124 2024-03-21 12:42 PM NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22) COMMITMENTS, CONTINGENCIES, AND GUARANTEES There are various claims and litigation in which Crombie is involved, arising out of the ordinary course of business operations. In the opinion of management, any liability that would arise from such contingencies in excess of existing accruals would not have a significant adverse effect on these financial statements. Crombie obtains standby letters of credit to support its obligations with respect to construction work on its investment properties and satisfying mortgage financing requirements. As at December 31, 2023, Crombie has $5,342 (December 31, 2022 – $2,883) in outstanding letters of credit related to construction work being performed on investment properties. As at December 31, 2023, Crombie had signed construction contracts totalling $254,880, of which $168,407 has been paid. This includes contracts signed within joint ventures at Crombie’s ownership percentage. Crombie has committed to funding the next $37,926 in development costs at 1700 East Broadway Limited Partnership. Crombie has 100% guarantees on mortgages related to properties in which it has less than a 100% interest. The mortgages payable related to these guarantees are secured by specific charges against the properties. As at December 31, 2023, Crombie has provided guarantees of approximately $81,781 (December 31, 2022 – $111,022) on mortgages in excess of their ownership interest in the properties. Responsibility for ongoing payments of principal and interest on these mortgages remains with the joint owners of the properties. The mortgages have a weighted average term to maturity of 1.8 years. Under the terms of head leases with certain of Crombie’s joint operation partners, Crombie guarantees its joint operation partners their portion of any uncollected rent receivable from the sub-tenant. During the year ended December 31, 2023, 1600 Davie Limited Partnership entered into a credit agreement with a Canadian chartered bank. The revolving credit facility has a maximum principal amount of $4,000 and matures July 31, 2026. Crombie has guaranteed 100% of the loan. 23) SUBSEQUENT EVENTS (a) On January 15, 2024, Crombie declared distributions of 7.417 cents per Unit for the period from January 1, 2024 up to and including January 31, 2024. The distributions were paid on February 15, 2024, to Unitholders of record as at January 31, 2024. (b) On February 15, 2024, Crombie declared distributions of 7.417 cents per Unit for the period from February 1, 2024 up to and including February 29, 2024. The distributions will be paid on March 15, 2024, to Unitholders of record as at February 29, 2024. (c) On February 20, 2024, Crombie and its joint venture partner closed on a 4.35% mortgage loan of $243,457 for a residential property held within an equity-accounted investment, maturing on June 1, 2029. Installments of principal and interest are to be paid on the first day of each month. Upon receipt of proceeds, the joint venture intends to repay the outstanding construction facility and partnership loans totalling $233,664 with a weighted average interest rate of 7.10% as of December 31, 2023. 24) SEGMENT DISCLOSURE Crombie owns and operates primarily retail, retail-related industrial, office, and mixed-use real estate assets located in Canada. Management, in measuring Crombie’s performance or making operating decisions, does not distinguish or group its operations on a geographical or other basis. Accordingly, Crombie has a single reportable segment. 25) INDEMNITIES Crombie has agreed to indemnify its trustees and officers, and particular employees, in accordance with Crombie’s policies. Crombie maintains insurance policies that may provide coverage against certain claims. CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 125 125 2024-03-21 12:42 PM PROPERTY PORTFOLIO Property Name Location Type % of Ownership Actual GLA (rounded) Occupancy % Committed NEWFOUNDLAND & LABRADOR Random Square Clarenville Conception Bay Plaza Conception Bay 2A Commerce Street 71 Grandview Boulevard 21 Cromer Avenue 69 Blockhouse Road 10 Elizabeth Avenue 45 Ropewalk Lane Avalon Mall Hamlyn Road Plaza Topsail Road Plaza Torbay Road Plaza Woodgate Plaza Deer Lake Grand Bank Grand Falls Placentia St. John’s St. John’s St. John’s St. John’s St. John’s St. John’s St. John’s PRINCE EDWARD ISLAND 400 University Avenue Charlottetown 9 Kinlock Road 485 Granville Street Stratford Summerside NOVA SCOTIA Amherst Centre Amherst Plaza 151 Church Street Hemlock Square Mill Cove Plaza Amherst Amherst Antigonish Bedford Bedford 2 Forest Hills Parkway Cole Harbour Dartmouth Crossing Cineplex Dartmouth Panavista Drive Penhorn Plaza Russell Lake Dartmouth Dartmouth Dartmouth Elmsdale Shopping Centre Elmsdale Fall River Plaza North & Windsor Street Park West Centre Queen Street Plaza Downsview Mall Downsview Plaza Fall River Halifax Halifax Halifax Lower Sackville Lower Sackville Aberdeen Business Centre New Glasgow Highland Square Mall West Side Plaza County Fair Mall 75 Emerald Street 3415 Plummer Avenue Blink Bonnie Plaza 622 Reeves Street 22579 Highway 7 279, 289 & 303 Herring Cove Road 293 Foord Street Prince Street Plaza Sydney Shopping Centre 39 Pitt Street North Shore Centre 70 Marketway Lane Fundy Trail Centre Tantallon Plaza Scotia Square Properties Barrington Tower Brunswick Place CIBC Building Cogswell Tower Duke Tower Scotia Square Scotia Square Parkade NEW BRUNSWICK 850 Saint Peters Avenue 477 Paul Street 501 Regis Street 580 Victoria Street Brookside Mall Uptown Centre Grand Bay Plaza 1234 Main Street Elmwood Drive Mountain Road Plaza Northwest Centre Vaughan Harvey Plaza 273 Pleasant Street New Glasgow New Glasgow New Minas New Waterford New Waterford Pictou Sheet Harbour Spryﬁeld Stellarton Sydney Sydney Sydney Mines Tatamagouche Timberlea Truro Upper Tantallon Halifax Halifax Halifax Halifax Halifax Halifax Halifax Bathurst Dieppe Dieppe Edmundston Fredericton Fredericton Grand Bay Moncton Moncton Moncton Moncton Moncton Newcastle Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Office Retail Office Office Office Retail Retail Retail Retail Retail Retail Retail Retail Retail Office Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Port Hawkesbury Retail Riverview – Findlay Boulevard Riverview Riverview Place Fairvale Plaza 107 Catherwood Street Loch Lomond Place Charlotte Mall 426 rue du Moulin 3430 rue Principale Riverview Rothesay Saint John Saint John St. Stephen Tracadie Tracadie-Sheila 126126 100.0% 107,000 100.0% 100.0% 100.0% 11.0% 11.0% 65,000 29,000 19,000 3,000 2,000 100.0% 80,000 11.0% 6,000 100.0% 594,000 100.0% 38,000 100.0% 158,000 100.0% 102,000 100.0% 80,000 1,283,000 11.0% 6,000 100.0% 103,000 100.0% 7,000 116,000 100.0% 228,000 100.0% 24,000 11.0% 6,000 100.0% 185,000 100.0% 151,000 50.0% 100.0% 11.0% 22,000 45,000 5,000 100.0% 145,000 50.0% 34,000 100.0% 147,000 100.0% 101,000 100.0% 50,000 100.0% 143,000 100.0% 100.0% 55,000 79,000 100.0% 226,000 100.0% 321,000 100.0% 200,000 100.0% 71,000 100.0% 271,000 11.0% 100.0% 100.0% 100.0% 11.0% 3,000 4,000 51,000 34,000 1,000 100.0% 73,000 100.0% 100.0% 24,000 71,000 100.0% 190,000 100.0% 100.0% 100.0% 18,000 17,000 61,000 100.0% 126,000 100.0% 157,000 100.0% 186,000 100.0% 252,000 100.0% 207,000 100.0% 204,000 100.0% 225,000 100.0% 195,000 100.0% - 4,608,000 100.0% 100.0% 100.0% 100.0% 100.0% 18,000 52,000 26,000 42,000 43,000 100.0% 263,000 100.0% 26,000 100.0% 140,000 100.0% 100.0% 100.0% 107,000 17,000 52,000 100.0% 103,000 100.0% 100.0% 20,000 76,000 100.0% 149,000 100.0% 52,000 11.0% 5,000 100.0% 188,000 100.0% 116,000 100.0% 100.0% 40,000 31,000 1,566,000 94.3% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.4% 76.8% 94.0% 81.7% 100.0% 95.0% 100.0% 95.1% 100.0% 95.6% 85.3% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 90.8% 100.0% 98.5% 97.5% 99.5% 100.0% 91.2% 51.2% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 98.7% 100.0% 100.0% 100.0% 98.3% 99.5% 99.7% 97.9% 87.7% 91.3% 90.1% 88.7% 0.0% 93.7% 100.0% 100.0% 100.0% 100.0% 100.0% 93.0% 100.0% 85.0% 94.8% 100.0% 100.0% 100.0% 100.0% 100.0% 73.1% 100.0% 100.0% 49.8% 97.8% 95.7% 100.0% 88.2% Property Name QUEBEC 1500 rue de Bretagne 1020 boulevard Monseigneur-de-Laval Beauport Plaza 50 rue Bourgeoys 50 rue Bourgeoys Location Type % of Ownership Actual GLA (rounded) Occupancy % Committed Baie Comeau Baie Saint Paul Beauport Bromptonville Bromptonville Retail Retail Retail Retail Retail Retail 100.0% 100.0% 50,000 65,000 100.0% 78,000 11.0% 100.0% 100.0% 3,000 4,000 48,000 100.0% 100.0% 98.4% 100.0% 0.0% 100.0% 3260 boulevard Lapiniere & Brossard 3305 Broadway 645 boulevard Thibeau Cap-de-la- Retail 100.0% 49,000 100.0% 80-90 boulevard d’Anjou Chateauguay Marché St-Charles-de- Drummondville Madeleine Drummond 1205 rue de Neuville 1248 boulevard de la Verendrye Est 1298 rue de la Digue 2195 chemin Ridge Centre Lavaltrie Marché Lavaltrie Gatineau Gatineau Havre-Saint- Pierre Huntingdon Lavaltrie Lavaltrie 5555 boulevard des Grandins Lebourgneuf Retail Retail Retail Retail Retail Retail Retail Retail Retail 5555 boulevard des Grandins Lebourgneuf Retail-related Industrial 5005 boulevard de l’Ormiere Les Saules 714 boulevard Saint-Laurent Ouest 1450 & 1454 rue Royale 551 avenue du Phare Est 20-70 boulevard Sir Wilfrid Laurier Louiseville Malartic Matane McMasterville 631-665 boulevard Saint Mercier Jean-Baptiste Marché St-Augustin Mirabel 1 avenue Westminster Nord Montreal 3964 rue Notre-Dame Ouest Montreal Retail Retail Retail Retail Retail Retail Retail Retail Retail Voilà CFC 2 Paspebiac Plaza 395 avenue Sirois 395 avenue Sirois 375 boulevard Jessop 254 boulevard de l’Hotel de Ville Montreal Paspebiac Rimouski Rimouski Rimouski Rivière-du-Loup Retail 680 avenue Chausse Rouyn-Noranda Retail Carrefour Bourgeois Saint-Amable Retail Saint-Apollinaire Plaza Saint-Apollinaire Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail 100.0% 100.0% 58,000 48,000 100.0% 100.0% 31,000 71,000 100.0% 100.0% 100.0% 100.0% 100.0% 26,000 100.0% 100.0% 100.0% 100.0% 11.0% 11.0% 19,000 43,000 52,000 5,000 2,000 100.0% 70,000 11.0% 3,000 100.0% 29,000 11.0% 3,000 100.0% 55,000 100.0% 77.2% 97.8% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 58,000 100.0% 100.0% 38,000 50.0% 100.0% 10,000 41,000 100.0% 73,000 11.0% 100.0% 100.0% 100.0% 11.0% 100.0% 100.0% 100.0% 11.0% 100.0% 100.0% 11.0% 100.0% 100.0% 11.0% 5,000 6,000 41,000 72,000 5,000 67,000 62,000 34,000 5,000 14,000 76,000 4,000 67,000 13,000 6,000 100.0% 40,000 100.0% 100.0% 100.0% 100.0% 91.7% 100.0% 100.0% 100.0% 100.0% 100.0% 97.6% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Retail-related Industrial 50.0% 155,000 867-871 rue Principale Saint-Donat 8980 boulevard Lacroix Saint-Georges- de-Beauce 131-A avenue Sainte-Cecile Saint-Pie Saint-Romuald Plaza Saint-Romuald 10505 boulevard Sainte-Anne Sainte-Anne- 1440-1510 rue Trudel 2959 rue King Ouest 3950 rue King Ouest 411 boulevard Poliquin 1101 boulevard de la Piniere Ouest ONTARIO 977 Golf Links Road 409 Bayﬁeld Street de-Beaupré Shawinigan Sherbrooke Sherbrooke Sorel-Tracy Terrebonne Ancaster Barrie 680 Longworth Avenue Bowmanville 20 Melbourne Drive Brampton Mall Brampton Plaza 4130 Harvester Road Burlington Plaza 142 Dundas Street 215 Park Avenue West 990 Division Street 77 Coldwater Road Village Centre 15 Lindsay Street 417 Scott Street 44 Livingston Avenue 188 Highland Street Havelock Centre 400 First Avenue South 2327 Princess Street 274 Highland Road West London Pine Valley 515 Main Street North 5931 Kalar Road 5931 Kalar Road Niagara Falls Plaza Village Square Mall Algonquin Avenue Mall 500 Riddell Road 5150 Innes Road Taunton and Wilson Plaza Don Reid Drive Bradford Brampton Brampton Burlington Burlington Cambridge Chatham Cobourg Coldwater Dorchester Fenelon Falls Fort Frances Grimbsy Haliburton Havelock Kenora Kingston Kitchener London Mount Forest Niagara Falls Niagara Falls Niagara Falls Nepean North Bay Orangeville Orleans Oshawa Ottawa Retail-related Industrial 100.0% 469,000 Retail Retail Retail Retail Retail Retail Retail-related Industrial Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail-related Industrial 2,173,000 98.9% 50.0% 50.0% 100.0% 11.0% 32,000 24,000 42,000 4,000 100.0% 103,000 50.0% 100.0% 100.0% 100.0% 11.0% 100.0% 100.0% 100.0% 11.0% 100.0% 100.0% 100.0% 11.0% 11.0% 100.0% 100.0% 100.0% 100.0% 11.0% 100.0% 100.0% 100.0% 38,000 20,000 70,000 4,000 5,000 31,000 15,000 32,000 4,000 43,000 36,000 24,000 2,000 4,000 35,000 67,000 39,000 46,000 4,000 2,000 64,000 92,000 100.0% 163,000 11.0% 100.0% 100.0% 100.0% 5,000 65,000 107,000 19,000 100.0% 100.0% 100.0% 100.0% 86.4% 100.0% 100.0% 78.6% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 97.4% 100.0% 100.0% 97.1% 100.0% CRA028 4400112 -Crombie_Text Proof R1.indd 126 2024-03-21 12:42 PM % of Ownership Actual GLA (rounded) Occupancy % Committed Property Name 25 Pine Drive 3130 Danforth Avenue McCowan Square Mountain Locks Plaza Stittsville Corner Stoney Creek Plaza 105 Arthur Street West 70 Court Street North 115 Arthur Street West 1015 Dawson Road Location Parry Sound Scarborough Scarborough St. Catharines Stittsville Stoney Creek Thornbury Thunder Bay Thunder Bay Thunder Bay 1099 Broadview Avenue 3362-3370 Yonge Street The Queensway Commons The Queensway Commons 8265 Huntington Road Toronto Toronto Toronto Toronto Vaughan Type Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail-related Industrial 100.0% 46,000 50.0% 100.0% 100.0% 3,000 61,000 85,000 100.0% 111,000 100.0% 100.0% 100.0% 100.0% 100.0% 50.0% 100.0% 100.0% 100.0% 12,000 40,000 39,000 58,000 54,000 15,000 29,000 36,000 17,000 Retail-related Industrial 100.0% 793,000 385 Springbank Avenue North Woodstock Retail MANITOBA 3156 Bird’s Hill Road East 3156 Bird’s Hill Road East East St. Paul East St. Paul 498 Mountain Avenue 318 Manitoba Avenue 2 Alpine Avenue 285 Marion Street 469-499 River Avenue 594 Mountain Avenue 600 Sargent Avenue 654 Kildare Avenue 655 Osborne Street 731 Henderson Highway 920 Jefferson Avenue Neepawa Selkirk Winnipeg Winnipeg Winnipeg Winnipeg Winnipeg Winnipeg Winnipeg Winnipeg Winnipeg 1305-1321 Pembina Highway Winnipeg 2155 Pembina Highway Winnipeg 3381 & 3393 Portage Avenue Winnipeg Kildonan Green River East Plaza Winnipeg Winnipeg Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail SASKATCHEWAN 200 1st Avenue NW Moose Jaw Retail 9801 Territorial Drive North Battleford Retail 2895 2nd Avenue West Prince Albert 2231 East Quance Street 2915 13th Avenue 4250 Albert Street 302 33rd Street 1860 McOrmond Drive River City Centre ALBERTA 318 Marten Street 5700 50th Street Regina Regina Regina Saskatoon Saskatoon Saskatoon Banff Beaumont Beaumont Shopping Centre Beaumont 550 Cassils Road & 654 4th Street West Brooks 55 Castleridge Boulevard NE Calgary 99 Crowfoot Crescent NW 110-620 McKenzie Towne Calgary Calgary Gate SE 410 10 Street NW 511 17 Avenue SE 504 & 524 Elbow Drive SW 813 11 Avenue SW 850 Saddletowne Circle NE 1818 Centre Street NE & 134 17 Avenue NE 2425 34 Street SW 3550 32 Avenue NE 5048 16 Avenue NW 5607 4 Street NW Calgary Calgary Calgary Calgary Calgary Calgary Calgary Calgary Calgary Calgary Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail 100.0% 55,000 2,695,000 11.0% 100.0% 11.0% 11.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 50.0% 50.0% 100.0% 100.0% 100.0% 4,000 3,000 2,000 4,000 57,000 38,000 59,000 18,000 33,000 43,000 20,000 24,000 56,000 38,000 46,000 56,000 74,000 84,000 659,000 39,000 30,000 56,000 19,000 20,000 41,000 16,000 58,000 100.0% 161,000 440,000 100.0% 100.0% 100.0% 100.0% 19,000 21,000 58,000 60,000 11.0% 6,000 100.0% 75,000 50.0% 9,000 100.0% 100.0% 100.0% 100.0% 11.0% 38,000 42,000 29,000 40,000 6,000 100.0% 36,000 100.0% 100.0% 50.0% 100.0% 48,000 69,000 21,000 50,000 260199 High Plains Boulevard Calgary Retail-related Industrial 50.0% 655,000 South Trail Plaza Strathcona Square Voilà CFC 3 1200 Railway Avenue Calgary Calgary Calgary Canmore 135 Chestermere Station Way Chestermere 304 5 Avenue West 17th Street & 23rd Avenue 400 & 500 Manning Crossing North 2304 109 Street NW 2534 Guardian Road NW 5119 167 Avenue NW 5309 Ellerslie Road 8118 118 Avenue NW 8204 109 Street NW 9611 167 Avenue NW 10907 82 Avenue NW 12950 137 Avenue NW 13550 Victoria Trail Cochrane Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Edmonton Retail Retail 100.0% 100.0% 79,000 81,000 Retail-related Industrial 100.0% 304,000 Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 50.0% 100.0% 100.0% 100.0% 100.0% 100.0% 53,000 48,000 54,000 52,000 50,000 48,000 50,000 39,000 50,000 22,000 34,000 37,000 21,000 55,000 37,000 CROMBIE REIT Annual Report 2023 CRA028 4400112 -Crombie_Text Proof R1.indd 127 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 98.7% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.6% 99.6% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 89.3% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 94.0% 100.0% 100.0% 100.0% 100.0% Property Name Lewis Estates Millwood Commons Namao Centre 304 54 Street 9601 Franklin Avenue Clearwater Landing 8100-8300 100 Street 9844 92 Street 9925 114 Avenue Leduc Centre 1760 23 Street 2750 Fairway Plaza Road South Location Edmonton Edmonton Edmonton Edson Fort McMurray Fort McMurray Grand Prairie Grand Prairie Grand Prairie Leduc Lethbridge Lethbridge Type Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail % of Ownership Actual GLA (rounded) Occupancy % Committed 100.0% 50.0% 100.0% 100.0% 11.0% 38,000 29,000 34,000 33,000 4,000 100.0% 143,000 100.0% 100.0% 100.0% 67,000 44,000 69,000 100.0% 140,000 100.0% 45,000 11.0% 7,000 100.0% 96.9% 100.0% 100.0% 100.0% 93.0% 95.1% 100.0% 97.5% 100.0% 100.0% 100.0% West Lethbridge Towne Lethbridge Retail 100.0% 104,000 97.1% Centre 615 Division Avenue South Medicine Hat 410 & 610 Big Rock Lane 4407 50th Avenue 688 Wye Road Okotoks Red Deer Sherwood Park 1109 James Mowatt Trail SW Southbrook 94 McLeod Avenue 395 St. Albert Trail 4607 50 Street 100 Ranch Market 4202 South Park Drive BRITISH COLUMBIA 575 Alder Avenue 575 Alder Avenue 4454 East Hastings Street Burnaby Heights 1721 Columbia Avenue 45850 Yale Road 1551 Cliffe Avenue Spruce Grove St. Albert Stettler Strathmore Stony Plain 100 Mile House 100 Mile House Burnaby Burnaby Castlegar Chilliwack Courtenay Crown Isle Shopping Centre Courtenay 934 Baker Street 1200 Baker Street 11200 8 Street 9123 100 Street 750 Fortune Drive 945 Columbia Street West 697 Bernard Avenue Belmont Market 20871 Fraser Highway 27566 Fraser Highway 32520 Lougheed Highway 211 Anderson Street Cranbrook Cranbrook Dawson Creek Fort St. John Kamloops Kamloops Kelowna Langford Langley Langley Mission Nelson Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail 800 McBride Boulevard New Westminster Retail 1170 27 Street East North Vancouver Retail 1175 Mount Seymour Road North Vancouver Retail 801-1301 Main Street Penticton 2850 Shaughnessy Street Port Coquitlam 200 2 Avenue West Prince Rupert 445 Reid Street 6140 Blundell Road Quesnel Richmond 3664 Yellowhead Highway Smithers 7450 120 Street 8860 152 Street 4655 Lakelse Avenue 1599 2nd Avenue Surrey Surrey Terrace Trail 990 King Edward Avenue West Vancouver 1641 & 1653 Davie Street 1766 Robson Street 1780 East Broadway 2733 West Broadway 3410 Kingsway 8475 Granville Street 3417 30 Avenue 4300 32 Street 451 Oliver Street Vancouver Vancouver Vancouver Vancouver Vancouver Vancouver Vernon Vernon Williams Lake Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail 100.0% 43,000 11.0% 100.0% 50.0% 50.0% 11.0% 100.0% 100.0% 100.0% 11.0% 11.0% 100.0% 100.0% 100.0% 11.0% 11.0% 5,000 56,000 23,000 23,000 6,000 53,000 31,000 35,000 5,000 3,433,000 2,000 7,000 4,000 61,000 3,000 6,000 100.0% 54,000 100.0% 109,000 100.0% 100.0% 11.0% 100.0% 100.0% 11.0% 9,000 48,000 5,000 67,000 56,000 5,000 100.0% 30,000 100.0% 143,000 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 11.0% 48,000 45,000 55,000 39,000 43,000 37,000 36,000 59,000 49,000 50,000 3,000 100.0% 28,000 11.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 50.0% 100.0% 100.0% 100.0% 5,000 60,000 56,000 43,000 32,000 28,000 54,000 42,000 42,000 55,000 51,000 24,000 29,000 57,000 29,000 1,708,000 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 99.1% 100.0% 0.0% 100.0% 100.0% 100.0% 100.0% 100.0% 97.2% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 94.5% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 99.0% Total Portfolio - Excluding Joint Ventures 18,681,000 96.5% Joint Ventures 140 Centennial Parkway North Hamilton Retail Le Duke Montreal Mixed-use Residential The Village at Bronte Harbour Oakville Mixed-use Residential Zephyr – Davie Street Vancouver Mixed-use Residential Residential Total Portfolio Inclusive of Joint Ventures 50.0% 50.0% 50.0% 50.0% 16,000 133,000 260,000 121,000 530,000 19,211,000 127 127 2024-03-21 12:42 PM UNITHOLDERS’ INFORMATION BOARD OF TRUSTEES J. Michael Knowlton Independent Trustee and Chair Mark Holly Trustee, President and Chief Executive Officer Paul V. Beesley Independent Trustee Jane Craighead Independent Trustee James M. Dickson Independent Trustee Heather Grey-Wolf Independent Trustee Heidi Jamieson-Mills Independent Trustee Jason P. Shannon Independent Trustee Paul D. Sobey Independent Trustee Michael Vels Independent Trustee Michael Waters Independent Trustee Karen Weaver Independent Trustee OFFICERS J. Michael Knowlton Chair Mark Holly President and Chief Executive Officer Kara Cameron Interim Chief Financial Officer John Barnoski Executive Vice President Corporate Development Arie Bitton Executive Vice President Leasing and Operations Victor Settino Executive Vice President Development and Construction Ashley Harrison Senior Vice President People and Culture Fred Santini General Counsel & Corporate Secretary CROMBIE REIT Head Office: 610 East River Road, Suite 200 New Glasgow, Nova Scotia, B2H 3S2 Telephone: (902) 755-8100 Fax: (902) 755-6477 Website: www.crombie.ca INVESTOR RELATIONS AND INQUIRIES Unitholders, analysts, and investors should direct their financial inquiries or requests to: Kara Cameron, CPA, CA Interim Chief Financial Officer Email: investing@crombie.ca Communication regarding investor records, including changes of address or ownership, lost certificates, or tax forms, should be directed to the Company’s transfer agent and registrar, TSX Trust Company. UNIT SYMBOL REIT Trust Units – CRR.UN STOCK EXCHANGE LISTING Toronto Stock Exchange TRANSFER AGENT TSX Trust Company Investor Correspondence 301-100 Adelaide Street W Toronto, Ontario, M5H 4H1 Telephone: (800) 387-0825 Email: shareholderinquiries@tmx.com Website: www.tsxtrust.com COUNSEL Stewart McKelvey Halifax, Nova Scotia AUDITORS PricewaterhouseCoopers, LLP Halifax, Nova Scotia MULTIPLE MAILINGS If you have more than one account, you may receive a separate mailing for each. If this occurs, please contact TSX Trust Company at (800) 387-0825 or (416) 682-3860 to eliminate multiple mailings. 128128128 CRA028 4400112 -Crombie_Text Proof R1.indd 128 2024-03-21 12:42 PM CRA028 4400112 -Crombie_Cover R1.indd 2 2024-03-21 1:05 PM CRA028 4400112 -Crombie_Cover R1.indd 1 2024-03-21 1:05 PM CROMBIE REIT

Continue reading text version or see original annual report in PDF format above