CROMBIE REIT Annual Report 2023
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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%.
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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.
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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.
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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
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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
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Own and Operate
Optimize
Partner
Financial Strength
ESG
People and Culture
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Le Duke,
Montreal,
Quebec
Own and Operate
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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.
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(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.
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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.
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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
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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.
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The Marlstone
Rendering,
Halifax,
Nova Scotia
Optimize
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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.
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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.
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Forest Lawn Sobeys,
Calgary, Alberta
Partner
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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.
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Zephyr –
Davie Street,
Vancouver,
British Columbia
Financial Strength
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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
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$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)
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6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
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Scotia Square,
Halifax,
Nova Scotia
BOMA BEST
Platinum
ESG
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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.
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Crombie employees
Natcha Wannaklang
and Charlee Gerrior,
Halifax, Nova Scotia
People and Culture
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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.
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“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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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%
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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.
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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%
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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.
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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
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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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.
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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.
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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).
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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.
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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
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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.
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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.
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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%
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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
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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.
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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
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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.
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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
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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
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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
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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(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.
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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.
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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.
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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
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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
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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
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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
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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)
$
$
$
$
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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
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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
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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
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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.
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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.
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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%).
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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.
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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.
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CROMBIE REIT