CROMBIE REIT
Annual Report 2024
Building
Together
Driven by a vision of enriching communities,
Crombie owns and operates real estate assets
that create value for today while shaping a
sustainable tomorrow. Our portfolio of grocery-
anchored retail properties – complemented
by retail-related industrial and mixed-use
residential assets – delivers stability and
growth, empowering vibrant neighbourhoods
across the country and positioning Crombie as
a leader in the Canadian real estate market.
Inside this Report
2
Crombie at a Glance
4
Letter from the CEO
6
Building Together
Crombie’s Priorities
8
Stability
9
Operational Excellence
10
Optimized Portfolio
12
Strategic Partnerships
13
Financial Strength
14
People and Culture
15
ESG
Financial Review
17
Management’s Discussion and Analysis
78
Management’s Statement of
Responsibility for Financial Reporting
79
Independent Auditor’s Report
84
Consolidated Financial Statements
88
Notes to the Consolidated
Financial Statements
119 Property Portfolio
121 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 77.
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 74.
About
Crombie
The Essential REIT
The results contained within this Annual Report are presented as of
December 31, 2024 and do not reflect events occurring after such date.
Crombie has integrated itself into communities across Canada, where people live, work, shop,
and play. With a coast-to-coast presence spanning urban hubs to the centre of vibrant cities and
towns, our properties are the fabric of the community, housing necessity-based retail stores.
Connecting Communities
Across Canada
1
CROMBIE REIT Annual Report 2024
At the heart of communities across the country
VECTOM2
$2.7b fair value
6.6m sq. ft.
Major Markets3
$1.5b fair value
4.9m sq. ft.
Rest of Canada
$1.7b fair value
7.6m sq. ft.
1. Crombie’s portfolio also includes $0.2b of fair value, equivalent to 1.0m sq. ft., represented by office and $0.2b of fair value represented by properties under development “PUD” and land.
2. Vancouver, Edmonton, Calgary, Toronto, Ottawa-Gatineau, Montreal, as defined by Statistics Canada 2021 boundaries for census metropolitan area 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.
Three of the most desirable asset classes in Canadian real estate1
Retail
$4.4b fair value
15.0m sq. ft.
Mixed-use residential
$0.5b fair value
0.6m sq. ft.
Crombie at a Glance
Retail-related industrial
$0.6b fair value
2.5m sq. ft.
Property Location
2
Strength in Stability,
Flexibility in Growth
Crombie has designed its portfolio for resilience and
growth. Rooted in grocery-anchored and necessity-based
retail, our core properties deliver consistent performance
through economic cycles. Complementing this foundation
are select retail-related industrial and mixed-use
residential assets that are complementary to the retail
portfolio and enhance long-term returns.
Scale
Stability
Operational Excellence
1. Non-GAAP measure which includes fair value of properties held in joint ventures at Crombie’s share; for additional information please reference the Non-GAAP Financial Measures
section in the MD&A.
2. Non-GAAP measure; for additional information please reference the Non-GAAP Financial Measures section in the MD&A.
304
properties spanning
coast to coast
$5.9b
fair value including properties
held in joint ventures1
19.1m sq. ft.
of GLA inclusive of joint ventures
8.5 year
weighted average lease term
(“WALT”)
81%
of annual minimum rent (“AMR”) generated
from grocery-anchored properties,
inclusive of retail-related industrial
96.8%
committed occupancy
2.9%
same-asset property cash NOI growth2
4.3%
property revenue growth
6.9%
AFFO per Unit growth2
3
CROMBIE REIT Annual Report 2024
Dear Fellow Unitholders,
At Crombie, our purpose guides our actions: to create lasting
value by owning, operating, and optimizing spaces that
enrich the communities we proudly serve. Real estate has
the unique power to shape how we live and connect, and
our grocery-anchored portfolio plays a vital role in fostering
resilient neighbourhoods across Canada.
2024 brought both opportunities and challenges for the real
estate sector and the broader Canadian capital markets,
with macroeconomic uncertainty shaping the environment.
Despite this, demand for retail space – particularly at
necessity-based locations – remained exceptionally strong,
a trend we expect to continue. Necessity-based retailers
have not slowed down their expansion plans, and at the
same time, new supply remains limited, creating a sustained
supply-demand imbalance. Necessity-based retail continues
to be well-positioned to remain one of the most resilient
asset classes.
I am proud of the progress we made as an organization
throughout 2024. Amidst a dynamic backdrop we remained
focused and delivered growth across all key financial
metrics, strengthening our foundation for long-term value
creation. Guided by our disciplined strategy, “Building
Together”, we maintained high occupancy across our coast-
to-coast portfolio, achieved same-asset property cash
NOI growth of 2.9%, and delivered AFFO per unit growth of
6.9%. We bolstered our financial position, ending the year
with $682 million in available liquidity and healthy leverage
ratios, well within our desired range. These accomplishments
reflect the dedication of our team and the effectiveness
of our approach, which continues to balance stability
with opportunity.
Building Together: Delivering on
Our Strategic Pillars
Our strategy remains anchored in two fundamental pillars:
Value Creation and Solid Foundation. These pillars guide
the decisions we make, driving both immediate results and
long-term benefit.
Value Creation
Three key drivers – Own and Operate, Optimize, and
Partner – form the basis of Crombie’s Value Creation strategy.
Own and Operate
Our focus is on owning and operating a carefully curated
portfolio of grocery-anchored retail properties, along with
complementary grocery-related industrial and mixed-use
residential assets – among the most sought-after classes
in Canadian real estate. By emphasizing necessity-based
properties at the heart of communities across Canada,
we aim to strike an optimal balance between stability
and growth.
In 2024, we achieved occupancy levels among the highest in
Crombie’s history – a testament to the deliberate strategies
we’ve implemented and our ongoing commitment to
operational excellence. Our leasing and operations teams
optimized tenant mix and upheld high standards in safety,
security, and upkeep, driving 2.9% same-asset property cash
NOI growth and growing our in-place annual minimum
rent per square foot by 3.9%. We renewed 1.1 million square
feet at a 9.8% spread over expiring rental rates, maintaining
our focus on stability and value creation. Necessity-based
tenants accounted for 81.8% of annual minimum rent and our
portfolio’s weighted average lease term remained strong
at 8.5 years.
Disciplined capital recycling enabled us to unlock value
by divesting of two non-core assets in Atlantic Canada
and a low-yielding potential future development project,
Broadview, in Toronto, to reinvest in high-quality,
necessity-based properties. During the year, we acquired
two grocery-anchored retail assets with Empire banners
and secured the land parcel of an existing grocery
asset. Additionally, we completed the acquisition of
the remaining 50% interest in Zephyr Residential,
a mixed-use residential property in Vancouver’s west
end neighbourhood, anchored by our in-place Safeway
asset and complementary necessity-based retailers.
Optimize
Optimizing our portfolio through both non-major and major
developments is an important component of driving cash
flow growth and long-term value creation.
Letter from
the CEO
4
On the non-major development front, we completed several
targeted projects with Empire, including our 50/50-owned
Alberta Central Kitchen Commissary industrial asset. We also
transformed an existing retail asset in Burlington, Ontario to
add a Farm Boy grocery store – marking Empire’s 50th Farm
Boy location and Crombie’s fourth.
Crombie also made meaningful progress on major
developments during the year, focusing on value creation
through entitlement activity and advancing our 291-unit
residential project, The Marlstone, in Halifax, Nova Scotia.
The Marlstone, on track for completion in the first half of
2026, will be a valuable addition to the rapidly growing
Halifax market, as well as Crombie’s portfolio, seamlessly
integrating with our existing assets.
Partner
Our strategic partnership with Empire is a core driver of
Crombie’s success. By aligning our real estate strategies, we
collaborate to deliver initiatives that enhance the quality and
resilience of our portfolio. These efforts include acquisitions,
modernizations, development management services, and
the construction of purpose-built projects. In 2024, we invested
$38.2 million in our modernization program with Empire
stretching across banners from coast to coast, delivering
returns in the 6% to 8% range and further strengthening the
quality of the asset.
We recognize the importance of partnerships in driving
growth while maintaining financial strength. Beyond Empire,
we look to broaden our collaborative efforts to fully realize
the potential of our major development pipeline and extract
significant embedded value.
Solid Foundation
Our solid foundation enables Crombie to deliver on its
strategy and navigate an evolving landscape with confidence.
This foundation rests on Financial Strength, ESG Leadership,
and People and Culture.
Financial Strength
Our balance sheet and robust financial condition are
essential components of our foundation, and we are
committed to maintaining their strength. They position us
to seize opportunities and progress strategic initiatives that
generate lasting value. Our disciplined approach to capital
allocation and proactive management of our debt maturity
ladder ensured ample liquidity and low leverage, ending
the year with debt-to-adjusted EBITDA of 7.96x and an
interest coverage ratio of 3.33x.
In 2024, we successfully accessed the unsecured debt market
twice, raising $200 million in Q1 and $300 million in Q4, and
closed the year with an unsecured-to-secured debt ratio of
61% to 39%, in line with our desired 60% to 40% split. We remain
focused on our goal of achieving a credit rating upgrade
from Morningstar DBRS to BBB (mid) from BBB (low). In 2024,
Morningstar DBRS updated our trend from stable to positive,
reflecting our continued progress in strengthening our
financial profile. As we enter 2025, Crombie is well-positioned
with minimal near-term debt maturities and access to diverse
capital sources, providing the flexibility to meet financing
needs and advance strategic initiatives.
ESG Leadership
Sustainability is a core pillar of Crombie’s strategy and
operations, driving our commitment to both environmental
stewardship and community well-being. Guided by our
Climate Action Plan, we continued to make progress toward
our near-term 2030 and long-term 2050 greenhouse gas
emission reduction targets, with purposeful investments
across our portfolio advancing our transition to a lower-
carbon future.
Our dedication to building stronger, greener communities
extends beyond our operations. Team members collectively
volunteered thousands of hours to support community
organizations nationwide, exemplifying our commitment to
social impact. These efforts, along with our environmental
initiatives, earned us recognition as one of Canada’s
Greenest Employers in 2024, a testament to the tangible
results of our sustainability strategy.
By integrating sustainability into every facet of our business,
we continue to deliver value while making a lasting positive
impact on the communities we serve.
People and Culture
Our people are at the core of Crombie’s success. In 2024, we
strengthened our commitment to foster a workplace where
individuals and the organization can thrive. We invested
in initiatives to enhance employee engagement, promote
diversity, and prioritize well-being – efforts that earned us
recognition as one of Canada’s top employers.
To further support our team, we introduced a wellness
reimbursement program, enabling all employees to claim
reimbursement for eligible services, activities, programs,
or equipment that support their well-being. This initiative is
designed to promote a well-rounded, healthy lifestyle for
every member of our team.
These efforts exemplify our dedication to creating an
exceptional workplace that empowers our people and
drives collective growth.
Looking Ahead
As we step into 2025, Crombie is well-positioned to build on
the sound foundation we have established. The stability of
our portfolio, coupled with disciplined execution, provides
a clear path for continued growth. Our focus remains on
delivering reliable cash flow and growing portfolio value,
to drive returns for Unitholders and have a meaningful
impact on the communities we serve.
On behalf of the entire Crombie team, thank you for your
trust and support. Together, we are shaping a resilient
future – one that benefits all stakeholders and strengthens
the neighbourhoods we proudly serve.
Sincerely,
Mark Holly
President & Chief Executive Officer
5
CROMBIE REIT Annual Report 2024
Building
Together
Purpose-Driven,
Results-Oriented
6
Near-term priorities
• Deliver consistent growth in same-asset property cash NOI and AFFO.
• Optimize our existing assets through a balanced approach to both non-major development and major development,
leveraging partnerships to unlock embedded value.
• Maintain superior financial condition while responsibly allocating capital.
Crombie creates lasting value for Unitholders through a disciplined strategy built on two
interlocking pillars: Value Creation and Solid Foundation. These pillars guide every decision,
enabling us to grow cash flow, enhance portfolio value, and build a platform designed for
long-term success.
Own and Operate
What we own and how we operate
Optimize
Maximize the value of our assets
through major and non-major
development
Partner
Leverage and unlock value
through partnerships
Value Creation
Financial Strength
Prioritizing cash flow growth and
disciplined allocation of capital
ESG
Further embedding ESG principles
into our business strategy, culture,
and values
People and Culture
Attracting, retaining, and developing
top talent across the organization
Solid Foundation
7
CROMBIE REIT Annual Report 2024
Resilient cash flow,
anchored in everyday needs
Crombie’s stability rests upon an intentionally curated
portfolio of high-quality properties designed for consistent
performance. Anchored in grocery-focused and necessity-
based retail, these assets are strengthened by enduring
tenant relationships and deliberate management
strategies. As Canada’s population has grown, the demand
for well-located, high-quality real estate continues to rise,
enhancing the value of our portfolio. By maintaining high
occupancy rates, leveraging our strategic locations, and
prioritizing operational efficiency, we ensure reliable cash
flow and sustained growth. Crombie’s ability to adapt to
evolving market conditions while remaining focused on
core strengths makes us a dependable performer in all
economic environments.
8.5 year
WALT vs. 5.9 year average retail peer WALT1
Empire 10.8 years
Other 4.3 years
82%
of AMR from necessity-based retailers
1. Retail peers include CHP, CRT, FCR, PMZ, REI & SRU as at September 30, 2024.
Stability
8
Operational
Excellence
Crombie delivers operational excellence by striking a
strategic balance between stability and growth.
We continuously enhance our portfolio with this balance
in mind, expanding our exposure to high-quality, grocery-
anchored retail properties, while taking a disciplined
approach to reviewing and refining our asset base.
In 2024, this disciplined focus led to the acquisition of two
grocery stores in British Columbia, as well as the sale of
two under-performing properties in Atlantic Canada, and
a potential development site, Broadview, in Toronto. For
our in-place assets, we prioritize long-term leases with
high-quality tenants that provide a dependable foundation,
ensuring stable cash flow and a strong base of operations.
At the same time, opportunities for market-driven lease
adjustments enable Crombie to respond dynamically to
changing market conditions and capture growth potential.
This dual focus on stability and adaptability drives consistent
same-asset property cash NOI and AFFO growth. Our
proactive leasing strategy combines disciplined tenant
selection with regular evaluations of lease terms, ensuring
our properties remain competitive and aligned with
market trends. Responsive property management and
targeted investments in property upgrades maintain high
occupancy rates and tenant satisfaction, ensuring optimal
portfolio performance.
Crombie emphasizes operational efficiency by leveraging
data-driven insights and property management tools.
These efforts not only enhance the performance of our
assets, but also support sustainable practices, aligning
operational improvements with broader environmental
and social goals. This alignment of precision, flexibility,
and sustainability underpins Crombie’s commitment
to delivering long-term value for Unitholders and the
communities we serve.
Net Operating Income by Asset Type
Retail 87%
Retail-related industrial 9%
Office 4%
Annual Minimum Rent Growth
2023
$17.58
2024
$18.27
3.9%
increase in AMR from 2023
Renewal Growth
9.8%
renewal leasing spread on 1.1m sq. ft.
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CROMBIE REIT Annual Report 2024
Optimized
Portfolio
Unlocking Value,
One Project at a Time
Crombie optimizes its portfolio through a focus on both
major and non-major developments, leveraging four
key levers: Modernize, Intensify, Entitle, and Develop.
Non-major developments focus on shorter-term projects,
such as modernizations, land-use intensifications, and
small-scale redevelopments. We designed these initiatives
to enhance existing assets; they require a total capital
investment of less than $50 million and deliver measurable
improvements in functionality and value. For example,
land-use intensifications have added approximately
116,000 square feet of new retail and industrial GLA over
the last 24 months, improving quality and increasing cash
flow across the portfolio.
Major developments stem from unlocking embedded
value through entitlements and large-scale, transformative
projects like The Marlstone in Halifax, Nova Scotia;
Crombie’s one active major development. These projects
require a capital investment of greater than $50 million,
which we carefully evaluate to ensure attractive risk-
adjusted returns. Our focus remains on advancing key
sites through the entitlement process, creating value, while
also providing flexibility and optionality. This disciplined
approach ensures that Crombie balances immediate
enhancements with long-term growth potential, unlocking
embedded value across all aspects of the portfolio.
10
1. Co-owned with Empire.
2. Alberta Central Kitchen GLA at 100%; Crombie includes 50% in its reportable GLA.
3. Please reference the development section of the MD&A for additional information on assumptions and risks.
Alberta Central Kitchen
Calgary, Alberta
Asset type: Retail-related industrial
Ownership: 50%1
GLA: 52,000 sq. ft.2
Substantial completion: Q1 2024
Non-major Development Spotlight
Major Development Spotlight
The Marlstone3
Halifax, Nova Scotia
Asset type: Residential
Ownership: 100%
Residential units: 291
Estimated substantial completion: Q1/Q2 2026
Non-Major Development
Major Development Pipeline
83,000 sq. ft.
4
4
33,000 sq. ft.
52,000 sq. ft.
18
2023 completions
Zoned
2024 completions
Application submitted
Under construction
Future
11
CROMBIE REIT Annual Report 2024
Our collaboration with Empire, one of Canada’s largest
grocers, enables us to align our real estate initiatives
with their operational needs, resulting in mutually
beneficial projects such as acquisitions, store conversions,
modernizations, land-use intensifications, and development
management services. This synergy ensures that our
properties remain essential to the communities we serve,
driving long-term growth.
Beyond Empire, Crombie partners with organizations that
bring specialized expertise, capital, and insights to support
the optimization of our assets. Whether it’s through joint
ventures or strategic collaborations on transformative
projects, these partnerships enable us to execute with
precision and efficiency. By working with trusted partners,
we amplify the value of our portfolio and strengthen our
ability to deliver meaningful results for Unitholders and
stakeholders alike.
Strategic
Partnerships
89%
of retail properties
anchored by Empire
61%
of GLA occupied by Empire,
equivalent to 11.3m sq. ft.1
$38.2m
invested in modernization program garnering
an incremental 6% – 8% yield on cost
1. Excludes assets held in joint ventures.
12
Financial
Strength
Superior
Financial Strength
Crombie’s financial strength is built on disciplined capital
management and a focus on long-term stability. Effectively
utilizing both debt and equity, we ensure access to diverse
funding sources that support current operations, as well as future
growth. Our well-structured debt ladder minimizes refinancing
risk by staggering maturities, while maintaining ample liquidity
ensures financial flexibility during economic fluctuations.
We prioritize prudent capital allocation, evaluating opportunities
to maximize returns while maintaining a strong balance sheet.
This includes leveraging joint ventures to unlock additional value
from development projects and using proceeds from strategic
dispositions to reinvest in high-performing assets. Our focus
on maintaining an investment-grade credit profile reflects a
commitment to financial resilience and Unitholder confidence.
As we navigate evolving market conditions, Crombie’s proactive
approach to financial management positions us to capitalize on
high-value opportunities while safeguarding long-term stability.
This foundation ensures we remain a trusted and reliable
investment partner in all economic environments.
Debt characteristics2
Secured debt 39%
Unsecured debt 61%
Floating rate debt 1%
Fixed rate debt 99%
$682m
available liquidity
7.96x
debt to adjusted
EBITDA (TTM)1
5.1 years
weighted average term
to debt maturity
BBB(low)
positive trend
Morningstar DBRS credit rating
1. Non-GAAP measure; for additional information please reference the Non-GAAP Financial Measures section in the MD&A.
2. Inclusive of joint venture debt.
13
CROMBIE REIT Annual Report 2024
People and
Culture
Empowering People,
Building Together
Crombie’s people are the driving force behind our success,
and we are committed to fostering a workplace where
collaboration, innovation, and accountability thrive. We
invest in professional development programs that equip
our employees with the skills and tools needed to excel
in a rapidly evolving industry. This includes mentorship
opportunities, leadership training, and support for
continued education.
We also prioritize diversity, equity, and inclusion, creating
an environment where every team member can contribute
their best and feel valued. Crombie’s flexible work policies
and emphasis on well-being ensure that our employees
can balance their professional and personal lives
effectively. This includes access to wellness programs,
mental health resources, and hybrid work options.
Our strong workplace culture is reflected in high employee
satisfaction and low turnover rates. By building a talented
and engaged team, the Crombie mindset ensures we
remain agile and innovative, ready to meet the demands
of the future. Together, we work to enrich communities,
exceed expectations, and create a lasting impact for
all stakeholders.
Top Employers1
1. Additional details on Crombie’s top employers award selection: https://reviews.canadastop100.com/top-employer-crombie-real-estate.
14
ESG
Crombie’s commitment to ESG is integral to our operations
and long-term strategy.
Focusing on Climate Action
Crombie measured its 2019 baseline carbon footprint and
analyzed its greenhouse gas (“GHG”) profile to identified
GHG emission reduction measures to develop its Climate
Action Plan. In 2023, the Science Based Targets initiative
(SBTi) independently validated and approved Crombie’s
2030 and 2050 GHG emission targets.
Enriching Communities and Culture
Crombie’s impact extends beyond real estate, reaching
deep into the communities we serve. Our Community
Impact Strategy focuses on making meaningful contributions
through three key pillars: financial support, volunteering,
and providing access to space. By aligning these efforts
with our corporate values, we ensure our initiatives create
tangible, positive outcomes.
Through financial contributions, Crombie has supported
numerous organizations that address pressing social needs,
from food security to shelter. Our employees play a central
role, volunteering thousands of hours annually to local
initiatives, fostering connections that strengthen communities
across Canada.
Through these efforts, Crombie demonstrates that our
purpose is not just about owning properties – it’s about
building spaces that make a difference, now and for
generations to come.
Enhancing Oversight and Mitigating Risks
Strong governance practices underpin our ESG strategy.
In 2024, we enhanced the overall diversity of our Board of
Trustees, adding one new diverse Trustee, refreshed our
Trustee onboarding process, and continued to improve
cybersecurity measures, while also completing a double
materiality assessment1 to renew our ESG strategy and
priorities, as well as inform forthcoming regulatory
reporting requirements. Our comprehensive approach
ensures accountability, mitigates risks, and positions us for
continued success in a dynamic business environment.
Near-term
Reduction of 50% in Scope 1 and 2 GHG emissions by
2030 from 2019 base year
Long-term
Reduction of 90% in Scope 1, 2, and 3 GHG emissions
by 2050 from 2019 base year
Crombie’s Targets
Community Impact Strategy
People
Money
National
Time
Local
Space
Individual
Planet
1. Double materiality considers both the effects an organization has on the climate and environment and the potential impact of these factors on its financial performance.
15
CROMBIE REIT Annual Report 2024
16
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, 2024 and 2023.
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 at
February 19, 2025, 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 used in this
document, refer to the “Glossary of Terms” on page 21.
*Non-GAAP Financial Measures
Some of the financial measures provided 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 74, for more information
on Crombie’s non-GAAP financial measures and reconciliations thereof.
Forward-Looking Statements
Some of the information provided in this document is forward-looking and
therefore could change over time to reflect changes in the environment in
which Crombie operates and competes. See “Forward-looking Information”,
starting on page 77, for more information.
Footnotes
Financial
Review
Management’s Discussion and Analysis
17
Key Highlights
21
Glossary of Terms
22
Portfolio Review
31
Operational Performance Review
34
Financial Performance Review
42
Development
48
Capital Management
58
Risk Management
66
Joint Ventures
70
Other Disclosures
70 Related Party Transactions
70 Use of Estimates and Judgments
72 Controls and Procedures
73 Quarterly Information
74
Non-GAAP Financial Measures
77
Forward-Looking Information
Consolidated Financial Statements
78
Management’s Statement of
Responsibility for Financial Reporting
79
Independent Auditor’s Report
84
Consolidated Balance Sheets
85
Consolidated Statements of
Comprehensive Loss
86
Consolidated Statements of Changes in
Net Assets Attributable to Unitholders
87
Consolidated Statements of Cash Flows
88
Notes to the Consolidated Financial
Statements
119 Property Portfolio
121 Unitholders’ Information
KEY HIGHLIGHTS
Crombie uses financial and operational metrics to measure its performance.
These key metrics are highlighted below:
Financial metrics
(in thousands except GLA and per Unit amounts)
(1) Property revenue for the three months and year ended December 31, 2023 has been increased by $2,687 and $10,750, respectively, from previously reported figures as a result of a change in the
presentation of recoverable property taxes for certain properties where tenants paid the property taxes on Crombie’s behalf.
* See “Non-GAAP Financial Measures”, starting on page 74, for more information on Crombie’s non-GAAP financial measures and reconciliations thereof.
Q4 2024
Year 2024
The increase in property revenue for both the quarter and the year was due
primarily to higher revenue from acquisitions, renewals, and new leasing activity. The
growth was partially offset by higher tenant incentive amortization, primarily from
modernizations.
Increased revenue from recently completed developments and supplemental rent
from modernization investments further contributed to the annual increase, offset in
part by decreased revenue from dispositions.
Property revenue1
$121,595
Q4 2023 $116,986 +3.9%
$471,025
Year 2023 $451,689 +4.3%
Q4 2024
Year 2024
Net property income was positively impacted during the quarter and the year by
growth in property revenue from acquisitions, renewals, and new leasing activity.
This was offset in part by higher tenant incentive amortization, primarily from
modernizations.
Increased revenue from recently completed developments and supplemental rent
from modernization investments further contributed to the annual increase, offset by
decreased property revenue from dispositions.
Net property income*
$78,150
Q4 2023 $75,869 +3.0%
$301,685
Year 2023 $287,412 +5.0%
Q4 2024
Year 2024
$76,143
Q4 2023 $26,295 +189.6%
$158,265
Year 2023 $98,821 +60.2%
The increase in operating income in the fourth quarter was mainly due to a gain
recognized on the acquisition of the remaining 50% interest in the Davie Street joint
venture, growth in property revenue from acquisitions, renewals, and new leasing.
This was offset in part by impairment of investment properties, higher interest
expense, increased tenant incentive amortization from modernizations, and higher
depreciation and amortization.
In addition to the items discussed for the quarter, the annual increase was further
driven by growth in property revenue from recently completed developments,
supplemental rent from modernization investments, increased revenue from
management and development services, and reduced general and administrative
expenses resulting from lower employee transition costs and organizational
changes. This increase was partially offset by lower income from equity-accounted
investments resulting from the sale of land at Crombie’s Opal Ridge joint venture in
2023, and decreased property revenue from dispositions.
Operating income attributable to Unitholders
Q4 2024
Year 2024
$81,112
Q4 2023 $79,229 +2.4%
$314,654
Year 2023 $305,784 +2.9%
The increase in same-asset property cash NOI for both the quarter and the year was
primarily driven by increased property revenue from renewals, contractual rent step-
ups, new leasing, and supplemental rent from modernization investments.
Same-asset property cash NOI*
MANAGEMENT’S DISCUSSION AND ANALYSIS
17
CROMBIE REIT Annual Report 2024
* See “Non-GAAP Financial Measures”, starting on page 74, for more information on Crombie’s non-GAAP financial measures and reconciliations thereof.
Financial metrics (continued)
(in thousands except GLA and per Unit amounts)
Q4 2024
Year 2024
$0.32
Q4 2023 $0.30 +6.7%
$1.24
Year 2023 $1.17 +6.0%
The increase in FFO in the quarter was driven primarily by higher property
revenue from acquisitions, renewals, and new leasing activity. This was offset in
part by higher interest expense.
In addition to the items discussed above for the quarter, the annual increase
in FFO was driven by growth in property revenue from recently completed
developments, supplemental rent from modernization investments, increased
revenue from management and development services, and reduced general
and administrative expenses resulting from lower employee transition costs and
organizational changes. The annual increase was partially offset by increased
interest expense, lower income from equity-accounted investments resulting from
the sale of land at Crombie’s Opal Ridge joint venture in 2023, and decreased
property revenue from dispositions.
Excluding employee transition costs of $979 in 2024, FFO* per Unit was $1.25
($1.21 excluding employee transition costs of $7,386 in 2023), an increase of
3.3% over 2023.
FFO* per Unit
Q4 2024
Year 2024
Items affecting total FFO, as discussed above, drove the improvement in FFO
payout ratio in both the quarter and the year compared to the same periods in
2023, offset in part by higher distributions due to Units issued under Crombie’s
distribution reinvestment plan (“DRIP”).
FFO* payout ratio
70.3%
Q4 2023 73.7% -3.4%
71.6%
Year 2023 76.2% -4.6%
Q4 2024
Year 2024
79.7%
Q4 2023 87.3% -7.6%
82.4%
Year 2023 88.4% -6.0%
Items affecting total AFFO, as discussed above, drove the improvement in AFFO
payout ratio in both the quarter and the year compared to the same period in
2023, offset in part by higher distributions due to Units issued under the DRIP.
AFFO* payout ratio
Q4 2024
Year 2024
$0.28
Q4 2023 $0.26 +7.7%
$1.08
Year 2023 $1.01 +6.9%
AFFO increased in the quarter primarily due to higher property revenue from
acquisitions, renewals, and new leasing activity. This was offset in part by higher
interest expense.
In addition to the items discussed above for the quarter, the annual growth
in AFFO was driven by growth in property revenue from recently completed
developments, supplemental rent from modernization investments, increased
revenue from management and development services, and reduced general
and administrative expenses resulting from lower employee transition costs and
organizational changes. This was partially offset by higher interest expense,
reduced income from equity-accounted investments resulting from the sale of
land at Crombie’s Opal Ridge joint venture in 2023, and decreased property
revenue from dispositions.
Excluding employee transition costs of $979 in 2024, AFFO* per Unit was
$1.09 ($1.05 excluding employee transition costs of $7,386 in 2023), an increase
of 3.8% over 2023.
AFFO* per Unit
MANAGEMENT’S DISCUSSION AND ANALYSIS
18
Operational Metrics — Commercial
10.0%
Q4 2023 8.4% +1.6%
Q4 2024
Year 2024
9.8%
Year 2023 5.9% +3.9%
The primary driver of renewal growth in the quarter and annually was renewals
at retail properties with an increase of 10.0% and 10.2% over expiring rental
rates, respectively.
Renewal spreads
Renewal activity in the quarter consisted of 77,000 square feet in VECTOM,
64,000 square feet in Major Markets, and 30,000 square feet in Rest of Canada.
Annual renewal activity consisted of 547,000 square feet in Rest of Canada,
316,000 square feet in VECTOM, and 209,000 square feet in Major Markets.
Renewals (GLA sq. ft.)
171,000
Q4 2023 246,000 -30.5%
Q4 2024
Year 2024
1,072,000
Year 2023 1,269,000 -15.5%
96.5%
Q4 2023 96.0% +0.5%
Q4 2024
Crombie’s economic occupancy was primarily influenced by new leases of
225,000 square feet outpacing lease expiries by 87,000 square feet. Notable
new leases over the last 12 months include a retail-related industrial asset and
two grocery stores.
The increase from the fourth quarter of 2023 was primarily due to new leasing
activity and the sale of two low-occupancy retail properties.
Economic occupancy
At the end of the fourth quarter of 2024, 59,000 square feet of space was committed.
VECTOM and Major Markets represent 32,000 square feet of committed space.
The increase from the fourth quarter of 2023 was primarily due to new leasing
activity, and the sale of two low-occupancy retail properties.
Committed occupancy
96.8%
Q4 2023 96.5% +0.3%
Q4 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS
19
CROMBIE REIT Annual Report 2024
* See “Non-GAAP Financial Measures”, starting on page 74, for more information on Crombie’s non-GAAP financial measures and reconciliations thereof.
Q4 2024
Year 2024
The increase in interest coverage ratio for both the quarter and the year was
driven by improved adjusted EBITDA, due primarily to higher property revenue
from acquisitions, renewals and new leasing activity. A decrease in adjusted
interest expense as a result of lower average floating rate loan balances further
contributed to the increase, offset in part by increased interest on senior unsecured
notes due to the issuance of notes in the first and fourth quarters of 2024.
On an annual basis, the increase in interest coverage ratio was further impacted by
growth in property revenue from recently completed developments, supplemental
rent from modernization investments, increased revenue from management
and development services, and reduced general and administrative expenses
resulting from lower employee transition costs and organizational changes. This
was additionally offset in part by lower income from equity-accounted investments
resulting from the sale of land at Crombie’s Opal Ridge joint venture in 2023, and
decreased property revenue from dispositions.
Interest coverage ratio*
3.31x
Q4 2023 3.06x +0.25x
3.33x
Year 2023 3.16x +0.17x
Q4 2024
7.96x
Q4 2023 8.03x -0.07x
The improvement in D/EBITDA ratio was due to increased trailing adjusted
EBITDA, due primarily to growth in property revenue, net property income from
the acquisition of the remaining 50% interest in the Davie Street joint venture, and
increased revenue from management and development services. Reduced general
and administrative expenses further contributed to the increase in adjusted EBITDA,
offset in part by higher interest on senior unsecured notes, lower income from
equity-accounted investments resulting from the sale of land at Crombie’s Opal
Ridge joint venture in 2023, and decreased property revenue from dispositions. The
improvement in the ratio was partially offset by higher outstanding debt compared
to the fourth quarter of 2023, primarily from the issuance of senior unsecured notes
in the first and fourth quarters of 2024, net of redemption of senior unsecured notes
in the fourth quarter of 2024.
Debt to trailing 12 months adjusted EBITDA* (D/EBITDA)
Q4 2024
Q4 2023
43.6%
Q4 2023 43.0% +0.6%
43.0%
Q4 2022 41.8% +1.2%
The increase in D/GFV was due to the issuance of senior unsecured notes in the
first and fourth quarters of 2024. This was partially offset by an increase in gross
fair value of investment properties compared to 2023, the redemption of senior
unsecured notes in the fourth quarter of 2024, a reduction in outstanding debt held
in equity-accounted joint ventures, and repayment of credit facilities.
Debt to gross fair value* (D/GFV)
Q4 2024
$682,218
Q4 2023 $583,770 +16.9%
The increase in available liquidity resulted from lower balances of floating rate
debt outstanding compared to the fourth quarter of 2023.
Available liquidity — unutilized credit facilities
Financial Condition Metrics
MANAGEMENT’S DISCUSSION AND ANALYSIS
20
GLOSSARY OF TERMS
Adjusted debt*
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 Crombie’s debt to gross fair value
and debt to trailing 12 months adjusted EBITDA.
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, gain on
acquisition of control of joint venture, gain on derecognition
of right-of-use asset, 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 Crombie’s 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 Crombie’s interest coverage and
debt service coverage ratios.
AFFO*
Adjusted funds from operations. Crombie follows the
recommendations of REALPAC’s January 2022 guidance in
determining AFFO.
AMR
Annual minimum rent. This represents annualized fixed
minimum rent payable by the tenant pursuant to the terms
of the lease.
CFC
Customer fulfillment centre.
CMA
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
Environmental, social, and governance.
Fair value
The amount at which an asset or liability could be exchanged
between two knowledgeable, willing, and unconnected
parties in an arm’s length transaction.
FFO*
Funds from operations. Crombie follows the
recommendations of REALPAC’s January 2022 guidance in
determining FFO.
GHG
Greenhouse gas emissions.
GLA
Gross leasable area (excludes space held in equity-
accounted joint ventures unless noted as proportionately
consolidated). For both commercial and residential
properties, GLA is calculated as the total square footage of
leasable units and excludes common area space.
GRESB
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
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.
Joint ventures
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
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.
Modernization
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 net operating income 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 Crombie’s substantial retail portfolio, including
certain additional properties that comprise both retail
and office space. These properties have been consistently
included in Crombie’s retail category.
Retail-related
industrial
Retail-related industrial includes retail distribution centres,
customer fulfillment centres, and spokes.
Revenue from
management
and
development
services
Represents revenue from co-owners, related parties, and
third parties for development, construction, and property
management services.
Same-asset
properties
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
Spokes are cross-dock distribution facilities developed to
support customer fulfillment centres, the hubs of Empire
Company Limited’s (“Empire”) hub-and-spoke network, by
expediting the movement of merchandise to customers with
minimal storage time.
Sq. ft.
Square footage.
Unencumbered
assets
Represents assets that have not been pledged as security or
collateral under a secured credit agreement or mortgage.
Unit turnovers
Represents the percentage of tenants that moved out of a
residential unit at the end of their lease period.
VECTOM
Vancouver, Edmonton, Calgary, Toronto, Ottawa-Gatineau,
and Montreal, as defined by Statistics Canada 2021
boundaries for census metropolitan areas and census
agglomeration.
WATM
Weighted average term to maturity.
Zoning
applications
submitted
A formal municipal rezoning application that 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.
Zoning approval Property has received municipal approval for a new land
use designation which generally permits different uses (i.e.
residential, mixed-use) and higher levels of density and height.
* See “Non-GAAP Financial Measures”, starting on page 74, for more information on Crombie’s non-GAAP financial measures and reconciliations thereof.
MANAGEMENT’S DISCUSSION AND ANALYSIS
21
CROMBIE REIT Annual Report 2024
PORTFOLIO REVIEW
As at December 31, 2024, Crombie’s property portfolio consisted of full ownership interests in 234 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”), as well as partial ownership in one asset in PUD held in a joint operation, three properties held in joint ventures, and one wholly-
owned residential property. Together, Crombie’s share of these 304 properties contains approximately 19.1 million square feet of GLA in all 10 provinces.
Total Portfolio Review Inclusive of Joint Ventures
Crombie holds partial ownership interests in seven joint ventures, three
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.
In the fourth quarter of 2024, Crombie acquired the remaining 50% interest
in the Davie Limited Partnership joint venture for total consideration of
$133,000, excluding closing and transaction costs. See page 66 of the “Joint
Ventures” section of this MD&A for details of the consideration paid.
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, 2024:
PORTFOLIO GLA BY MARKET CLASS (SQ. FT.)
as at December 31, 2024
34.6%
25.4%
40.0%
VECTOM
Major Markets
Rest of Canada
PORTFOLIO FAIR VALUE BY MARKET CLASS (%)
as at December 31, 2024
45.6%
25.7%
28.7%
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.
December 31, 2024
December 31, 2023
VECTOM
5.10%
5.10%
Major Markets
6.17%
6.16%
Rest of Canada
6.90%
6.93%
Weighted average portfolio capitalization rate
5.90%
5.92%
Crombie’s weighted average capitalization rate has remained relatively consistent with December 31, 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS
22
GLA (sq. ft.)
December 31, 2024
December 31, 2023
VECTOM
6,585,000
6,480,000
Major Markets
4,845,000
4,843,000
Rest of Canada
7,620,000
7,888,000
Total
19,050,000
19,211,000
When compared to December 31, 2023, VECTOM and Major Markets GLA
increased by 105,000 and 2,000 square feet, respectively. The increase in
VECTOM GLA is primarily driven by the acquisition of the remaining 50% of
the Davie Street residential property. Rest of Canada GLA decreased
by 268,000 square feet largely due to the disposition of two retail
properties in 2024.
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, 2024:
PORTFOLIO GLA BY ASSET TYPE (SQ. FT.)
as at December 31, 2024
78.9%
5.1%
12.9%
3.1%
Retail-related
industrial
Retail
Office
Mixed-use
residential
PORTFOLIO FAIR VALUE BY ASSET TYPE (%)
as at December 31, 2024
74.3%
2.7%
9.2%
4.3%
9.5%
Retail-related
industrial
Retail
Office
Other1
Mixed-use
residential
(1) Other includes PUD and land.
Retail properties represent 78.9% of Crombie’s GLA and 72.1% of fair value
at December 31, 2024, compared to 79.6% of Crombie’s GLA and 76.9%
of fair value at December 31, 2023. The decrease in the retail percentage
of total fair value is due primarily to increased fair value in properties
under development, and in mixed-use residential properties resulting
from Crombie’s acquisition of the remaining 50% of the Davie Street
residential property.
GLA (sq. ft.)
December 31, 2024
December 31, 2023
Retail
15,026,000
15,301,000
Retail-related industrial
2,460,000
2,434,000
Office
963,000
962,000
Mixed-use residential
601,000
514,000
Total
19,050,000
19,211,000
When compared to December 31, 2023, retail GLA decreased 275,000
square feet largely due to the disposition of two retail properties in the
fourth quarter of 2024. Retail-related industrial GLA increased 26,000
square feet due to the substantial completion of a co-owned property in
VECTOM in the first quarter of 2024. Mixed-use residential GLA increased
87,000 square feet primarily driven by the acquisition of the remaining
50% of the Davie Street residential property.
MANAGEMENT’S DISCUSSION AND ANALYSIS
23
CROMBIE REIT Annual Report 2024
Portfolio Review — Excluding Joint Ventures and Residential Property
Below are select operating metrics for the full portfolio presented without
inclusion of Crombie’s partial ownership interests in seven joint ventures
and without inclusion of Crombie’s wholly-owned residential property.
Partial ownership interests are reflected in Crombie’s financial statements,
based on its proportionate ownership in joint operations.
Market Class
Crombie’s portfolio of GLA and fair value consisted of the following as at December 31, 2024:
PORTFOLIO GLA BY MARKET CLASS (SQ. FT.)
as at December 31, 2024
32.5%
26.2%
41.3%
VECTOM
Major Markets
Rest of Canada
PORTFOLIO FAIR VALUE BY MARKET CLASS (%)
as at December 31, 2024
39.8%
28.4%
31.8%
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.
December 31, 2024
December 31, 2023
VECTOM
5.44%
5.44%
Major Markets
6.17%
6.16%
Rest of Canada
6.90%
6.93%
Weighted average portfolio capitalization rate
6.12%
6.12%
Crombie’s weighted average capitalization rate, excluding joint ventures and residential, has remained stable relative to December 31, 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS
24
Crombie’s portfolio diversification by market class of its commercial investment properties as at December 31, 2024 and 2023 is as follows:
GLA (sq. ft.)
Number of
Investment
Properties
Market Class
January 1,
2024
Acquisition/
Disposition
Other1
December 31,
2024
% of AMR
% NOI2
Economic
Occupancy
Committed
Occupancy
VECTOM
5,966,000
(15,000)
33,000
5,984,000
88
35.0%
34.0%
98.9%
99.0%
Major Markets
4,827,000
—
2,000
4,829,000
64
26.8%
27.4%
96.6%
97.0%
Rest of Canada
7,888,000
(276,000)
8,000
7,620,000
143
38.2%
38.6%
94.6%
95.0%
Total
18,681,000
(291,000)
43,000
18,433,000
295
100.0%
100.0%
96.5%
96.8%
GLA (sq. ft.)
Number of
Investment
Properties
Market Class
January 1,
2023
Acquisition/
Disposition
Other1
December 31,
2023
% of AMR
% NOI2
Economic
Occupancy
Committed
Occupancy
VECTOM
5,956,000
—
10,000
5,966,000
88
35.1%
33.8%
99.3%
99.4%
Major Markets
4,794,000
—
33,000
4,827,000
64
26.7%
27.8%
96.2%
97.0%
Rest of Canada
7,695,000
139,000
54,000
7,888,000
142
38.2%
38.4%
93.3%
94.0%
Total
18,445,000
139,000
97,000
18,681,000
294
100.0%
100.0%
96.0%
96.5%
(1) Changes in GLA include increases for completed developments and additions/expansions to GLA on existing properties.
(2) Property cash NOI for the year ended December 31.
For the year ended December 31, 2024, two retail properties, totalling
62,000 square feet, were acquired in the Rest of Canada. This was offset
by the disposition of three retail properties, two in Rest of Canada totalling
338,000 square feet and one partially-owned property in VECTOM
totalling 15,000 square feet. Crombie completed the development of one
retail-related industrial asset, of which it has a 50% ownership, adding
26,000 square feet in VECTOM in addition to the development of two retail
freestanding buildings in VECTOM for 7,000 square feet. These additions to
GLA are included in “Other” changes.
When compared to December 31, 2023, the percentage of annual
minimum rent (“AMR”) generated from the Rest of Canada remained
constant, while Major Markets AMR increased by 10 basis points, and
VECTOM AMR decreased by 10 basis points.
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 81.4% of Crombie’s GLA and 82.3% of fair value at December 31, 2024, compared to 81.8% of GLA and 83.9% of fair value at
December 31, 2023.
PORTFOLIO GLA BY ASSET TYPE (SQ. FT.)
as at December 31, 2024
81.4%
5.2%
13.4%
Retail-related
industrial
Retail
Office
PORTFOLIO FAIR VALUE BY ASSET TYPE (%)
as at December 31, 2024
82.1%
3.0%
4.3%
10.6%
Retail-related
industrial
Retail
Office
Other1
(1) Other includes PUD and land.
MANAGEMENT’S DISCUSSION AND ANALYSIS
25
CROMBIE REIT Annual Report 2024
Crombie’s portfolio diversification of its commercial investment properties by asset class, as at December 31, 2024 and 2023, is as follows:
GLA (sq. ft.)
Number of
Investment
Properties
Asset Class
January 1,
2024
Acquisition/
Disposition
Other1
December 31,
2024
% of AMR
% of NOI2
Economic
Occupancy
Committed
Occupancy
Retail
15,285,000
(291,000)
16,000
15,010,000
282
87.4%
87.3%
96.6%
96.9%
Retail-related
industrial
2,434,000
—
26,000
2,460,000
8
9.0%
8.9%
100.0%
100.0%
Office
962,000
—
1,000
963,000
5
3.6%
3.8%
86.8%
87.3%
Total
18,681,000
(291,000)
43,000
18,433,000
295
100.0%
100.0%
96.5%
96.8%
GLA (sq. ft.)
Number of
Investment
Properties
January 1,
2023
Acquisition/
Disposition
Other1
December 31,
2023
% of AMR
% of NOI2
Economic
Occupancy
Committed
Occupancy
Retail
15,077,000
139,000
69,000
15,285,000
282
87.4%
88.3%
95.6%
96.3%
Retail-related
industrial
2,414,000
—
20,000
2,434,000
7
8.8%
7.7%
100.0%
100.0%
Office
954,000
—
8,000
962,000
5
3.8%
4.0%
90.9%
91.0%
Total
18,445,000
139,000
97,000
18,681,000
294
100.0%
100.0%
96.0%
96.5%
(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, 2024, retail GLA had a net decrease
of 275,000 square feet due to the disposition of three retail properties,
one in VECTOM, in which Crombie held a partial interest, and two in
Rest of Canada, offset by the acquisition of two retail properties in
Rest of Canada. Crombie completed the development of one retail-
related industrial asset, in VECTOM, of which it has a 50% ownership,
adding 26,000 square feet, in addition to the development of two retail
freestanding buildings in VECTOM for 7,000 square feet. These additions
to GLA are included in “Other” changes.
Please see the “Operational Performance Review” section of this MD&A,
under “Occupancy and Leasing Activity” for additional information on
economic and committed occupancy.
As Crombie’s wholly-owned residential property and properties held in
equity-accounted joint ventures are not reflected in this information, the
applicable residential square footage, occupancy, and asset mix details of
these properties are reflected in the following sections of this MD&A: “Total
Portfolio Review Inclusive of Joint Ventures” starting on page 22, page 33
of the “Operational Performance Review” section, and the “Joint Ventures”
section starting on page 66.
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 major development projects. For the
year ended December 31, 2024, Crombie added 33,000 square feet of GLA
to its portfolio.
Three months ended
Asset Class
Location
Market Class
March 31,
2024
June 30,
2024
September 30,
2024
December 31,
2024
Total GLA
Tenants
Retail-related
industrial
Calgary
VECTOM
26,000
—
—
—
26,000
Empire
Retail
Edmonton
VECTOM
—
—
2,000
—
2,000
Wendy’s
Retail
Calgary
VECTOM
—
—
—
5,000
5,000
McDonald’s
Total
26,000
—
2,000
5,000
33,000
MANAGEMENT’S DISCUSSION AND ANALYSIS
26
Tenant Profile
Crombie builds and owns 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, 2024, 80.7%
of Crombie’s AMR was generated from grocery-anchored properties,
inclusive of retail-related industrial, compared to 80.8% at December 31,
2023. 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)
81.8%
1.3%
1.5%
1.6%
1.8%
2.4%
4.4%
5.2%
Necessity-based
Retailers1
Office & Hotel
Tenants
Apparel &
Accessories
Entertainment, Sporting Goods
& Stationery Retailers
Restaurants —
Full Service
Home Improvement,
Furniture & Auto Supplies
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, quick service restaurants, medical, professional and personal services, banking and financial services.
MANAGEMENT’S DISCUSSION AND ANALYSIS
27
CROMBIE REIT Annual Report 2024
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, 2024.
Tenant
% of AMR
GLA (sq. ft.)
Weighted Average
Remaining
Lease Term
Morningstar DBRS
Credit Rating
Empire Company Limited1
59.1%
11,298,000
10.8 years
BBB
Shoppers Drug Mart
2.4%
228,000
4.9 years
BBB
Dollarama
1.7%
372,000
5.7 years
BBB
Province of Nova Scotia
1.6%
356,000
5.8 years
A (high)
Shell
1.0%
19,000
11.4 years
AA (low)
Bank of Nova Scotia
1.0%
156,000
2.0 years
AA
Cineplex
0.9%
207,000
6.2 years
—
Canadian Imperial Bank of Commerce
0.9%
129,000
13.0 years
AA
GoodLife Fitness
0.9%
184,000
4.5 years
—
Government of Canada
0.8%
118,000
3.4 years
AAA
Canadian Tire Corporation
0.8%
154,000
2.4 years
BBB
Restaurant Brands International
0.7%
66,000
5.1 years
—
Pet Valu
0.5%
76,000
4.8 years
—
Royal Bank of Canada
0.5%
49,000
2.8 years
AA (high)
SAQ / Province of Quebec
0.5%
65,000
5.4 years
AA (low)
Halifax Regional Municipality
0.5%
127,000
6.0 years
—
Metro
0.5%
88,000
5.0 years
BBB (high)
BC Liquor / Province of British Columbia
0.4%
40,000
3.3 years
AA (high)
Toronto Dominion Bank
0.4%
45,000
1.9 years
AA (high)
TJX Companies
0.4%
120,000
3.8 years
—
Total
75.5%
13,897,000
9.8 years
(1) Includes Sobeys and all other subsidiaries of Empire Company Limited.
Other than Empire, which accounts for 59.1% of AMR, and Shoppers Drug
Mart, which accounts for 2.4% of AMR, no other tenant accounts for more
than 1.7% of Crombie’s AMR. Empire’s percent of AMR increased by 60
basis points compared to December 31, 2023 due to the acquisition of
two assets anchored by Empire over the last 12 months, the development
of retail-related industrial assets, modernizations, and contractual rent
step-ups.
For the year ended December 31, 2024, Empire represents 56.3% 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 8.5 years, which decreased 0.3 years as compared
to December 31, 2023. This remaining lease term is influenced by the
weighted average Empire remaining lease term of 10.8 years, which
decreased 0.5 years from December 31, 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS
28
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
Commercial
Investment
Properties
Residential
Investment
Property1
Properties
Under
Development
Sub-total
Properties in
Joint Ventures
(“JV”)
Total2
Same-asset properties
287
—
—
287
2
289
Non-same-asset properties:
Acquisitions – 2024
2
1
—
3
—
3
Other3
6
—
4
10
—
10
Active or completed major developments4
—
—
1
1
1
2
8
1
5
14
1
15
Total Properties
295
1
5
301
3
304
(1) On October 15, 2024, Crombie acquired its partner’s interest in the Davie Limited Partnership joint venture and obtained control of the property. As a result, Crombie derecognized its share of the Davie
Limited Partnership joint venture and recognized the property as an asset acquisition.
(2) Same-asset metrics throughout the MD&A do not include properties held in joint ventures.
(3) Other includes investment properties that have been designated for repositioning and land parcels included in PUD.
(4) Active or completed major developments include:
The Marlstone (PUD)
The Village at Bronte Harbour (JV)
The following table illustrates the movement in Crombie’s same-asset properties as at December 31, 2024.
Investment
Properties (“IP”)
Properties in
Joint Ventures (“JV”)
Total1
Same-asset properties December 31, 2023
287
2
289
Transfers from acquisitions2
2
—
2
Transfers to dispositions
(3)
—
(3)
Other3
—
(1)
(1)
Transfers to/from active or completed major developments
1
1
2
Total same-asset properties December 31, 2024
287
2
289
(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 2023 and have comparative period results.
(3) On October 15, 2024, Crombie acquired its partner’s interest in the Davie Limited Partnership joint venture and obtained control of the property. As a result, Crombie derecognized its share of the
Davie Limited Partnership joint venture and recognized the property as an asset acquisition under non-same-asset properties.
MANAGEMENT’S DISCUSSION AND ANALYSIS
29
CROMBIE REIT Annual Report 2024
Strategic Acquisitions and Dispositions
As at December 31, 2024, GLA, at Crombie’s interest, of its investment properties was 18.4 million square feet compared to 18.7 million square feet as
at December 31, 2023. The decrease in GLA is due to 353,000 square feet of dispositions, partially offset by 62,000 square feet of acquisitions and
43,000 square feet of other changes throughout the portfolio.
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 AFFO* accretion and NAV* growth. During
the year ended December 31, 2024, Crombie completed the acquisitions
of two grocery-anchored retail properties, one from a related party, and
a land parcel at an existing property for a total purchase price of $15,640
excluding transaction and closing costs. The properties added a total of
62,000 square feet, located in the Rest of Canada.
Ownership
Date
Property
Location
Vendor
Strategy
Number of
Investment
Properties
Interest
Sq. ft.
Price1
2024 Second Quarter
June 24, 2024
Barnet Street
Powell River, BC
Third Party
Income-producing
1
100%
48,000
$
9,880
2024 Third Quarter
September 26, 2024
9th Avenue
Golden, BC
Related Party
Income-producing
1
100%
14,000
3,760
2024 Fourth Quarter
October 24, 2024
Paul Street
Dieppe, NB
Third Party
Land2
—
100%
—
2,000
—
—
2,000
Total commercial acquisitions for the year ended December 31, 2024
2
62,000
$
15,640
Total commercial acquisitions for the year ended December 31, 2023
3
100%
139,000
$
26,482
(1) Prices are stated before transaction and closing costs.
(2) Acquisition of a land parcel at an existing property previously held through a long-term lease.
Strategic Dispositions
From time to time, in line with Crombie’s strategy on capital recycling,
Crombie will undertake 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 completion of major mixed-use
developments.
Ownership
Date
Property
Location
Number of
Investment
Properties
Interest
Sq. ft.
Net Property
Income*
Price
2024 Second Quarter
April 30, 2024
Broadview Avenue
Toronto, ON
1
50%
15,000¹
$
150
$
13,000
2024 Fourth Quarter
October 8, 2024
Riverview Place
Riverview, NB
1
100%
149,000
$
732
$
3,600
October 8, 2024
Amherst Centre
Amherst, NS
1
100%
189,000²
$
(95)
$
2,400
2
338,000
637
6,000
Total commercial dispositions for the year ended
December 31, 2024
3
—
353,000
$
7873
$
19,000
Total commercial dispositions for the year ended
December 31, 2023
—
—
—
$
—
$
—
(1) Square footage is at 100% interest.
(2) As part of this transaction, Crombie retained the grocery component at this property through a long-term land lease. The square footage is exclusive of the grocery GLA.
(3) Reflects actual net property income* earned on 2024 dispositions for the full year ended December 31, 2023. Total actual net property income* for the year ended December 31, 2024 for the disposed
properties prior to disposition was $(359), as reflected in Crombie’s consolidated results.
MANAGEMENT’S DISCUSSION AND ANALYSIS
30
OPERATIONAL PERFORMANCE REVIEW
Commercial Occupancy and Leasing Activity
The commercial portfolio occupancy and committed space activity by market class and asset type for the year ended December 31, 2024 was as follows:
Commercial Occupied Space (sq. ft.)
Total
Committed
Space
(sq. ft.)
Market Class
January 1,
2024
Net
Acquisitions
New
Leases1
Lease
Expiries
Other2
December 31,
2024
Economic
Occupancy
Committed
Space
(sq. ft.)3
Committed
Occupancy
VECTOM
5,924,000
(15,000)
37,000
(25,000)
(6,000)
5,915,000
98.9%
12,000
5,927,000
99.0%
Major Markets
4,645,000
—
63,000
(20,000)
(24,000)
4,664,000
96.6%
20,000
4,684,000
97.0%
Rest of Canada
7,359,000
(161,000)
125,000
(93,000)
(19,000)
7,211,000
94.6%
27,000
7,238,000
95.0%
Total
17,928,000
(176,000)
225,000
(138,000)
(49,000)
17,790,000
96.5%
59,000
17,849,000
96.8%
Commercial Occupied Space (sq. ft.)
Total
Committed
Space
(sq. ft.)
Asset Type
January 1,
2024
Net
Acquisitions
New
Leases1
Lease
Expiries
Other2
December 31,
2024
Economic
Occupancy
Committed
Space
(sq. ft.)3
Committed
Occupancy
Retail
14,619,000
(176,000)
188,000
(120,000)
(17,000)
14,494,000
96.6%
54,000
14,548,000
96.9%
Retail-related
industrial
2,434,000
—
26,000
—
—
2,460,000
100.0%
—
2,460,000
100.0%
Office
875,000
—
11,000
(18,000)
(32,000)
836,000
86.8%
5,000
841,000
87.3%
Total
17,928,000
(176,000)
225,000
(138,000)
(49,000)
17,790,000
96.5%
59,000
17,849,000
96.8%
(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 was 96.8% at December 31, 2024 and 96.5% at
December 31, 2023. For the year ended December 31, 2024, Crombie had
new leases outpace lease expiries by 87,000 square feet.
Committed occupancy in Crombie’s retail properties portfolio was 96.9% at
December 31, 2024 and 96.3% December 31, 2023. This increase is primarily
due to new leases, and was partially offset by natural lease expiries and
early terminations. Committed occupancy in office properties was 87.3%
at December 31, 2024, which decreased from 91.0% at December 31, 2023.
This was primarily due to natural lease expiries, terminations, and tenant
downsizing, and was partially offset by new leases. Committed space in
retail-related industrial properties of 100.0% at December 31, 2024 remained
constant from 100.0% at December 31, 2023.
The portfolio average AMR per occupied square foot for Crombie’s
income-producing properties was $18.27 as at December 31, 2024, an
increase of 3.9%, compared to $17.58 as at December 31, 2023.
New Leasing Activity
NEW LEASING BY MARKET CLASS (SQ. FT.)
as at December 31, 2024
28.0%
55.6%
VECTOM
Major Markets
Rest of Canada
16.4%
NEW LEASING BY ASSET TYPE (SQ. FT.)
as at December 31, 2024
Retail
Office
Retail-related industrial
11.6%
4.4%
84.0%
MANAGEMENT’S DISCUSSION AND ANALYSIS
31
CROMBIE REIT Annual Report 2024
New commercial leases increased occupancy by 225,000 square feet at
December 31, 2024, at an average first year rate of $23.65 per square foot.
For the year ended December 31, 2024, 55.6% of new leases, equivalent
to 125,000 square feet, were completed in Rest of Canada markets.
Notable new leases in these markets included a grocery tenant and
another necessity-based tenant. In VECTOM and Major Markets, 100,000
square feet, or 44.4% of new leases, were completed in 2024, including
a retail-related industrial tenant in VECTOM and a grocery tenant in
Major Markets.
At December 31, 2024, 59,000 square feet of GLA at an average first year
rate of $30.37 per square foot was committed, with tenants expected to
take possession through 2025. VECTOM and Major Markets represent
32,000 square feet of committed space with Rest of Canada representing
the remaining 27,000 square feet of committed space.
Renewal Activity
0
100
200
300
400
500
600
700
Rest of
Canada
Major
Markets
VECTOM
RENEWAL BY MARKET CLASS (SQ. FT.)
as at December 31, 2024
Sq. ft. (’000s)
2024 renewals
Early renewals completed
0
200
400
600
800
1,000
1,200
Office
Retail
Sq. ft. (’000s)
2024 renewals
Early renewals completed
RENEWAL BY ASSET TYPE (SQ. FT.)
as at December 31, 2024
For the year ended December 31, 2024, renewal activity for Crombie’s commercial portfolio was as follows:
Three months ended December 31, 2024
Year ended December 31, 2024
Square Feet
Rate PSF
Growth%
Square Feet
Rate PSF
Growth%
2024 Renewals
46,000
$30.34
12.0%
480,000
$20.29
11.6%
Future Year Renewals
125,000
$22.96
9.0%
592,000
$18.79
8.2%
Total
171,000
$24.94
10.0%
1,072,000
$19.46
9.8%
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.
Crombie’s renewal activity for the three months ended December 31, 2024
included retail renewals of 170,000 square feet with an increase of 10.0%
over expiring rental rates. For the year ended December 31, 2024, Crombie
renewed 1,037,000 square feet of retail renewals with an increase of 10.2%
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 12.3% and 11.6% for
the three months and year ended December 31, 2024, respectively.
On an annual basis, total renewal growth was positively impacted by the
316,000 square feet of renewals in VECTOM at an average first year rate
of $23.54 per square foot, an increase of 10.8% over expiring rental rates.
Excluding one lease with renewal growth over 100.0%, VECTOM renewals had
an increase of 8.1% over expiring rental rates. Major Markets saw renewals of
209,000 square feet, with an increase of 13.8% over expiring rental rates or an
average first year rate of $22.54 per square foot. Rest of Canada accounted
for the remaining 547,000 square feet of renewals at an average first year
rate of $15.93, with an increase of 7.0% 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, 2024, 592,000 square feet of renewals related to future year
expiries were completed.
MANAGEMENT’S DISCUSSION AND ANALYSIS
32
Lease Maturities
The following table sets out, as at December 31, 2024, the total number of commercial leases, including committed 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
Number of Leases1
Renewal Area (sq. ft.)
% of Total GLA
Average AMR
per sq. ft. at Expiry
2025
280
1,313,000
7.1%
$
16.00
2026
187
1,048,000
5.7%
16.94
2027
192
1,305,000
7.1%
19.80
2028
144
1,005,000
5.5%
19.34
2029
174
1,380,000
7.5%
20.39
2030
71
666,000
3.6%
18.66
2031
93
1,085,000
5.9%
19.92
2032
78
545,000
3.0%
21.20
2033
98
1,860,000
10.1%
24.11
2034
75
743,000
4.0%
23.00
Thereafter
205
6,899,000
37.4%
20.86
Total
1,597
17,849,000
96.9%
$
20.37
(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, 2024, 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
Number of Leases1
Renewal Area (sq. ft.)
% of Total GLA
Average AMR
per sq. ft. at Expiry
2025
13
205,000
1.1%
$
13.78
2026
15
317,000
1.7%
12.46
2027
14
414,000
2.2%
15.82
2028
11
269,000
1.5%
16.18
2029
18
574,000
3.1%
15.86
2030
7
260,000
1.4%
15.74
2031
14
465,000
2.5%
16.87
2032
4
145,000
0.8%
18.92
2033
38
1,524,000
8.3%
22.71
2034
15
441,000
2.4%
20.95
Thereafter
154
6,684,000
36.3%
20.67
Total
303
11,298,000
61.3%
$
19.78
(1) Assuming tenants do not hold over on a month-to-month basis or exercise renewal options or termination rights.
Residential Portfolio
Crombie’s rental residential portfolio consists of three assets totalling
1,198 rental units. Crombie owns a 100% interest in Zephyr (Vancouver,
British Columbia) and owns a 50% interest of Le Duke (Montreal, Quebec)
and The Village at Bronte Harbour (Oakville, Ontario), both held in
joint ventures.
The information presented below is reflected at 100% ownership interest
and does not include the retail component of these assets.
Residential Occupied Units
GLA (sq. ft.)1
Number of
Residential Units
January 1, 2024
Net Movement2
December 31, 2024
Committed
Occupancy %
Average Rent PSF
Residential properties
913,000
1,198
1,131
(15)
1,116
93.2%
$3.82
(1) GLA has been updated from the previously reported figure to exclude common area space.
(2) Net Movement includes new and expired leases.
MANAGEMENT’S DISCUSSION AND ANALYSIS
33
CROMBIE REIT Annual Report 2024
FINANCIAL PERFORMANCE REVIEW
Three months ended December 31,
Year ended December 31,
2024
20231
Variance
2024
20231
Variance
20221
Property revenue
$ 121,595
$ 116,986
$
4,609
$ 471,025
$ 451,689
$
19,336
$ 438,250
Revenue from management and development
services
1,397
1,087
310
5,335
3,430
1,905
—
Property operating expenses
(43,445)
(41,117)
(2,328)
(169,340)
(164,277)
(5,063)
(156,432)
Gain (loss) on disposal of investment properties
(996)
—
(996)
1,167
588
579
80,804
Gain on acquisition of control of joint venture
51,794
—
51,794
51,794
—
51,794
—
Gain on derecognition of right-of-use asset
405
—
405
405
—
405
—
Impairment of investment properties
(3,100)
—
(3,100)
(5,100)
—
(5,100)
(10,400)
Depreciation and amortization
(21,196)
(20,087)
(1,109)
(81,530)
(78,835)
(2,695)
(79,836)
General and administrative expenses
(4,776)
(5,749)
973
(20,974)
(27,644)
6,670
(19,547)
Finance costs – operations
(25,401)
(23,839)
(1,562)
(92,543)
(86,268)
(6,275)
(83,014)
Gain on distribution from equity-accounted
investments
—
—
—
—
—
—
2,933
Income (loss) from equity-accounted investments
(130)
(980)
850
(1,970)
144
(2,114)
(4,954)
Operating income before taxes
76,147
26,301
49,846
158,269
98,827
59,442
167,804
Taxes – current
(4)
(6)
2
(4)
(6)
2
(4)
Operating income attributable to Unitholders
76,143
26,295
49,848
158,265
98,821
59,444
167,800
Distributions to Unitholders
(40,889)
(40,237)
(652)
(162,587)
(160,010)
(2,577)
(157,840)
Change in fair value of financial instruments
2,591
(1,400)
3,991
270
1,911
(1,641)
2,323
Increase (decrease) in net assets attributable
to Unitholders
$
37,845
$ (15,342)
$
53,187
$
(4,052)
$ (59,278)
$
55,226
$
12,283
Operating income attributable to Unitholders
per Unit, basic
$
0.41
$
0.15
$
0.26
$
0.87
$
0.55
$
0.32
$
0.95
Basic weighted average Units outstanding
(in 000’s)
183,657
180,728
2,929
182,567
179,684
2,883
176,325
Distributions per Unit to Unitholders
$
0.22
$
0.22
$
—
$
0.89
$
0.89
$
—
$
0.89
Other Non-GAAP Performance Metrics
Same-asset property cash NOI*
$
81,112
$
79,229
$
1,883
$ 314,654
$ 305,784
$
8,870
$ 293,921
FFO*
$
58,131
$
54,590
$
3,541
$ 227,049
$ 210,003
$
17,046
$ 203,737
FFO* per Unit – basic
$
0.32
$
0.30
$
0.02
$
1.24
$
1.17
$
0.07
$
1.16
FFO* payout ratio (%)
70.3%
73.7%
(3.4)%
71.6%
76.2%
(4.6)%
77.5%
AFFO*
$
51,298
$
46,111
$
5,187
$ 197,304
$ 181,100
$
16,204
$ 177,297
AFFO* per Unit – basic
$
0.28
$
0.26
$
0.02
$
1.08
$
1.01
$
0.07
$
1.01
AFFO* payout ratio (%)
79.7%
87.3%
(7.6)%
82.4%
88.4%
(6.0)%
89.0%
(1) Property revenue and property operating expenses for the three months and year ended December 31, 2023 and for the year ended December 31, 2022 have been increased by $2,687, $10,750,
and $10,171, respectively, from previously reported figures as a result of a change in the presentation of recoverable property taxes for certain properties where tenants paid the property taxes on
Crombie’s behalf.
MANAGEMENT’S DISCUSSION AND ANALYSIS
34
Operating income attributable to Unitholders
For the three months ended:
Operating income attributable to Unitholders increased by $49,848, or
189.6%, primarily driven by a gain of $51,794 on the acquisition of the
remaining 50% interest in the Davie Street joint venture in the quarter.
This gain was the result of remeasuring Crombie’s previously held interest
in the joint venture to fair value. Growth in property revenue of $3,462
from acquisitions, and $1,181 from renewals and new leasing further
contributed to the increase. This was offset in part by $3,100 in impairment
of two investment properties, higher interest expense of $1,562, increased
tenant incentive amortization of $1,196 (primarily from modernizations),
and an increase of $1,109 in depreciation and amortization as a result of
acquisitions.
For the year ended:
Operating income attributable to Unitholders increased by $59,444, or
60.2%, on an annual basis. Excluding employee transition costs of $979
(December 31, 2023 – $7,386), operating income attributable to Unitholders
increased by 49.9%. A gain of $51,794 on the acquisition of the remaining
50% interest in the Davie Street joint venture in the fourth quarter of 2024
was the primary driver of the increase in operating income. This gain
was the result of remeasuring Crombie’s previously held interest in the
joint venture to fair value. Also contributing to the variance year over
year was growth in property revenue of $6,976 from renewals and new
leasing, $5,100 from recently completed developments, $4,029 from
acquisitions, $2,374 in supplemental rent from modernization investments,
and increased revenue from management and development services of
$1,905. Lower general and administrative expenses of $6,670, resulting
from lower employee transition costs and organizational changes, further
contributed to the increase. The growth in operating income was offset in
part by an increase of $6,275 in interest expense, $5,100 in impairment of
investment properties in 2024, and increased tenant incentive amortization
of $2,711, primarily from modernizations. Further offsetting the increase in
operating income was higher depreciation and amortization of $2,695 due
to accelerated depreciation on properties scheduled for redevelopment
and acquisitions, reduced income from equity-accounted investments of
$2,114 due to the sale of land at Crombie’s Opal Ridge joint venture in 2023,
and decreased property revenue of $1,050 from dispositions.
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 74, 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:
Three months ended December 31,
Year ended December 31,
2024
20231
Variance
2024
20231
Variance
Property revenue
$ 121,595
$ 116,986
$
4,609
$ 471,025
$ 451,689
$
19,336
Property operating expenses
(43,445)
(41,117)
(2,328)
(169,340)
(164,277)
(5,063)
Net property income*
$
78,150
$
75,869
$
2,281
$ 301,685
$ 287,412
$
14,273
Net property income* margin percentage
64.3%
64.9%
(0.6)%
64.0%
63.6%
0.4%
(1) Property revenue and property operating expenses for the three months and year ended December 31, 2023 have been increased by $2,687 and $10,750, respectively, from previously reported figures as a
result of a change in the presentation of recoverable property taxes for certain properties where tenants paid the property taxes on Crombie’s behalf.
For the three months ended:
An increase in net property income of $2,281 was primarily due to growth
in property revenue of $3,462 from acquisitions and $1,181 from renewals
and new leasing. This was offset in part by increased tenant incentive
amortization of $1,196, primarily from modernizations.
For the year ended:
An increase in net property income of $14,273, compared to the same
period in 2023, was primarily due to growth in property revenue of
$6,976 from renewals and new leasing, $5,100 from recently completed
developments, $4,029 from acquisitions, and $2,374 in supplemental rent
from modernization investments. This was partially offset by increased
tenant incentive amortization of $2,711, primarily from modernizations, and
decreased property revenue of $1,050 from dispositions.
MANAGEMENT’S DISCUSSION AND ANALYSIS
35
CROMBIE REIT Annual Report 2024
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 74, 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:
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Net property income*
$
78,150
$
75,869
$
2,281
$ 301,685
$ 287,412
$
14,273
Non-cash straight-line rent
(872)
(2,498)
1,626
(5,035)
(5,415)
380
Non-cash tenant incentive amortization1
7,725
6,529
1,196
29,227
26,516
2,711
Property cash NOI*
85,003
79,900
5,103
325,877
308,513
17,364
Acquisitions and dispositions property cash NOI*
2,942
365
2,577
3,529
459
3,070
Development property cash NOI*
949
306
643
7,694
2,270
5,424
Acquisitions, dispositions, and development property cash NOI*
3,891
671
3,220
11,223
2,729
8,494
Same-asset property cash NOI*
$
81,112
$
79,229
$
1,883
$ 314,654
$ 305,784
$
8,870
(1) Refer to “Amortization of Tenant Incentives” on page 39 for a breakdown of tenant incentive amortization.
Development property cash NOI includes properties 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 market class and asset type is as follows:
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
%
2024
2023
Variance
%
VECTOM
$
27,534
$
27,110
$
424
1.6%
$ 104,419
$ 102,359
$
2,060
2.0%
Major Markets
22,036
21,815
221
1.0%
87,101
85,405
1,696
2.0%
Rest of Canada
31,542
30,304
1,238
4.1%
123,134
118,020
5,114
4.3%
Same-asset property cash NOI*
$
81,112
$
79,229
$
1,883
2.4%
$ 314,654
$ 305,784
$
8,870
2.9%
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
%
2024
2023
Variance
%
Retail1
$
71,405
$
69,403
$
2,002
2.9%
$ 280,252
$ 271,761
$
8,491
3.1%
Retail-related industrial
6,798
6,656
142
2.1%
22,045
21,599
446
2.1%
Office
2,909
3,170
(261)
(8.2)%
12,357
12,424
(67)
(0.5)%
Same-asset property cash NOI*
$
81,112
$
79,229
$
1,883
2.4%
$ 314,654
$ 305,784
$
8,870
2.9%
(1) Retail includes Crombie’s substantial retail portfolio and reflects certain additional properties which comprise both retail and office space. These properties have been consistently included in the retail
category.
For the three months ended:
Same-asset property cash NOI increased by $1,883, or 2.4%, compared to
the fourth quarter of 2023 primarily due to renewals, contractual rent step-
ups, new leasing, and supplemental rent from modernization investments.
For the year ended:
On an annual basis, same-asset property cash NOI increased by $8,870,
or 2.9%, compared to the same period in 2023 primarily due to renewals,
contractual rent step-ups, new leasing, and an increase of $2,368 in
supplemental rent from modernization investments.
MANAGEMENT’S DISCUSSION AND ANALYSIS
36
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 74, for a more detailed discussion on FFO*.
The reconciliation of FFO* for the three months and year ended December 31, 2024 and 2023 is as follows:
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Increase (decrease) in net assets attributable to Unitholders
$
37,845
$
(15,342)
$
53,187
$
(4,052)
$
(59,278)
$
55,226
Add (deduct):
Amortization of tenant incentives
7,725
6,529
1,196
29,227
26,516
2,711
Loss (gain) on disposal of investment properties
996
—
996
(1,167)
(588)
(579)
Gain on acquisition of control of joint venture
(51,794)
—
(51,794)
(51,794)
—
(51,794)
Gain on derecognition of right-of-use asset
(405)
—
(405)
(405)
—
(405)
Impairment of investment properties
3,100
—
3,100
5,100
—
5,100
Depreciation and amortization of investment properties
20,826
19,715
1,111
80,054
77,352
2,702
Adjustments for equity-accounted investments
841
1,259
(418)
4,548
4,774
(226)
Principal payments on right-of-use assets
62
155
(93)
242
330
(88)
Internal leasing costs
637
637
—
2,979
2,798
181
Finance costs – distributions to Unitholders
40,889
40,237
652
162,587
160,010
2,577
Change in fair value of financial instruments1
(2,591)
1,400
(3,991)
(270)
(1,911)
1,641
FFO* as calculated based on REALPAC recommendations
$
58,131
$
54,590
$
3,541
$ 227,049
$ 210,003
$
17,046
Basic weighted average Units (in 000’s)
183,657
180,728
2,929
182,567
179,684
2,883
FFO* per Unit – basic
$
0.32
$
0.30
$
0.02
$
1.24
$
1.17
$
0.07
FFO* payout ratio (%)
70.3%
73.7%
(3.4)%
71.6%
76.2%
(4.6)%
(1) Includes the fair value changes of Crombie’s deferred unit plan and fair value changes of financial instruments which do not qualify for hedge accounting.
For the three months ended:
The increase in FFO of $3,541 was primarily due to growth in property
revenue of $3,462 from acquisitions, and $1,181 from renewals and new
leasing. This was offset in part by higher interest expense of $1,562.
For the year ended:
On an annual basis, FFO increased by $17,046 primarily driven by growth
in property revenue of $6,976 from renewals and new leasing, $5,100
from recently completed developments, $4,029 from acquisitions, $2,374
in supplemental rent from modernization investments, and increased
revenue from management and development services of $1,905. Lower
general and administrative expenses of $6,670, resulting from lower
employee transition costs of $979 compared to $7,386 in 2023 and
organizational changes in the current year, further contributed to the
increase in FFO. FFO growth was offset in part by an increase of $6,275
in interest expense, reduced income from equity-accounted investments
of $2,114 due primarily to the sale of land at Crombie’s Opal Ridge joint
venture in Dartmouth, Nova Scotia in 2023, and decreased property
revenue of $1,050 from dispositions.
FFO excluding employee transition costs of $979 was $228,028 or $1.25 per
Unit, with a payout ratio of 71.3% (December 31, 2023 – FFO of $217,389 or
$1.21 per Unit, with a payout ratio of 73.6% excluding employee transition
costs of $7,386).
MANAGEMENT’S DISCUSSION AND ANALYSIS
37
CROMBIE REIT Annual Report 2024
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 74, for a more detailed discussion.
The reconciliation of AFFO* for the three months and year ended December 31, 2024 and 2023 is as follows:
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
FFO* as calculated based on REALPAC recommendations
$
58,131
$
54,590
$
3,541
$ 227,049
$ 210,003
$
17,046
Add (deduct):
Straight-line rent adjustment
(872)
(2,498)
1,626
(5,035)
(5,415)
380
Straight-line rent adjustment included in income (loss) from
equity-accounted investments
(2)
(98)
96
153
67
86
Internal leasing costs
(637)
(637)
—
(2,979)
(2,798)
(181)
Maintenance expenditures on a square footage basis
(5,322)
(5,246)
(76)
(21,884)
(20,757)
(1,127)
AFFO* as calculated based on REALPAC recommendations
$
51,298
$
46,111
$
5,187
$ 197,304
$ 181,100
$
16,204
Basic weighted average Units (in 000’s)
183,657
180,728
2,929
182,567
179,684
2,883
AFFO* per Unit – basic
$
0.28
$
0.26
$
0.02
$
1.08
$
1.01
$
0.07
AFFO* payout ratio (%)
79.7%
87.3%
(7.6)%
82.4%
88.4%
(6.0)%
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:
The increase in AFFO was primarily due to the same factors impacting
FFO for the quarter.
For the year ended:
The growth in AFFO on an annual basis was driven primarily by the
same factors impacting FFO. It was partially offset by the increase in
maintenance expenditures of $1,127, caused in part by the increased
charge from $1.10 to $1.15 per square foot of weighted average GLA.
AFFO excluding employee transition costs of $979 was $198,283 or
$1.09 per Unit, with a payout ratio of 82.0% (December 31, 2023 – AFFO
of $188,486 or $1.05 per Unit, with a payout ratio of 84.9% excluding
employee transition costs of $7,386).
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 2024
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 taxable income of Crombie, to
ensure that Crombie will not be liable for income taxes.
Details of distributions to Unitholders are as follows:
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Distributions to Unitholders
$
24,136
$
23,755
$
381
$
95,978
$
94,470
$
1,508
Distributions to Class B Voting Unitholder1
16,753
16,482
271
66,609
65,540
1,069
Total distributions
$
40,889
$
40,237
$
652
$ 162,587
$ 160,010
$
2,577
FFO* payout ratio
70.3%
73.7%
(3.4)%
71.6%
76.2%
(4.6)%
AFFO* payout ratio
79.7%
87.3%
(7.6)%
82.4%
88.4%
(6.0)%
(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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
38
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,
2024
2023
Variance
2024
2023
Variance
Cash provided by operating activities
$
94,103
$
69,095
$
25,008
$ 264,964
$
239,915
$
25,049
Monthly distributions paid and payable
(40,889)
(40,237)
(652)
(162,587)
(160,010)
(2,577)
Cash provided by operating activities in excess
of distributions paid and payable
$
53,214
$
28,858
$
24,356
$ 102,377
$
79,905
$
22,472
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Operating income attributable to Unitholders
$
76,143
$
26,295
$
49,848
$ 158,265
$
98,821
$
59,444
Monthly distributions paid and payable
(40,889)
(40,237)
(652)
(162,587)
(160,010)
(2,577)
Operating income attributable to Unitholders in excess
(shortfall) of distributions paid and payable
$
35,254
$
(13,942)
$
49,196
$
(4,322)
$
(61,189)
$
56,867
Monthly distributions paid for the three months and year ended
December 31, 2024 and 2023 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 16, 2025, Crombie declared distributions of 7.417 cents per Unit
for the period from January 1, 2025 up to and including January 31, 2025.
The distributions were paid on February 14, 2025, to Unitholders of record
as at January 31, 2025.
On February 14, 2025, Crombie declared distributions of 7.417 cents per
Unit for the period from February 1, 2025 up to and including February 28,
2025. The distributions will be paid on March 14, 2025, to Unitholders of
record as at February 28, 2025.
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.
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Regular tenant incentive amortization
$
3,710
$
3,325
$
385
$
14,519
$
14,691
$
(172)
Modernization tenant incentive amortization
4,015
3,204
811
14,708
11,825
2,883
Total amortization of tenant incentives
$
7,725
$
6,529
$
1,196
$
29,227
$
26,516
$
2,711
MANAGEMENT’S DISCUSSION AND ANALYSIS
39
CROMBIE REIT Annual Report 2024
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,
2024
2023
Variance
2024
2023
Variance
Salaries and benefits
$
3,811
$
2,535
$
(1,276)
$
11,483
$
13,549
$
2,066
Unit-based compensation1
(925)
1,282
2,207
2,502
6,854
4,352
Professional fees
696
579
(117)
2,504
2,223
(281)
Public company costs
289
343
54
1,240
1,577
337
Rent and occupancy
164
148
(16)
687
632
(55)
Other
741
862
121
2,558
2,809
251
General and administrative expenses
$
4,776
$
5,749
$
973
$
20,974
$
27,644
$
6,670
As a percentage of property revenue, and revenue from
management and development services
3.9%
4.9%2
1.0%
4.4%
6.1%2
1.7%
(1) Unit-based compensation includes both employees and trustees.
(2) Property revenue for the three months and year ended December 31, 2023 has been increased by $2,687 and $10,750, respectively, from previously reported figures as a result of a change in the
presentation of recoverable property taxes for certain properties where tenants paid the property taxes on Crombie’s behalf.
For the three months ended:
General and administrative expenses decreased in the quarter due to
lower Unit-based compensation costs of $2,207 resulting from a decrease
in Crombie’s Unit price compared to an increase in Unit price in the fourth
quarter of 2023. This is offset in part by an increase in salaries and benefits
of $1,276 resulting from new hires and employee transition costs.
For the year ended:
On an annual basis, the decrease in general and administrative expenses
was driven by lower Unit-based compensation costs of $4,352 and lower
salaries and benefits of $2,066. These decreases resulted primarily
from lower employee transition costs compared to the same period in
2023 and organizational changes in 2024. The decrease in Unit-based
compensation costs was further impacted by a decrease in Crombie’s Unit
price. General and administrative expenses excluding employee transition
costs and Unit-based compensation of $3,390 were 3.7% of property
revenue (December 31, 2023 – 4.0% of property revenue excluding
employee transition costs and Unit-based compensation of $9,615).
Finance Costs – Operations
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Fixed rate mortgages
$
9,365
$
8,189
$
(1,176)
$
34,764
$
34,206
$
(558)
Floating rate term, revolving, and demand facilities1
(60)
4,300
4,360
3,366
9,197
5,831
Capitalized interest
(1,628)
(1,273)
355
(6,282)
(4,433)
1,849
Senior unsecured notes
15,888
11,495
(4,393)
55,881
43,120
(12,761)
Interest income on finance lease receivable
(125)
(132)
(7)
(511)
(537)
(26)
Interest on lease liability
528
672
144
2,180
2,260
80
Finance costs
23,968
23,251
(717)
89,398
83,813
(5,585)
Amortization of deferred financing charges
1,433
588
(845)
3,145
2,455
(690)
Finance costs – operations
$
25,401
$
23,839
$
(1,562)
$
92,543
$
86,268
$
(6,275)
(1) Interest earned on any short-term deposits is net with interest expense on floating rate term, revolving, and demand facilities.
For the three months ended:
Finance costs increased by $717 primarily due to higher interest expense
on senior unsecured notes of $4,393 and increased mortgage interest
of $1,176 resulting from the addition of two residential mortgages in the
quarter. This was partially offset by a decrease of $4,360 due to reduced
floating rate debt interest expense resulting from lower average loan
balances compared to the same period in 2023.
For the year ended:
On an annual basis, finance costs increased by $5,585 primarily due to
the issuance of Series L notes in the first quarter of 2024 and the issuance
of Series M notes in the fourth quarter of 2024, offset in part by the
redemption of Series E notes in the fourth quarter of 2024, resulting in a net
increase of $12,761 in interest on senior unsecured notes. The increase was
partially offset by a decrease of $5,831 on floating rate debt resulting from
lower average loan balances, and increased capitalized interest of $1,849.
MANAGEMENT’S DISCUSSION AND ANALYSIS
40
Depreciation, Amortization, and Impairment
Crombie’s total fair value of investment properties exceeds carrying value by $1,289,615 at December 31, 2024 (December 31, 2023 – $1,109,289). 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,
2024
2023
Variance
2024
2023
Variance
Same-asset* depreciation and amortization
$
19,630
$
19,828
$
198
$
77,413
$
76,953
$
(460)
Acquisitions, dispositions, and development
depreciation/amortization
1,566
259
(1,307)
4,117
1,882
(2,235)
Depreciation and amortization
$
21,196
$
20,087
$
(1,109)
$
81,530
$
78,835
$
(2,695)
Impairment
$
3,100
$
—
$
(3,100)
$
5,100
$
—
$
(5,100)
For the three months ended:
The increase in depreciation and amortization of $1,109 for the quarter
was due primarily to acquisitions.
For the year ended:
On an annual basis, depreciation and amortization increased by $2,695
primarily due to acquisitions and accelerated depreciation on properties
scheduled for redevelopment.
During the year ended December 31, 2024, Crombie recorded
impairments totalling $5,100 on three retail properties in the Rest of
Canada. These impairments were the result of vacancy at the properties.
Impairment is measured on a per property basis and is determined as
the amount by which the carrying value, using the cost method, exceeds
the recoverable amount for the 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. 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.
Selected Balance Sheet Information
As at December 31,
2024
2023
Variance
2022
Total Assets
$
4,430,366
$
4,148,569
$
281,797
$
4,078,398
Investment properties, carrying value
$
4,314,385
$
3,986,711
$
327,674
$
3,936,427
Investment properties, fair value
$
5,604,000
$
5,096,000
$
508,000
$
5,050,000
Investment properties held in joint ventures, carrying value
$
200,784
$
283,282
$
(82,498)
$
286,077
Investment properties held in joint ventures, fair value
$
285,000
$
472,500
$
(187,500)
$
454,000
Total liabilities1
$
2,574,826
$
2,323,855
$
250,971
$
2,227,858
Total non-current financial liabilities
$
2,399,411
$
1,994,125
$
405,286
$
1,861,702
Number of Units outstanding (in 000’s)
183,990
181,084
2,906
178,377
(1) Total liabilities 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 $281,797 compared to the
prior year) is driven primarily by acquisitions of investment properties of
$289,240. The increase of $508,000 in fair value of investment properties
resulted from acquisitions, the reclassification of other assets to investment
properties and properties under development, completed developments,
and modernization investments. Investment properties held in joint
ventures decreased in fair value by $187,500 compared to the prior
year due to Crombie’s acquisition of the remaining 50% interest in the
Davie Limited Partnership joint venture. The increase in total liabilities of
$250,971 is driven by the $500,000 issuance of senior unsecured notes and
mortgage issuances of $46,968, offset in part by the redemption of senior
unsecured notes of $175,000, repayment of mortgages during the year of
$233,286, and net repayments on credit facilities of $294,071.
MANAGEMENT’S DISCUSSION AND ANALYSIS
41
CROMBIE REIT Annual Report 2024
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 77 for additional
information regarding such statements and the related risks and
uncertainties.
Crombie has a strategic relationship with Empire, and the majority of
Crombie’s development properties currently have Empire as an anchor
tenant. Crombie’s strategic relationship enables the organization to unlock
value and transition from existing operating properties to construction/
development of these sites on mutually agreeable terms. In conjunction
with Crombie’s strategic partner, the organization’s management
continuously reviews and prioritizes development opportunities that drive
NAV* and cash flow 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, 2024
(December 31, 2023 – 26). Crombie benefits from having 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 organization’s 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. Crombie views this approach as the optimal way to drive both
NAV* and cash flow 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 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,
2024, total project costs to develop the pipeline range from $5,000,000
to $6,800,000 (December 31, 2023 – $5,000,000 to $6,800,000). 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.
$ in millions
Property
CMA
Use
Ownership%
Residential
GLA on
Completion
Residential
Units
Estimated
Substantial
Completion
Date
Estimated
Total Cost
Estimated
Cost to
Complete
Estimated
Yield
on Cost
The Marlstone
Halifax
Residential
100%
189,000
291
Q1/Q2 2026
$
1341
$
79
4.5% – 5.5%
(1) Costs presented for The Marlstone are exclusive of land costs.
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
42
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 a stabilized vacancy
rate of 2%. These estimates are established using market rents, Crombie’s
market knowledge, and/or 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
0
250
500
750
Halifax
Vancouver
Victoria
Commercial
Residential
NEAR-TERM GLA BY CITY
as at December 31, 2024
Sq. ft. (’000s)
NEAR-TERM GLA BY ASSET TYPE (SQ. FT.)
as at December 31, 2024
Commercial
Residential
960,000
105,000
The table below provides additional detail on Crombie’s near-term development opportunities.
Full Project Density
Property
City
% Ownership
Estimated
Commercial GLA
Estimated
Residential GLA
Estimated
Residential Units
The Marlstone
Halifax
100%
—
189,000
291
1780 East Broadway (Broadway and Commercial)
Vancouver
50%1
105,000
626,000
970
Belmont Market – Phase II
Victoria
100%
—
145,000
200
Total near-term developments
105,000
960,000
1,461
(1) Crombie will own 100% of the retail 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
43
CROMBIE REIT Annual Report 2024
Near-term Project Update
THE MARLSTONE, 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 2.4 acres of land located at one of the busiest transit
nodes 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. Rezoning is expected to be completed in 2025,
which could support construction tendering in 2026.
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 1.7 acres of land
within the Belmont Market development area. The lands are fully entitled
and could be ready for construction tendering in 2025.
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, 2024:
CROMBIE DEVELOPMENT SPENDING BY PROJECT TIMELINE
as at December 31, 2024
Near-term
Medium-term
Long-term
8.8%
42.7%
48.5%
At Crombie’s Share ($ in millions)
Project Timeline
Number of Projects
Total Estimated Costs1
Total Spend to Date2
Estimated Cost
to Complete
Near-term
3
$
500-600
$
85
$
415-515
Medium-term
7
2,200-2,900
100
2,100-2,800
Long-term
16
2,300-3,300
180
2,120-3,120
Total pipeline
26
$
5,000-6,800
$
365
$
4,635-6,435
(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 cash flow 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
44
For joint venture projects, 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, including 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).
0
1,000
2,000
3,000
4,000
5,000
Halifax
Toronto
Hamilton
Edmonton
Calgary
Kelowna
Vancouver
Victoria
TOTAL PIPELINE GLA BY CITY
as at December 31, 2024
Sq. ft. (’000s)
Total Pipeline Density by Project Timeline
Project Timeline1
Estimated
Commercial GLA
Estimated
Residential GLA
Estimated
Total GLA
Estimated
Residential Units
Near-term
105,000
960,000
1,065,000
1,461
Medium-term
259,000
4,407,000
4,666,000
5,080
Long-term
780,000
4,093,000
4,873,000
4,750
Total pipeline
1,144,000
9,460,000
10,604,000
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 table:
Crombie’s Entitled Projects
Number of
Projects
Estimated
Commercial
GLA1
Estimated
Residential
GLA1
Estimated Total
GLA1
Estimated
Residential Units1
Zoned
4
55,000
1,444,000
1,499,000
1,801
Application Submitted
4
197,000
2,893,000
3,090,000
3,460
Future
18
892,000
5,123,000
6,015,000
6,030
Total
26
1,144,000
9,460,000
10,604,000
11,291
(1) GLA 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
(Halifax), Belmont Market – Phase II (Victoria), Barrington Residential
(Halifax), and Brunswick Place (Halifax). Rezoning applications have
been submitted and are in process for Broadway and Commercial
(Vancouver), McCowan and Ellesmere (Toronto), Toronto East (Toronto)
and Park West (Halifax).
MANAGEMENT’S DISCUSSION AND ANALYSIS
45
CROMBIE REIT Annual Report 2024
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:
Major Development Pipeline
Existing Property1
CMA
Site Size
(acres)
Existing Tenants
Potential
Commercial
Expansion
Entitlement Status
Project Timing
1
The Marlstone
Halifax
0.462
N/A
No
Zoned
Near-term
2
Belmont Market – Phase II
Victoria
1.70
N/A
No
Zoned
Near-term
3
Broadway and Commercial
Vancouver
2.43
Safeway
Yes
Application
Submitted
Near-term
4
Brunswick Place
Halifax
0.753
Office/Parkade
Yes
Zoned
Medium-term
5
McCowan and Ellesmere
Toronto
4.48
FreshCo/Other
Yes
Application
Submitted
Medium-term
6
Lynn Valley
Vancouver
2.82
Safeway
Yes
Future
Medium-term
7
Park West
Halifax
19.66
Sobeys
Yes
Application
Submitted
Medium-term
8
Toronto East
Toronto
0.14
N/A
Yes
Application
Submitted
Medium-term
9
Barrington Residential
Halifax
0.68
N/A
Yes
Zoned
Medium-term
10
Fleetwood
Vancouver
4.45
Safeway
Yes
Future
Medium-term
11
Danforth
Toronto
0.79
The Beer Store
Yes
Future
Long-term
12
West Broadway
Vancouver
1.95
Safeway
Yes
Future
Long-term
13
Kingsway and Tyne
Vancouver
3.74
Safeway/Other
Yes
Future
Long-term
14
East Hastings
Vancouver
3.30
Safeway/Other
Yes
Future
Long-term
15
1818 Centre Street
Calgary
2.18
Safeway
Yes
Future
Long-term
16
Port Coquitlam
Vancouver
5.31
Safeway
Yes
Future
Long-term
17
Centennial Parkway
Hamilton
2.75
Retail
Yes
Future
Long-term
18
King Edward
Vancouver
1.80
Safeway
Yes
Future
Long-term
19
Elbow Drive
Calgary
1.60
Safeway
Yes
Future
Long-term
20
Robson Street
Vancouver
1.15
Safeway
Yes
Future
Long-term
21
Kensington
Calgary
1.73
Safeway
Yes
Future
Long-term
22
Beltline
Calgary
2.59
Safeway
Yes
Future
Long-term
23
Bernard Ave
Kelowna
1.83
Safeway
Yes
Future
Long-term
24
Whyte Ave
Edmonton
2.44
Safeway/Other
Yes
Future
Long-term
25
New Westminster
Vancouver
2.82
Safeway
Yes
Future
Long-term
26
Brampton Mall
Brampton
8.74
Office/Retail
Yes
Future
Long-term
(1) All projects in the pipeline are transit-oriented and have the potential for residential expansion.
(2) The Marlstone is being developed through densification on 0.46 acres of the existing 9.05-acre Scotia Square site.
(3) Brunswick Place can be developed through densification on the existing 0.75-acre Brunswick Place Parkade.
MANAGEMENT’S DISCUSSION AND ANALYSIS
46
Non-major Developments
Non-major developments, categorized as land-use intensification,
property redevelopments, and modernizations, include projects with a
total estimated cost below $50,000 at Crombie’s share. Projects in the
non-major category are shorter in duration and thus boast less overall
risk as compared to Crombie’s major development pipeline. Current
non‑major developments have a yield range of 6.9% to 8.0%. These
projects have the ability to create value while enhancing the overall
quality of the portfolio. The below table summarizes active non-major
developments within Crombie’s portfolio at December 31, 2024.
Project Count
Estimated GLA on
Completion
At Crombie’s Share ($ in thousands)
Type
Estimated
Total Cost
Estimated Cost
to Complete2
Land-use intensification, redevelopments, and other
1
52,000
$
26,494
$
17,027
Modernizations1
88
—
38,223
—
Total non-major developments
89
52,000
$
64,717
$
17,027
Yield on cost projections
6.9% – 8.0%
(1) Modernizations are capital investments to modernize/renovate Crombie-owned grocery-anchored properties in exchange for a defined return and potential extended lease term. The spend on completed
modernizations for the three months and year ended December 31, 2024 was $7,067 and $38,223, respectively (three months and year ended December 31, 2023 – $8,223 and $25,201, respectively).
(2) Estimated cost to complete reflects approved projects currently in progress. It does not include potential future projects for which approvals have not yet been obtained.
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 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
47
CROMBIE REIT Annual Report 2024
CAPITAL MANAGEMENT
Crombie continues to reduce risk and build financial strength by
strategically managing its capital structure and optimizing capital
allocation to generate long-term value for its stakeholders. Crombie’s
continued success is underpinned by a strong balance sheet, more-than-
adequate liquidity, and an investment-grade credit rating profile providing
Crombie with a solid financial foundation and financial flexibility.
Capital Management Framework
Crombie’s strategic capital management objectives consist of four
main priorities:
1. maintain multiple sources of debt and equity financing;
2. reduce risk by prefunding capital commitments;
3. source capital with the lowest cost on a long-term basis and 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
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 Crombie’s 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 DRIP
Crombie’s guiding principles for managing capital are as follows:
Guiding Principles
Current Status
Reduce total leverage over the medium/long-term
D/GFV* is 43.6% at December 31, 2024 compared to 43.0% at December 31, 2023.
Maintain ample sources of liquidity
Increased liquidity to $682.2M, up $98.3M from 2023.
Improve weighted average term to maturity
Increased to 5.1 years at December 31, 2024 versus 4.9 years at December 31, 2023.
Lower cost of capital through equity raises and/or
innovative funding solutions, such as capital recycling
No equity raises in 2024 other than reinvestment of distributions through Crombie’s DRIP.
During 2024, Crombie completed dispositions for cash proceeds of $17.9M.
Maintain balance sheet strength during a period of
elevated interest rates
Reduced mortgage debt outstanding by $12M from December 31, 2023.
During 2024, Crombie issued, on a private placement basis, $500M of senior unsecured notes.
During 2024, Crombie redeemed $175M principal amount of senior unsecured notes which were
originally scheduled to mature on January 31, 2025.
During 2024, Crombie lowered floating rate credit facilities balances outstanding.
Increase unencumbered asset pool
Expanded unencumbered asset pool by approximately 40% to $3.7B since December 31, 2023.
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. Crombie has been
rated by Morningstar DBRS or its predecessors since 2013 and currently has a rating of “BBB(low)” with a “Positive” trend.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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
48
Strong Capital Structure
CAPITAL STRUCTURE
as at December 31, 2024
Mortgages
19.3%
Bank Credit Facilities
and Lease Liabilities
2.3%
Unsecured Notes
35.0%
Net Assets Attributable
to Unitholders
43.4%
Bank Credit Facilities
and Lease Liabilities
Mortgages
Unsecured
Notes
Net Assets Attributable
to Unitholders
Crombie’s capital structure consists of the following carrying values, inclusive of deferred financing costs where applicable:
December 31, 2024
December 31, 2023
Fixed rate mortgages
$
822,804
19.3%
$
834,628
20.8%
Drawn credit facilities
65,131
1.5%
144,391
3.6%
Senior unsecured notes
1,495,293
35.0%
1,171,769
29.2%
Lease liabilities
33,937
0.8%
36,292
0.9%
Net assets attributable to Crombie REIT Unitholders
1,099,588
25.7%
1,081,631
27.0%
Net assets attributable to Special Voting Units and Class B Limited Partnership Unitholders
755,952
17.7%
743,082
18.5%
Total capital structure
$
4,272,705
100.0%
$
4,011,793
100.0%
Debt Metrics
Crombie monitors its debt by utilizing a number of key metrics, including the following:
December 31, 2024
December 31, 2023
Fair value of unencumbered investment properties
$
3,662,000
$
2,608,000
Fair value of unencumbered investment properties as a% of unsecured debt*
236.3%
205.6%
Debt to gross fair value*
43.6%
43.0%
Weighted average interest rate1
4.1%
4.1%
Debt to trailing 12 months adjusted EBITDA*
7.96x
8.03x
Interest coverage ratio*
3.31x
3.06x
(1) Calculated based on interest rates for all outstanding fixed rate debt.
Crombie has continued to grow its unencumbered asset pool, increasing its fair value from $2,608,000 as at December 31, 2023 to $3,662,000 as at
December 31, 2024. This increase is primarily due to the conversion of the secured revolving credit facility to unsecured, and mortgage repayments
and maturities.
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, 2024 and December 31, 2023, respectively,
MANAGEMENT’S DISCUSSION AND ANALYSIS
49
CROMBIE REIT Annual Report 2024
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 December 31, 2024,
Crombie’s weighted average capitalization used in the determination
of the fair value of its investment properties was 5.98%, a decrease of
14 basis points from December 31, 2023. 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 4.27% as
at December 31, 2024, an increase of 60 basis points from December 31,
2023. Both of these changes were primarily due to Crombie’s acquisition
of the remaining 50% interest in the Davie Street joint venture in the
fourth quarter of 2024. 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 43.6% at December 31, 2024 compared to
43.0% at December 31, 2023.
The increase in this leverage ratio during the year ended December 31,
2024 was due primarily to the issuance of $500,000 of senior unsecured
notes, a decrease of $187,500 in gross fair value of investment properties
held in equity-accounted joint ventures, and the reduction of other assets
of $53,785 from the reclassification of other assets to investment properties
and properties under development. This was offset in part by an increase
of $508,000 in gross fair value of investment properties, redemption
of senior unsecured notes of $175,000, reduced balance of debt held
in equity-accounted joint ventures of $88,124, and repayment of credit
facilities of $77,424.
December 31, 2024
December 31, 2023
Fixed rate mortgages
$
827,930
$
838,957
Senior unsecured notes
1,500,000
1,175,000
Unsecured non-revolving credit facility I
—
93,297
Unsecured non-revolving credit facility II
50,000
—
Construction financing facility
13,447
—
Secured revolving credit facility
—
47,591
Unsecured revolving credit facility
—
—
Joint operation credit facility
3,520
3,503
Debt held in joint ventures, at Crombie’s share1,2
185,991
274,115
Lease liabilities
33,937
36,292
Adjusted debt*
$
2,614,825
$
2,468,755
Investment properties, fair value
$
5,604,000
$
5,096,000
Investment properties held in joint ventures, fair value, at Crombie’s share2
285,000
472,500
Other assets, cost3
82,296
136,081
Other assets, cost, held in joint ventures, at Crombie’s share2,3,4
5,755
26,214
Cash and cash equivalents
10,021
—
Cash and cash equivalents held in joint ventures, at Crombie’s share2
3,434
3,004
Deferred financing charges
11,669
7,560
Gross fair value
$
6,002,175
$
5,741,359
Debt to gross fair value*
43.6%
43.0%
(1) Includes Crombie’s share of fixed rate mortgages, floating rate 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 74, for more information.
In calculating adjusted EBITDA*, Crombie includes its share of revenue,
operating expenses, and general and administrative expenses in joint
ventures, and excludes its share of amortization of tenant incentives 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* decreased to 7.96x for the trailing
12 months ended December 31, 2024 from 8.03x for the trailing 12 months
ended December 31, 2023. The decrease was primarily due to an
increase of $21,201 in adjusted EBITDA over the trailing 12 months ended
December 31, 2024 when compared to the trailing 12 months ended
December 31, 2023. The increase in adjusted EBITDA resulted mainly from
higher net property income* due to renewals, new leasing, completed
developments, and the acquisition of the remaining 50% interest in
the Davie Street joint venture. Supplemental rent from modernization
investments, revenue from management and development services,
and lower general and administrative expenses further contributed
to the increase in adjusted EBITDA. Additionally, redemption of senior
unsecured notes of $175,000, lower debt outstanding in equity-accounted
joint ventures, and reduced outstanding balances credit facilities and
mortgages contributed to the improvement in the ratio. This was offset in
part by the issuance of $500,000 of senior unsecured notes, a reduction
in income from the sale of land within equity-accounted joint ventures in
2023, and decreased property revenue from dispositions.
The interest coverage* ratio for the quarter ended December 31, 2024
increased to 3.31x compared to 3.06x for the quarter ended December 31,
2023 primarily due to increased adjusted EBITDA of $3,878 compared to
MANAGEMENT’S DISCUSSION AND ANALYSIS
50
the fourth quarter of 2023. This resulted primarily from higher net property
income* due to the acquisition of the remaining 50% interest in the Davie
Street residential property, renewals, and new leasing. Adjusted interest
expense decreased by $850 compared to the fourth quarter of 2023
primarily due to lower interest in equity-accounted joint ventures and
decreased interest expense on floating rate debt resulting from lower
average loan balances, offset in part by increased interest on unsecured
notes due to the issuance of unsecured notes in the first and fourth
quarters of 2024.
Crombie’s debt service coverage* increased to 2.52x for the quarter ended
December 31, 2024 from 2.36x for the quarter ended December 31, 2023
due primarily to improved adjusted EBITDA as described above.
Three months ended
Dec. 31,2024
Sep. 30,2024
Jun. 30,2024
Mar. 31,2024
Dec. 31,2023
Sep. 30,2023
Jun. 30,2023
Mar. 31,2023
Operating income attributable to
Unitholders
$
76,143
$
26,570
$
29,347
$
26,205
$
26,295
$
27,796
$
19,557
$
25,173
Amortization of tenant incentives
7,725
7,663
7,121
6,718
6,529
7,838
5,357
6,792
Loss (gain) on disposal of investment
properties
996
—
(2,163)
—
—
(477)
—
(111)
Gain on acquisition of control of joint
venture
(51,794)
—
—
—
—
—
—
—
Gain on derecognition of right-of-use
asset
(405)
—
—
—
—
—
—
—
Impairment of investment properties
3,100
—
2,000
—
—
—
—
—
Depreciation and amortization
21,196
20,359
19,961
20,014
20,087
19,834
19,494
19,420
Finance costs – operations
25,401
22,677
22,182
22,283
23,839
20,665
21,000
20,764
(Income) loss from equity-accounted
investments
130
469
230
1,141
980
(876)
1,425
(1,673)
Property revenue in joint ventures, at
Crombie’s share
3,797
5,325
5,212
4,918
7,222
9,691
4,144
11,269
Amortization of tenant incentives in joint
ventures, at Crombie’s share
78
79
73
75
—
—
—
—
Property operating expenses in joint
ventures, at Crombie’s share
(1,199)
(1,815)
(1,368)
(1,617)
(3,684)
(4,270)
(1,231)
(5,170)
General and administrative expenses in
joint ventures, at Crombie’s share
(43)
(110)
(65)
(55)
(23)
(145)
(54)
(107)
Taxes – current
4
—
—
—
6
—
—
—
Adjusted EBITDA* [1]
$
85,129
$
81,217
$
82,530
$
79,682
$
81,251
$
80,056
$
69,692
$
76,357
Trailing 12 months adjusted EBITDA* [4]
$
328,558
$
324,680
$
323,519
$
310,681
$
307,356
$
300,970
$
296,508
$
299,271
Finance costs – operations
$
25,401
$
22,677
$
22,182
$
22,283
$
23,839
$
20,665
$
21,000
$
20,764
Finance costs – operations in joint
ventures, at Crombie’s share
1,922
2,726
2,558
3,228
3,279
3,428
3,293
3,430
Amortization of deferred financing
charges
(1,433)
(558)
(600)
(554)
(588)
(604)
(641)
(622)
Amortization of deferred financing
charges in joint ventures, at Crombie’s
share
(210)
(277)
(322)
(316)
—
—
—
—
Adjusted interest expense* [2]
$
25,680
$
24,568
$
23,818
$
24,641
$
26,530
$
23,489
$
23,652
$
23,572
Debt principal repayments
$
7,251
$
6,971
$
6,927
$
7,522
$
7,606
$
7,703
$
8,357
$
9,041
Debt principal repayments in joint
ventures, at Crombie’s share
862
982
687
233
317
315
312
1,738
Debt principal repayments [3]
$
8,113
$
7,953
$
7,614
$
7,755
$
7,923
$
8,018
$
8,669
$
10,779
Debt outstanding (see Debt to Gross Fair
Value*) [5]1
$ 2,614,825
$ 2,506,648
$ 2,483,303
$ 2,475,343
$ 2,468,755
$ 2,448,384
$ 2,421,240
$ 2,383,231
Interest coverage* ratio {[1]/[2]}
3.31x
3.31x
3.47x
3.23x
3.06x
3.41x
2.95x
3.24x
Debt service coverage* ratio{[1]/
([2]+[3])}
2.52x
2.50x
2.63x
2.46x
2.36x
2.54x
2.16x
2.22x
Debt to trailing 12 months adjusted
EBITDA* {[5]/[4]}
7.96x
7.72x
7.68x
7.97x
8.03x
8.13x
8.17x
7.96x
(1) Includes debt held in joint ventures, at Crombie’s share.
MANAGEMENT’S DISCUSSION AND ANALYSIS
51
CROMBIE REIT Annual Report 2024
Debt Profile
A continuity of Crombie’s fixed rate mortgages, senior unsecured notes, and credit facilities for the years ended December 31, 2024 and December 31, 2023
is as follows:
Year ended December 31, 2024
Year ended December 31, 2023
Mortgages
Senior
Unsecured
Notes
Credit
Facilities
Mortgages
Senior
Unsecured
Notes
Credit
Facilities
Opening balance, beginning of year
$
839,008
$
1,175,000
$
144,391
$
918,321
$
975,000
$
160,264
New borrowings or issuances
46,968
500,000
50,000
120,660
200,000
—
Principal repayments
(28,671)
—
—
(32,707)
—
—
Repayments on maturity
(204,615)
—
—
(167,266)
—
—
Assumed on acquisitions
177,932
—
—
—
—
—
Redemption
—
(175,000)
—
—
—
—
Net (repayments) advances
—
—
(127,424)
—
—
(15,873)
Closing balance, end of year
$
830,6221
$
1,500,000
$
66,967
$
839,0081
$
1,175,000
$
144,391
(1) Excludes unamortized fair value debt adjustment of $(2,692) (December 31, 2023 – $(51)).
Mortgages
Crombie had outstanding fixed rate mortgages consisting of:
December 31, 2024
December 31, 2023
Fixed rate mortgages
$
830,622
$
839,008
Unamortized fair value debt adjustment
(2,692)
(51)
827,930
838,957
Deferred financing charges on fixed rate mortgages
(5,126)
(4,329)
Total mortgage debt
$
822,804
$
834,628
Long-term portion
$
792,265
$
617,717
Current portion
$
30,539
$
216,911
Weighted average interest rate
4.13%
4.30%
Weighted average term to maturity
5.8 years
5.9 years
Senior Unsecured Notes (“Notes”)
The following series of senior unsecured notes were outstanding as at December 31, 2024 and December 31, 2023:
Maturity Date
Effective Interest Rate
December 31, 2024
December 31, 2023
Series E
January 31, 2025
4.80%
$
—
$
175,000
Series F
August 26, 2026
3.68%
200,000
200,000
Series G
June 21, 2027
3.92%
150,000
150,000
Series H
March 31, 2028
2.69%
150,000
150,000
Series I
October 9, 2030
3.21%
150,000
150,000
Series J
August 12, 2031
3.13%
150,000
150,000
Series K
September 28, 2029
5.24%
200,000
200,000
Series L
March 29, 2030
5.14%
200,000
—
Series M
January 15, 2032
4.73%
300,000
—
Deferred financing charges
(4,707)
(3,231)
Total senior unsecured notes
$
1,495,293
$
1,171,769
Long-term portion
$
1,495,293
$
1,171,769
Current portion
—
—
Weighted average interest rate
4.12%
3.89%
Weighted average term to maturity
4.8 years
4.4 years
MANAGEMENT’S DISCUSSION AND ANALYSIS
52
On March 6, 2024, Crombie issued, on a private placement basis,
$200,000 of Series L senior unsecured notes maturing March 29, 2030.
The net proceeds were used to repay existing indebtedness, including
repayment of outstanding credit facilities, and for general trust purposes.
The Series L notes were priced with an effective yield to maturity of 5.14%.
Interest is payable in equal semi-annual installments on March 29 and
September 29.
On October 11, 2024, Crombie issued, on a private placement basis,
$300,000 of Series M senior unsecured notes maturing January 15, 2032.
The net proceeds were used to fund the early repayment of the Series E
senior unsecured notes, repayment of upcoming secured mortgage
maturities, and for general trust purposes. The Series M notes were priced
with an effective yield to maturity of 4.73%. Interest is payable in equal
semi-annual installments on January 15 and July 15.
On October 31, 2024, Crombie redeemed $175,000 principal amount of its
4.80% Series E senior unsecured notes which were originally scheduled to
mature on January 31, 2025.
There are no required periodic principal payments, with the full face value
of the notes due on their respective maturity dates.
Credit Facilities
The following floating rate credit facilities had balances drawn as at December 31, 2024 and December 31, 2023:
Total Available Facility
Weighted Average
Term to Maturity
December 31, 2024
December 31, 2023
Secured revolving credit facility
$
—
— years
$
—
$
47,591
Unsecured revolving credit facility
550,000
4.0 years
—
—
Construction financing facility1
105,876
0.9 years
13,447
—
Unsecured non-revolving credit facility I
—
— years
—
93,297
Unsecured non-revolving credit facility II2
50,000
3.0 years
50,000
—
Unsecured bilateral credit facility
130,000
1.5 years
—
—
Joint operation credit facility II2,3
3,520
4.8 years
3,520
3,503
Deferred financing charges
(1,836)
—
Total credit facilities
$
839,396
2.7 years
$
65,131
$
144,391
Long-term portion
$
52,604
$
140,888
Current portion
$
12,527
$
3,503
Weighted average interest rate for drawn credit facilities
4.58%
6.78%
(1) Availability is limited by development spending to date.
(2) Includes credit facility that is fixed under a swap agreement.
(3) Availability is limited by mortgages held in the joint operations.
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 $53,520 of credit facilities that
are floating rate, that is classified as fixed rate due to interest rate swap
agreements in place.
In the second quarter of 2024, in anticipation of the cessation of the
publication of Canadian Dollar Offered Rate (“CDOR”), all credit facilities
were amended such that borrowings under all credit facilities are possible
by way of prime rate advance or Canadian Overnight Repo Rate Average
(“CORRA”). The use of CORRA rates, which replaced Bankers’ Acceptance
rates, did not result in a material change in Crombie’s cost of borrowing
under the credit facilities. Currently, all advances are by way of CORRA
rather than prime rate. Where applicable, the respective spread or
margin may change depending on Crombie’s unsecured bond rating with
Morningstar DBRS.
UNSECURED REVOLVING CREDIT FACILITY
On December 23, 2024, Crombie converted its secured revolving credit
facility to an unsecured revolving credit facility. In conjunction, the
maximum principal amount was increased from $400,000 to $550,000
and the maturity date extended to December 23, 2028. No balance was
drawn as at December 31, 2024; however, the maximum principal amount
is reduced by $5,198 in outstanding letters of credit. Borrowings under the
unsecured revolving credit facility can be by way of prime rate advance
or CORRA, 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.
CONSTRUCTION FINANCING FACILITY
On September 4, 2024, Crombie secured a CMHC-insured construction
financing facility with an initial maturity date of December 1, 2025 on a
residential property currently under development. It has a balance drawn
of $13,447 at December 31, 2024. The construction facility carries a floating
rate which varies with the lender’s cost of funds. Upon completion of the
development, Crombie has the ability to convert the facility to a fixed rate
with an initial term of 10 years.
UNSECURED NON-REVOLVING CREDIT FACILITY I
The unsecured non-revolving credit facility I was amended on October
15, 2024 to reduce the maximum principal amount from $200,000 to
$150,000. The facility was subsequently closed on December 23, 2024 in
conjunction with the amendment to the revolving credit facility.
UNSECURED NON-REVOLVING CREDIT FACILITY II
On October 15, 2024, Crombie obtained an unsecured non-revolving
credit facility with a maturity date of January 17, 2028. The facility carries
a floating rate which varies with the lender’s cost of funds and has a
maximum principal amount of $50,000. The facility was used for the
acquisition of the Davie Street residential property on October 15, 2024 and
was fully drawn as at December 31, 2024. Borrowings under the unsecured
non-revolving credit facility II can be by way of prime rate advance or
CORRA, and the floating interest rate is contingent on the type of advance
plus the applicable spread or margin. Crombie entered into a fixed-for-
floating interest rate swap, effectively fixing the interest rate at 4.19%.
MANAGEMENT’S DISCUSSION AND ANALYSIS
53
CROMBIE REIT Annual Report 2024
UNSECURED BILATERAL CREDIT FACILITY
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, 2026. No balance was drawn as at December 31, 2024. 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 prime rate advance
or CORRA, 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 FACILITY II
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 co-owned properties. On October 7, 2024, the facilities were
amended to increase the term loan facility to $32,000 and reset the
revolving credit facility to $9,000; the revolving credit facility will become
available when certain properties are pledged as security. At the same
time, the maturity date was extended to October 7, 2029. Borrowings
under both facilities can be by way of prime rate advance or CORRA, 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 which effectively fixed the interest rate on both facilities.
On October 7, 2024, the initial swap matured, at which point Crombie and
its co-ownership partner entered into a new fixed-for-floating interest
rate swap, effectively fixing the interest rate on both facilities at 5.20%. At
December 31, 2024, Crombie’s portion of the term and revolving credit
facilities was $3,520 and $Nil, respectively.
Debt Maturities
Principal repayments of the fixed rate mortgages, unsecured notes, and credit facilities are scheduled as follows:
Maturing Debt Balances
Payments of
Mortgage
Principal
12 Months Ending
Mortgages
Senior
Unsecured
Notes
Credit
Facilities
Total
% of Total
Total
Required
Payments
% of Total
December 31, 2025
$
7,753
$
—
$
13,447
$
21,200
0.9%
$
24,990
$
46,190
1.9%
December 31, 2026
12,401
200,000
—
212,401
9.5%
24,842
237,243
9.9%
December 31, 2027
281,262
150,000
—
431,262
19.2%
21,790
453,052
18.9%
December 31, 2028
45,234
150,000
50,000
245,234
10.9%
17,155
262,389
10.9%
December 31, 2029
89,302
200,000
3,520
292,822
13.1%
13,369
306,191
12.8%
Thereafter
241,632
800,000
—
1,041,632
46.4%
50,892
1,092,524
45.6%
Total1
$
677,584
$ 1,500,000
$
66,967
$ 2,244,551
100.0%
$
153,038
$ 2,397,589
100.0%
(1) Excludes fair value debt adjustment of $(2,692) and deferred financing charges of $(5,126) on mortgages, $(1,836) on credit facilities, and $(4,707) on unsecured notes (December 31, 2023 – $(51), $(4,329),
$Nil, and $(3,231), respectively).
Outstanding Unit Data
REIT Units and Class B LP Units and the Attached
Special Voting Units
For the year ended December 31, 2024, Crombie issued 1,701,519 REIT Units
and 1,205,345 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, 2025, were as follows:
Units
108,739,006
Special Voting Units1
75,477,186
(1) Crombie Limited Partnership, a subsidiary of Crombie, has issued 75,477,186 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
54
Cash Flows
Three months ended December 31,
Year ended December 31,
2024
2023
Variance
2024
2023
Variance
Cash provided by (used in):
Operating activities
$
94,103
$
69,095
$
25,008
$ 264,964
$ 239,915
$
25,049
Financing activities
(24,762)
(30,165)
5,403
(154,216)
(102,145)
(52,071)
Investing activities
(59,320)
(39,040)
(20,280)
(100,727)
(143,887)
43,160
Net change during the period
$
10,021
$
(110)
$
10,131
$
10,021
$
(6,117)
$
16,138
Operating Activities
For the three months ended:
The increase in cash provided by operating activities was primarily due
to an increase in the net change in non-cash working capital items of
$16,544 and higher property cash NOI* of $5,103 due to growth in property
revenue. A decrease in additions to tenant incentives of $2,076 further
contributed to the increase in cash.
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 $17,364 due to growth in
property revenue, increased revenue from management and development
services of $1,905, and reduced general and administration expenses
of $6,670 due to lower employee transition costs and organizational
changes. Additionally, a decrease in additions to tenant incentives of $1,564
contributed to the increase in cash. This was offset in part by a decrease in
the net change in non-cash working capital items of $2,456.
Financing Activities
For the three months ended:
The decrease in cash used in financing activities was due primarily to
the issuance of senior unsecured notes of $300,000, lower repayments
on floating rate credit facilities of $89,857, and a decrease in interest
expense payments of $2,543. This was offset in part by the redemption
of senior unsecured notes of $175,000, lower mortgage repayments of
$96,668, and the $14,001 issuance of mortgages in the fourth quarter in
2024 compared to $72,000 in the same quarter in 2023. Lower advances
on floating rate credit facilities of $54,431 further offset the decrease.
For the year ended:
The increase in cash used in financing activities on an annual basis was
primarily driven by lower advances on floating rate credit facilities of
$183,061, the redemption of senior unsecured notes of $175,000, and the
$46,968 issuance of mortgages in 2024 compared to $120,660 in 2023.
Higher mortgage repayments of $33,313, increased interest expense
payments of $4,257, and higher cash distributions to Unitholders of $1,316
further contributed to the increase in cash used. This was partially offset by
increased issuance of senior unsecured notes of $300,000, lower repayment
of floating rate credit facilities of $114,732, and the repayment of the joint
operation credit facility I of $7,167 in the second quarter of 2023.
Investing Activities
For the three months ended:
The increase in cash used in investing activities resulted primarily from
an increase in acquisitions of investment properties of $47,563 and lower
distributions from equity-accounted investments of $5,748. This was offset
in part by a decrease in predevelopment costs of $20,679, proceeds on
disposal of investment properties of $8,729, higher collection of notes
receivable from related parties of $2,326, and reduced contributions of
$1,073 to equity-accounted investments.
For the year ended:
The decrease in cash used in investing activities was primarily due to a
decrease in predevelopment costs of $33,562, higher collection of notes
receivable from related parties of $15,768, and proceeds on disposal
of investment properties of $14,947. Lower additions to investment
properties of $13,215 and reduced additions to leasing costs of $11,665 also
contributed to the decrease. This was partially offset by an increase in
acquisitions of investment properties of $33,738, lower distributions from
equity-accounted investments of $10,508, and increased contributions of
$1,106 to equity-accounted investments.
MANAGEMENT’S DISCUSSION AND ANALYSIS
55
CROMBIE REIT Annual Report 2024
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:
December 31, 2024
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
Secured revolving credit facility
$
—
$
400,000
$
400,000
$
400,000
$
400,000
Unsecured revolving credit facility
550,000
—
—
—
—
Amount drawn
—
(4,643)
(7,997)
—
(47,591)
Outstanding letters of credit
(5,198)
(5,208)
(5,286)
(5,286)
(5,342)
Available liquidity
544,802
390,149
386,717
394,714
347,067
Construction financing facility
105,876
105,876
—
—
—
Amount drawn
(13,447)
(1,207)
—
—
—
Available liquidity1
—
—
—
—
—
Unsecured revolving bilateral credit facility
130,000
130,000
130,000
130,000
130,000
Amount drawn
—
(43,500)
(10,000)
—
—
Available liquidity
130,000
86,500
120,000
130,000
130,000
Unsecured non-revolving credit facility
50,000
200,000
200,000
200,000
200,000
Amount drawn
(50,000)
—
—
—
(93,297)
Available liquidity
—
200,000
200,000
200,000
106,703
Unrestricted cash
7,416
—
—
12,276
—
Total available liquidity2
$
682,218
$
676,649
$
706,717
$
736,990
$
583,770
(1) Availability is limited by development spending to date.
(2) 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.
The terms of the unsecured revolving credit facility require that each
quarter Crombie must maintain certain covenants:
• total leverage to total gross book value of 60% (65% including
convertible debentures);
• total unencumbered property asset value must be a minimum of
1.4 times the total unsecured debt outstanding;
• annualized NOI on all properties must be a minimum of 1.5 times
the coverage of all annualized debt service requirements;
• secured debt to total gross book value less than 40%; and
• cash distributions to Unitholders are limited to 100% of funds
from operations.
As at December 31, 2024, the remaining amount available under the
unsecured revolving credit facility was $550,000 (prior to reduction for
standby letters of credit outstanding of $5,198). 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, cash distributions to Unitholders to be limited to
100% of funds from operations as defined in the credit facilities, and total
leverage to total gross book value of 60% or less.
Crombie’s liquidity is impacted by contractual debt commitments.
Crombie’s estimated contractual debt commitments for the next five years
are as follows:
Twelve months ending December 31,
Contractual
Cash Flows1
2025
2026
2027
2028
2029
Thereafter
Fixed rate mortgages – principal and interest
$
330,265
$
58,304
$
56,502
$
49,834
$
36,805
$
28,339
$
100,481
Fixed rate mortgages – maturities
677,584
7,753
12,401
281,262
45,234
89,302
241,632
Senior unsecured notes
1,802,451
61,738
259,182
201,284
195,486
241,857
842,904
Trade and other payables
131,327
110,729
9,750
1,559
1,184
1,184
6,921
Lease liabilities
139,844
4,642
2,895
2,662
2,439
2,307
124,899
3,081,471
243,166
340,730
536,601
281,148
362,989
1,316,837
Credit facilities2
74,934
16,447
2,278
2,278
50,270
3,661
—
Total estimated payments
$ 3,156,405
$
259,613
$
343,008
$
538,879
$
331,418
$
366,650
$ 1,316,837
(1) Includes principal and interest and excludes extension options.
(2) Includes the fixed portion of the interest expense for credit facilities under swap agreements.
Crombie’s contractual debt obligations and projected development
expenditures can be funded from the following financing sources:
• secured and unsecured short-term financing;
• recycling capital through the disposition of select investment properties;
• secured mortgage and term debt on unencumbered properties;
• the issuance of additional senior unsecured notes;
• the issuance of new Units; and
• entering into new joint arrangements.
MANAGEMENT’S DISCUSSION AND ANALYSIS
56
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, 2024, Crombie
had a total of $5,198 (December 31, 2023 – $5,342) 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, 2024, Crombie had signed construction contracts
totalling $259,087, of which $197,329 has been paid.
Crombie has committed to funding $37,926 in development costs at 1700
East Broadway Limited Partnership, of which $719 has been funded as at
December 31, 2024.
Crombie has provided 100% guarantees on mortgages related to
properties classified as joint operations 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,
2024, Crombie has provided guarantees of approximately $26,655
(December 31, 2023 – $81,781) 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
3.3 years.
Crombie and its partners have provided joint and several guarantees on
100% of debt outstanding in the following joint ventures: Bronte Village
Limited Partnership $241,718 (December 31, 2023 – $223,000), 1700 East
Broadway Limited Partnership $20,500 (December 31, 2023 – $17,400), and
140 CPN Limited $3,121 (December 31, 2023 – $3,200). Crombie includes
its 50% ownership interest in the outstanding debt related to these joint
ventures in its debt metrics. Each mortgage-related debt supported by a
joint and several guarantee is secured by the income-producing property
related to the mortgage.
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.
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 during the year
ended December 31, 2024.
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, 2024
December 31, 2023
Fair Value
Carrying Value
Fair Value
Carrying Value1
Financial liabilities
Investment property debt
$
881,078
$
887,935
$
956,601
$
979,019
Senior unsecured notes
1,496,790
1,495,293
1,108,474
1,171,769
Total financial liabilities
$
2,377,868
$
2,383,228
$
2,065,075
$
2,150,788
(1) Carrying values for 2023 were updated to include deferred financing costs.
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
57
CROMBIE REIT Annual Report 2024
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 actions taken to manage them, are
as follows (please see the “Risks” section of Crombie’s 2023 Annual
Information Form available at www.sedarplus.ca for additional
information on risks related to Crombie):
Enterprise Risk Management
The impact on markets of recent political uncertainty, elevated interest
rates, and the resulting effect on the available income of retail customers,
may adversely impact Crombie’s operations and development activities.
Risks include, but are not limited to, increasing the credit risk associated
with its receivables, limiting its ability to quickly respond to changes
in credit risk, increased construction supply and labour costs, and
extending the time to completion and occupancy of 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 Crombie’s 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 Crombie’s 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
Crombie’s properties.
Fixed Costs
The failure to rent a material amount of unleased space on a timely
basis, or at all, would potentially 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.
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 stronger financially, 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
MANAGEMENT’S DISCUSSION AND ANALYSIS
58
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 third
party entities, including its mixed-use developments at Le Duke, The
Village at Bronte Harbour, Opal Ridge, Broadway and Commercial, Lynn
Valley, and Kingsway & Tyne, where Crombie holds a 50% ownership. For
more information on these developments, please see the “Development”
and “Joint Ventures” sections of this MD&A. Crombie’s 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, valuations are derived by
dividing trailing stabilized net operating income (property revenue less
property operating expenses) by market capitalization rates. 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
its 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 its input assumptions. If these input assumptions
are not reasonable, Crombie’s valuation disclosures may not accurately
describe the fair value of its properties. The Audit Committee provides
oversight to this process, receiving a detailed summary including any
major capitalization rate movement and other key decisions made each
quarter, and are provided with opportunities to discuss and question
management on decisions made.
There was upward pressure on capitalization rates, resulting in negative
pressure on property valuations, since the beginning of 2022, largely
in response to the dramatic increase in Government of Canada bond
yields, and the weakening Canadian economy. Although this pressure
has subsided in 2024, 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, and adversely affect the reliability of Crombie’s valuation input
assumptions, which in turn may adversely affect the certainty of Crombie’s
reported fair value-based measures. Further increases to Government
of Canada bond yields could put additional upward pressure on
capitalization rates.
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 Crombie’s environmental
performance through the lens of ESG deliverables.
Crombie’s President and Chief Executive Officer (“CEO”) is responsible
for developing its ESG strategy and the day-to-day oversight and
MANAGEMENT’S DISCUSSION AND ANALYSIS
59
CROMBIE REIT Annual Report 2024
implementation of ESG at Crombie. The Executive Committee, as well as
select members of the leadership team, have responsibility for developing
a roadmap that expands Crombie’s ESG commitments and identifies key
actions, milestones, and targets that will drive performance improvements.
An update and review of ESG-related initiatives occurs monthly with the
Executive Committee, including analysis and response to the impacts
of climate change on Crombie’s operations and portfolio of assets.
Crombie has a 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 closely monitor and
prepare for the Canadian Sustainability Standards Board (“CSSB”)
reporting standards.
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, 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
Crombie’s properties, increase costs for future property insurance, impact
the tenant demand for space, and cause substantial damages or losses
to its properties which could exceed any applicable insurance coverage.
The incurrence of any of these losses, costs, or business interruptions may
adversely affect Crombie’s 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 its existing properties and could also
require Crombie to spend more on its development or redevelopment
projects without a corresponding increase in revenues, which may
adversely affect its financial condition, results of operations, and cash
flows.
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 Business Conduct and Ethics 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 Property Management Agreement and right of
first offer 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 two years, including the retirement of its Chief Executive
Officer (“CEO”) and the recent departure of its Chief Financial Officer
MANAGEMENT’S DISCUSSION AND ANALYSIS
60
(“CFO”), among others. While replacements for these roles have been
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 2023 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.
Rent Control Risk
Crombie owns one residential property and 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, 2024, 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, 2024, 59.1% (December 31, 2023 – 58.5%) of the AMR and
56.3% (December 31, 2023 – 55.1%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.1
Potential Future Changes in Laws, Regulations,
and Tariffs
Crombie’s supply chain may be impacted by potential future changes
in laws, regulations, or tariffs, whether imposed by the Canadian
government or the government of a trade partner. The timing and nature
of these changes are difficult to predict, and may result in increased
supply costs for development projects and maintenance of investment
properties, which could adversely impact Crombie’s results of operation
and decrease the amount of cash available for distribution.
(1) Property revenue for the year ended December 31, 2023 has been increased by $10,479 from the previously reported figure as a result of a change in the presentation of recoverable property taxes for
certain properties where tenants paid the property taxes on Crombie’s behalf.
MANAGEMENT’S DISCUSSION AND ANALYSIS
61
CROMBIE REIT Annual Report 2024
Financial Risk Management
The following table outlines Crombie’s financial risks, how these risks are managed, 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.
Additionally, there is credit risk relating to joint arrangement partners, interest rate swap agreements, and credit extended through vendor take-back
financing in the event of default by borrowers on the financing repayment.
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. Crombie’s residential component further
diversifies its 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 59.1% (December 31, 2023 – 58.5%)
of AMR. No other tenant accounts for more than 2.4% (December 31,
2023 – 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 $265,394 for the year ended December 31, 2024
(December 31, 2023 – $249,086¹) from Sobeys and other subsidiaries of
Empire; and
• over the next five years, leases on no more than 7.5% (December 31,
2023 – 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. 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 the 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, 2024, Crombie recorded bad debt
expense of $108 (December 31, 2023 – recovery of $(104)).
Crombie’s trade receivables and provision for doubtful accounts
balances at December 31, 2024 were $21,838 and $(1,472), respectively
(December 31, 2023 – $18,605 and $(1,396), 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.
Crombie mitigates risk related to financing with joint arrangement
partners, interest rate swap agreements, and vendor take-back financing
by obtaining guarantees from the borrowers where necessary.
(1) Property revenue for the year ended December 31, 2023 has been increased by $10,479 from the previously reported figure as a result of a change in the presentation of recoverable property taxes for
certain properties where tenants paid the property taxes on Crombie’s behalf.
Liquidity Risk
Risk Description
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.
Risk Management
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 on 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
62
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,
2024, Crombie’s credit rating on outstanding senior unsecured notes was
“BBB(low)” with a “Positive” 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 2023 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 $550,000 unsecured revolving credit facility is limited by
the amount utilized under the facility and the amount of any outstanding
letters of credit.
Refer to the “Debt Maturities” section of this MD&A for a maturity analysis
of Crombie’s 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
Crombie mitigates the 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 that
are hedged:
As at December 31, 2024
Hedge type
Maturity date
Fixed
interest rate
Hedge effectiveness
Notional amount of the
hedging instrument1
Fair value of hedging
instrument1
Cash flow hedge2
Oct. 7, 2029
5.20%
100.00%
$
3,520
$
(62)
Cash flow hedge3
Mar. 1, 2029
3.15%
100.00%
51,206
1,522
Cash flow hedge2
Oct. 15, 2029
4.19%
—%
50,000
(483)
$
104,726
$
977
(1) Amounts are shown at Crombie’s ownership percentage.
(2) Included in trade and other payables in Crombie’s financial statements.
(3) Included in investment in joint ventures in Crombie’s financial statements.
Three months ended December 31, 2024
Year ended December 31, 2024
Hedge type
Maturity date
Fixed interest rate
Change in fair
value gain (loss)
recognized in other
comprehensive loss1
Hedge recognized
in statements of
comprehensive loss
Change in fair
value gain (loss)
recognized in other
comprehensive loss1
Hedge recognized
in statements of
comprehensive loss
Cash flow hedge
Dec. 20, 2024
3.72%
$
(534)
$
—
$
(1,983)
$
—
Cash flow hedge2
Mar. 18, 2025
3.52%
(41)
30
(140)
30
Cash flow hedge
Oct. 7, 2024
3.27%
(10)
—
(96)
—
Cash flow hedge
Mar. 1, 2029
3.15%
42
—
(1,386)
—
Cash flow hedge
Oct. 7, 2029
5.20%
(62)
—
(62)
—
Cash flow hedge
Oct. 15, 2029
4.19%
—
(483)
—
(483)
$
(605)
$
(453)
$
(3,667)
$
(453)
(1) Amounts are shown at Crombie’s ownership percentage.
(2) Mortgage and swap were settled on November 14, 2024, with the net settlement amount reducing finance costs.
MANAGEMENT’S DISCUSSION AND ANALYSIS
63
CROMBIE REIT Annual Report 2024
As at December 31, 2024:
• Crombie’s weighted average term to maturity of its fixed rate
mortgages is 5.8 years;
• Crombie’s weighted average term to maturity of its unsecured notes is
4.8 years;
• Crombie has a floating rate unsecured revolving credit facility available
to a maximum of $550,000 with no balance outstanding/drawn;
• Crombie has an unsecured non-revolving credit facility available to a
maximum of $50,000 with a balance of $50,000 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 $3,520 outstanding;
• Crombie has interest rate swap agreements in place on $53,520 of
floating rate debt and an interest rate swap agreement in place held
in equity-accounted investments on $51,206 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 $12,000 with
a balance of $10,250 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 loss:
Three months ended December 31, 2024
Year ended December 31, 2024
Impact on operating income attributable to Unitholders of
interest rate changes on the unsecured revolving credit facility
Increase in rate
Decrease in rate
Increase in rate
Decrease in rate
Impact of a 0.5% interest rate change
$
(63)
$
63
$
(268)
$
268
Impact of a 1.0% interest rate change
$
(125)
$
125
$
(536)
$
536
Impact of a 1.5% interest rate change
$
(188)
$
188
$
(804)
$
804
As at December 31, 2024
Impact on other comprehensive loss of interest rate changes on interest rate swap agreements at Crombie’s share
Increase in rate
Decrease in rate
Impact of a 0.5% interest rate change
$
1,100
$
(1,100)
Impact of a 1.0% interest rate change
$
2,100
$
(2,100)
Impact of a 1.5% interest rate change
$
3,200
$
(3,200)
As at December 31, 2024
Impact on decrease in net assets attributable to Unitholders of interest rate changes on
interest rate swap agreements not designated as a hedge
Increase in rate
Decrease in rate
Impact of a 0.5% interest rate change
$
1,100
$
(1,100)
Impact of a 1.0% interest rate change
$
2,200
$
(2,300)
Impact of a 1.5% interest rate change
$
3,200
$
(3,500)
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
64
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
2024 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.
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
65
CROMBIE REIT Annual Report 2024
JOINT VENTURES
As at December 31, 2024, Crombie holds partial ownership interests in
seven joint ventures, three 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:
December 31, 2024
December 31, 2023
1600 Davie Limited Partnership
—%
50.0%
Bronte Village Limited Partnership
50.0%
50.0%
The Duke Limited Partnership
50.0%
50.0%
Penhorn Residential Holdings Limited Partnership
50.0%
50.0%
140 CPN Limited
50.0%
50.0%
1700 East Broadway Limited Partnership
50.0%
50.0%
Lynn Valley Limited Partnership
50.0%
50.0%
Kingsway & Tyne Property Development Limited Partnership
50.0%
50.0%
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, while the joint
venture held ownership of the 330 residential units. On October 15,
2024, Crombie acquired the remaining 50% interest in the Davie Limited
Partnership joint venture for total consideration of $133,000, excluding
closing and transaction costs. Consideration paid for the acquisition
included $44,000 in cash, financed through a new unsecured credit
facility, and the assumption of $89,071 of debt, net of a $24,622 mortgage
payable to the joint venture for the commercial component of the Davie
Street development, 100% of which was already recognized in Crombie’s
financial statements. The results are now fully consolidated with Crombie.
Bronte Village Limited Partnership
The Village at Bronte Harbour is a retail/residential mixed-used property
located in Oakville, Ontario. It is comprised of two residential towers
incorporating 481 residential rental units and 55,000 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.
Stabilization of NOI was reached in April 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.
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 and
development agreements were approved in June 2022 with all land
parcels being sold thereafter and 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 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 one
of the busiest transit nodes 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 evaluating the project
design to ensure the proposal satisfies new municipal and provincial
policies prior to submitting a formal zoning 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 and due diligence to support a rezoning application.
MANAGEMENT’S DISCUSSION AND ANALYSIS
66
Financial Performance
Three months ended
December 31, 2024
December 31, 2023
Davie LP
Bronte LP
Duke LP
Other
Total
Davie LP
Bronte LP
Duke LP
Other
Total
Variance
Property revenue
$
—
$
5,138
$
2,325
$
131
$
7,594
$
3,074
$
4,199
$
2,656
$
4,515
$ 14,444
$
(6,850)
Property operating
expenses
—
(1,424)
(895)
(78)
(2,397)
(775)
(1,852)
(2,855)
(1,886)
(7,368)
4,971
Net property income*
—
3,714
1,430
53
5,197
2,299
2,347
(199)
2,629
7,076
(1,879)
General and administrative
—
(25)
(19)
(42)
(86)
42
(91)
(13)
17
(45)
(41)
Depreciation and
amortization
—
(1,036)
(476)
(14)
(1,526)
(733)
(1,154)
(476)
(14)
(2,377)
851
Finance costs – operations
—
(3,012)
(816)
(16)
(3,844)
(1,553)
(4,132)
(825)
(47)
(6,557)
2,713
Net income (loss)
$
—
$
(359)
$
119
$
(19)
$
(259)
$
55
$
(3,030)
$
(1,513)
$
2,585
$
(1,903)
$
1,644
Contribution to Crombie’s
FFO*1
$
—
$
404
$
311
$
(3)
$
712
$
367
$
(880)
$
(506)
$
1,518
$
499
$
213
(1) FFO is at Crombie’s share and is included in Crombie’s total FFO numbers.
Year ended
December 31, 2024
December 31, 2023
Davie LP1
Bronte LP
Duke LP
Other
Total
Davie LP
Bronte LP
Duke LP
Other
Total
Variance
Property revenue
$
9,515
$ 18,908
$
9,374
$
706
$ 38,503
$ 12,007
$ 13,153
$
8,959
$ 30,532
$ 64,651
$ (26,148)
Property operating
expenses
(2,157)
(6,129)
(3,425)
(285)
(11,996)
(2,915)
(5,381)
(4,456)
(15,955)
(28,707)
16,711
Net property income*
7,358
12,779
5,949
421
26,507
9,092
7,772
4,503
14,577
35,944
(9,437)
General and administrative
expenses
(134)
(196)
(67)
(149)
(546)
(224)
(220)
(87)
(126)
(657)
111
Depreciation and
amortization
(2,149)
(4,373)
(1,908)
(56)
(8,486)
(2,934)
(4,492)
(1,903)
(55)
(9,384)
898
Finance costs – operations
(4,529)
(13,011)
(3,277)
(51)
(20,868)
(7,178)
(16,188)
(3,299)
(194)
(26,859)
5,991
Net income (loss)
$
546
$ (4,801)
$
697
$
165
$ (3,393)
$
(1,244)
$ (13,128)
$
(786)
$ 14,202
$
(956)
$
(2,437)
Contribution to Crombie’s
FFO*2
$
1,074
$
42
$
1,353
$
110
$
2,579
$
1,269
$
(4,088)
$
608
$
7,129
$
4,918
$
(2,339)
(1) Reflects property results for the nine months ended September 30, 2024, as a result of Crombie’s acquisition of the remaining 50% interest in the joint venture.
(2) FFO is at Crombie’s share and is included in Crombie’s total FFO numbers.
For the three months ended:
Net loss decreased by $1,644, primarily due to lower operating expenses
at Le Duke of $1,960 as a result of the reassessment of property taxes in
2023, as well as revenue growth of $939 at The Village at Bronte Harbour
compared to the fourth quarter of 2023 due to ongoing lease-up efforts
over the past 12 months and lower finance costs of $1,120 as a result of
CMHC financing put in place in 2024. This is offset by $2,541 in net income
recognized on the disposition of land parcels at Opal ridge in the fourth
quarter of 2023 and the impact of acquiring the remaining 50% share of
Davie Street in the fourth quarter of 2024.
For the year ended:
Net loss increased by $2,437, primarily due to $13,986 in net income on the
disposition of land parcels at Opal Ridge in 2023. This was offset in part
by the reassessment of property taxes at Le Duke in the fourth quarter of
2023 resulting in net income growth of $1,483 in 2024, as well as reduced
net loss of $8,327 at The Village at Bronte Harbour compared to 2023 due
to ongoing lease-up efforts over the past 12 months and CMHC financing
put in place in 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS
67
CROMBIE REIT Annual Report 2024
Three months ended
December 31, 2024
December 31, 2023
Retail
Residential
Total
Retail
Residential
Total
Variance
Net property income*
$
444
$
4,753
$
5,197
$
3,025
$
4,051
$
7,076
$
(1,879)
Non-cash straight-line rent
10
(14)
(4)
(43)
(151)
(194)
190
Non-cash tenant incentive amortization
156
—
156
142
—
142
14
Property cash NOI*
$
610
$
4,739
$
5,349
$
3,124
$
3,900
$
7,024
$
(1,675)
Year ended
December 31, 2024
December 31, 2023
Retail
Residential
Total
Retail
Residential
Total
Variance
Net property income*
$
2,121
$
24,386
$
26,507
$
16,099
$
19,845
$
35,944
$
(9,437)
Non-cash straight-line rent
(90)
396
306
(97)
231
134
172
Non-cash tenant incentive amortization
610
—
610
560
—
560
50
Property cash NOI*
$
2,641
$
24,782
$
27,423
$
16,562
$
20,076
$
36,638
$
(9,215)
For the three months ended:
Property cash NOI decreased by $1,675 compared to the fourth quarter of
2023 primarily due to the recognition of income on the sale of land parcels
at Opal Ridge in 2023 and the acquisition of Davie Street in the fourth
quarter of 2024. This was offset by the reassessment of property taxes
at Le Duke in the fourth quarter of 2023 and the lease-up efforts at The
Village at Bronte Harbour over the past 12 months.
For the year ended:
On an annual basis, property cash NOI decreased by $9,215 compared to
the same period in 2023, primarily due to the disposition of land parcels
at Opal Ridge in 2023 and the acquisition of Davie Street in the fourth
quarter of 2024. This was partially offset by the reassessment of property
taxes at Le Duke in the fourth quarter of 2023 and the ongoing lease-up
efforts at The Village at Bronte Harbour in 2024.
Fair Value
The estimated fair value of the investment properties held within Crombie’s equity-accounted joint ventures at 100% is as follows:
Fair Value
Carrying Value
December 31, 2024
$
570,000
$
401,569
December 31, 2023
$
945,000
$
566,563
The fair value included in this summary reflects the fair value of the
properties as at December 31, 2024 and December 31, 2023, 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, plus any
incremental fair value recognized through entitlement, until the property
is substantially completed. As at December 31, 2024, properties held
within Bronte Village Limited Partnership, The Duke Limited Partnership,
and 140 CPN Limited are revenue-generating properties.
Crombie has utilized the following weighted average capitalization rates
for its joint venture properties:
December 31, 2024
December 31, 2023
Weighted average capitalization rate
4.27%
3.67%
Fair Value Sensitivity of the Investment Properties Held Within Crombie’s Equity-accounted Joint ventures
Crombie has determined that a change in this applied capitalization rate and net operating income at December 31, 2024 would result in an (increase)
decrease in the fair value of the investment properties as follows:
Capitalization rate change
Net Operating Income Change
$
(1,500)
$
(1,000)
$
(500)
$
—
$
500
$
1,000
$
1,500
(0.75)%
$
77,000
$
89,000
$
100,000
$
112,000
$
124,000
$
135,000
$
147,000
(0.50)%
$
35,000
$
47,000
$
58,000
$
70,000
$
82,000
$
93,000
$
105,000
(0.25)%
$
(2,000)
$
10,000
$
21,000
$
33,000
$
45,000
$
56,000
$
68,000
—%
$
(35,000)
$
(23,000)
$
(12,000)
$
—
$
12,000
$
23,000
$
35,000
0.25%
$
(64,000)
$
(52,000)
$
(41,000)
$
(29,000)
$
(17,000)
$
(6,000)
$
6,000
0.50%
$
(90,000)
$
(78,000)
$
(67,000)
$
(55,000)
$
(43,000)
$
(32,000)
$
(20,000)
0.75%
$
(114,000)
$
(102,000)
$
(91,000)
$
(79,000)
$
(67,000)
$
(56,000)
$
(44,000)
MANAGEMENT’S DISCUSSION AND ANALYSIS
68
Debt to Gross Fair Value*
December 31, 2024
December 31, 2023
Fixed and floating rate mortgages and construction loans
$
347,251
$
510,254
Revolving credit facilities
20,500
21,400
Partnership loans
—
10,664
Lease liabilities
4,231
5,912
Total debt outstanding
$
371,982
$
548,230
Investment properties, fair value
$
570,000
$
945,000
Other assets, cost1
11,509
52,429
Cash and cash equivalents
6,868
6,008
Gross fair value
$
588,377
$
1,003,437
Debt to gross fair value*
63.2%
54.6%
(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, 2024
December 31, 2023
Mortgages1
Revolving
Credit
Facilities2
Partnership
Loans
Total
Borrowings
Mortgages1
Revolving
Credit
Facilities2
Partnership
Loans
Total
Borrowings
Opening balance, beginning
of period
$ 510,254
$
21,400
$
10,664
$ 542,318
$ 506,143
$
17,256
$
10,364
$ 533,763
Additions
243,457
—
438
243,895
6,615
—
—
6,615
Net advances
—
3,100
—
3,100
—
7,000
300
7,300
Other3
(177,932)
—
—
(177,932)
—
—
—
—
Principal repayments
(228,528)
(4,000)
(11,102)
(243,630)
(2,504)
(2,856)
—
(5,360)
Closing balance, end of period
$ 347,251
$
20,500
$
—
$ 367,751
$ 510,254
$
21,400
$
10,664
$ 542,318
(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.
(3) Other includes the mortgages assumed by Crombie’s acquisition of the remaining 50% interest in the Davie Limited Partnership joint venture on October 15, 2024.
December 31, 2024
December 31, 2023
Total borrowings
$
367,751
$
542,318
Long-term portion
$
342,584
$
315,146
Current portion
$
25,167
$
227,172
Weighted average fixed interest rate1
4.00%
3.27%
Weighted average floating interest rate
5.32%
7.16%
Weighted average term to maturity of fixed rate debt
4.3 years
4.2 years
Weighted average term to maturity of floating rate debt
0.2 years
1.3 years
(1) Includes a floating rate mortgage that is fixed under a swap agreement.
From time to time, Crombie’s 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.
Crombie’s joint ventures currently have an interest rate swap agreement in
place on $102,413 of floating rate debt.
MANAGEMENT’S DISCUSSION AND ANALYSIS
69
CROMBIE REIT Annual Report 2024
OTHER DISCLOSURES
Related Party Transactions
As at December 31, 2024, 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 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.
Crombie’s transactions with related parties are as follows:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Property revenue
Property revenue
(a)
$
70,508
$
63,4021
$
265,394
$
249,0861
Head lease income
$
160
$
580
$
809
$
1,275
Revenue from management and development services
(b)
$
1,194
$
771
$
4,974
$
3,114
Property operating expenses
(c)
$
—
$
(34)
$
(45)
$
(135)
General and administrative expenses
Property management services recovered
(d)
$
56
$
39
$
154
$
208
Other general and administrative expenses
$
(41)
$
(41)
$
(164)
$
(171)
Finance costs – distributions to Unitholders
$
(16,955)
$
(16,684)
$
(67,418)
$
(66,349)
(1) Property revenue for the three months and year ended December 31, 2023 has been increased by $2,620 and $10,479, respectively, from previously reported figures as a result of a change in the
presentation of recoverable property taxes for certain properties where tenants paid the property taxes on Crombie’s behalf.
(a) Crombie earns property revenue from Empire (including Sobeys and
all other subsidiaries of Empire).
(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
Property Management Agreement and a Development 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, 2024, Crombie
issued 1,205,345 (December 31, 2023 – 1,122,338) Class B LP Units to ECLD
under the DRIP.
During the year ended December 31, 2024, Crombie invested $42,325
(December 31, 2023 – $25,201) in properties anchored by subsidiaries of
Empire, which resulted in amended lease terms. These amounts have
been included in tenant incentive additions and the costs are being
amortized over the amended lease terms.
During the year ended December 31, 2024, Crombie acquired one
grocery-anchored retail property from a subsidiary of Empire for a total
purchase price of $3,760 before closing and transaction costs.
Amounts due from related parties include $40 (December 31, 2023 – $801)
in a note receivable due from Lynn Valley Limited Partnership related to
development services.
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.
Critical Accounting Estimates and Assumptions
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
70
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.
For asset acquisitions where there is a previously held joint venture interest,
Crombie determines the cost of the asset acquired by remeasuring its
previously held interest in the joint venture to fair value, in addition to the
fair value of the consideration paid for the asset acquired. Judgment is
involved in the determination of fair value of Crombie’s previously held
interest. In the event that the fair value exceeds the carrying amount of
the previously held interest, the difference will be recognized as a gain on
acquisition of control of the property in the financial statements.
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.
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. 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. 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 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 its 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 its input assumptions. As at December 31, 2024,
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, plus any incremental fair value recognized through entitlement,
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.
REVENUE RECOGNITION
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
71
CROMBIE REIT Annual Report 2024
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.
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 Chief Executive Officer (“CEO”),
and Chief Financial Officer (“CFO”), as appropriate, to allow timely
decisions regarding disclosure. Crombie’s CEO and CFO have evaluated
the design and effectiveness of its disclosure controls and procedures as
at December 31, 2024. They have concluded that the current disclosure
controls and procedures are effective.
In addition, Crombie’s 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,
Crombie’s 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, 2024 and have concluded that its current ICFR are
effective based on that evaluation. There have been no material changes
to Crombie’s internal controls during the period.
MANAGEMENT’S DISCUSSION AND ANALYSIS
72
Quarterly Information
Three months ended
Dec. 31, 2024
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Net property income*
$
78,150
$
75,006
$
74,888
$
73,641
$
75,869
$
71,453
$
71,442
$
68,648
Operating income
$
76,143
$
26,570
$
29,347
$
26,205
$
26,295
$
27,796
$
19,557
$
25,173
Finance costs – distributions to
Unitholders
(40,889)
(40,735)
(40,564)
(40,399)
(40,237)
(40,077)
(39,921)
(39,775)
Finance income (costs) – change in fair
value of financial instruments
2,591
(3,506)
1,063
122
(1,400)
1,191
1,517
603
Increase (decrease) in net assets
attributable to Unitholders
$
37,845
$
(17,671)
$
(10,154)
$
(14,072)
$
(15,342)
$
(11,090)
$
(18,847)
$
(13,999)
Operating income per Unit – basic
$
0.41
$
0.15
$
0.16
$
0.14
$
0.15
$
0.15
$
0.11
$
0.14
Distributions
Distributions
$
40,889
$
40,735
$
40,564
$
40,399
$
40,237
$
40,077
$
39,921
$
39,775
Per Unit
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
FFO*
Basic
$
58,131
$
56,170
$
57,880
$
54,868
$
54,590
$
56,510
$
46,068
$
52,835
Per Unit – basic
$
0.32
$
0.31
$
0.32
$
0.30
$
0.30
$
0.31
$
0.26
$
0.30
Payout ratio
70.3%
72.5%
70.1%
73.6%
73.7%
70.9%
86.7%
75.3%
AFFO*
Basic
$
51,298
$
48,742
$
50,317
$
46,947
$
46,111
$
49,962
$
39,118
$
45,909
Per Unit – basic
$
0.28
$
0.27
$
0.28
$
0.26
$
0.26
$
0.28
$
0.22
$
0.26
Payout ratio
79.7%
83.6%
80.6%
86.1%
87.3%
80.2%
102.1%
86.6%
Operating information
Number of investment properties
295
296
295
295
294
294
293
291
Gross leasable area
18,433,000
18,766,000
18,750,000
18,709,000
18,681,000
18,652,000
18,625,000
18,550,000
Economic occupancy
96.5%
95.9%
95.9%
95.7%
96.0%
96.0%
95.9%
94.5%
Committed occupancy
96.8%
96.1%
96.4%
96.2%
96.5%
96.4%
96.4%
96.7%
Debt metrics
Fair value of unencumbered
investment properties
$ 3,662,000
$ 2,651,000
$ 2,687,000
$ 2,771,000
$ 2,608,000
$ 2,582,000
$ 2,488,000
$ 2,291,000
Available liquidity
$
682,218
$
676,649
$
706,717
$
736,990
$
583,770
$
564,903
$
614,072
$
735,877
Debt to gross fair value*
43.6%
42.9%
42.6%
42.9%
43.0%
42.4%
42.3%
41.9%
Weighted average interest rate1
4.1%
4.2%
4.2%
4.2%
4.1%
4.0%
4.0%
4.0%
Debt to trailing 12 months adjusted
EBITDA*
7.96x
7.72x
7.68x
7.97x
8.03x
8.13x
8.17x
7.96x
Interest coverage ratio*
3.31x
3.31x
3.47x
3.23x
3.06x
3.41x
2.95x
3.24x
(1) 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:
• Property acquisitions and dispositions (gross proceeds excluding closing
and transaction costs) for each of the above three-month periods were:
- December 31, 2024 – acquisition of a land parcel at an existing
property in the Rest of Canada for a total purchase price of $2,000,
acquisition of the remaining 50% of the Davie Street residential
property in VECTOM previously held in a joint venture for a total
purchase price of $133,000 (see page 66 of the “Joint Ventures”
section of this MD&A for details of the consideration paid), and
disposition of two retail properties in the Rest of Canada for proceeds
of $6,000;
- September 30, 2024 – acquisition of one retail property in the Rest of
Canada for a total purchase price of $3,760;
- June 30, 2024 – acquisition of one retail property in the Rest of
Canada for a total purchase price of $9,880 and disposition of one
retail property in VECTOM for proceeds of $13,000 at Crombie’s share;
- March 31, 2024 – no acquisitions or dispositions;
- 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 in the Rest of
Canada for a total purchase price of $9,760; and
- March 31, 2023 – acquisition of two retail properties in the Rest of
Canada for a total purchase price of $16,722.
• 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 Unit.
MANAGEMENT’S DISCUSSION AND ANALYSIS
73
CROMBIE REIT Annual Report 2024
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
Reconciliation
Operating income
attributable to
Unitholders excluding
employee transition
costs
• Management believes that the removal of expenditures for employee transition costs, whose timing and
magnitude is highly variable, from operating income attributable to Unitholders is a useful calculation in
providing a comparable measure of Crombie’s financial performance period over period.
“Operating Income
Attributable to
Unitholders”
starting on page 35
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.
“Net Property
Income*” starting
on page 35
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.
• 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
Property Cash
NOI*” starting on
page 36
Same-asset property
cash NOI
• 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, 2024.
“Same-asset
Property Cash
NOI*” starting on
page 36
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 acquisition of control of joint venture;
- gain on derecognition of right-of-use asset;
- 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.
• Crombie uses this metric as an input in debt covenant calculations.
“Funds from
Operations (FFO)*”
starting on page 37
MANAGEMENT’S DISCUSSION AND ANALYSIS
74
Non-GAAP Measure
Description and Purpose
Reconciliation
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 the
period.
• Management uses this key metric in evaluating the sustainability of Crombie’s distribution payments to
Unitholders.
“Funds from
Operations (FFO)*”
starting on page 37
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.
“Adjusted Funds
from Operations
(AFFO)*” starting on
page 38
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.
“Adjusted Funds
from Operations
(AFFO)*” starting on
page 38
Net asset value (“NAV”) • NAV represents total assets less total liabilities excluding net assets attributable to Unitholders.
“Development”
starting on page 42
Fair value of
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,
unsecured non-revolving, and unsecured 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 Metrics”
starting on page 49
Debt to gross fair value • Used to evaluate Crombie’s flexibility to incur additional financial leverage.
“Debt Metrics”
starting on page 49
Adjusted debt
• Represents debt excluding transaction costs, which Crombie believes 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 Crombie’s debt to gross fair value and debt to trailing 12
months adjusted EBITDA.
• Crombie uses this metric as an input in debt covenant calculations.
“Debt Metrics”
starting on page 49
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, gain on acquisition of control of joint venture, 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 used as an input in several of Crombie’s debt metrics, providing information with
respect to certain financial ratios that are used in measuring Crombie’s debt profile and assessing its
ability to satisfy obligations, including servicing its debt.
• Crombie believes adjusted EBITDA is an indicative measure of its ability to service debt requirements,
fund capital projects, and acquire properties.
“Debt Metrics”
starting on page 49
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.
“Debt Metrics”
starting on page 49
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 Crombie’s interest coverage and debt service
coverage ratios.
“Debt Metrics”
starting on page 49
Interest coverage
Debt service coverage
• These ratios are useful in determining Crombie’s ability to service the interest requirements of its
outstanding debt.
“Debt Metrics”
starting on page 49
MANAGEMENT’S DISCUSSION AND ANALYSIS
75
CROMBIE REIT Annual Report 2024
Maintenance Capital Expenditures, and 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.
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 commercial
properties from its maintenance charge for the first year until a baseline
of actual expenditures is obtained. Crombie also excludes mixed-use and
residential properties from its maintenance charge given these properties
are all newly constructed and have minimal maintenance expense. As
Crombie uses a reserve, it also discloses actual maintenance expenditures
for comparative purposes. The rate per 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. During the year, Crombie increased the normalized rate from
$1.10 in 2023 to $1.15 per square foot of weighted average GLA in 2024,
based on the actual spend for the previous three years and for 2024.
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.
Maintenance Expenditures – Actual
Year ended
Three months ended
Year ended
Three months ended
Dec. 31,
2024
Dec. 31,
2024
Sep. 30,
2024
Jun. 30,
2024
Mar. 31,
2024
Dec. 31,
2023
Dec. 31,
2023
Sep. 30,
2023
Jun. 30,
2023
Mar. 31,
2023
Total additions to investment
properties
$
62,439
$
21,395
$
16,314
$
11,028
$
13,702
$
75,654
$
21,695
$
13,337
$
26,893
$
13,729
Transfer of predevelopment costs
to investment properties
48,910
—
—
—
48,910
—
—
—
—
—
Total additions to investment
properties held in joint
ventures, at Crombie’s share
48
—
3
45
—
125
125
—
—
—
Less: revenue-enhancing
expenditures
(103,285)
(17,169)
(15,232)
(10,258)
(60,626)
(66,952)
(19,577)
(12,036)
(25,367)
(9,972)
Maintenance capital
expenditures
8,112
4,226
1,085
815
1,986
8,827
2,243
1,301
1,526
3,757
Total additions to TI and deferred
leasing costs
49,100
11,276
21,752
12,229
3,843
62,329
13,325
25,393
12,090
11,521
Less: revenue-enhancing
expenditures
(42,755)
(9,962)
(20,939)
(9,751)
(2,103)
(32,248)
(9,756)
(6,025)
(8,126)
(8,341)
Maintenance TI and deferred
leasing costs
6,345
1,314
813
2,478
1,740
30,081
3,569
19,368
3,964
3,180
Total maintenance
expenditures – actual
$
14,457
$
5,540
$
1,898
$
3,293
$
3,726
$
38,908
$
5,812
$
20,669
$
5,490
$
6,937
Reserve amount charged
against AFFO*
$
21,884
$
5,322
$
5,528
$
5,516
$
5,518
$
20,757
$
5,246
$
5,186
$
5,182
$
5,143
An obligation for TI expenditure occurs when renewing existing tenant
leases or a new tenant occupies 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
2024 and 2023. 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.
Revenue-enhancing expenditures are capitalized and depreciated or
charged against revenue over their useful lives. Revenue-enhancing
expenditures during the year ended December 31, 2024 consisted
primarily of development work and modernization investments.
MANAGEMENT’S DISCUSSION AND ANALYSIS
76
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 2023 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 Crombie’s total portfolio, which depends on
successful execution of its current development strategy, its 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, 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, the availability
of labour, actual development costs, ability to achieve lease-up
stabilization at current market rents, general economic conditions,
and factors described under the “Development” section, and which
assume obtaining required municipal zoning and development
approvals, 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
property income, capitalization rates, 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.
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
77
CROMBIE REIT Annual Report 2024
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 Accounting
Standards”). 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, 2024, 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 19, 2025
Kara Cameron, CPA, CA
Chief Financial Officer
February 19, 2025
MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING
78
INDEPENDENT AUDITOR’S REPORT
Independent
Auditor’s Report
79
CROMBIE REIT Annual Report 2024
PricewaterhouseCoopers LLP
Cogswell Tower, 2000 Barrington Street, Suite 1101, Halifax, Nova Scotia, Canada B3J 3K1
T.: +1 902 491 7400, F.: +1 902 422 1166, Fax to mail: ca_halifax_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Unitholders of Crombie Real Estate Investment Trust
Our 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, 2024 and 2023, 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).
What we have audited
The Trust’s consolidated financial statements comprise:
•
the consolidated balance sheets as at December 31, 2024 and 2023;
•
the consolidated statements of comprehensive 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.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the 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.
INDEPENDENT AUDITOR’S REPORT
80
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, 2024. 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
Fair value of investment properties
Refer to note 2 – Summary of material accounting
policies and note 3 – Investment properties to the
consolidated financial statements.
The Trust’s total investment properties as at
December 31, 2024 were $4.314 billion. The
investment properties are carried at cost less
accumulated depreciation and impairment, with
their fair value disclosed at each reporting period.
The Trust disclosed a total fair value of $5.604
billion as at December 31, 2024.
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 (stabilized 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.
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 comparing them to externally available
market data.
−
Evaluated 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 stabilized 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.
INDEPENDENT AUDITOR’S REPORT
81
CROMBIE REIT Annual Report 2024
Key audit matter
How our audit addressed the key audit matter
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.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis and the information, other than the consolidated financial statements and our
auditor’s report thereon, included in the annual report.
Our opinion on the consolidated financial statements does not cover the other information and we do 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, 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.
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.
INDEPENDENT AUDITOR’S REPORT
82
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.
•
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.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Trust as a basis for forming an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and review of the
audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
INDEPENDENT AUDITOR’S REPORT
83
CROMBIE REIT Annual Report 2024
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.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Halifax, Nova Scotia
February 19, 2025
Consolidated
Balance Sheets
(In thousands of Canadian dollars)
Note
December 31, 2024
December 31, 2023
Assets
Non-current assets
Investment properties
3
$
3,923,880
$
3,624,457
Investment in joint ventures
4
29,761
30,778
Other assets
5
422,776
444,173
4,376,417
4,099,408
Current assets
Cash and cash equivalents
18
10,021
—
Other assets
5
43,928
49,160
53,949
49,160
Total assets
4,430,366
4,148,568
Liabilities
Non-current liabilities
Fixed rate mortgages
7
792,265
617,717
Credit facilities
7
52,604
140,888
Senior unsecured notes
8
1,495,293
1,171,769
Employee future benefits obligation
9
7,415
7,434
Trade and other payables
10
20,598
20,966
Lease liabilities
22
31,236
35,351
2,399,411
1,994,125
Current liabilities
Fixed rate mortgages
7
30,539
216,911
Credit facilities
7
12,527
3,503
Employee future benefits obligation
9
525
327
Trade and other payables
10
129,123
108,048
Lease liabilities
22
2,701
941
175,415
329,730
Total liabilities excluding net assets attributable to Unitholders
2,574,826
2,323,855
Net assets attributable to Unitholders
$
1,855,540
$
1,824,713
Net assets attributable to Unitholders represented by:
Crombie REIT Unitholders
$
1,099,588
$
1,081,631
Special Voting Units and Class B Limited Partnership Unitholders
755,952
743,082
$
1,855,540
$
1,824,713
Commitments, contingencies and guarantees
23
Subsequent events
24
See accompanying notes to the consolidated financial statements.
Approved on behalf of the Board of Trustees
signed (Jason Shannon)
Jason Shannon
Chair
signed (Paul Beesley)
Paul Beesley
Audit Committee Chair
CONSOLIDATED BALANCE SHEETS
84
Consolidated Statements
of Comprehensive Loss
Year ended December 31,
(In thousands of Canadian dollars)
Note
2024
20231
Property revenue
11
$
471,025
$
451,689
Revenue from management and development services
12
5,335
3,430
Property operating expenses
13
(169,340)
(164,277)
Gain on disposal of investment properties
3
1,167
588
Gain on acquisition of control of joint venture
3
51,794
—
Gain on derecognition of right-of-use asset
3
405
—
Impairment of investment properties
3
(5,100)
—
Depreciation and amortization
3,5
(81,530)
(78,835)
General and administrative expenses
15
(20,974)
(27,644)
Finance costs – operations
16
(92,543)
(86,268)
Income (loss) from equity-accounted investments
4
(1,970)
144
Operating income before taxes
158,269
98,827
Taxes – current
(4)
(6)
Operating income attributable to Unitholders
158,265
98,821
Distributions to Unitholders
(162,587)
(160,010)
Change in fair value of financial instruments
15
270
1,911
(162,317)
(158,099)
Decrease in net assets attributable to Unitholders
(4,052)
(59,278)
Other comprehensive 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
20
(1,386)
(1,083)
Net change in derivatives designated as cash flow hedges
20
(2,281)
(2,717)
Unamortized actuarial losses in employee future benefits obligation
9
(273)
(440)
Other comprehensive loss
(3,940)
(4,240)
Comprehensive loss
$
(7,992)
$
(63,518)
(1) Property revenue and property operating expenses for the year ended December 31, 2023 have been increased by $10,750 from previously reported figures as a result of a change in the presentation of
recoverable property taxes for certain properties where tenants paid the property taxes on Crombie’s behalf.
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
85
CROMBIE REIT Annual Report 2024
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 17)
Net Assets
Attributable to
Unitholders
Accumulated
Other
Comprehensive
Loss
Total
Attributable to
REIT Units
Class B
LP Units
Balance, January 1, 2024
$
2,233,731
$
(415,426)
$
6,408
$
1,824,713
$
1,081,631
$
743,082
Comprehensive loss
—
(4,052)
(3,940)
(7,992)
(4,717)
(3,275)
Units issued under Distribution
Reinvestment Plan (“DRIP”)
38,819
—
—
38,819
22,674
16,145
Balance, December 31, 2024
$
2,272,550
$
(419,478)
$
2,468
$
1,855,540
$
1,099,588
$
755,952
(In thousands of Canadian dollars)
REIT Units, Special
Voting Units and
Class B LP Units
(Note 17)
Net Assets
Attributable to
Unitholders
Accumulated
Other
Comprehensive
Income (Loss)
Total
Attributable to
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
—
(59,278)
(4,240)
(63,518)
(37,501)
(26,017)
Units issued under DRIP
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
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
86
Consolidated Statements
of Cash Flows
Year ended December 31,
(In thousands of Canadian dollars)
Note
2024
2023
Cash flows provided by (used in)
Operating Activities
Decrease in net assets attributable to Unitholders
$
(4,052)
$
(59,278)
Additions to tenant incentives
(48,460)
(50,024)
Items not affecting operating cash
18
59,160
97,299
Change in other non-cash operating items
18
3,190
5,646
Income taxes paid
(4)
(6)
Finance costs – operations
16
92,543
86,268
Distributions to Unitholders
162,587
160,010
Cash provided by operating activities
264,964
239,915
Financing Activities
Issuance of mortgages
7
46,968
120,660
Financing – other
(5,024)
(2,174)
Repayment of mortgages – principal
(28,671)
(32,707)
Repayment of mortgages – maturity
7
(204,615)
(167,266)
Finance costs – operations
16
(86,074)
(81,817)
Advance of floating rate credit facilities and construction financing facility
216,647
399,708
Repayment of floating rate credit facilities and construction financing facility
(294,088)
(408,820)
Advance of joint operation credit facility
7
17
86
Repayment of joint operation credit facility
7
—
(6,847)
Issuance of senior unsecured notes
8
500,000
200,000
Redemption of senior unsecured notes
8
(175,000)
—
Cash distributions to Unitholders
(123,435)
(122,119)
Payments of lease liabilities
(941)
(849)
Cash used in financing activities
(154,216)
(102,145)
Investing Activities
Acquisition of investment properties and intangible assets
(62,384)
(28,646)
Additions to investment properties
(62,439)
(75,654)
Additions to predevelopment costs
—
(33,562)
Proceeds on disposal of investment properties
14,947
—
Contributions to joint ventures
4
(3,574)
(2,468)
Distributions from joint ventures
4
1,235
11,743
Additions to fixtures and computer equipment
(849)
(204)
Additions to deferred leasing costs
(640)
(12,305)
Collections on (advances to) related party receivables
5
12,977
(2,791)
Cash used in investing activities
(100,727)
(143,887)
Net change in cash and cash equivalents
10,021
(6,117)
Cash and cash equivalents, beginning of year
—
6,117
Cash and cash equivalents, end of year
$
10,021
$
—
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
87
CROMBIE REIT Annual Report 2024
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, residential, 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, 2024 and December 31, 2023 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 19, 2025.
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, 2024. Subsidiaries are all entities
over which Crombie has control. All subsidiaries have a reporting date of
December 31, 2024.
All intercompany transactions, balances, income, and expenses are
eliminated in preparing the consolidated financial statements.
Operating loss and other comprehensive 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.
(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
Notes to the Consolidated
Financial Statements
(In thousands of Canadian dollars)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
88
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 asset acquisitions where there is a previously held joint venture interest,
Crombie determines the cost of the asset acquired by remeasuring its
previously held interest in the joint venture to fair value, in addition to the
fair value of the consideration paid for the interest acquired. Judgment is
involved in the determination of fair value of Crombie’s previously held
interest. In the event that the fair value exceeds the carrying amount of
the previously held interest, the difference will be recognized as a gain
on acquisition of control of the property in the consolidated statements of
comprehensive loss.
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 loss. A component of Crombie includes a property type or
geographic area of operations.
(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 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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
89
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.
(i) Distribution reinvestment plan (“DRIP”)
Crombie has a DRIP which is described in Note 17.
(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 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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
90
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.
(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 loss. Any
ineffective portion of the cash flow hedge is recognized in operating
income. Amounts recognized in accumulated other comprehensive 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 the
unsecured non-revolving credit facility II, the joint operation credit
facility II, and a variable mortgage in a joint venture.
(p) Consolidated statement of comprehensive loss
Consolidated statement of comprehensive 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 loss comprising changes
in net assets attributable to Unitholders and other comprehensive loss
for the year. Accumulated other comprehensive 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 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 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 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
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 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
91
Crombie’s financial assets and liabilities are generally classified and measured as follows:
Financial Asset/Liability
Category
Measurement
Cash and cash equivalents
Assets at amortized cost
Amortized cost
Trade receivables
Assets at amortized cost
Amortized cost
Restricted cash
Assets at amortized cost
Amortized cost
Long-term receivables
Assets at amortized cost
Amortized cost
Derivative financial assets and liabilities
FVTPL
Fair value
Derivatives designated in a hedging relationship
FVTOCI
Fair value
Accounts payable and other liabilities (excluding interest rate swaps)
Financial liabilities at amortized cost
Amortized cost
Fixed rate mortgages
Financial liabilities at amortized cost
Amortized cost
Credit facilities
Financial liabilities at amortized cost
Amortized cost
Senior unsecured notes
Financial liabilities at 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 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 the 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
92
(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 loss presentation
As a result of the classification of all units as financial liabilities, the
consolidated statement of comprehensive loss recognizes distributions to
Unitholders as a finance cost. In addition, terminology such as net income
has been replaced by 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 loss
The components of comprehensive 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 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.
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
93
(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 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, 2024,
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) Changes in accounting standards
Effective January 1, 2024, Crombie has applied the amendments of IAS 1
“Presentation of Financial Statements” (“IAS 1”). The amendments clarify
how to classify liabilities as current or non-current. The change was
applied retrospectively on the effective date and there was no material
impact as a result of this amendment.
(y) Future changes in accounting standards
The International Accounting Standards Board (“IASB”) has issued a new
standard, IFRS 18 “Presentation and Disclosure in Financial Statements”.
This standard will replace IAS 1 and provide a defined structure for the
statement of profit or loss, require enhanced disclosures for certain profit
or loss performance measures that are reported outside an entity’s
financial statements and clarification on aggregation and disaggregation.
The new standard will apply to reporting periods beginning on or after
January 1, 2027 and will apply to comparative information. Management
is currently evaluating the impact of this future policy on the consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
94
3) Investment Properties
December 31, 2024
December 31, 2023
Income properties
$
3,754,741
$
3,529,969
Properties under development
169,139
94,488
Total investment properties
$
3,923,880
$
3,624,457
Income properties
Land
Buildings
Intangibles
Deferred
Leasing Costs
Total
Cost
Opening balance, January 1, 2024
$
1,157,300
$
3,099,955
$
75,320
$
22,381
$
4,354,956
Acquisitions
84,561
203,191
1,488
—
289,240
Additions
14
17,709
—
666
18,389
Derecognition of right-of-use land asset
(1,664)
—
—
—
(1,664)
Write-off of fully depreciated assets
—
(5,014)
(2,380)
(1,299)
(8,693)
Transfer from other assets (Note 5)1
—
3,814
—
—
3,814
Transfer to investment properties held for sale (Note 6)
(6,480)
(22,004)
(230)
(65)
(28,779)
Reclassification from properties under development
1,121
15,231
—
—
16,352
Balance, December 31, 2024
1,234,852
3,312,882
74,198
21,683
4,643,615
Accumulated depreciation, amortization, and impairment
Opening balance, January 1, 2024
10,738
771,287
37,133
5,829
824,987
Depreciation and amortization
312
72,888
4,822
2,032
80,054
Derecognition of right-of-use land asset
(148)
—
—
—
(148)
Impairment
1,800
3,300
—
—
5,100
Write-off of fully depreciated assets
—
(5,014)
(2,380)
(1,299)
(8,693)
Transfer to investment properties held for sale (Note 6)
—
(12,283)
(117)
(26)
(12,426)
Balance, December 31, 2024
12,702
830,178
39,458
6,536
888,874
Net carrying value, December 31, 2024
$
1,222,150
$
2,482,704
$
34,740
$
15,147
$
3,754,741
(1) For the year ended December 31, 2024, Crombie transferred $3,814 in predevelopment costs to investment properties. These costs were previously presented as prepaid expenses and deposits within other
assets (Note 5).
Included in land are right-of-use assets of $14,928 net of accumulated
depreciation of $1,747 for land held under lease.
During the year, Crombie recorded impairment totalling $5,100 on
three retail properties. This impairment was the result of vacancy at
the properties. Impairment is measured on a per property basis and
is determined as the amount by which the carrying value, using the
cost method, exceeds the recoverable amount for each property. The
recoverable amount is determined to be the higher value of the economic
benefit of the continued use of the asset or the selling price less costs to
sell. 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.
Land
Buildings
Intangibles
Deferred
Leasing Costs
Total
Cost
Opening balance, January 1, 2023
$
1,148,829
$
3,043,096
$
75,945
$
10,703
$
4,278,573
Acquisitions
5,715
23,722
2,205
—
31,642
Additions
2,743
25,108
—
12,091
39,942
Write-off of fully depreciated assets
—
(4,628)
(2,830)
(413)
(7,871)
Reclassification from properties under development
13
12,657
—
—
12,670
Balance, December 31, 2023
1,157,300
3,099,955
75,320
22,381
4,354,956
Accumulated depreciation, amortization, and impairment
Opening balance, January 1, 2023
10,422
705,420
35,076
4,588
755,506
Depreciation and amortization
316
70,495
4,887
1,654
77,352
Write-off of fully depreciated assets
—
(4,628)
(2,830)
(413)
(7,871)
Balance, December 31, 2023
10,738
771,287
37,133
5,829
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
95
Properties under development
Land
Buildings
Total
Opening balance, January 1, 2024
$
56,637
$
37,851
$
94,488
Additions
4,754
40,463
45,217
Transfer from other assets (Note 5)1
34,510
11,276
45,786
Reclassification to income-producing properties
(1,121)
(15,231)
(16,352)
Balance, December 31, 2024
$
94,780
$
74,359
$
169,139
Land
Buildings
Total
Opening balance, January 1, 2023
$
52,852
$
14,292
$
67,144
Additions
3,798
36,216
40,014
Reclassification to income-producing properties
(13)
(12,657)
(12,670)
Balance, December 31, 2023
$
56,637
$
37,851
$
94,488
(1) For the year ended December 31, 2024, Crombie transferred $45,786 in predevelopment costs to properties under development. These costs were previously presented as prepaid expenses and deposits
within other assets (Note 5).
Fair value
The fair 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. Crombie’s total fair value of
investment properties exceeds carrying value by $1,289,615 at December 31,
2024 (December 31, 2023 – $1,109,289). 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:
Fair Value
Carrying Value
December 31, 2024
$
5,604,000
$
4,314,385
December 31, 2023
$
5,096,000
$
3,986,711
Carrying value consists of the net carrying value of:
Note
December 31, 2024
December 31, 2023
Income properties
$
3,754,741
$
3,529,969
Properties under development
169,139
94,488
Accrued straight-line rent receivable
5
108,800
103,753
Tenant incentives
5
281,705
258,501
Total carrying value
$
4,314,385
$
3,986,711
The fair value included in this summary reflects the fair value of the
properties as at December 31, 2024 and 2023, 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, plus any incremental fair value recognized through
entitlement, 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)
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.
(ii)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
96
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
for the valuation of 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.
December 31, 2024
December 31, 2023
Weighted average capitalization rate
5.98%
6.12%
Fair value sensitivity
Crombie has determined that a change in this applied capitalization rate and net operating income at December 31, 2024 would result in an (increase)
decrease in the fair value of the investment properties as follows:
Capitalization
rate change
Net operating income change
$
(15,000)
$
(10,000)
$
(5,000)
$
—
$
5,000
$
10,000
$
15,000
(0.75)%
$
553,000
$
637,000
$
720,000
$
804,000
$
888,000
$
971,000
$
1,055,000
(0.50)%
$
258,000
$
342,000
$
425,000
$
509,000
$
593,000
$
676,000
$
760,000
(0.25)%
$
(9,000)
$
75,000
$
158,000
$
242,000
$
326,000
$
409,000
$
493,000
—%
$
(251,000)
$
(167,000)
$
(84,000)
$
—
$
84,000
$
167,000
$
251,000
0.25%
$
(472,000)
$
(388,000)
$
(305,000)
$
(221,000)
$
(137,000)
$
(54,000)
$
30,000
0.50%
$
(676,000)
$
(592,000)
$
(509,000)
$
(425,000)
$
(341,000)
$
(258,000)
$
(174,000)
0.75%
$
(863,000)
$
(779,000)
$
(696,000)
$
(612,000)
$
(528,000)
$
(445,000)
$
(361,000)
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.
2024
Transaction Date
Vendor/Purchaser
Properties
Acquired (Disposed)
Approximate Square
Footage
Initial Acquisition
(Disposition) Price1
April 30, 2024
Third Party
(1)
(15,000)
$
(13,000)
June 24, 2024
Third Party
1
48,000
$
9,880
September 26, 2024
Related Party
1
14,000
$
3,760
October 8, 2024
Third Party
(2)
(338,000)
$
(6,000)
October 15, 2024
Third Party
1
208,000
$
133,000
October 24, 2024²
Third Party
—
—
$
2,000
(1) The initial acquisition (disposition) prices exclude closing and transaction costs.
(2) Acquisition of land parcel previously held through a long-term land lease. This acquisition resulted in a gain of $405 on derecognition of the right-of-use asset associated with the land lease.
On October 15, 2024, Crombie acquired its partners’ interest in the
Davie Limited Partnership joint venture and recognized the property as
an asset acquisition, which resulted in a gain of $51,794 following the
remeasurement of its previously held interest in Davie Limited Partnership
joint venture. This investment property is now consolidated 100% with
Crombie’s investment properties.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
97
2023
Transaction Date
Vendor/Purchaser
Properties
Acquired
Approximate Square
Footage
Initial Acquisition
Price1
January 19, 2023
Related Party
1
21,000
$
2,122
February 27, 2023
Related Party
1
60,000
$
14,600
May 1, 2023
Related Party
1
58,000
$
9,760
(1) The initial acquisition prices exclude closing and transaction costs.
Investment property disposals
Year ended
December 31, 2024
December 31, 2023
Gross proceeds
$
19,000
$
—
Selling costs
(1,053)
—
17,947
—
Carrying values derecognized:
Land
(6,480)
—
Buildings
(9,314)
—
Intangibles
(113)
—
Deferred leasing costs
(39)
—
Tenant incentives
(438)
—
Recognition of deferred gain
—
594
Provisions
(396)
(6)
Total gain on disposal
$
1,167
$
588
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.
Year ended
December 31, 2024
December 31, 2023
Number of co-owned
properties
Ownership
Number of co-owned
properties
Ownership
Retail
59
11%-50%
60
11%–50%
Retail-related industrial
3
50%
3
50%
Total co-owned properties
62
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
98
4) Investment In Joint Ventures
The following represents Crombie’s interest in equity-accounted investments:
December 31, 2024
December 31, 2023
1600 Davie Limited Partnership
—%
50.0%
Bronte Village Limited Partnership
50.0%
50.0%
The Duke Limited Partnership
50.0%
50.0%
Penhorn Residential Holdings Limited Partnership
50.0%
50.0%
140 CPN Limited
50.0%
50.0%
1700 East Broadway Limited Partnership
50.0%
50.0%
Lynn Valley Limited Partnership
50.0%
50.0%
Kingsway & Tyne Property Development Limited Partnership
50.0%
50.0%
Crombie acquired the remaining 50% interest in 1600 Davie Limited Partnership on October 15, 2024.
The following tables represent 100% of the financial position and financial results of the equity-accounted entities:
December 31, 2024
December 31, 2023
Davie LP
Bronte LP
Duke LP
Other
Total
Davie LP
Bronte LP
Duke LP
Other
Total
Non-current assets
$
—
$
252,600
$
110,502
$
45,576
$
408,678
$
184,015
$
256,271
$
112,446
$
39,220
$
591,952
Current assets
—
3,785
6,777
2,752
13,314
13,610
2,650
10,932
4,719
31,911
Non-current liabilities
—
(239,311)
(100,233)
(27,841)
(367,385)
(206,275)
—
(104,000)
(26,477)
(336,752)
Current liabilities
—
(5,310)
(2,778)
(1,468)
(9,556)
(3,864)
(241,208)
(3,033)
(3,329)
(251,434)
Net assets
—
11,764
14,268
19,019
45,051
(12,514)
17,713
16,345
14,133
35,677
Crombie’s share at 50%
—
5,882
7,134
9,509
22,525
(6,257)
8,856
8,172
7,067
17,838
Reconciling items:
Deferred gain
—
—
—
—
—
(7,441)
—
—
(334)
(7,775)
Partnership loans
—
5,551
1,685
—
7,236
(6,000)
5,332
1,685
—
1,017
Gain on distributions
—
—
—
—
—
18,458
—
—
—
18,458
Unrecognized losses
—
—
—
—
—
1,240
—
—
—
1,240
Crombie's investment
in joint ventures
$
—
$
11,433
$
8,819
$
9,509
$
29,761
$
—
$
14,188
$
9,857
$
6,733
$
30,778
Year ended
December 31, 2024
December 31, 2023
Davie LP
Bronte LP
Duke LP
Other
Total
Davie LP
Bronte LP
Duke LP
Other
Total
Revenue
$
9,515
$
18,908
$
9,374
$
706
$
38,503
$
12,007
$
13,153
$
8,959
$
30,532
$
64,651
Property operating expenses
(2,157)
(6,129)
(3,425)
(285)
(11,996)
(2,915)
(5,381)
(4,456)
(15,955)
(28,707)
General and administrative
expenses
(134)
(196)
(67)
(149)
(546)
(224)
(220)
(87)
(126)
(657)
Depreciation and amortization
(2,149)
(4,373)
(1,908)
(56)
(8,486)
(2,934)
(4,492)
(1,903)
(55)
(9,384)
Finance costs – operations
(4,529)
(13,011)
(3,277)
(51)
(20,868)
(7,178)
(16,188)
(3,299)
(194)
(26,859)
Net income (loss)
$
546
$
(4,801)
$
697
$
165
$
(3,393)
$
(1,244)
$
(13,128)
$
(786)
$
14,202
$
(956)
Crombie’s income (loss) from
equity-accounted investments
$
—
$
(2,401)
$
348
$
83
$
(1,970)
$
—
$
(6,564)
$
(393)
$
7,101
$
144
The following table shows the changes in the total carrying value of Crombie’s investment in joint ventures for the year ended:
December 31, 2024
December 31, 2023
Opening balance
$
30,778
$
40,397
Contributions
3,574
2,468
Distributions
(1,235)
(11,743)
Deferred gain
—
595
Share of income (loss)
(1,970)
144
Share of other comprehensive loss
(1,386)
(1,083)
Closing balance
$
29,761
$
30,778
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
99
Fair Value
The estimated fair value of the investment properties held within Crombie’s equity-accounted joint ventures at 100% is as follows:
Fair Value
Carrying Value
December 31, 2024
$
570,000
$
401,569
December 31, 2023
$
945,000
$
566,563
Carrying value consists of the net carrying value at 100% of:
December 31, 2024
December 31, 2023
Income properties
$
357,105
$
528,754
Properties under development
39,754
32,537
Accrued straight-line rent receivable
546
862
Tenant incentives
4,164
4,410
Total carrying value
$
401,569
$
566,563
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, 2024 and December 31, 2023, 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, plus any
incremental fair value recognized through entitlement, until the property
is substantially completed. As at December 31, 2024, Bronte Village Limited
Partnership, The Duke Limited Partnership, and 140 CPN Limited are
revenue-generating properties.
Crombie has utilized the following weighted average capitalization rates
for its joint venture properties:
December 31, 2024
December 31, 2023
Weighted average capitalization rate
4.27%
3.67%
Fair value sensitivity of the investment properties held within Crombie’s equity-accounted joint ventures
Crombie has determined that a change in this applied capitalization rate and net operating income at December 31, 2024 would result in an (increase)
decrease in the fair value of the investment properties as follows::
Capitalization
rate change
Net operating income change
$
(1,500)
$
(1,000)
$
(500)
$
—
$
500
$
1,000
$
1,500
(0.75)%
$
77,000
$
89,000
$
100,000
$
112,000
$
124,000
$
135,000
$
147,000
(0.50)%
$
35,000
$
47,000
$
58,000
$
70,000
$
82,000
$
93,000
$
105,000
(0.25)%
$
(2,000)
$
10,000
$
21,000
$
33,000
$
45,000
$
56,000
$
68,000
—%
$
(35,000)
$
(23,000)
$
(12,000)
$
—
$
12,000
$
23,000
$
35,000
0.25%
$
(64,000)
$
(52,000)
$
(41,000)
$
(29,000)
$
(17,000)
$
(6,000)
$
6,000
0.50%
$
(90,000)
$
(78,000)
$
(67,000)
$
(55,000)
$
(43,000)
$
(32,000)
$
(20,000)
0.75%
$
(114,000)
$
(102,000)
$
(91,000)
$
(79,000)
$
(67,000)
$
(56,000)
$
(44,000)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100
5) Other Assets
December 31, 2024
December 31, 2023
Current
Non-current
Total
Current
Non-current
Total
Trade receivables
$
21,838
$
—
$
21,838
$
18,605
$
—
$
18,605
Provision for doubtful accounts
(1,472)
—
(1,472)
(1,396)
—
(1,396)
Net trade receivables
20,366
—
20,366
17,209
—
17,209
Prepaid expenses and deposits1
19,946
—
19,946
11,107
48,910
60,017
Fair value of interest rate swap agreements
—
—
—
2,219
—
2,219
Other fixed assets2,3
—
9,526
9,526
—
9,629
9,629
Finance lease receivable
699
10,609
11,308
631
11,309
11,940
Accrued straight-line rent receivable
—
108,800
108,800
—
103,753
103,753
Tenant incentives
—
281,705
281,705
—
258,501
258,501
Vendor financing4
786
1,834
2,620
—
—
—
Amounts receivable from related parties
2,131
10,302
12,433
17,994
12,071
30,065
Total other assets
$
43,928
$ 422,776
$
466,704
$
49,160
$ 444,173
$ 493,333
(1) For the year ended December 31, 2024, Crombie transferred $49,600 to investment properties and properties under development.
(2) For the year ended December 31, 2024, depreciation of other fixed assets was $1,474 (December 31, 2023 – $1,483).
(3) Other fixed assets include right-of-use assets of $2,175 (December 31, 2023 – $2,234) net of accumulated depreciation of $1,574 (December 31, 2023 – $1,372) relating to office and vehicle leases.
(4) Vendor financing arising from the disposition of two properties in the fourth quarter of 2024 with repayment due in three annual interest free installments beginning one year following the transaction date.
Tenant Incentives
Cost
Accumulated
Amortization
Net Carrying
Value
Balance, January 1, 2024
$ 374,468
$ (115,967)
$ 258,501
Additions
52,869
—
52,869
Amortization
—
(29,227)
(29,227)
Write-off of fully depreciated assets
(9,912)
9,912
—
Transfer to investment properties held for sale (Note 6)
(785)
347
(438)
Balance, December 31, 2024
$ 416,640
$ (134,935)
$ 281,705
Tenant incentives
Cost
Accumulated
Amortization
Net Carrying
Value
Balance, January 1, 2023
$ 342,305
$
(94,427)
$ 247,878
Additions
37,139
—
37,139
Amortization
—
(26,516)
(26,516)
Write-off of fully depreciated assets
(4,976)
4,976
—
Balance, December 31, 2023
$ 374,468
$ (115,967)
$ 258,501
6) Investment Properties Held For Sale
Land
Buildings
Intangibles
Deferred
Leasing Costs
Tenant
Incentives
Total
Balance, January 1, 2024
$
—
$
—
$
—
$
—
$
—
$
—
Assets transferred to held for sale
6,480
9,721
113
39
438
16,791
Additions1
—
(407)
—
—
—
(407)
Derecognition through disposition
(6,480)
(9,314)
(113)
(39)
(438)
(16,384)
Net carrying value, December 31, 2024
$
—
$
—
$
—
$
—
$
—
$
—
(1) Prior to disposition, Crombie was reimbursed $407 in development costs incurred.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
101
7) Investment Property Debt
Range
Weighted Average
Interest Rate
Weighted Average
Term to Maturity
December 31, 2024
December 31, 2023
Fixed rate mortgages
2.70%–6.07%
4.13%
5.8 years
$
827,930
$
838,957
Construction financing facility
0.9 years
13,447
—
Unsecured non-revolving credit facility I
— years
—
93,297
Unsecured non-revolving credit facility II
3.0 years
50,000
—
Secured revolving credit facility
— years
—
47,591
Unsecured revolving credit facility
4.0 years
—
—
Joint operation credit facility II
4.8 years
3,520
3,503
Deferred financing charges
(6,962)
(4,329)
Total investment property debt
$
887,935
$
979,019
Mortgages
Non-current
$
792,265
$
617,717
Current
30,539
216,911
Credit facilities
Non-current
52,604
140,888
Current
12,527
3,503
$
887,935
$
979,019
Weighted average interest rate for drawn credit facilities
4.58%
6.78%
Specific investment properties with a carrying value of $1,480,863 as at December 31, 2024 (December 31, 2023 – $2,047,666) are currently pledged as
security for mortgages. Carrying value includes investment properties, as well as accrued straight-line rent receivable and tenant incentives, which are
included in other assets.
Mortgage activity
Weighted Average
For the year ended:
Type
Number of
Mortgages
Rate
Terms in Years
Amortization
Period in Years
Proceeds
(Repayments)
December 31, 2024
Assumed
2
3.22%
3.2
37.2
$
177,932
New
10
5.04%
5.0
17.7
$
46,968
Repaid
24
4.26%
$
(204,615)
Weighted Average
For the year ended:
Type
Number of
Mortgages
Rate
Terms in Years
Amortization
Period in Years
Proceeds
(Repayments)
December 31, 2023
New
3
5.27%
9.5
29.8
$
120,660
Repaid
22
4.18%
$
(167,266)
In the second quarter of 2024, in anticipation of the cessation of the
publication of Canadian Dollar Offered Rate (“CDOR”), all credit facilities
were amended such that borrowings under all credit facilities are possible
by way of prime rate advance or Canadian Overnight Repo Rate Average
(“CORRA”). The use of CORRA rates, which replaced Bankers’ Acceptance
rates, did not result in a material change in Crombie’s cost of borrowing
under the credit facilities. The respective spread or margin may change
depending on Crombie’s unsecured bond rating with Morningstar DBRS.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
102
Unsecured Revolving Credit Facility
On December 23, 2024, Crombie converted its secured revolving credit
facility to an unsecured revolving credit facility. In conjunction, the
maximum principal amount was increased from $400,000 to $550,000
and the maturity date extended to December 23, 2028. No balance was
drawn as at December 31, 2024; however, the maximum principal amount
is reduced by $5,198 in outstanding letters of credit. Borrowings under the
unsecured revolving credit facility can be by way of prime rate advance
or CORRA, 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.
Construction Financing Facility
On September 4, 2024, Crombie secured a CMHC-insured construction
financing facility with an initial maturity date of December 1, 2025 on a
residential property currently under development. It has a balance drawn
of $13,447 at December 31, 2024. The construction facility carries a floating
rate which varies with the lender’s cost of funds. Upon completion of the
development, Crombie has the ability to convert the facility to a fixed rate
with an initial term of 10 years.
Unsecured Non-revolving Credit Facility I
The unsecured non-revolving credit facility I was amended on October
15, 2024 to reduce the maximum principal amount from $200,000 to
$150,000. The facility was subsequently closed on December 23, 2024 in
conjunction with the amendment to the unsecured revolving credit facility.
Unsecured Non-revolving Credit Facility II
On October 15, 2024, Crombie obtained an unsecured non-revolving
credit facility with a maturity date of January 17, 2028. The facility carries
a floating rate which varies with the lender’s cost of funds and has a
maximum principal amount of $50,000. The facility was used for the
acquisition of the Davie Street residential property on October 15, 2024
and is fully drawn. Borrowings under the facility are by way of prime rate
advance or CORRA, and the floating interest rate is contingent on the type
of advance plus the applicable spread or margin. Crombie entered into a
fixed-for-floating rate interest rate swap, effectively fixing the interest rate
at 4.19%.
Unsecured Bilateral Credit Facility
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, 2026. No balance was drawn as at December 31, 2024. 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 prime rate advance
or CORRA, 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 Facility II
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 co-owned properties. On October 7, 2024, the facilities were
amended to increase the term loan facility to $32,000 and reset the
revolving credit facility to $9,000; the revolving credit facility will become
available when certain properties are pledged as security. At the same
time, the maturity date was extended to October 7, 2029. Borrowings
under both facilities can be by way of prime rate advance or CORRA, 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 which effectively fixed the interest rate on both facilities.
On October 7, 2024, the initial swap matured, at which point Crombie and
its co-ownership partner entered into a new fixed-for-floating interest
rate swap effectively fixing the interest rate on both facilities at 5.20%. At
December 31, 2024, Crombie’s portion of the term and revolving credit
facilities was $3,520 and $Nil, respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
103
8) Senior Unsecured Notes
Maturity Date1
Contractual
Interest Rate
December 31, 2024
December 31, 2023
Series E
January 31, 2025
4.80%
$
—
$
175,000
Series F
August 26, 2026
3.68%
200,000
200,000
Series G
June 21, 2027
3.92%
150,000
150,000
Series H
March 31, 2028
2.69%
150,000
150,000
Series I
October 9, 2030
3.21%
150,000
150,000
Series J
August 12, 2031
3.13%
150,000
150,000
Series K
September 28, 2029
5.24%
200,000
200,000
Series L
March 29, 2030
5.14%
200,000
—
Series M
January 15, 2032
4.73%
300,000
—
Deferred financing charges
(4,707)
(3,231)
Total senior unsecured notes
$
1,495,293
$
1,171,769
Non-current
$
1,495,293
$
1,171,769
Current
—
—
$
1,495,293
$
1,171,769
Weighted average interest rate
4.12%
3.89%
(1) The weighted average term to maturity as at December 31, 2024 was 4.8 years (December 31, 2023 – 4.4 years).
On March 6, 2024, Crombie issued, on a private placement basis,
$200,000 of Series L senior unsecured notes maturing March 29, 2030.
The net proceeds were used to pay existing indebtedness, including
repayment of outstanding credit facilities, and for general trust purposes.
The notes were priced with a contractual interest rate of 5.14%. Interest
is payable in equal semi-annual installments on September 29 and
March 29.
On October 11, 2024, Crombie issued, on a private placement basis,
$300,000 of Series M senior unsecured notes maturing January 15, 2032.
The proceeds were used to fund the early repayment of the Series E senior
unsecured notes, repayment of upcoming secured mortgage maturities,
and for general trust purposes. The notes were priced with a contractual
interest rate of 4.73%. Interest is payable in equal semi-annual installments
on January 15 and July 15.
On October 31, 2024, Crombie redeemed $175,000 principal amount of its
4.80% Series E senior unsecured notes which were originally scheduled to
mature on January 31, 2025.
A continuity of Crombie’s senior unsecured notes is as follows:
Senior Unsecured Notes
Opening balance, January 1, 2024
$
1,175,000
Net borrowing or issuances
500,000
Redemption
(175,000)
Balance, December 31, 2024
$
1,500,000
Senior Unsecured Notes
Opening balance, January 1, 2023
$
975,000
Net borrowing or issuances
200,000
Balance, December 31, 2023
$
1,175,000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
104
9) 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, 2024 was
$233 (year ended December 31, 2023 – $502).
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.
Most recent valuation date
Next required valuation date
Senior Management Pension Plan
December 31, 2024
December 31, 2025
Post-employment Benefit Plans
January 1, 2022
January 1, 2025
The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations and pension costs are as follows:
December 31, 2024
December 31, 2023
Senior Management
Pension Plan
Post-employment
Benefit Plans
Senior Management
Pension Plan
Post-employment
Benefit Plans
Discount rate – accrued benefit obligation
4.60%
4.60%
4.60%
4.60%
Rate of compensation increase
3.00%
N/A
3.00%
N/A
For measurement purposes, a 4.50% (2023 – 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
105
Information about Crombie’s defined benefit plans are as follows:
December 31, 2024
December 31, 2023
Senior
Management
Pension Plan
Post-employment
Benefit Plans
Total
Senior
Management
Pension Plan
Post-employment
Benefit Plans
Total
Accrued benefit obligation
Balance, beginning of year
$
5,966
$
1,795
$
7,761
$
5,428
$
1,662
$
7,090
Service cost
(135)
18
(117)
130
16
146
Interest cost
268
82
350
278
84
362
Actuarial losses (gains)
(63)
336
273
336
104
440
Benefits paid
(248)
(79)
(327)
(200)
(71)
(271)
Termination benefits
—
—
—
(6)
—
(6)
Balance, end of year
5,788
2,152
7,940
5,966
1,795
7,761
Plan assets
Fair value, beginning of year
—
—
—
—
—
—
Employer contributions
248
79
327
200
71
271
Benefits paid
(248)
(79)
(327)
(200)
(71)
(271)
Fair value, end of year
—
—
—
—
—
—
Funded status – deficit
5,788
2,152
7,940
5,966
1,795
7,761
Current portion
415
110
525
248
79
327
Non-current portion
5,373
2,042
7,415
5,718
1,716
7,434
Accrued benefit obligation recorded as a
liability
$
5,788
$
2,152
$
7,940
$
5,966
$
1,795
$
7,761
Net expense
Service cost
$
(135)
$
18
$
(117)
$
130
$
16
$
146
Termination benefits
—
—
—
(6)
—
(6)
Interest cost
268
82
350
278
84
362
Net expense
$
133
$
100
$
233
$
402
$
100
$
502
The table below outlines the sensitivity of the fiscal 2024 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.
Senior Management Pension Plan
Post-Employment Benefit Plans
Benefit Obligations
Benefit Cost1
Benefit Obligations
Benefit Cost1
Discount Rate
4.60%
4.60%
4.60%
4.60%
Impact of:
1% increase
(509)
27
(220)
6
1% decrease
599
(34)
261
(8)
Growth rate of health costs
4.50%
4.50%
Impact of:
1% increase
84
4
1% decrease
(76)
(4)
(1) Reflects the impact of the current service costs and the interest cost.
For the year ended December 31, 2024, the net defined contribution pension plans expense was $1,149 (year ended December 31, 2023 – $1,188).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
106
10) Trade And Other Payables
December 31, 2024
December 31, 2023
Current
Non-current
Total
Current
Non-current
Total
Tenant incentives and capital expenditures
$
27,763
$
—
$
27,763
$
27,355
$
—
$
27,355
Property operating costs
47,504
—
47,504
33,524
—
33,524
Prepaid rents
14,468
—
14,468
13,242
—
13,242
Finance costs on investment property debt and notes
18,394
—
18,394
15,299
—
15,299
Amounts payable to related party
1,376
—
1,376
1,623
—
1,623
Fair value of interest rate swap agreements
545
—
545
—
—
—
Distributions payable
13,647
—
13,647
13,431
—
13,431
Unit-based compensation plans
2,779
16,440
19,219
2,680
16,846
19,526
Deferred revenue
2,647
4,158
6,805
894
4,120
5,014
Total trade and other payables
$ 129,123
$
20,598
$ 149,721
$ 108,048
$
20,966
$ 129,014
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. During 2024, Crombie recorded
$2,100 in deferred revenue related to development management services.
11) Property Revenue
Year ended
December 31, 2024
December 31, 20232
Operating lease revenue
Rental revenue contractually due from tenants1
$
418,535
$
399,321
Contingent rental revenue
2,921
3,484
Straight-line rent recognition
5,035
5,415
Tenant incentive amortization
(29,227)
(26,516)
Lease termination income
2,108
1,672
Revenue from contracts with customers
Common area cost recoveries
65,829
62,852
Parking revenue
5,824
5,461
Total property revenue
$
471,025
$
451,689
(1) Includes reimbursement of Crombie’s property tax expense.
(2) Property revenue for the year ended December 31, 2023 has been increased by $10,750 from previously reported figures as a result of a change in the presentation of recoverable property taxes for certain
properties where tenants paid the property taxes on Crombie’s behalf.
The following table sets out tenants that contributed in excess of 10% of total property revenue:
Year ended
December 31, 2024
December 31, 20231
Sobeys Inc. (including all subsidiaries of Empire Company Limited (“Empire”))
$
265,394
56.3%
$
249,086
55.1%
(1) Property revenue for the year ended December 31, 2023 has been increased by $10,479 as a result of a change in the presentation of recoverable property taxes for certain properties where tenants paid
the property taxes on Crombie’s behalf.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
107
12) 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:
Year ended
December 31, 2024
December 31, 2023
Development fees
$
4,805
$
2,951
Management fees
530
479
Total revenue from management and development services
$
5,335
$
3,430
13) Property Operating Expenses
Year ended
December 31, 2024
December 31, 20231
Recoverable property taxes
$
95,669
$
94,340
Recoverable operating expenses
66,865
64,182
Other operating costs2
6,806
5,755
Total property operating expenses
$
169,340
$
164,277
(1) Property operating expenses for the year ended December 31, 2023 has been increased by $10,750 from previously reported figures as a result of a change in the presentation of recoverable property taxes
for certain properties where tenants paid the property taxes on Crombie’s behalf.
(2) Includes residential non-shareable expenses.
14) Operating Leases
Crombie as a lessor
Crombie’s operations include leasing commercial and residential real estate. Future minimum rental income under non-cancellable tenant leases as at
December 31, 2024, is as follows:
Year ending December 31,
2025
2026
2027
2028
2029
Thereafter
Total
Future minimum rental income
$ 306,585
$ 290,962
$ 274,334
$ 255,077
$ 235,246
$1,512,042
$2,874,246
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
108
15) General and Administrative Expenses and Change In Fair Value of Financial Instruments
(a) General and administrative expenses
Year ended
December 31, 2024
December 31, 2023
Salaries and benefits
$
13,026
$
19,592
Professional and public company costs
4,703
4,611
Occupancy and other
3,245
3,441
Total general and administrative expenses
$
20,974
$
27,644
General and administration expenses for the year ended December 31, 2024 includes employee transition costs of $979 (December 31, 2023 - $7,386).
(b) Change in fair value of financial instruments
Year ended
December 31, 2024
December 31, 2023
Deferred Unit Plan
$
753
$
1,911
Net change in derivatives not designated as cash flow hedge
(483)
—
Total change in fair value of financial instruments
$
270
$
1,911
16) Finance Costs – Operations
Year ended
December 31, 2024
December 31, 2023
Fixed rate mortgages
$
36,038
$
35,384
Floating rate term, revolving, and demand facilities
4,287
9,747
Capitalized interest1
(6,282)
(4,433)
Senior unsecured notes
56,831
43,847
Interest income on finance lease receivable
(511)
(537)
Interest on lease liability
2,180
2,260
Finance costs – operations, expense
92,543
86,268
Amortization of fair value debt adjustment
(229)
282
Change in accrued finance costs
(3,095)
(2,278)
Amortization of deferred financing charges
(3,145)
(2,455)
Finance costs – operations, paid
$
86,074
$
81,817
(1) For the year ended December 31, 2024, interest was capitalized for qualifying development projects based on a weighted average interest rate of 3.87% (December 31, 2023 - 3.87%).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
109
17) Units Outstanding
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, 2024
106,905,347
$
1,317,139
74,178,234
$
916,592
181,083,581
$
2,233,731
Units issued under DRIP
1,701,519
22,674
1,205,345
16,145
2,906,864
38,819
Balance, December 31, 2024
108,606,866
$
1,339,813
75,383,579
$
932,737
183,990,445
$
2,272,550
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, 2023
105,321,000
$
1,295,077
73,055,896
$
900,963
178,376,896
$
2,196,040
Units issued under DRIP
1,584,347
22,062
1,122,338
15,629
2,706,685
37,691
Balance, December 31, 2023
106,905,347
$
1,317,139
74,178,234
$
916,592
181,083,581
$
2,233,731
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)
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);
(ii)
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
(iii)
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.
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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
110
18) Supplementary Cash Flow Information
(a) Items not affecting operating cash
Year ended
December 31, 2024
December 31, 2023
Items not affecting operating cash:
Straight-line rent recognition
$
(5,035)
$
(5,415)
Amortization of tenant incentives
29,227
26,516
Gain on disposal of investment properties
(1,167)
(588)
Gain on acquisition of control of joint venture
(51,794)
—
Gain on derecognition of right-of-use asset
(405)
—
Impairment of investment properties
5,100
—
Depreciation and amortization
81,530
78,835
(Income) loss from equity-accounted investments
1,970
(144)
Income tax expense
4
6
Change in fair value of financial instruments
(270)
(1,911)
$
59,160
$
97,299
(b) Change in other non-cash operating items
Year ended
December 31, 2024
December 31, 2023
Cash provided by (used in):
Trade receivables
$
(3,157)
$
2,108
Prepaid expenses and deposits and other assets
(8,634)
(761)
Payables and other liabilities
14,981
4,299
$
3,190
$
5,646
(c) Cash and cash equivalents
December 31, 2024
December 31, 2023
Restricted cash1
$
2,605
$
—
Cash
7,416
—
Total cash and cash equivalents
$
10,021
$
—
(1) Crombie received funds on closing of the remaining 50% interest in 1600 Davie Limited Partnership that are held in escrow.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
111
19) Related Party Transactions
As at December 31, 2024, 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:
Year ended
December 31, 2024
December 31, 20231
Property revenue
Property revenue
$
265,394
$
249,086
Head lease income
$
809
$
1,275
Revenue from management and development services
$
4,974
$
3,114
Property operating expenses
$
(45)
$
(135)
General and administrative expenses
Property management services recovered
$
154
$
208
Other general and administrative expenses
$
(164)
$
(171)
Finance costs – distributions to Unitholders
$
(67,418)
$
(66,349)
(1) Property revenue for the year ended December 31, 2023 has been increased by $10,479 from previously reported figures as a result of a change in the presentation of recoverable property taxes for certain
properties where tenants paid 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 Property Management
Agreement which is being recognized as revenue from management and
development services.
During the year ended December 31, 2024, Crombie issued 1,205,345
(December 31, 2023 – 1,122,338) Class B LP Units to ECLD under the DRIP
(Note 17).
During the year ended December 31, 2024, Crombie invested $42,325
(December 31, 2023 – $25,201) in properties anchored by subsidiaries of
Empire, which resulted in amended lease terms. These amounts have
been included in tenant incentive additions and the costs are being
amortized over the amended lease terms.
During the year ended December 31, 2024, Crombie acquired one retail
property from a subsidiary of Empire for a total purchase price of $3,760
before closing and transaction costs.
Amounts due from related parties include $40 (December 31, 2023 – $801)
in a note receivable due from Lynn Valley Limited Partnership related to
development services.
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 as follows:
Year ended
December 31, 2024
December 31, 2023
Salary, bonus and other short-term employee benefits
$
6,993
$
7,404
Transition costs
—
6,883
Total compensation paid to trustees
973
1,020
Other long-term benefits
131
204
$
8,097
$
15,511
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
112
20) Financial Instruments
(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, 2024.
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, 2024
December 31, 2023
Fair Value
Carrying Value
Fair Value
Carrying Value1
Financial liabilities
Investment property debt
$
881,078
$
887,935
$
956,601
$
979,019
Senior unsecured notes
1,496,790
1,495,293
1,108,474
1,171,769
Total financial liabilities
$
2,377,868
$
2,383,228
$
2,065,075
$
2,150,788
(1) Carrying values for December 31, 2023 were updated to included deferred financing costs.
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 receivable
• Trade and other payables.
(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 59.1% (December 31, 2023 – 58.5%)
of annual minimum rent; no other tenant accounts for more than 2.4%
(December 31, 2023 – 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,
2024, Empire (including Sobeys and all other subsidiaries of Empire)
represents 56.3% (December 31, 2023 – 55.1%(1)) of total property
revenue. Excluding these tenants, no other tenant accounts for more
than 2.2% (December 31, 2023 – 2.3%) of Crombie’s total property
revenue.
• Over the next five years, leases on no more than 7.5% (December 31,
2023 – 7.3%) of the gross leasable area of Crombie will expire in any
one year.
(1) Property revenue for the year ended December 31, 2023 has been increased by $10,479 from
previously reported figures as a result of a change in the presentation of recoverable property
taxes for certain properties where tenants paid the property taxes on Crombie’s behalf.
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. 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.
Year ended
December 31, 2024
December 31, 2023
Provision for doubtful accounts, beginning of year
$
1,396
$
2,328
Additional provision
1,102
1,035
Recoveries
(593)
(885)
Write-offs
(433)
(1,082)
Provision for doubtful accounts, end of year
$
1,472
$
1,396
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
113
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 decreased from 7.20%
at December 31, 2023 to 5.45% at December 31, 2024. 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 on financial instruments
The following tables summarize Crombie’s financial instruments that are
hedged:
As at December 31, 2024
Hedge type
Maturity date
Fixed interest rate
Hedge
effectiveness
Notional amount of the
hedging instrument1
Fair value of
hedging instrument1
Cash flow hedge2
October 7, 2029
5.20%
100%
$
3,520
$
(62)
Cash flow hedge3
March 1, 2029
3.15%
100%
51,206
1,522
Cash flow hedge2
October 15, 2029
4.19%
—%
50,000
(483)
$
104,726
$
977
(1) Amounts are shown at Crombie’s ownership percentage.
(2) Included in Note 10 in the consolidated financial statements.
(3) Included in Note 4 in the consolidated financial statements.
Year ended December 31, 2024
Hedge type
Maturity date
Fixed interest rate
Change in fair value
gain (loss) recognized in
other comprehensive
income (loss)1
Hedge recognized
in statements of
comprehensive loss
Cash flow hedge
December 20, 2024
3.72%
$
(1,983)
$
—
Cash flow hedge2
March 18, 2025
3.52%
(140)
30
Cash flow hedge
October 7, 2024
3.27%
(96)
—
Cash flow hedge
March 1, 2029
3.15%
(1,386)
—
Cash flow hedge
October 7, 2029
5.20%
(62)
—
Cash flow hedge
October 15, 2029
4.19%
—
(483)
$
(3,667)
$
(453)
(1) Amounts are shown at Crombie’s ownership percentage.
(2) Mortgage and swap were settled on November 14, 2024, with the net settlement amount reducing finance costs.
As at December 31, 2024
• Crombie’s weighted average term to maturity of its fixed rate
mortgages is 5.8 years;
• Crombie’s weighted average term to maturity of its unsecured notes is
4.8 years;
• Crombie has an unsecured non-revolving credit facility to a maximum
of $50,000 with a balance of $50,000 outstanding;
• Crombie has a floating rate unsecured revolving credit facility available
to a maximum of $550,000 with no balance outstanding/drawn;
• 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 $3,520 outstanding;
• Crombie has interest rate swap agreements in place on $53,520 of
floating rate debt and an interest rate swap agreement in place held
in equity-accounted investments on $51,206 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 $12,000 with
a balance of $10,250 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 (loss):
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
114
Year ended December 31, 2024
Impact on operating income attributable to Unitholders
of interest rate changes on the unsecured revolving credit facility
Increase in Rate
Decrease in Rate
Impact of a 0.5% interest rate change
$
(268)
$
268
Impact of a 1.0% interest rate change
$
(536)
$
536
Impact of a 1.5% interest rate change
$
(804)
$
804
As at December 31, 2024
Impact on other comprehensive loss of interest rate changes
on interest rate swap agreements at Crombie’s share
Increase in Rate
Decrease in Rate
Impact of a 0.5% interest rate change
$
1,100
$
(1,100)
Impact of a 1.0% interest rate change
$
2,100
$
(2,100)
Impact of a 1.5% interest rate change
$
3,200
$
(3,200)
As at December 31, 2024
Impact on decrease in net assets attributable to Unitholders of interest
rate changes on interest rate swap agreements not designated as a hedge
Increase in Rate
Decrease in Rate
Impact of a 0.5% interest rate change
$
1,100
$
(1,100)
Impact of a 1.0% interest rate change
$
2,200
$
(2,300)
Impact of a 1.5% interest rate change
$
3,200
$
(3,500)
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 $550,000 unsecured revolving credit facility is limited by the amount
utilized under the facility and the amount of any outstanding letters of
credit. As at December 31, 2024, $544,802 was available on this facility.
The estimated payments, including principal and interest, on financial liabilities to maturity date are as follows:
Twelve months ending December 31,
Contractual
Cash Flows1
2025
2026
2027
2028
2029
Thereafter
Fixed rate mortgages2
$
1,007,849
$
66,057
$
68,903
$
331,096
$
82,039
$
117,641
$
342,113
Senior unsecured notes
1,802,451
61,738
259,182
201,284
195,486
241,857
842,904
Trade and other payables
131,327
110,729
9,750
1,559
1,184
1,184
6,921
Lease liabilities
139,844
4,642
2,895
2,662
2,439
2,307
124,899
3,081,471
243,166
340,730
536,601
281,148
362,989
1,316,837
Credit facilities2
74,934
16,447
2,278
2,278
50,270
3,661
—
Total estimated payments
$
3,156,405
$
259,613
$
343,008
$
538,879
$
331,418
$
366,650
$
1,316,837
(1) Includes principal and interest and excludes extension options.
(2) Includes the fixed portion of the interest expense for credit facilities under swap agreements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
115
21) 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:
December 31, 2024
December 31, 2023
Fixed rate mortgages1
$
822,804
$
834,628
Drawn credit facilities1
65,131
144,391
Senior unsecured notes1
1,495,293
1,171,769
Crombie REIT Unitholders
1,099,588
1,081,631
SVU and Class B LP Unitholders2
755,952
743,082
Lease liabilities
33,937
36,292
$
4,272,705
$
4,011,793
(1) Net of deferred financing charges.
(2) Crombie REIT Special Voting Units (“SVU”) and Class B LP Units.
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.
December 31, 2024
December 31, 2023
Fixed rate mortgages
$
827,930
$
838,957
Senior unsecured notes
1,500,000
1,175,000
Unsecured non-revolving credit facility I
—
93,297
Unsecured non-revolving credit facility II
50,000
—
Secured revolving credit facility
—
47,591
Construction financing facility
13,447
—
Unsecured revolving credit facility
—
—
Joint operation credit facilities
3,520
3,503
Debt held in joint ventures, at Crombie’s share1
185,991
274,115
Lease liabilities
33,937
36,292
Total debt
$
2,614,825
$
2,468,755
Income properties, cost2
$
4,633,758
$
4,345,799
Properties under development, cost
169,139
94,488
Investment properties, held in joint ventures, cost, at Crombie’s share
211,997
294,607
Below-market lease component, cost3
70,182
72,990
Other assets, cost4
607,736
614,302
Other assets, cost, held in joint ventures, at Crombie’s share
9,578
30,012
Cash and cash equivalents
10,021
—
Cash and cash equivalents held in joint ventures, at Crombie’s share
3,434
3,004
Deferred financing charges
11,669
7,560
Gross book value
$
5,727,514
$
5,462,762
Debt to gross book value – cost basis
45.7%
45.2%
(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 $9,857 (December 31, 2023 – $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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
116
The terms of the unsecured revolving credit facility require that each
quarter Crombie must maintain certain covenants:
• total leverage to total gross book value of 60% (65% including
convertible debentures);
• total unencumbered property asset value must be a minimum of 1.4
times the total unsecured debt outstanding;
• annualized net operating income on all properties must be a minimum
of 1.5 times the coverage of all annualized debt service requirements;
• secured debt to total gross book value less than 40%; and
• cash distributions to Unitholders are limited to 100% of funds from
operations.
As at December 31, 2024, Crombie is in compliance with all externally
imposed capital requirements and all covenants relating to its debt
facilities.
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, cash distributions to Unitholders to be limited to
100% of funds from operations as defined in the credit facilities, and total
leverage to total gross book value of 60% or less.
22) Lease liabilities
Crombie’s future minimum lease payments as a lessee are as follows:
Twelve months ending December 31,
Total
2025
2026
2027
2028
2029
Thereafter
Future minimum lease payments
$ 139,844
$
4,642
$
2,895
$
2,662
$
2,439
$
2,307
$ 124,899
Finance charges
(105,907)
(1,941)
(1,903)
(1,866)
(1,841)
(1,821)
(96,535)
Present value of lease payments
$
33,937
$
2,701
$
992
$
796
$
598
$
486
$
28,364
Lease liabilities are presented on the consolidated balance sheets as follows:
December 31, 2024
December 31, 2023
Non-current
$
31,236
$
35,351
Current
2,701
941
Total lease liabilities
$
33,937
$
36,292
Some of Crombie’s lease agreements contain contingent rent clauses.
Contingent rental payments are recognized in the consolidated statements
of comprehensive 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, 2024, minimum lease payments of $3,126
were paid by Crombie.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROMBIE REIT Annual Report 2024
117
23) 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, 2024, Crombie
has $5,198 (December 31, 2023 – $5,342) in outstanding letters of credit
related to construction work being performed on investment properties.
As at December 31, 2024, Crombie had signed construction contracts
totalling $259,087, of which $197,329 has been paid.
Crombie has committed to funding $37,926 in development costs at 1700
East Broadway Limited Partnership, of which $719 has been funded as
at December 31, 2024.
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, 2024, Crombie has provided guarantees
of approximately $26,655 (December 31, 2023 – $81,781) 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 3.3 years.
Crombie and its partners have provided joint and several guarantees on
100% of debt outstanding in the following joint ventures: Bronte Village
Limited Partnership $241,718 (December 31, 2023 – $223,000), 1700 East
Broadway Limited Partnership $20,500 (December 31, 2023 – $17,400),
and 140 CPN Limited $3,121 (December 31, 2023 – $3,200). Each
mortgage-related debt supported by a joint and several guarantee is
secured by the income-producing property related to the mortgage.
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.
24) Subsequent Events
(a)
On January 16, 2025, Crombie declared distributions of 7.417 cents
per Unit for the period from January 1, 2025 up to and including
January 31, 2025. The distributions were paid on February 14, 2025,
to Unitholders of record as at January 31, 2025.
(b)
On February 14, 2025, Crombie declared distributions of 7.417 cents
per Unit for the period from February 1, 2025 up to and including
February 28, 2025. The distributions will be paid on March 14,
2025, to Unitholders of record as at February 28, 2025.
(c)
On February 14, 2025, Crombie disposed of a 100% interest in a
retail property totalling 188,000 square feet of gross leasable area.
Total proceeds, before closing adjustments and transaction costs,
were approximately $3,300.
25) 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.
26) 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
118
Property Portfolio
Property Name
Location
Type
% of
Ownership
Actual GLA
(rounded)
Occupancy%
Committed
NEWFOUNDLAND & LABRADOR
Random Square
Clarenville
Retail
100.0%
108,000
92.8%
Conception Bay Plaza
Conception Bay
Retail
100.0%
65,000
100.0%
2A Commerce Street
Deer Lake
Retail
100.0%
29,000
100.0%
71 Grandview Boulevard
Grand Bank
Retail
100.0%
19,000
100.0%
21 Cromer Avenue
Grand Falls
Retail
11.0%
3,000
100.0%
69 Blockhouse Road
Placentia
Retail
11.0%
2,000
100.0%
10 Elizabeth Avenue
St. John’s
Retail
100.0%
80,000
100.0%
45 Ropewalk Lane
St. John’s
Retail
11.0%
6,000
100.0%
Avalon Mall
St. John’s
Retail
100.0%
594,000
96.3%
Hamlyn Road Plaza
St. John’s
Retail
100.0%
38,000
76.8%
Topsail Road Plaza
St. John’s
Retail
100.0%
158,000
98.4%
Torbay Road Plaza
St. John’s
Retail
100.0%
102,000
81.7%
Kenmount Woodgate
St. John’s
Retail
100.0%
80,000
100.0%
1,284,000
95.3%
PRINCE EDWARD ISLAND
400 University Avenue
Charlottetown
Retail
11.0%
5,000
100.0%
Kinlock Plaza
Stratford
Retail
100.0%
103,000
95.1%
485 Granville Street
Summerside
Retail
100.0%
7,000
100.0%
115,000
95.6%
NOVA SCOTIA
Amherst Centre Sobeys
Amherst
Retail
100.0%
39,000
100.0%
Amherst Plaza
Amherst
Retail
100.0%
24,000
100.0%
151 Church Street
Antigonish
Retail
11.0%
6,000
100.0%
Hemlock Square
Bedford
Retail
100.0%
185,000
100.0%
Mill Cove Plaza
Bedford
Retail
100.0%
151,000
100.0%
2 Forest Hills Parkway
Cole Harbour
Retail
50.0%
22,000
100.0%
Dartmouth Crossing Cineplex
Dartmouth
Retail
100.0%
45,000
100.0%
Panavista Drive
Dartmouth
Retail
11.0%
5,000
100.0%
Penhorn Plaza
Dartmouth
Retail
100.0%
145,000
100.0%
Russell Lake
Dartmouth
Retail
50.0%
34,000
100.0%
Elmsdale Shopping Centre
Elmsdale
Retail
100.0%
147,000
100.0%
Fall River Plaza
Fall River
Retail
100.0%
101,000
100.0%
North & Windsor Street
Halifax
Retail
100.0%
50,000
100.0%
Park West Centre
Halifax
Retail
100.0%
143,000
91.9%
Queen Street Plaza
Halifax
Retail
100.0%
55,000
100.0%
Downsview Mall
Lower Sackville
Retail
100.0%
80,000
95.8%
Downsview Plaza
Lower Sackville
Retail
100.0%
226,000
98.5%
Aberdeen Business Centre
New Glasgow
Retail
100.0%
321,000
99.5%
Highland Square
New Glasgow
Retail
100.0%
200,000
100.0%
West Side Plaza
New Glasgow
Retail
100.0%
71,000
95.2%
County Fair Mall
New Minas
Retail
100.0%
271,000
52.8%
75 Emerald Street
New Waterford
Retail
11.0%
3,000
100.0%
3415 Plummer Avenue
New Waterford
Retail
100.0%
4,000
100.0%
Blink Bonnie Plaza
Pictou
Retail
100.0%
56,000
100.0%
622 Reeves Street
Port Hawkesbury
Retail
100.0%
34,000
100.0%
22579 Highway 7
Sheet Harbour
Retail
11.0%
1,000
100.0%
279, 289 & 303 Herring Cove Road
Spryfield
Retail
100.0%
73,000
100.0%
293 Foord Street
Stellarton
Retail
100.0%
24,000
100.0%
Prince Street Plaza
Sydney
Retail
100.0%
71,000
96.3%
Sydney Shopping Centre
Sydney
Retail
100.0%
190,000
98.7%
39 Pitt Street
Sydney Mines
Retail
100.0%
18,000
100.0%
North Shore Centre
Tatamagouche
Retail
100.0%
17,000
100.0%
70 Marketway Lane
Timberlea
Retail
100.0%
61,000
100.0%
Fundy Trail Centre
Truro
Retail
100.0%
127,000
99.0%
Tantallon Plaza
Upper Tantallon
Retail
100.0%
157,000
100.0%
Scotia Square Properties
Barrington Tower
Halifax
Office
100.0%
186,000
93.6%
Brunswick Place
Halifax
Retail
100.0%
253,000
98.0%
CIBC Building
Halifax
Office
100.0%
208,000
88.9%
Cogswell Tower
Halifax
Office
100.0%
204,000
92.4%
Duke Tower
Halifax
Office
100.0%
225,000
89.4%
Scotia Square
Halifax
Retail
100.0%
195,000
83.0%
Scotia Square Parkade
Halifax
Retail
100.0%
—
0.0%
4,428,000
93.9%
NEW BRUNSWICK
850 Saint Peters Avenue
Bathurst
Retail
100.0%
18,000
100.0%
477 Paul Street
Dieppe
Retail
100.0%
52,000
100.0%
501 Regis Street
Dieppe
Retail
100.0%
25,000
100.0%
580 Victoria Street
Edmundston
Retail
100.0%
42,000
100.0%
Brookside Mall
Fredericton
Retail
100.0%
43,000
100.0%
Uptown Centre
Fredericton
Retail
100.0%
263,000
100.0%
Grand Bay Plaza
Grand Bay
Retail
100.0%
26,000
100.0%
1234 Main Street
Moncton
Office
100.0%
140,000
65.8%
Elmwood Drive
Moncton
Retail
100.0%
107,000
96.1%
Mountain Road Plaza
Moncton
Retail
100.0%
17,000
100.0%
Northwest Centre
Moncton
Retail
100.0%
52,000
100.0%
Vaughan Harvey Plaza
Moncton
Retail
100.0%
103,000
100.0%
273 Pleasant Street
Newcastle
Retail
100.0%
20,000
100.0%
Riverview – Findlay Boulevard
Riverview
Retail
100.0%
76,000
100.0%
Fairvale Plaza
Rothesay
Retail
100.0%
52,000
100.0%
107 Catherwood Street
Saint John
Retail
11.0%
5,000
100.0%
Loch Lomond Place
Saint John
Retail
100.0%
188,000
49.8%
Charlotte Mall
St. Stephen
Retail
100.0%
116,000
97.8%
426 rue du Moulin
Tracadie
Retail
100.0%
40,000
95.7%
3430 rue Principale
Tracadie-Sheila
Retail
100.0%
31,000
100.0%
1,416,000
89.4%
Property Name
Location
Type
% of
Ownership
Actual GLA
(rounded)
Occupancy%
Committed
QUEBEC
1500 rue de Bretagne
Baie Comeau
Retail
100.0%
50,000
100.0%
1020 boulevard Monseigneur-de-Laval
Baie Saint Paul
Retail
100.0%
65,000
100.0%
Beauport Plaza
Beauport
Retail
100.0%
78,000
100.0%
50 rue Bourgeoys
Bromptonville
Retail
11.0%
3,000
100.0%
50 rue Bourgeoys
Bromptonville
Retail
100.0%
4,000
0.0%
3260 boulevard Lapiniere &
3305 Broadway
Brossard
Retail
100.0%
48,000
97.9%
645 boulevard Thibeau
Cap-de-la-
Madeleine
Retail
100.0%
49,000
100.0%
80-90 boulevard d’Anjou
Chateauguay
Retail
100.0%
58,000
100.0%
Marché St-Charles-de- Drummond
Drummondville
Retail
100.0%
48,000
100.0%
1205 rue de Neuville
Gatineau
Retail
100.0%
31,000
100.0%
1248 boulevard de la Verendrye Est
Gatineau
Retail
100.0%
71,000
100.0%
1298 rue de la Digue
Havre-Saint-
Pierre
Retail
100.0%
26,000
100.0%
2195 chemin Ridge
Huntingdon
Retail
100.0%
19,000
100.0%
Centre Lavaltrie
Lavaltrie
Retail
100.0%
43,000
82.4%
Marché Lavaltrie
Lavaltrie
Retail
100.0%
52,000
100.0%
5555 boulevard des Grandins
Lebourgneuf
Retail
11.0%
5,000
100.0%
5556 boulevard des Grandins
Lebourgneuf
Retail-related
Industrial
11.0%
2,000
100.0%
5005 boulevard de l'Ormiere
Les Saules
Retail
100.0%
70,000
100.0%
714 boulevard Saint-Laurent Ouest
Louiseville
Retail
11.0%
3,000
100.0%
1450 & 1454 rue Royale
Malartic
Retail
100.0%
29,000
100.0%
551 avenue du Phare Est
Matane
Retail
11.0%
3,000
100.0%
20-70 boulevard Sir Wilfrid Laurier
McMasterville
Retail
100.0%
55,000
100.0%
631-665 boulevard Saint Jean-Baptiste
Mercier
Retail
100.0%
58,000
100.0%
Marché St-Augustin
Mirabel
Retail
100.0%
38,000
96.1%
1 avenue Westminster Nord
Montreal
Retail
50.0%
10,000
100.0%
3964 Notre Dame St Ouest
Montreal
Retail
100.0%
41,000
100.0%
Voilà CFC 2
Montreal
Retail-related
Industrial
50.0%
155,000
100.0%
Paspebiac Plaza
Paspebiac
Retail
100.0%
73,000
91.7%
395 avenue Sirois
Rimouski
Retail
11.0%
5,000
100.0%
395 avenue Sirois
Rimouski
Retail
100.0%
6,000
100.0%
375 boulevard Jessop
Rimouski
Retail
100.0%
41,000
100.0%
254 boulevard de l’Hotel de Ville
Riviere-du-Loup
Retail
100.0%
72,000
100.0%
680 avenue Chausse
Rouyn-Noranda
Retail
11.0%
5,000
100.0%
Carrefour Bourgeois
Saint-Amable
Retail
100.0%
67,000
97.6%
Saint-Apollinaire Plaza
Saint-Apollinaire
Retail
100.0%
62,000
100.0%
867-871 rue Principale
Saint-Donat
Retail
100.0%
34,000
100.0%
8980 boulevard Lacroix
Saint-Georges-
de-Beauce
Retail
11.0%
5,000
100.0%
131-A avenue Sainte-Cecile
Saint-Pie
Retail
100.0%
14,000
100.0%
Saint Romuald Plaza
Saint Romuald
Retail
100.0%
76,000
100.0%
10505 boulevard Sainte-Anne
Sainte-Anne-
de-Beaupré
Retail
11.0%
4,000
100.0%
1440-1510 rue Trudel
Shawinigan
Retail
100.0%
67,000
100.0%
2959 rue King Ouest
Sherbrooke
Retail
100.0%
13,000
100.0%
3950 rue King Ouest
Sherbrooke
Retail
11.0%
6,000
100.0%
411 boulevard Poliquin
Sorel-Tracy
Retail
100.0%
40,000
100.0%
1101 boulevard de la Piniere Ouest
Terrebonne
Retail-related
Industrial
100.0%
469,000
100.0%
2,173,000
99.0%
ONTARIO
977 Golf Links Road
Ancaster
Retail
50.0%
32,000
100.0%
409 Bayfield Street
Barrie
Retail
50.0%
24,000
100.0%
680 Longworth Avenue
Bowmanville
Retail
100.0%
42,000
100.0%
20 Melbourne Drive
Bradford
Retail
11.0%
4,000
100.0%
Brampton Mall
Brampton
Retail
100.0%
103,000
87.8%
Brampton Plaza
Brampton
Retail
50.0%
38,000
100.0%
4130 Harvester Road
Burlington
Retail-related
Industrial
100.0%
20,000
100.0%
Burlington Plaza
Burlington
Retail
100.0%
69,000
89.8%
142 Dundas Street South
Cambridge
Retail
100.0%
4,000
100.0%
215 Park Avenue West
Chatham
Retail
11.0%
5,000
100.0%
990 Division Street
Cobourg
Retail
100.0%
31,000
100.0%
77 Coldwater Road
Coldwater
Retail
100.0%
15,000
100.0%
Village Centre
Dorchester
Retail
100.0%
32,000
100.0%
15 Lindsay Street
Fenelon Falls
Retail
11.0%
4,000
100.0%
417 Scott Street
Fort Frances
Retail
100.0%
43,000
100.0%
44 Livingston Avenue
Grimbsy
Retail
100.0%
36,000
100.0%
188 Highland Street
Haliburton
Retail
100.0%
24,000
100.0%
Havelock Centre
Havelock
Retail
11.0%
2,000
100.0%
400 First Avenue South
Kenora
Retail
11.0%
4,000
100.0%
2327 Princess Street
Kingston
Retail
100.0%
35,000
100.0%
274 Highland Road West
Kitchener
Retail
100.0%
67,000
100.0%
London Pine Valley
London
Retail
100.0%
39,000
100.0%
515 Main Street North
Mount Forest
Retail
100.0%
46,000
100.0%
5931 Kalar Road
Niagara Falls
Retail
11.0%
4,000
100.0%
5931 Kalar Road
Niagara Falls
Retail
100.0%
2,000
100.0%
Niagara Falls Plaza
Niagara Falls
Retail
100.0%
64,000
100.0%
Village Square Mall
Nepean
Retail
100.0%
92,000
100.0%
Algonquin Avenue Mall
North Bay
Retail
100.0%
163,000
100.0%
500 Riddell Road
Orangeville
Retail
11.0%
5,000
100.0%
5150 Innes Road
Orleans
Retail
100.0%
65,000
100.0%
Taunton and Wilson Plaza
Oshawa
Retail
100.0%
107,000
100.0%
Don Reid Drive
Ottawa
Retail-related
Industrial
100.0%
19,000
100.0%
119
CROMBIE REIT Annual Report 2024
Property Name
Location
Type
% of
Ownership
Actual GLA
(rounded)
Occupancy%
Committed
25 Pine Drive
Parry Sound
Retail
100.0%
46,000
100.0%
3130 Danforth Avenue
Scarborough
Retail
50.0%
3,000
100.0%
McCowan Square
Scarborough
Retail
100.0%
61,000
100.0%
Mountain Locks Plaza
St. Catharines
Retail
100.0%
85,000
100.0%
Stittsville Corner
Stittsville
Retail
100.0%
111,000
98.1%
Stoney Creek Plaza
Stoney Creek
Retail
100.0%
12,000
100.0%
105 Arthur Street West
Thornbury
Retail
100.0%
40,000
100.0%
70 Court Street North
Thunder Bay
Retail
100.0%
39,000
100.0%
115 Arthur Street West
Thunder Bay
Retail
100.0%
58,000
100.0%
1015 Dawson Road
Thunder Bay
Retail
100.0%
54,000
100.0%
3362-3370 Yonge Street
Toronto
Retail
100.0%
29,000
100.0%
The Queensway Commons
Toronto
Retail
100.0%
36,000
100.0%
The Queensway Commons
Toronto
Retail-related
Industrial
100.0%
17,000
100.0%
8265 Huntington Road
Vaughan
Retail-related
Industrial
100.0%
792,000
100.0%
385 Springbank Avenue
Woodstock
Retail
100.0%
55,000
100.0%
2,678,000
99.2%
MANITOBA
3156 Bird’s Hill Road East
East St. Paul
Retail
11.0%
4,000
100.0%
3156 Bird’s Hill Road East
East St. Paul
Retail
100.0%
3,000
100.0%
498 Mountain Avenue
Neepawa
Retail
11.0%
2,000
100.0%
318 Manitoba Avenue
Selkirk
Retail
11.0%
5,000
100.0%
2 Alpine Avenue
Winnipeg
Retail
100.0%
57,000
100.0%
285 Marion Street
Winnipeg
Retail
100.0%
38,000
100.0%
469-499 River Avenue
Winnipeg
Retail
100.0%
59,000
100.0%
594 Mountain Avenue
Winnipeg
Retail
100.0%
18,000
100.0%
600 Sargent Avenue
Winnipeg
Retail
100.0%
33,000
100.0%
654 Kildare Avenue
Winnipeg
Retail
100.0%
43,000
100.0%
655 Osborne Street
Winnipeg
Retail
100.0%
20,000
100.0%
731 Henderson Highway
Winnipeg
Retail
100.0%
24,000
100.0%
920 Jefferson Avenue
Winnipeg
Retail
100.0%
56,000
100.0%
1305-1321 Pembina Highway
Winnipeg
Retail
100.0%
39,000
100.0%
2155 Pembina Highway
Winnipeg
Retail
100.0%
46,000
100.0%
3381 & 3393 Portage Avenue
Winnipeg
Retail
100.0%
56,000
100.0%
Kildonan Green
Winnipeg
Retail
100.0%
74,000
100.0%
River East Plaza
Winnipeg
Retail
100.0%
84,000
100.0%
661,000
100.0%
SASKATCHEWAN
200 1st Avenue NW
Moose Jaw
Retail
100.0%
39,000
100.0%
9801 Territorial Drive
North Battleford
Retail
100.0%
30,000
100.0%
2895 2nd Avenue West
Prince Albert
Retail
100.0%
56,000
100.0%
2231 East Quance Street
Regina
Retail
50.0%
19,000
100.0%
2915 13th Avenue
Regina
Retail
50.0%
20,000
100.0%
4250 Albert Street
Regina
Retail
100.0%
41,000
100.0%
302 33rd Street
Saskatoon
Retail
100.0%
16,000
100.0%
1860 McOrmond Drive
Saskatoon
Retail
100.0%
58,000
100.0%
River City Centre
Saskatoon
Retail
100.0%
161,000
100.0%
440,000
100.0%
ALBERTA
318 Marten Street
Banff
Retail
100.0%
19,000
100.0%
5700 50th Street
Beaumont
Retail
100.0%
21,000
100.0%
Beaumont Shopping Centre
Beaumont
Retail
100.0%
58,000
100.0%
550 Cassils Road & 654 4th Street West
Brooks
Retail
100.0%
61,000
100.0%
55 Castleridge Boulevard NE
Calgary
Retail
11.0%
6,000
100.0%
99 Crowfoot Crescent NW
Calgary
Retail
100.0%
75,000
100.0%
110-620 McKenzie Towne Gate SE
Calgary
Retail
50.0%
9,000
100.0%
410 10 Street NW
Calgary
Retail
100.0%
38,000
100.0%
511 17 Avenue SE
Calgary
Retail
100.0%
42,000
100.0%
504 & 524 Elbow Drive SW
Calgary
Retail
100.0%
29,000
100.0%
813 11 Avenue SW
Calgary
Retail
100.0%
40,000
100.0%
850 Saddletowne Circle NE
Calgary
Retail
11.0%
6,000
100.0%
850 Saddletowne Circle NE
Calgary
Retail
100.0%
5,000
100.0%
1818 Centre Street NE & 134 17 Avenue NE
Calgary
Retail
100.0%
36,000
100.0%
2425 34 Avenue SW
Calgary
Retail
100.0%
48,000
100.0%
3550 32 Avenue NE
Calgary
Retail
100.0%
69,000
100.0%
5048 16 Avenue NW
Calgary
Retail
50.0%
21,000
100.0%
5607 4 Street NW
Calgary
Retail
100.0%
50,000
100.0%
260199 High Plains Boulevard
Calgary
Retail-related
Industrial
50.0%
656,000
100.0%
Alberta Central Kitchen
Calgary
Retail-related
Industrial
50.0%
26,000
100.0%
South Trail Plaza
Calgary
Retail
100.0%
79,000
100.0%
Strathcona Square
Calgary
Retail
100.0%
81,000
91.5%
Voilà CFC 3
Calgary
Retail-related
Industrial
100.0%
304,000
100.0%
1200 Railway Avenue
Canmore
Retail
100.0%
53,000
100.0%
135 Chestermere Station Way
Chestermere
Retail
100.0%
48,000
100.0%
304 5 Avenue West
Cochrane
Retail
100.0%
54,000
100.0%
17th St & 23rd Avenue
Edmonton
Retail
100.0%
52,000
100.0%
400 & 500 Manning Crossing North
Edmonton
Retail
100.0%
50,000
100.0%
2304 109 Street NW
Edmonton
Retail
100.0%
48,000
100.0%
2534 Guardian Road NW
Edmonton
Retail
100.0%
50,000
100.0%
5119 167 Avenue NW
Edmonton
Retail
100.0%
39,000
100.0%
5309 Ellerslie Road
Edmonton
Retail
100.0%
50,000
100.0%
8118 118 Avenue NW
Edmonton
Retail
50.0%
22,000
100.0%
8204 109 Street NW
Edmonton
Retail
100.0%
34,000
94.0%
9611 167 Avenue NW
Edmonton
Retail
100.0%
39,000
100.0%
Property Name
Location
Type
% of
Ownership
Actual GLA
(rounded)
Occupancy%
Committed
10907 82 Avenue NW
Edmonton
Retail
100.0%
21,000
100.0%
12950 137 Avenue NW
Edmonton
Retail
100.0%
55,000
100.0%
13550 Victoria Trail
Edmonton
Retail
100.0%
37,000
100.0%
Lewis Estates
Edmonton
Retail
100.0%
38,000
100.0%
Millwood Commons
Edmonton
Retail
50.0%
29,000
100.0%
Namao Centre
Edmonton
Retail
100.0%
34,000
100.0%
304 54 Street
Edson
Retail
100.0%
33,000
100.0%
9601 Franklin Avenue
Fort McMurray
Retail
11.0%
4,000
100.0%
Clearwater Landing
Fort McMurray
Retail
100.0%
143,000
93.9%
8100-8300 100 Street
Grand Prairie
Retail
100.0%
67,000
95.1%
9844 92 Street
Grand Prairie
Retail
100.0%
44,000
100.0%
9925 114 Avenue
Grand Prairie
Retail
100.0%
69,000
100.0%
Leduc Centre
Leduc
Retail
100.0%
140,000
83.8%
1760 23 Street
Lethbridge
Retail
100.0%
45,000
100.0%
2750 Fairway Plaza Road South
Lethbridge
Retail
11.0%
7,000
100.0%
West Lethbridge Towne Centre
Lethbridge
Retail
100.0%
104,000
100.0%
615 Division Avenue South
Medicine Hat
Retail
100.0%
43,000
100.0%
410 & 610 Big Rock Lane
Okotoks
Retail
11.0%
5,000
100.0%
4407 50th Avenue
Red Deer
Retail
100.0%
56,000
100.0%
688 Wye Road
Sherwood Park
Retail
50.0%
23,000
100.0%
1109 James Mowatt Trail SW
Southbrook
Retail
50.0%
23,000
100.0%
94 McLeod Avenue
Spruce Grove
Retail
11.0%
6,000
100.0%
395 St. Albert Trail
St. Albert
Retail
100.0%
53,000
100.0%
4607 50 Street
Stettler
Retail
100.0%
31,000
100.0%
100 Ranch Market
Strathmore
Retail
100.0%
35,000
100.0%
4202 South Park Drive
Stony Plain
Retail
11.0%
5,000
100.0%
3,463,000
98.7%
BRITISH COLUMBIA
575 Alder Avenue
100 Mile House
Retail
11.0%
2,000
100.0%
576 Alder Avenue
100 Mile House
Retail
100.0%
6,000
100.0%
4454 East Hastings Street
Burnaby
Retail
100.0%
4,000
100.0%
Burnaby Heights
Burnaby
Retail
100.0%
61,000
100.0%
1721 Columbia Avenue
Castlegar
Retail
11.0%
3,000
100.0%
45850 Yale Road
Chilliwack
Retail
11.0%
6,000
100.0%
1551 Cliffe Avenue
Courtenay
Retail
100.0%
54,000
100.0%
Crown Isle Shopping Centre
Courtenay
Retail
100.0%
109,000
97.2%
934 Baker Street
Cranbrook
Retail
100.0%
48,000
100.0%
1200 Baker Street
Cranbrook
Retail
100.0%
9,000
100.0%
11200 8 Street
Dawson Creek
Retail
11.0%
5,000
100.0%
9123 100 Street
Fort St. John
Retail
100.0%
67,000
100.0%
624 9th Avenue North
Golden
Retail
100.0%
14,000
100.0%
750 Fortune Drive
Kamloops
Retail
100.0%
56,000
100.0%
945 Columbia Street West
Kamloops
Retail
11.0%
5,000
100.0%
697 Bernard Avenue
Kelowna
Retail
100.0%
30,000
100.0%
Belmont Market
Langford
Retail
100.0%
144,000
95.5%
20871 Fraser Highway
Langley
Retail
100.0%
48,000
100.0%
27566 Fraser Highway
Langley
Retail
100.0%
45,000
100.0%
32520 Lougheed Highway
Mission
Retail
100.0%
55,000
100.0%
211 Anderson Street
Nelson
Retail
100.0%
39,000
100.0%
800 McBride Boulevard
New Westminster Retail
100.0%
43,000
100.0%
1170 27 Street East
North Vancouver
Retail
100.0%
37,000
100.0%
1175 Mount Seymour Road
North Vancouver
Retail
100.0%
36,000
100.0%
801-1301 Main Street
Penticton
Retail
100.0%
59,000
100.0%
2850 Shaughnessy Street
Port Coquitlam
Retail
100.0%
49,000
100.0%
7040 Barnet Street
Powell River
Retail
100.0%
48,000
100.0%
200 2 Avenue West
Prince Rupert
Retail
100.0%
50,000
100.0%
445 Reid Street
Quesnel
Retail
11.0%
3,000
100.0%
6140 Blundell Road
Richmond
Retail
100.0%
28,000
100.0%
3664 Yellowhead Highway
Smithers
Retail
11.0%
5,000
100.0%
7450 120 Street
Surrey
Retail
100.0%
60,000
100.0%
8860 152 Street
Surrey
Retail
100.0%
56,000
100.0%
4655 Lakelse Avenue
Terrace
Retail
100.0%
43,000
100.0%
1599 Second Avenue
Trail
Retail
100.0%
32,000
100.0%
990 King Edward Avenue West
Vancouver
Retail
100.0%
28,000
100.0%
1641 & 1653 Davie Street
Vancouver
Retail
100.0%
54,000
100.0%
1766 Robson Street
Vancouver
Retail
100.0%
42,000
100.0%
1780 East Broadway
Vancouver
Retail
100.0%
42,000
100.0%
2733 West Broadway
Vancouver
Retail
100.0%
55,000
100.0%
3410 Kingsway
Vancouver
Retail
100.0%
51,000
100.0%
8475 Granville Street
Vancouver
Retail
50.0%
24,000
100.0%
3417 30 Avenue
Vernon
Retail
100.0%
29,000
100.0%
4300 32 Street
Vernon
Retail
100.0%
57,000
100.0%
451 Oliver Street
Williams Lake
Retail
100.0%
29,000
100.0%
1,770,000
99.5%
Total Portfolio — Excluding Joint Ventures & Residential
18,433,000
96.8%
Joint Ventures & Residential
140 Centennial Parkway North
Hamilton
Retail
50.0%
16,000
Le Duke
Montreal
Mixed-use
Residential
50.0%
133,000
The Village at Bronte Harbour
Oakville
Mixed-use
Residential
50.0%
260,000
Zephyr
Vancouver
Mixed-use
Residential
100.0%
208,000
617,000
Total Portfolio Inclusive of Joint Ventures & Residential
19,050,000
120
Unitholders’ Information
BOARD OF TRUSTEES
Jason P. Shannon
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
Vivek Sood
Independent Trustee
Michael Vels
Independent Trustee
Michael Waters
Independent Trustee
Karen Weaver
Independent Trustee
OFFICERS
Jason P. Shannon
Chair
Mark Holly
President and Chief Executive Officer
Kara Cameron
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 and 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
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.
121
CROMBIE REIT Annual Report 2024
CROMBIE REIT