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Alpine Income Property TrustRELIABLE.
DURABLE.
GROWING.
2022 ANNUAL REPORT
CT Real Estate Investment Trust
(CT REIT) is an unincorporated,
closed-end real estate investment
trust formed to own income
producing commercial properties
primarily located in Canada.
In 2022, CT REIT successfully
grew its portfolio, adding nearly
1 million square feet of gross
leasable area, all while prudently
managing its balance sheet and
maintaining strong credit metrics.
FIVE YEAR FINANCIAL PERFORMANCE:
AFFO/UNIT – DILUTED* AND DISTRIBUTIONS GROWTH
$1.20
$1.10
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
1.147
1.104
1.032
1.007
0.954
0.919
3.9%
4
5
8
.
0
3.7%
2
2
8
.
0
4.7%
3
9
7
.
0
0
2
0
2
1
2
0
2
2
2
0
2
4.0%
4.0%
0
0
7
.
0
7
1
0
2
8
2
7
.
0
8
1
0
2
7
5
7
.
0
9
1
0
2
Annual distribution
AFFO/unit – diluted*
KEY STRATEGIC ACHIEVEMENTS
2013–2022
5.9%
AFFO per unit growth CAGR*
11.2 million
square feet added to the portfolio
9
distribution increases since IPO
5.7%
NAV per unit CAGR
$2.4 billion
invested since IPO
$1.1 billion+
public unsecured debt issues
AFFO payout ratio* reduced to
74.5%
Public float increased to
$1.1 billion+
and included in several market indices
Leverage reduced to
40.7%
* Non-GAAP ratio. Refer to Section 10.2 of the REIT’s 2022 Management’s Discussion & Analysis included in this Annual Report.
COVER PHOTO: Canadian Tire Store, Niagara Falls, Ontario
Management's Discussion and Analysis
CT REIT
Fourth Quarter and Full Year 2022
TABLE OF CONTENTS
Forward-looking Disclaimer
1.0
Preface
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
2.0
3.0
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
Basis of Presentation
Definitions
Accounting Estimates and Assumptions
Quarterly and Annual Comparisons in this MD&A
Currency and Rounding
Key Operating Performance Measures and Specified Financial Measures
Review and Approval by the Board of Trustees
Nature and Formation
Growth Strategy and Objectives
Summary of Selected Financial and Operational Information
Portfolio Overview
Portfolio Profile
Revenue by Region
Six Largest Urban Markets
Fair Value of Portfolio of Properties
2022 Investment Activities
Development Activities
Investment and Development Funding
Lease Maturities
Top 10 Tenants Excluding CTC Related Tenancies
Leasing Activities
Recoverable Capital Costs
5.0
Results of Operations
5.1
5.2
Financial Results for the Three Months and Year Ended December 31, 2022
Non-GAAP Financial Measures and Non-GAAP Ratios
6.0
Liquidity and Financial Condition
6.1
6.2
6.3
6.4
6.5
Liquidity
Discussion of Cash Flows
Credit Ratings
Indebtedness and Capital Structure
Interest Coverage Ratio
3
4
4
4
4
4
5
5
5
5
6
7
8
8
10
10
11
13
13
15
16
17
17
17
18
18
22
24
24
25
25
26
28
CT REIT 2022 ANNUAL REPORT 1
TABLE OF CONTENTS (continued)
6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.13
6.14
Indebtedness Ratio
Class C LP Units
Debentures
Mortgages Payable
Credit Facilities
Capital Strategy
Commitments and Contingencies
Base Shelf Prospectus
Normal Course Issuer Bid
7.0
Equity
7.1
7.2
7.3
7.4
8.0
9.0
9.1
9.2
9.3
Authorized Capital and Outstanding Units
Equity
Distributions
Book Value Per Unit
Related Party Transactions
Accounting Policies and Estimates
Significant Areas of Estimation
Standards, Amendments and Interpretations Issued and Adopted
Standards, Amendments and Interpretations Issued but Not Yet Adopted
10.0
Specified Financial Measures
10.1
10.2
Non-GAAP Financial Measures
Non-GAAP Ratios
11.0
Selected Quarterly Consolidated Information
12.0
Enterprise Risk Management
13.0
Internal Controls and Procedures
13.1
13.2
13.3
Disclosure Controls and Procedures
Internal Control Over Financial Reporting
Changes in Internal Control Over Financial Reporting
14.0
Forward-looking Information
2 CT REIT 2022 ANNUAL REPORT
29
29
30
31
31
32
32
33
33
33
33
34
35
36
37
39
39
39
40
41
41
48
52
53
58
58
59
59
60
MANAGEMENT'S DISCUSSION AND ANALYSIS
CT REAL ESTATE INVESTMENT TRUST
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2022
Forward-looking Disclaimer
This Management’s Discussion and Analysis (“MD&A”) contains statements that are forward-looking. Actual results or events
may differ materially from those forecasted in this disclosure because of the risks and uncertainties associated with the
business of CT Real Estate Investment Trust® and its subsidiaries, (referred to herein as “CT REIT”, “Trust” or “REIT”, unless
the context requires otherwise), and the general economic environment. CT REIT cannot provide any assurance that any
forecasted financial or operational performance will actually be achieved or, if achieved, that it will result in an increase in the
price of CT REIT’s Units. See section 14.0 in this MD&A for a more detailed discussion of the REIT’s use of forward-looking
statements.
CT REIT 2022 ANNUAL REPORT 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
1.0 PREFACE
1.1 Basis of Presentation
The following MD&A is intended to provide readers with an assessment of the performance of CT REIT® for the year ended
December 31, 2022 and should be read in conjunction with the REIT’s audited consolidated financial statements
(“consolidated financial statements”) and accompanying notes for the year ended December 31, 2022 which have been
prepared in accordance with International Financial Reporting Standards (“IFRS”). In addition, the following MD&A should be
read in conjunction with CT REIT’s forward-looking information found in section 14.0 of this MD&A. Information about CT
REIT, including the Annual Information Form for the year ended December 31, 2022 (“AIF”), the consolidated financial
statements as at and for the period ending December 31, 2022 and all other continuous disclosure documents required by the
Canadian securities regulators, can be found on the System for Electronic Document Analysis and Retrieval (“SEDAR”)
website at www.sedar.com and on CT REIT’s website at www.ctreit.com under the tab "Investors" in the Financial Reporting
section.
1.2 Definitions
In this document, the terms “CT REIT”, “REIT” and “Trust” refer to CT Real Estate Investment Trust® and its subsidiaries
unless the context requires otherwise. In addition, “CTC” refers to Canadian Tire Corporation, Limited, entities that it controls
and their collective businesses unless the context requires otherwise.
This document contains certain trade-marks and trade names of CTC and is the property of CTC. Solely for convenience, the
trade-marks and trade names referred to herein may appear without the ® or ™ symbol.
Any term not defined in this MD&A shall be defined in the Glossary of Terms in the AIF filed on SEDAR at www.sedar.com and
on CT REIT’s website at www.ctreit.com under the tab Investors in the Financial Reporting section.
1.3 Accounting Estimates and Assumptions
The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgments
and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Refer to section 9.0 in this MD&A for further information.
Financial data included in this MD&A includes material information as of February 14, 2023. Disclosure contained in this
document is current to that date, unless otherwise indicated.
1.4 Quarterly and Annual Comparisons in this MD&A
Unless otherwise indicated, all comparisons of results for three months ended December 31, 2022 (“Q4 2022”) are against
results for three months ended December 31, 2021 (“Q4 2021”) and comparisons of results for the year ended December 31,
2022 are against results for the year ended December 31, 2021.
4 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
1.5 Currency and Rounding
All amounts in this MD&A are in thousands of Canadian dollars, except per unit, unit, per square foot and square foot amounts
or unless otherwise indicated. Rounded numbers are used in this MD&A and, as such, totals may not add up to 100 percent.
1.6 Key Operating Performance Measures and Specified Financial Measures
The key operating performance measures used by management may not be comparable to similar measures presented by
other real estate investment trusts or enterprises. Net income and comprehensive income prepared in accordance with IFRS is
also subject to varying degrees of judgment, and some meaningful differences in accounting policies exist between publicly
traded entities in Canada. Accordingly, net income and comprehensive income as presented by CT REIT may not be
comparable to net income and comprehensive income presented by other real estate investment trusts or enterprises.
1.7 Review and Approval by the Board of Trustees
The Board of Trustees (the “Board”), on the recommendation of its Audit Committee, approved this MD&A for issuance on
February 14, 2023.
1.8 Nature and Formation
CT REIT is an unincorporated, closed-end real estate investment trust established on July 15, 2013 pursuant to a declaration
of trust as amended and restated as of October 22, 2013 and as further amended and restated as of April 5, 2020 and as
may be further amended from time to time (“Declaration of Trust”). CT REIT commenced operations on October 23, 2013.
The principal, registered and head office of CT REIT is located at 2180 Yonge Street, Toronto, Ontario, M4P 2V8. CTC
owned a 68.7% effective interest in CT REIT as at December 31, 2022, consisting of 33,989,508 of the issued and
outstanding units of CT REIT (“Units”) and all of the issued and outstanding Class B limited partnership units (“Class B LP
Units”) of CT REIT Limited Partnership (the “Partnership”), which are economically equivalent to and exchangeable for Units.
The holders of Units and Class B LP Units are collectively referred to as “unitholders”. CTC also owns all of the issued and
outstanding Class C limited partnership units (“Class C LP Units”) of the Partnership. The Units are listed on the Toronto
Stock Exchange (“TSX”) and are traded under the symbol CRT.UN.
CT REIT has one segment for financial reporting purposes which comprises the ownership and management of primarily net
lease single tenant retail investment properties located across Canada.
CT REIT 2022 ANNUAL REPORT 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
2.0 GROWTH STRATEGY AND OBJECTIVES
The following section contains forward-looking information and readers are cautioned that actual results may vary.
The principal objective of CT REIT, as a real estate investment trust investing primarily in net lease, single tenant assets, is to
create Unitholder value over the long-term by generating reliable, durable and growing monthly distributions on a tax-efficient
basis. To achieve this objective, management is focused on expanding the REIT’s asset base while also increasing its AFFO
per unit.
Future growth is expected to continue to be achieved from a number of sources including:
1.
the portfolio of Canadian Tire leases, which generally contain contractual rent escalations of approximately 1.5% per
year, on average, over their initial term and have a weighted average remaining lease term of 8.9 years;
2.
contractual arrangements with CTC whereby CT REIT has a right of first offer (“ROFO”) 1 on all CTC properties which
meet the REIT’s investment criteria and through preferential rights, subject to certain exceptions, to participate in the
development of, and to acquire, certain new retail and industrial properties; and
3.
its relationship with CTC, which CT REIT will continue to leverage in order to obtain insights into potential real estate
acquisitions and development opportunities in markets across Canada.
1 The ROFO Agreement continues in effect until the later of October 2023 and such time as CTC ceases to hold a majority of the voting units, being the Units and Special Voting Units (as
defined in section 7.0).
6 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
3.0 SUMMARY OF SELECTED FINANCIAL AND OPERATIONAL INFORMATION
Readers are reminded that certain key performance measures may not have standardized meanings under GAAP. For further
information on the REIT’s operating measures, non-GAAP financial measures and non-GAAP ratios, refer to section 1.6,
section 10.1 and section 10.2.
(in thousands of Canadian dollars, except unit, per unit and square footage amounts)
For the periods ended December 31,
Property revenue
EBITFV 1
Net operating income 1
Net income
Net income per unit - basic 2
Net income per unit - diluted 3
Funds from operations 1
FFO per unit - diluted (non-GAAP) 2,4,5
Adjusted funds from operations 1
AFFO per unit - diluted (non-GAAP) 2,4,5
Distributions per unit - paid 2
AFFO payout ratio 4
Excess of AFFO 1 over distributions:
Excess of AFFO over distributions paid 1,6
Per unit - diluted (non-GAAP) 2,4,5
Cash generated from operating activities
Adjusted cashflow from operations 1,7
Weighted average number of units outstanding 2
Basic
Diluted 3
Diluted (non-GAAP) 5
Period-end units outstanding 2
Total assets
Total non-current liabilities
Total indebtedness
Book value per unit 2
Market price per unit - Close (end of period) 2
OTHER INFORMATION
Weighted average interest rate 8
Indebtedness ratio
Interest coverage ratio 4,9
Weighted average term to debt maturity (in years) 8
Gross leasable area (square feet) 10
Occupancy rate 10,11
Year Ended
2022
2021
2020
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
532,795
406,459
419,818
324,613
1.387
1.185
296,204
1.264
268,783
1.147
0.854
74.5 %
69,084
0.295
399,273
268,379
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
514,537
393,557
401,079
456,859
1.969
1.635
287,565
1.238
256,504
1.104
0.822
74.5 %
66,002
0.284
407,201
271,948
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
502,348
378.814
381,566
183,305
0.801
0.772
270,725
1.181
236,457
1.032
0.793
76.8 %
55,063
0.240
370,766
238,954
234,017,376
328,011,845
234,305,809
234,695,777
$ 6,844,789
$ 2,738,956
$ 2,787,634
16.31
$
15.59
$
232,026,661
318,507,219
232,324,806
233,185,145
$ 6,500,102
$ 2,518,598
$ 2,677,861
15.77
$
17.32
$
228,934,001
322,574,451
229,199,901
230,969,595
$ 6,176,142
$ 2,509,733
$ 2,652,341
14.62
$
15.67
$
3.99 %
40.7 %
3.67
6.2
30,078,518
3.84 %
41.2 %
3.72
6.8
29,105,050
3.87 %
42.9 %
3.51
7.5
28,738,736
99.3 %
99.3 %
99.3 %
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Total units means Units and Class B LP Units outstanding.
3 Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the
Class C LP Units will be settled with Class B LP Units. Refer to section 7.0.
4 Non-GAAP ratio. Refer to section 10.2 for further information.
5 Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all
of the Class C LP Units will be settled with Class B LP Units. Refer to section 7.0.
6 Refer to section 7.0 for further information.
7 Comparatives have been restated to conform with current year’s presentation.
8 Excludes the Credit Facilities. Refer to section 6.10 for definition.
9 Refer to section 6.5 for further information.
10 Excludes Development Properties and Properties Under Development. Refer to the Glossary of Terms in the 2022 AIF for definition.
11 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted
on or before December 31, 2022 and December 31, 2021, and vacancies as at the end of the reporting period.
CT REIT 2022 ANNUAL REPORT 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.0 PORTFOLIO OVERVIEW
4.1 Portfolio Profile
The portfolio of Properties, as at December 31, 2022, consisted of 365 retail properties, four industrial properties, one mixed-
use commercial property and three Development Properties (collectively, “Properties”). The Properties are located in each of
the provinces and in two territories across Canada. The retail properties, industrial properties and mixed-use commercial
property contain approximately 30.1 million square feet of gross leasable area (“GLA”).
CT REIT’s consolidated financial position, results of operations and portfolio metrics include the REIT’s one-half interest in
Canada Square, a mixed-use commercial property with future re-development potential, in Toronto, Ontario.
CTC is CT REIT’s most significant tenant. As at December 31, 2022, CTC, including Canadian Tire stores and Other CTC
Banners, leased 27.7 million square feet, representing 92.3% of total GLA (December 31, 2021 - 92.1%) and 91.4% of total
annualized base minimum rent (December 31, 2021 - 91.5%). Approximately 85.6% and 14.4% of the REIT’s total GLA are
attributable to retail and mixed-use, and industrial properties, respectively.
CT REIT’s occupancy, excluding Properties Under Development, is as follows:
(in square feet)
Property Type
Retail
Canadian Tire stores
Other CTC Banners 1
Third party retail tenants
Industrial properties
Mixed-use property 3
Total
As at December 31, 2022
Occupied GLA Occupancy rate 2
GLA
22,907,190
22,907,190
633,021
2,054,530
4,205,749
278,028
633,021
1,878,596
4,205,749
256,308
30,078,518
29,880,864
100.0 %
100.0 %
91.4 %
100.0 %
92.2 %
99.3 %
1 Includes Mark’s and L’Équipeur, SportChek, Sports Experts, and Canadian Tire Bank (referred to herein as “Other CTC Banners”).
2 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2022, and vacancies as at the end of the reporting period
3 Relates to the REIT's one-half interest in Canada Square.
(in square feet)
Property Type
Retail
Canadian Tire stores
Other CTC Banners 1
Third party retail tenants
Industrial properties
Mixed-use property 3
Total
1 Includes Other CTC Banners.
GLA
As at December 31, 2021
Occupancy rate 2
Occupied GLA
22,330,291
22,330,291
591,124
2,021,858
3,883,749
278,028
591,124
1,843,871
3,883,749
256,308
29,105,050
28,905,343
100.0 %
100.0 %
91.2 %
100.0 %
92.2 %
99.3 %
2 Occupancy and other leasing key performance measures have been prepared on a committed basis which includes the impact of existing lease agreements contracted on or before
December 31, 2021.
3 Relates to the REIT's one-half interest in Canada Square.
8 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The REIT’s property portfolio consists of:
As at
Canadian Tire store single tenant properties
Other single tenant properties
Multi-tenant properties anchored by Canadian Tire store
Multi-tenant properties not anchored by Canadian Tire store
Industrial properties
Mixed-use property
Total operating properties
Development Properties
Total properties
As at
Gas bars at retail properties
December 31, 2022
December 31, 2021
262
27
68
8
4
1
370
3
373
262
25
67
8
4
1
367
1
368
December 31, 2022
December 31, 2021
112
112
CT REIT’s Properties by region, as a percentage of total GLA, as of December 31, 2022 are as follows:
1 Excluding Development Properties and Properties Under Development.
2 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or
before December 31, 2022 and December 31, 2021, and vacancies as at the end of the reporting period.
CT REIT 2022 ANNUAL REPORT 9
Properties by Region ¹ ²(% of Total GLA)Atlantic Canada8.8%Ontario41.2%Quebec23.6%Western Canada26.4%
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.2 Revenue by Region
CT REIT’s Properties by region, as a percentage of total annualized base minimum rent, as of December 31, 2022 are as
follows:
1 Excluding Development Properties and Properties Under Development.
2 Occupancy and other leasing key operating performance measures have been prepared on a committed basis, which includes the impact of lease agreements
contracted on or before December 31, 2022 and December 31, 2021, and vacancies as at the end of the reporting period.
4.3 Six Largest Urban Markets
A significant portion of CT REIT’s Properties are located in the following six largest urban markets:
As at
Vancouver
Edmonton
Calgary
Toronto
Ottawa
Montreal
Percentage of Total Annualized Base Minimum Rent 1, 2
1 Excluding Development Properties and Properties Under Development.
December 31, 2022
December 31, 2021
3.3 %
4.7 %
2.9 %
19.6 %
3.8 %
11.0 %
45.3 %
3.0 %
4.8 %
3.0 %
19.9 %
3.9 %
10.7 %
45.3 %
2 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2022 and December 31, 2021, and vacancies as at the end of the reporting period.
10 CT REIT 2022 ANNUAL REPORT
Properties by Region ¹ ²(% of Total Annualized Base Minimum Rent)Atlantic Canada7.6%Ontario43.5%Quebec20.4%Western Canada28.5% MANAGEMENT'S DISCUSSION AND ANALYSIS
4.4 Fair Value of Portfolio of Properties
The fair value of the Properties represents 99.8% of the total assets of CT REIT as at December 31, 2022.
Year Ended
December 31, 2022
Year Ended
December 31, 2021
Income-
producing
properties
Properties
Under
Development
Total
investment
properties
Income-
producing
properties
Properties
Under
Development
Total
investment
properties
(in thousands of Canadian dollars)
Balance, beginning of period
6,409,844
79,156
6,489,000
6,083,145
57,855
6,141,000
Property investments
Intensifications
Developments
Development land
Capitalized interest and property taxes
Transfers from PUD
Transfers to PUD
Right-of-use assets - lease amendments
and additions
Fair value adjustment on investment
properties
Straight-line rent
Recoverable capital expenditures
Dispositions
27,375
—
27,375
100,749
—
100,749
—
—
—
—
136,674
136,674
76,246
76,246
16,468
16,468
3,666
3,666
—
—
—
—
7,371
1,911
1,488
16,677
16,677
182,672
(182,672)
—
—
—
—
16,383
(16,383)
(10,237)
10,237
7,371
1,911
1,488
—
—
27,047
—
27,047
9,945
—
9,945
27,845
1,844
26,835
—
—
—
—
—
27,845
169,911
1,844
6,168
26,835
33,994
—
(214)
—
—
—
—
169,911
6,168
33,994
(214)
Balance, end of period
$ 6,703,462 $
129,538 $ 6,833,000 $ 6,409,844 $
79,156 $ 6,489,000
Investment properties are measured at fair value, determined using the discounted cash flow method. Under this methodology,
discount rates are applied to the projected annual operating cash flows, generally over a minimum term of ten years, and
include a terminal value based on a capitalization rate applied to the estimated NOI in the terminal year. The portfolio is
internally valued each quarter with external appraisals performed for a portion of the portfolio on a semi-annual basis.
Approximately 80% of the property portfolio (by value) is appraised externally by an independent national real estate appraisal
firm over a four-year period.
Included in CT REIT’s portfolio of Properties are 11 properties which are situated on ground leases with remaining current
terms up to 33 years, and an average remaining current term of approximately 14 years. Assuming all extensions are
exercised, the ground leases have, on average, approximately 32 years of remaining lease term.
CT REIT 2022 ANNUAL REPORT 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
The significant inputs used to determine the fair value of CT REIT’s income-producing properties using the discounted cash
flow method are as follows:
Number of properties
Value at the period end
Discount rate1
Terminal capitalization rate1
Hold period (years)
1 Weighted average rate based on the fair value as at the period end date.
Year Ended
Year Ended
December 31, 2022
December 31, 2021
373
368
$
6,833,000
$
6,489,000
7.01 %
6.51 %
11
6.98 %
6.48 %
12
The estimates of fair value are sensitive to changes in the investment metrics and forecasted future cash flows for each
property. The sensitivity analysis in the table below indicates the approximate impact on the fair value of the portfolio of
properties resulting from changes in the terminal capitalization and discount rates assuming no changes in other inputs.
Rate sensitivity
+ 75 basis points
+ 50 basis points
+ 25 basis points
Period ended
- 25 basis points
- 50 basis points
- 75 basis points
Year Ended
Year Ended
December 31, 2022
December 31, 2021
Fair value
Change in fair
value
Fair value
Change in fair
value
$
6,166,000 $
(667,000) $
5,852,000 $
(637,000)
6,380,000
(453,000)
6,056,000
6,588,000
(245,000)
6,304,000
$
6,833,000 $
— $
6,489,000 $
7,096,000
7,384,000
263,000
6,743,000
551,000
7,084,000
$
7,701,000 $
868,000 $
7,319,000 $
(433,000)
(185,000)
—
254,000
595,000
830,000
12 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.5 2022 Investment Activities
The following table presents income-producing properties acquired, intensified, developed, or redeveloped during the year
ended December 31, 2022.
(in thousands of Canadian dollars, except for GLA amounts)
Property Location
Kingston, ON 1
Napanee, ON 2
Sherbrooke, QC 3
Invermere, BC 2
Bowmanville, ON 4
Midland, ON 5
Toronto, ON 4
Moose Jaw, SK 3,6
Lethbridge, AB 5
Brampton, ON 5
Orillia, ON - Phase 2 7
Whitby, ON 5
Coteau-du-Lac, QC 5
Sept-Iles, QC 5
Lloydminster, AB 3
Toronto (Islington & 401), ON 6, 8
Goderich, ON 5
Charlottetown, PEI 5
La Plaine, QC 5
Welland, ON 5
Lloydminster, AB 6
Chicoutimi, QC 5
Pad Developments
Total
1 Acquisition of income-producing property.
2 Acquisition of land adjacent to an existing CT REIT property to facilitate the expansion of a CTR store.
3 Acquisition of development land.
4 Expansion of a CTR store into existing space at an existing CT REIT property.
5 Intensification of an existing income-producing property.
6 Development of new CTR store.
7 Redevelopment property.
8 Ground lease.
Transaction date
GLA
Total
investment cost
March 2022
March 2022
April 2022
May 2022
May 2022
May 2022
May 2022
May 2022
June 2022
June 2022
June 2022
June 2022
June 2022
June 2022
September 2022
September 2022
September 2022
October 2022
October 2022
October 2022
October 2022
November 2022
December 2022
77,762
—
—
—
—
41,434
—
95,986
28,209
15,888
62,405
6,947
322,000
17,943
—
—
17,990
30,294
26,398
88,693
132,989
2,260
10,700
977,898 $
210,291
The following section contains forward-looking information and readers are cautioned that actual results may vary.
4.6 Development Activities
The following table provides details of the REIT’s development activities as at December 31, 2022. The total “GLA” column
represents the maximum anticipated area of the developments. The “Not committed to lease” column includes areas which
may be under construction but not committed to lease. The “Committed additional investment” column represents the
approximate financial commitment required to complete the “Committed to lease” areas and related site works.
CT REIT 2022 ANNUAL REPORT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
GLA
(in square feet)
Total investment
(in thousands of Canadian dollars)
Anticipated
date of
completion
Committed
to lease
Not
committed to
lease
Development
costs
incurred 7
Committed
additional
investment
Total
development
costs
Total
— 24,000
— 28,000
— 18,000
— 45,000
— 101,000
— 40,000
— 350,000
— 33,000
— 40,000
— 29,000
— 130,000
— 12,000
— 27,000
— 16,000
Q2 2023
Q2 2023
Q2 2023
Q2 2023
24,000
28,000
18,000
45,000
Q2 2023
101,000
Q2 2023
40,000
Q4 2023
350,000
Q4 2023
Q4 2023
Q4 2023
33,000
40,000
29,000
Q4 2023
130,000
12,000
27,000
16,000
Q2 2024
Q2 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
Q4 2024
TBD
—
7,000
7,000
32,000
29,000
43,000
26,000
32,000
43,000
45,000
69,000
35,000
26,000
TBD
— 32,000
— 29,000
— 43,000
— 26,000
— 32,000
— 43,000
— 45,000
— 69,000
— 35,000
— 26,000
TBD
TBD
Property 1
Casselman, ON 2
Summerside, PEI 2
Chambly,QC 2
Drummondville, QC 2, 3
Sherbrooke East, QC 4
Moose Jaw, SK 4
Calgary (Dufferin Distribution
Centre), AB 4
Invermere, BC 2, 3
Sydney, NS 2
Napanee, ON 2, 3
Toronto (Islington/401), ON 4, 5
Victoria (View Royal), BC 2
Granby, QC 2
Stettler, AB 2
Fort St John, BC — Phase 2 4
Brampton McLaughlin, ON 2
Burlington North, ON 2
Dryden, ON 2
Fenelon Falls, ON 2
London North, ON 2
Milton, ON 2
Orleans, ON 2
Kirkland, QC 2
Valleyfield, QC 2
Martensville, SK 2
Toronto (Canada Square), ON 5, 6
TOTAL
1,273,000
7,000 1,280,000 $
129,538 $
245,547 $
375,085
1 Properties Under Development under 5,000 square feet that are not anticipated to be completed within the next 12 months have not been included. The previously disclosed Mission, BC
intensification has been removed as the REIT has made the decision not to proceed with this project.
2 Intensification of an existing income-producing property.
3 Acquired development land for the intensification of an existing income-producing property.
4 Development property.
5 Land Leases.
6 Redevelopment Property. Potential building area and investment costs to be determined ("TBD").
7 Includes amounts related to projects in early stages of development.
As at December 31, 2022, CT REIT had committed lease agreements for 1,273,000 square feet, representing 99.5% of total
GLA under development, of which 96.9% has been leased to CTC. A total of $129,538 has been expended to date, and CT
REIT anticipates investing an additional $245,547 to complete the developments, of which $227,453 is due to CTC. In the next
12 months, the REIT expects to spend approximately $127,000 on these development activities. These commitments do not
include the future development costs related to Canada Square, other than previously approved pre-development consultant
related costs.
The REIT’s 50% co-ownership interest in Canada Square, represents around 1.7% of the REIT’s 2022 annual NOI. Its co-
owner, who is also acting as development manager for the project, submitted a development application for the redevelopment
14 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
of the Canada Square site in December 2020, and in December 2022, submitted an updated development application
representing a revised master plan scheme for the site that incorporated feedback from an extensive stakeholder engagement
process. Accordingly, the co-owners continue to manage the property in contemplation of its redevelopment. In connection
therewith, tenants in the first phases of the redevelopment with expiring leases are either having their leases extended for
shorter periods or not at all resulting in lower occupancy levels and a loss of property revenue. Declining occupancy and loss
of revenue are expected to continue until the commencement of construction, after which they will cease altogether until such
time as the development is completed. In this regard, leases with terms that have already expired in 2022, or will not be
extended, generate approximately $3.8 million in annual NOI. In addition, CTC will be vacating a portion of their previously
occupied space at 2180 Yonge Street, which is not part of the first phases of the redevelopment. Such CTC leased space
generates approximately $1.8 million of annual NOI, and the process of re-leasing these premises will begin in due course.
4.7 Investment and Development Funding
Funding of investment and development activities for the year ended December 31, 2022 was as follows:
2022 Investment and Development Activity
(in thousands of Canadian dollars)
Property
investments
Development
land Developments Intensifications
Funded with working capital to CTC
$
8,916 $
3,918 $
14,361 $
70,822 $
Funded with working capital to third parties 1
Funded with CTC Credit Facility
Capitalized interest and property taxes
Issuance of Class B LP Units to CTC
10,488
2,324
—
5,647
6,324
6,226
—
—
30,073
31,812
3,666
—
6,807
59,045
—
—
Total
98,017
53,692
99,407
3,666
5,647
Total costs
$
27,375 $
16,468 $
79,912 $
136,674 $
260,429
1 Includes $2,448 for the construction of Other CTC Banner stores.
Funding of investment and development activities for the year ended December 31, 2021 was as follows:
Funded with working capital to CTC
$
Funded with working capital to third parties 1
Funded with CTC Credit Facility
Capitalized interest and property taxes
Issuance of Class B LP Units to CTC
Mortgage assumed
Total costs
1Includes $4,203 for the construction of Other CTC Banner stores.
2021 Investment and Development Activity
Property
investments
Development
land
Developments
Intensifications
8,096 $
3,727
61,423
—
17,357
10,146
— $
— $
2,600 $
1,161
750
—
—
—
7,371
14,056
—
1,488
—
—
21
—
—
—
Total
10,696
26,315
62,194
1,488
17,357
10,146
$
100,749 $
1,911 $
8,859 $
16,677 $
128,196
CT REIT 2022 ANNUAL REPORT 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.8 Lease Maturities
The weighted average lease term of the portfolio of leases with Canadian Tire is 8.9 years. The weighted average lease term
of all leases in the REIT’s portfolio, excluding Properties Under Development, is 8.6 years.
The following graph presents the lease maturity profile from 2023 to 2044 (assuming tenants do not exercise renewal options
or termination rights, if any) as a percentage of total annualized base minimum rent and GLA as of the time of the lease expiry.
1 Excludes Properties Under Development.
Total base minimum rent excludes future contractual escalations.
Toronto (Canada Square), Ontario is included at the REIT’s one-half interest.
Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2022 and December 31, 2021, and vacancies as at the end of the reporting period.
2 Excludes any lease renewal terms.
16 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.9 Top 10 Tenants Excluding CTC Related Tenancies
CT REIT’s 10 largest tenants, excluding all CTC related tenancies, as represented by the percentage of total annualized base
minimum rent, are:
Rank Tenant Name
1
2
3
4
5
6
7
8
9
Save-On-Foods/Buy-Low Foods
Loblaws/No Frills/Shoppers Drug Mart
Bank of Montreal
Canadian Imperial Bank of Commerce
Sobeys/FreshCo/Farm Boy
Winners/Marshalls
Walmart
Dollarama
Best Buy
10
Tim Hortons
Total
Percentage of total
annualized base
minimum rent 1
0.65 %
0.48 %
0.48 %
0.43 %
0.43 %
0.38 %
0.29 %
0.25 %
0.23 %
0.21 %
3.83 %
1 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2022 and December 31, 2021, and vacancies as at the end of the reporting period.
4.10 Leasing Activities
The future financial performance of CT REIT will be impacted by many factors including occupancy rates and renewing
currently leased space. During the current quarter, the REIT completed 11 Canadian Tire store lease extensions and one CTC
lease extension related to its occupancy at the mixed-use property. This brings the total number of Canadian Tire lease
extensions in 2022 to 31. As at December 31, 2022, the REIT’s occupancy rate, excluding Development Properties and
Properties Under Development, was 99.3% (Q4 2021 - 99.3%). Refer to section 4.1 for further details.
4.11 Recoverable Capital Costs
Many of the capital costs that will be incurred by CT REIT are recoverable from tenants pursuant to the terms of their leases.
These recoveries will occur either in the year in which such expenditures are incurred or, in the case of a major item of
replacement or betterment, on a straight-line basis over the expected useful life thereof together with an imputed rate of
interest on the unrecovered balance at any point in time. Capital expenditures of $14,903 and $26,835 (Q4 2021 - $7,945 and
YTD 2021 - $33,994) were incurred during the three months and year ended December 31, 2022, respectively. Most of the
REIT’s recoverable capital expenditures relate to parking lots, roofs and heating, ventilation and air conditioning equipment,
the incurrence of which are typically seasonal in nature. As a result, the actual recoverable capital costs incurred may vary
widely from period to period.
CT REIT 2022 ANNUAL REPORT 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.0 RESULTS OF OPERATIONS
5.1 Financial Results for the Three Months and Year Ended December 31, 2022
CT REIT’s financial results for the three months and year ended December 31, 2022 and December 31, 2021 are summarized
below:
(in thousands of Canadian dollars, except per
unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021 Change 1
2022
2021
Change
Property revenue
Property expense
$
135,175 $
129,537
4.4 % $
532,795 $
514,537
3.5 %
(27,833)
(27,054)
2.9 %
(111,133)
(107,290)
3.6 %
General and administrative expense
(4,030)
(3,942)
2.2 %
(14,478)
(14,593)
(0.8) %
Net interest and other financing charges
(27,703)
(26,429)
4.8 %
(110,416)
(105,706)
4.5 %
Fair value adjustment on investment properties
(860)
53,254
NM
27,845
169,911
(83.6) %
Net income and comprehensive income
Net income per unit - basic
Net income per unit - diluted
1 NM - not meaningful.
Property Revenue
$
$
$
74,749 $
125,366
(40.4) % $
324,613 $
456,859
(28.9) %
0.319 $
0.538
(40.7) % $
1.387 $
1.969
(29.6) %
0.276 $
0.443
(37.7) % $
1.185 $
1.635
(27.5) %
Property revenue includes all amounts earned from tenants pursuant to lease agreements including property taxes, operating
costs and other recoveries. Many of CT REIT’s expenses are recoverable from tenants pursuant to the terms of their leases,
with the REIT absorbing these expenses to the extent that vacancies exist.
Total revenue for the three months ended December 31, 2022 was $135,175 which was $5,638 (4.4%) higher compared to the
same period in the prior year, primarily due to both the properties acquired and developments and intensifications completed
during 2022 and 2021 and the contractual rent escalations. Total revenue for the three months ended December 31, 2022 also
included property operating expense recoveries in the amount of $26,353 (Q4 2021 - $25,814).
Total revenue for the year ended December 31, 2022 was $532,795 which was $18,258 (3.5%) higher compared to the same
period in the prior year, primarily due to both the properties acquired and developments and intensifications completed during
2022 and 2021 and the contractual rent escalations. Total revenue for the year ended December 31, 2022 also included
property operating expense recoveries in the amount of $106,687 (Q4 2021 - $103,348).
The total amount of base rent to be received from operating leases is recognized on a straight-line basis over the term of the
lease. For the three months ended December 31, 2022, straight-line rent of $579 (Q4 2021 - $1,552) was included in property
revenue. For the year ended December 31, 2022, straight-line rent of $1,844 (2021 - $6,168) was included in property
revenue.
18 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Property Expense
Property expense consists primarily of property taxes and operating costs. The majority of property expenses are recoverable
from tenants with the REIT absorbing these expenses to the extent that vacancies exist.
Property expense for the three months ended December 31, 2022, increased by $779 (2.9%) compared to the same period in
the prior year primarily due to increased operating expenses and property acquisitions completed during 2022 and 2021.
Property expense for the year ended December 31, 2022, increased by $3,843 (3.6%) compared to the same period in the
prior year primarily due to increased operating expenses and property acquisitions completed during 2022 and 2021.
General and Administrative Expense
CT REIT has three primary categories of general and administrative expense, namely: (i) personnel costs; (ii) public entity and
other costs, including external audit fees, trustee compensation expense, legal and professional fees, travel and income tax
expense (recovery) related to CT REIT GP Corp.’s (“GP”) activities; and (iii) outsourcing costs, which may fluctuate depending
on when such costs are incurred. The personnel and public entity and other costs reflect the expenses related to ongoing
operations of CT REIT. The outsourcing costs are largely related to certain tax, treasury, internal audit and other support
services provided by CTC to the REIT pursuant to the Services Agreement, as further described in section 8.0 of this MD&A.
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021 Change
2022
2021 Change
Personnel expense 1
Services Agreement with CTC
Public entity and other 1
$
3,007
$
3,090
(2.7) % $
9,708
$
233
790
225
627
3.6 %
26.0 %
1,094
3,676
9,637
1,081
3,875
General and administrative expense
$
4,030
$
3,942
2.2 % $
14,478
$
14,593
As a percent of property revenue
Adjusted general and administrative expense as a
percent of property revenue 2
3.0 %
2.8 %
3.0 %
2.9 %
2.7 %
2.9 %
2.8 %
2.6 %
0.7 %
1.2 %
(5.1) %
(0.8) %
1 Includes unit-based awards, including (gain) loss adjustments as a result of the change in the fair market value of the Units of $276 (Q4 2021 - $244) and $(866) (YTD 2021 - $990) for the
three months and year ended December 31, 2022.
2 Adjusted for fair value adjustments on unit-based awards.
General and administrative expenses amounted to $4,030 or 3.0% of property revenue for the three months ended
December 31, 2022 which was comparable to the same period in the prior year.
General and administrative expenses amounted to $14,478 or 2.7% of property revenue for the year ended December 31,
2022 which was comparable to the same period in the prior year.
Net Interest and Other Financing Charges
As at December 31, 2022 the Partnership had 1,451,550 Class C LP Units outstanding with a face value of $1,451,550 and
bearing a weighted average distribution rate of 4.41% per annum. The Class C LP Units are subject to redemption rights.
Accordingly, the Class C LP Units are classified as financial liabilities and distributions on the Class C LP Units are presented
in the net interest and other financing charges in the consolidated statements of income and comprehensive income.
CT REIT 2022 ANNUAL REPORT 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net interest and other financing charges are comprised of the following:
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021
Change 1
2022
2021
Change 1
Interest on Class C LP Units 2
$
15,990 $
15,990
— % $
63,962 $
63,962
— %
Interest and financing costs - debentures
9,853
9,018
9.3 %
39,968
36,108
10.7 %
Interest and financing costs - Credit Facilities 3
Interest on mortgages payable
Interest on lease liabilities
1,011
797
752
407
386
905
NM
NM
(16.9) %
2,042
2,377
3,964
1,503
1,408
3,615
$
28,403 $
26,706
6.4 % $
112,313 $
106,596
35.9 %
68.8 %
9.7 %
5.4 %
Less: capitalized interest
(660)
(275)
NM
(1,641)
(876)
87.3 %
Interest expense and other financing charges
$
27,743 $
26,431
5.0 % $
110,672 $
105,720
4.7 %
Less: interest income
(40)
(2)
NM
(256)
(14)
NM
Net interest and other financing charges
$
27,703 $
26,429
4.8 % $
110,416 $
105,706
4.5 %
1 NM - not meaningful.
2 CTC elected to defer receipt of distributions on Series 3-9 and Series 16 and 19 of the Class C LP Units for the three months and year ended December 31, 2022 in the amount of $15,990
(Q4 2021 - $15,990) and $58,631 (YTD 2021 - $58,631), until the first business day following the end of the fiscal year. The deferred distributions have been netted against interest payable
on Class C LP Units and are included under the heading “other liabilities” on the consolidated balance sheets.
3 See section 6.10 for details on Credit Facilities.
Net interest and other financing charges for the three months ended December 31, 2022 was $1,274 (4.8%) higher compared
to the same period in the prior year due to an increase in indebtedness as a result of the issuance of $250,000 Series H
unsecured debentures with a coupon of 3.029% per annum, which closed on February 3, 2022 and an increase in the prime
rate on the CTC Credit Facility and the variable rate mortgage, partially offset by the early redemption of the $150,000 Series
A senior unsecured debentures with a coupon of 2.853%, which occurred on February 11, 2022.
Net interest and other financing charges for the year ended December 31, 2022 was $4,710 (4.5%) higher compared to the
same period in the prior year due to an increase in indebtedness as a result of the issuance of $250,000 Series H unsecured
debentures with a coupon of 3.029% per annum, which closed on February 3, 2022 and the prepayment cost of $744 related
to the early redemption of the $150,000 Series A senior unsecured debentures with a coupon of 2.853%, which occurred on
February 11, 2022 and an increase in the prime rate on the variable rate mortgage and on the CTC Credit Facility.
Fair Value Adjustment on Investment Properties
The fair value adjustment on investment properties for the three months ended December 31, 2022 was $(860), a decrease of
$54,114 compared to the adjustment in the same period in the prior year. The difference relative to the same period was
primarily driven by changes to underlying investment metrics for properties located in secondary and tertiary markets, partially
offset by cash flow growth.
The fair value adjustment on investment properties for the year ended December 31, 2022 was $27,845, a decrease of
$142,066 compared to the adjustment in the same period in the prior year. The difference relative to the same period was
primarily driven by changes to underlying investment metrics for properties located in secondary and tertiary markets, partially
offset by cash flow growth.
20 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Income Tax Expense
Management operates CT REIT in a manner that enables the REIT to continue to qualify as a real estate investment trust
pursuant to the Income Tax Act (Canada) (“ITA”). CT REIT distributes 100% of its taxable income to unitholders and therefore
does not incur income tax expense in relation to its activities. The REIT only records income tax expense or recovery in
relation to the GP activities.
If CT REIT fails to distribute the required amount of taxable income to unitholders, or if CT REIT fails to qualify as a “real estate
investment trust” under the ITA, substantial adverse tax consequences may occur. Refer to section 12.0 for further information.
Net Income
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021 Change
2022
2021 Change
Net income and comprehensive income
Net income per unit - basic
Net income per unit - diluted
$
$
$
74,749 $ 125,366
(40.4) % $ 324,613 $ 456,859
(28.9) %
0.319 $
0.538
(40.7) % $
1.387 $
1.969
(29.6) %
0.276 $
0.443
(37.7) % $
1.185 $
1.635
(27.5) %
Net income decreased by $50,617 (40.4%) for the three months ended December 31, 2022 compared to the same period in
the prior year for the reasons discussed above.
Net income decreased by $132,246 (28.9%) for the year ended December 31, 2022 compared to the same period in the prior
year for the reasons discussed above.
Net income per unit - basic decreased by $0.219 (40.7%) for the three months ended December 31, 2022, compared to the
same period in the prior year primarily due to decreased net income, as discussed above, as well as an increase in the
weighted average number of units outstanding - basic.
For the year ended December 31, 2022, net income per unit - basic decreased by $0.582 (29.6%) compared to the same
period in the prior year primarily due to decreased net income, as discussed above, as well as an increase in the weighted
average number of units outstanding - basic.
Net income per unit - diluted decreased by $0.167 (37.7%) for the three months ended December 31, 2022, compared to the
same period in the prior year primarily due to decreased net income, as discussed above, as well as an increase in the
weighted average number of units outstanding - diluted.
For the year ended December 31, 2022, net income per unit - diluted decreased by $0.450 (27.5%) compared to the same
period in the prior year primarily due to decreased net income, as discussed above, as well as an increase in the weighted
average number of units outstanding - diluted.
CT REIT 2022 ANNUAL REPORT 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.2 Non-GAAP Financial Measures and Non-GAAP Ratios
In addition to the GAAP measures previously described, management uses non-GAAP financial measures and non-GAAP
ratios in assessing the financial performance of CT REIT. Refer to section 1.0 and section 10.0 in this MD&A for further
information.
(in thousands of Canadian dollars, except
per unit amounts)
For the periods ended December 31,
Net operating income 1
Same store NOI 1
Same property NOI 1
Funds from operations 1
FFO per unit - basic 2
FFO per unit - diluted (non-GAAP) 2
Adjusted funds from operations 1
AFFO per unit - basic 2
AFFO per unit - diluted (non-GAAP) 2
AFFO payout ratio 2
ACFO 1,3
EBITFV 1
Three Months Ended
Year Ended
2022
2021
Change
2022
2021
Change
$
$
$
$
$
$
$
$
$
$
$
106,763
102,374
104,423
75,570
0.322
0.322
68,515
0.292
0.292
74.3 %
89,461
103,133
$
$
$
$
$
$
$
$
$
$
$
100,931
5.8 % $
419,818
99,756
99,776
71,935
0.309
0.308
2.6 % $
405,706
4.7 % $
409,967
5.1 % $
296,204
4.2 % $
4.5 % $
1.266
1.264
64,124
6.8 % $
268,783
0.275
0.275
6.2 % $
6.2 % $
1.149
1.147
76.4 %
(2.7) %
74.5 %
80,844
98,322
10.7 % $
268,379
4.9 % $
406,459
$
$
$
$
$
$
$
$
$
$
$
401,079
396,022
396,295
287,565
1.239
1.238
256,504
1.105
1.104
74.5 %
271,948
393,557
4.7 %
2.4 %
3.4 %
3.0 %
2.2 %
2.1 %
4.8 %
4.0 %
3.9 %
— %
(1.3) %
3.3 %
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
3 Comparatives have been restated to conform with current year’s presentation.
Net Operating Income
NOI for the three months ended December 31, 2022 increased by $5,832 (5.8%) compared to the same period in the prior
year primarily due to the rent escalations from Canadian Tire leases and the acquisition and development of income-producing
properties completed in 2022 and 2021, which contributed $1,419 and $1,398 to NOI growth, respectively.
Same store NOI for the three months ended December 31, 2022 increased by $2,618 (2.6%), when compared to the prior year
primarily for the following reasons:
•
•
contractual rent escalations of 1.5% per year, on average, contained within the Canadian Tire leases, which are
generally effective January 1st, contributed $1,419 to NOI growth; and
recovery of capital expenditures and interest earned on the unrecovered balance contributed $1,048 to NOI.
Same property NOI for the three months ended December 31, 2022, increased $4,647 (4.7%) compared to the prior year due
to the increase in same store NOI noted above, as well as an increase in NOI of $2,029 from the intensifications completed in
2022 and 2021.
NOI for the year ended December 31, 2022 increased by $18,739 (4.7%) compared to the same period in the prior year
primarily due to the rent escalations from Canadian Tire leases and the acquisition and development of income-producing
properties completed in 2022 and 2021, which contributed $5,669 and $6,347 to NOI growth, respectively. This was offset by
$1,280 reduction due to declining occupancy and the associated loss of revenue with respect to Canada Square, as further
described in section 4.6.
22 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Same store NOI for the year ended December 31, 2022 increased $9,684 (2.4%), when compared to the prior year primarily
for the following reasons:
•
•
•
contractual rent escalations of 1.5% per year, on average, contained within the Canadian Tire leases, which are
generally effective January 1st, contributed $5,669 to NOI growth;
recovery of capital expenditures and interest earned on the unrecovered balance contributed $3,360 to NOI; and
lower provision for expected credit losses increased NOI by $550.
Same property NOI for the year ended December 31, 2022 increased $13,672 (3.4%) compared to the prior year due to the
increase in same store NOI noted above, as well as an increase in NOI of $3,988 from intensifications completed in 2022 and
2021.
Funds From Operations
FFO for the three months ended December 31, 2022 amounted to $75,570 or $0.322 per unit - diluted (non-GAAP) which was
$3,635 (5.1%) higher than the same period in 2021 primarily due to the impact of NOI variances, partially offset by an increase
in the interest on the public debentures and an increase in the prime rate on the CTC Credit Facility and the variable rate
mortgage. FFO per unit - diluted (non-GAAP) for the three months ended December 31, 2022 was higher by $0.014 (4.5%) per
unit - diluted (non-GAAP) compared to the same period in 2021 due to the growth of FFO exceeding the growth in the
weighted average units outstanding-diluted (non-GAAP).
FFO for the year ended December 31, 2022 amounted to $296,204 or $1.264 per unit - diluted (non-GAAP) which was $8,639
(3.0%) higher than the same period in 2021 primarily due to the impact of NOI variances, partially offset by an increase in
public debentures, the debenture pre-payment penalty and an increase in the prime rate on the variable rate mortgage and the
CTC Credit Facility. FFO per unit - diluted (non-GAAP) for the year ended December 31, 2022 was higher by $0.026 (2.1%)
compared to the same period in 2021 due to the growth of FFO exceeding the growth in the weighted average units
outstanding-diluted (non-GAAP).
Adjusted Funds From Operations
AFFO for the three months ended December 31, 2022 amounted to $68,515 or $0.292 per unit - diluted (non-GAAP) which
was $4,391 (6.8%) and $0.017 (6.2%), respectively, higher than the same period in 2021 primarily due to the impact of NOI
variances, partially offset by an increase in the interest on the public debentures and an increase in the prime rate on the CTC
Credit Facility and the variable rate mortgage.
AFFO for the year ended December 31, 2022 amounted to $268,783 or $1.147 per unit - diluted (non-GAAP) which was
$12,279 (4.8%) and $0.043 (3.9%), respectively, higher than the same period in 2021 primarily due to the impact of NOI
variances, partially offset by an increase in public debentures, the debenture pre-payment penalty and an increase in the prime
rate on the variable rate mortgage and the CTC Credit Facility.
CT REIT 2022 ANNUAL REPORT 23
MANAGEMENT'S DISCUSSION AND ANALYSIS
Adjusted Funds From Operations Payout Ratio
The AFFO payout ratio for the three months ended December 31, 2022 was 74.3%, a decrease of 2.7% for the same period in
2021 due to the rate of increase in AFFO per unit exceeding the increase in the monthly distribution.
The AFFO payout ratio for the year ended December 31, 2022 was 74.5%, consistent from the same period in 2021.
Adjusted Cashflow From Operations
ACFO for the three months ended December 31, 2022 increased by $8,617 or 10.7% over the same period in 2021 primarily
due to the impact of NOI variances, discussed earlier, and to the non-operating adjustments to changes in working capital and
other due to the timing of property taxes, partially offset by higher interest expense.
ACFO for the year ended December 31, 2022 decreased by $3,569 or 1.3% over the same period in 2021 primarily due to
higher interest expense and to the non-operating adjustments to changes in working capital and other, partially offset by the
impact of NOI variances, discussed earlier.
Earnings Before Interest and Other Financing Costs, Taxes and Fair Value Adjustments
EBITFV for the three months ended December 31, 2022 increased by $4,811 (4.9%) over the same period in 2021, primarily
due to the impact of NOI variances, discussed earlier.
EBITFV for the year ended December 31, 2022 increased by $12,902 (3.3%) over the same period in 2021, primarily due to
the impact of NOI variances, discussed earlier.
6.0 LIQUIDITY AND FINANCIAL CONDITION
The following section contains forward-looking information and readers are cautioned that actual results may vary.
6.1 Liquidity
CT REIT intends to fund capital expenditures for acquisitions and development activities through a combination of (i) cash on
hand, (ii) issuances of Class B LP Units and/or Class C LP Units, (iii) draws on the Credit Facilities, (iv) assumption of existing
debt, and/or (v) new public or private issuance of debt or equity.
(in thousands of Canadian dollars)
As at
Cash and cash equivalents
Unused portion of available Bank Credit Facility 1
Liquidity
1 See section 6.10 for details on Credit Facilities.
December 31, 2022
December 31, 2021
$
$
2,611 $
195,117
197,728 $
3,555
294,183
297,738
Cash flow generated from operating the portfolio of properties represents the primary source of liquidity to service debt and to
fund planned maintenance expenditures, leasing costs, general and administrative expenses and distributions. Other sources
being interest income, as well as cash on hand.
24 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021
Change
2022
2021
Change
Cash generated from operating activities
$ 123,937 $ 117,018
5.9 % $ 399,273 $ 407,201
(1.9) %
Cash (used for) investing activities
Cash (used for) financing activities
(89,108)
(97,256)
(8.4) %
(219,617)
(146,766)
49.6 %
(38,300)
(23,660)
61.9 %
(180,600)
(261,411)
(30.9) %
Cash (used for) in the period
$
(3,471) $
(3,898)
(11.0) $
(944) $
(976)
(3.3) %
6.2 Discussion of Cash Flows
Cash used for the three months ended December 31, 2022 of $3,471 was primarily the result of cash used for development of
investment properties, distribution payments and interest payments on the debentures, partially offset by cash generated from
operating activities and amounts drawn on the Bank Credit Facility.
Cash used for the year ended December 31, 2022 of $944 was primarily the result of cash used for redemption of the Series A
senior unsecured debentures, acquisitions and development of investment properties, distribution payments, interest
payments on the debentures, and repayment of amounts drawn under the CTC Credit Facility and of a mortgage which
matured, partially offset by cash generated from operating activities, the issuance of the Series H senior unsecured debentures
and amounts drawn on the Bank Credit Facility.
6.3 Credit Ratings
The senior unsecured debt of CT REIT is rated by S&P Global Ratings (“S&P”) and by DBRS Morningstar (“DBRS
Morningstar”), two independent credit rating agencies which provide credit ratings of debt securities for commercial entities. A
credit rating generally provides an indication of the risk that the borrower will not fulfill its full obligations in a timely manner with
respect to both interest and principal commitments. Rating categories range from highest credit quality (generally “AAA”) to
default in payment (generally “D”).
These ratings are related to and currently equivalent to those of CTC, as CTC holds a significant ownership position in CT
REIT and CTC is CT REIT’s most significant tenant.
The following table sets out CT REIT’s issuer and senior unsecured debenture credit ratings:
Issuer Rating
Senior unsecured debentures
DBRS Morningstar
S&P
Credit Rating
BBB
BBB
Trend
Stable
Stable
Credit Rating
BBB
BBB
Outlook
Stable
-
CT REIT 2022 ANNUAL REPORT 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
6.4 Indebtedness and Capital Structure
CT REIT’s indebtedness and capital structure is as follows:
(in thousands of Canadian dollars)
As at
Class C LP Units
Mortgages payable
Debentures
Credit Facilities 1
Total indebtedness
Unitholders’ equity
Non-controlling interests
Total capital under management
1 See section 6.10 for details on Credit Facilities.
December 31, 2022
December 31, 2021
$
1,451,550 $
1,451,550
65,295
1,170,905
99,884
2,787,634 $
1,698,250
2,128,923
6,614,807 $
75,549
1,071,462
79,300
2,677,861
1,622,365
2,055,784
6,356,010
$
$
CT REIT’s total indebtedness as at December 31, 2022 was higher than at December 31, 2021 primarily due to the issuance
of the Series H senior unsecured debentures and amounts drawn on the Bank Credit Facility, partially offset by the redemption
of the Series A senior unsecured debentures, the repayment of amounts drawn on the CTC Credit Facility and of a mortgage
which matured. Refer to section 6.6 of this MD&A for further details.
CT REIT’s unitholders’ equity and non-controlling interests as at December 31, 2022 increased as compared to December 31,
2021 primarily as a result of net income exceeding distributions.
Future payments in respect of CT REIT’s indebtedness as at December 31, 2022 are as follows:
(in thousands of Canadian dollars)
Principal
Amortization
Maturities
Class C LP
Units Debentures 1
Credit
Facilities
Total
Mortgages payable
2023
2024
2025
2026
2027 and thereafter
Total contractual obligation
Unamortized portion of mark to market
on mortgages payable assumed on the
acquisition of properties
Unamortized transaction costs
1 Refer to section 6.8.
378
391
403
103
—
55,700
—
200,000
—
—
251,550
200,000
7,967
—
200,000
—
1,000,000
775,000
—
—
99,884
155,962
—
—
—
—
200,391
451,953
208,070
1,775,000
$
1,275 $
63,667 $
1,451,550 $
1,175,000 $
99,884 $
2,791,376
—
—
381
(28)
—
—
—
(4,095)
—
—
381
(4,123)
$
1,275 $
64,020 $
1,451,550 $
1,170,905 $
99,884 $
2,787,634
Interest rates on CT REIT’s indebtedness range from 2.37% to 6.61%. The maturity dates on the indebtedness range from
March 2023 to May 2038.
Total indebtedness as at December 31, 2022 had a weighted average interest rate of 3.99% and a weighted average term to
maturity of 6.2 years, excluding the Credit Facilities.
26 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
As at December 31, 2022, variable rate and fixed rate indebtedness were $155,584 and $2,632,050, respectively.
As at
Variable rate indebtedness
Total indebtedness
Variable rate indebtedness / total indebtedness
December 31, 2022
December 31, 2021
$
155,584
$
135,000
2,787,634
2,677,861
5.58 %
5.04 %
CT REIT’s variable rate debt-to-total indebtedness ratio as at December 31, 2022 increased as compared to December 31,
2021 primarily due to increased draws on the Bank Credit Facility, partially offset by an increase in public debentures, the
repayment of amounts drawn on the CTC Credit Facility and of a mortgage which matured.
The following table presents the contractual obligations of CT REIT:
Class C LP Units 1
Debentures
Future payments on Class C LP
Units 1
Total
2023
2024
2025
2026
2027
2028 and
thereafter
$ 1,451,550 $
— $
200,000 $
251,550 $
—
— $ 1,000,000
1,175,000
—
—
200,000
200,000
375,000
400,000
552,575
63,962
58,712
51,484
49,000
49,000
280,417
Future interest on debentures
188,087
38,562
38,562
35,035
28,219
21,894
25,815
Credit Facilities
Future undiscounted lease liabilities
payments
99,884
99,884
—
—
—
—
—
246,726
5,123
6,382
6,511
6,636
6,648
215,426
Mortgages payable
64,942
56,078
391
403
8,070
—
—
—
—
—
—
—
—
—
—
—
—
Future payment other liabilities
98,118
92,968
5,150
Distributions payable 2
16,973
16,973
Payable on Class C LP Units, net of
loans receivable
Future interest payments on
mortgages payable
Interest on CTC Credit Facility
Total
5,330
5,330
1,129
388
517
388
—
—
280
—
—
—
—
267
—
—
—
—
65
—
$ 3,900,702 $
379,785 $
309,477 $
545,250 $
291,990 $
452,542 $ 1,921,658
1 Assumes redemption on Current Fixed Rate Period for each series.
2 On Units and Class B LP Units.
The table below presents CT REIT’s interest in investment properties at fair value that are available to it to finance and/or
refinance its debt as at December 31, 2022:
(in thousands of Canadian dollars)
Unencumbered investment properties
Encumbered investment properties
Total investment properties
Number of
properties
Fair value of
investment
properties
Percentage of
total assets
Mortgages
payable
Loan to value
ratio
371 $
6,682,630
2
150,370
373 $
6,833,000
97.6 % $
2.2 %
99.8 % $
—
65,295
65,295
—
43.4 %
1.0 %
CT REIT 2022 ANNUAL REPORT 27
MANAGEMENT'S DISCUSSION AND ANALYSIS
The table below presents CT REIT’s secured debt as a percentage of total indebtedness:
(in thousands of Canadian dollars)
As at
Secured debt
Total indebtedness
Secured debt / total indebtedness
December 31, 2022
December 31, 2021
$
65,295
$
2,787,634
2.34 %
75,549
2,677,861
2.82 %
CT REIT’s secured debt to total indebtedness ratio as of December 31, 2022 decreased as compared to December 31, 2021
primarily due to the repayment of a secured mortgage which matured, as well as an increase in public debentures and draws
on the Bank Credit Facility.
Indebtedness to EBITFV ratios are used to measure an entity’s ability to meet its debt obligations. Generally, the lower the
ratio, the less an entity is leveraged which increases its ability to pay off its debts.
The table below presents CT REIT’s indebtedness to EBITFV ratio:
(in thousands of Canadian dollars)
As at
Total indebtedness
EBITFV 1
Total indebtedness / EBITFV 2
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
December 31, 2022
December 31, 2021
$
$
2,787,634 $
406,459
6.86
2,677,861
393,557
6.80
CT REIT’s indebtedness to EBITFV ratio as at December 31, 2022 increased as compared to the indebtedness to EBITFV
ratio at December 31, 2021 primarily due to the growth of total indebtedness exceeding the growth of EBITFV.
6.5 Interest Coverage Ratio
Interest coverage ratios are used to measure an entity’s ability to service its debt. Generally, the higher the ratio is, the lower
the risk of default on debt. The ratio is calculated as follows:
(in thousands of Canadian dollars)
For the periods ended December 31,
EBITFV 1 (A)
Interest expense and other financing charges (B)
Three Months Ended
Year Ended
2022
2021
2022
$
$
103,133 $
98,322 $
406,459 $
27,743 $
26,431 $
110,672 $
Interest coverage ratio 2 (A)/(B)
3.72
3.72
3.67
2021
393,557
105,720
3.72
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
The interest coverage ratio for the three months ended December 31, 2022, was comparable to the same period in 2021.
The slight decrease in interest coverage ratio for the year ended December 31, 2022, as compared to the same period in
2021, is primarily due to higher interest and financing charges, including an increase in public debentures, the prepayment
28 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
cost of $744 related to the early redemption of the $150,000 Series A senior unsecured debentures and an increase in the
prime rate on the CTC Credit Facility and the variable rate mortgage, substantially offset by the growth of EBITFV.
6.6 Indebtedness Ratio
CT REIT has adopted an indebtedness ratio guideline which management uses as a measure to evaluate its leverage and the
strength of its equity position, expressed as a percentage of total assets. This ratio can help investors determine the REIT’s
risk levels. CT REIT’s Declaration of Trust and the Trust Indenture limit its indebtedness (plus the aggregate par value of the
Class C LP Units) to a maximum of 60% of the gross book value, excluding convertible debentures, and 65% including
convertible debentures. Gross book value is defined as total assets as reported on the latest consolidated balance sheets.
CT REIT calculates its indebtedness ratio as follows:
(in thousands of Canadian dollars)
As at
Total indebtedness 1 (A)
Total assets (B)
Indebtedness ratio (A)/(B)
December 31, 2022
December 31, 2021
$
$
2,787,634
6,844,789
$
$
2,677,861
6,500,102
40.7 %
41.2 %
1 Total indebtedness reflects the value of the Class C LP Units, mortgages payable, debentures and draws on the Credit Facilities.
The indebtedness ratio as at December 31, 2022 decreased compared to the indebtedness ratio as at December 31, 2021
primarily due to the growth from fair value adjustments made to its Properties and the REIT’s 2022 acquisition, intensification
and development activities exceeding the growth of total indebtedness.
6.7 Class C LP Units
As at December 31, 2022, there were 1,451,550 Class C LP Units outstanding, all of which were held by CTC. The Class C LP
Units are designed to provide CTC with an interest in the Partnership that entitles holders to a fixed cumulative monthly
payment, during the fixed rate period for each series of Class C LP Units (the “Current Fixed Rate Period”). Such payments
are made in priority to distributions made to holders of Class B LP Units and units representing an interest in the GP (subject
to certain exceptions) if, as and when declared by the Board of Directors of the GP and are payable monthly at an annual
distribution rate for each series as set out in the table below. In addition, the Class C LP Units are entitled to receive Special
Voting Units, in certain limited circumstances. Refer to section 7.0 for further details.
On expiry of the Current Fixed Rate Period applicable to each series of Class C LP Units, and each five-year period
thereafter, each such series of Class C LP Units is redeemable at par (together with all accrued and unpaid payments
thereon) at the option of the Partnership or the holder, upon giving at least 120 days’ prior notice. The Partnership also has
the ability to settle any of the Class C LP Units at any time at a price equal to the greater of par and a price to provide a yield
equal to the then equivalent Government of Canada bond yield plus a spread, so long as such redemption is in connection
with a sale of properties.
During the five-year period beginning immediately following the completion of the initial fixed rate period, and each five-year
period thereafter, if not redeemed, the fixed payment rate for Class C LP Units will be reset, and the holders of Class C LP
Units will be entitled, subject to certain conditions, to elect either a fixed rate or variable rate option.
CT REIT 2022 ANNUAL REPORT 29
MANAGEMENT'S DISCUSSION AND ANALYSIS
Such redemptions of Class C LP Units (other than upon a change of control of CT REIT) can be settled at the option of the
Partnership, in cash or Class B LP Units of equal value.
The following table presents the details of the Class C LP Units:
Series of Class C LP Units
Subscription
price
Annual
distribution rate
during Current
Fixed Rate Period
Expiry of Current Fixed Rate
Period
% of Total Class C
LP Units
Series 3
Series 4
Series 5
Series 6
Series 7
Series 8
Series 9
Series 16
Series 17
Series 18
Series 19
$
200,000
200,000
200,000
200,000
200,000
200,000
200,000
16,550
18,500
4,900
11,600
2.37 %
4.50 %
4.50 %
5.00 %
5.00 %
5.00 %
5.00 %
2.37 %
2.37 %
2.37 %
2.37 %
May 31, 2025 (2.4 years)
May 31, 2024 (1.4 years)
May 31, 2028 (5.4 years)
May 31, 2031 (8.4 years)
May 31, 2034 (11.4 years)
May 31, 2035 (12.4 years)
May 31, 2038 (15.4 years)
May 31, 2025 (2.4 years)
May 31, 2025 (2.4 years)
May 31, 2025 (2.4 years)
May 31, 2025 (2.4 years)
Total / weighted average
$
1,451,550
4.41 %
7.9 years
13.78 %
13.78 %
13.78 %
13.78 %
13.78 %
13.78 %
13.78 %
1.14 %
1.27 %
0.34 %
0.79 %
100.0 %
6.8 Debentures
Series
A, 2.85%, June 9, 2022
B, 3.53%, June 9, 2025
D, 3.29%, June 1, 2026
E, 3.47%, June 16, 2027
F, 3.87%, December 7, 2027
G, 2.37%, January 6, 2031
H, 3.03%, February 5, 2029
Total
Current
Non-current
Total
December 31, 2022
December 31, 2021
Face value
Carrying
amount
Face value
Carrying
amount
$
— $
— $
150,000 $
149,934
200,000
199,581
200,000
200,000
199,537
200,000
175,000
174,487
175,000
200,000
199,346
200,000
150,000
149,223
150,000
250,000
248,731
—
199,416
199,401
174,372
199,213
149,126
—
$
$
$
$
1,175,000 $
1,170,905 $
1,075,000 $
1,071,462
— $
— $
150,000 $
149,934
1,175,000 $
1,170,905 $
925,000 $
921,528
1,175,000 $
1,170,905 $
1,075,000 $
1,071,462
Debentures as at December 31, 2022 had a weighted average interest rate of 3.28% (December 31, 2021 - 3.28%).
For the three months and year ended December 31, 2022, amortization of transaction costs of $213 (Q4 2021 - $201) and
$900 (YTD 2021 - $798) was included in net interest and other financing charges on the consolidated statement of income and
comprehensive income. Refer to Note 17 of the consolidated financial statements.
30 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The debentures are rated “BBB” by S&P and “BBB” by DBRS Morningstar. The debentures are direct senior unsecured
obligations of CT REIT. Refer to section 6.3 for further details.
6.9 Mortgages Payable
Mortgages payable, secured by certain investment properties, include the following:
(in thousands of Canadian dollars)
As at
Current
Non-current
Total
December 31, 2022
December 31, 2021
Face value
Carrying
amount
Face value
$
$
56,078 $
56,167 $
10,081 $
8,864
9,128
64,942
64,942 $
65,295 $
75,023 $
Carrying
amount
10,233
65,316
75,549
Mortgages payable as at December 31, 2022 had a weighted average interest rate of 5.49% (December 31, 2021 – 2.36%).
6.10 Credit Facilities
Bank Credit Facility
CT REIT has a committed, unsecured $300,000 revolving credit facility with a syndicate of Canadian banks (“Bank Credit
Facility”) maturing in September 2027. The Bank Credit Facility bears interest at a rate based on a stipulated bank prime rate
or bankers’ acceptance plus a margin. A standby fee is charged on the Bank Credit Facility.
As of December 31, 2022 the Bank Credit Facility had $99,884, at a weighted average interest rate of 5.40% (December 31,
2021 - nil) drawn under the revolving credit facility, and $4,999 (December 31, 2021 – $5,817) of outstanding letters of credit.
CTC Credit Facility
CT REIT has an uncommitted, unsecured $300,000 revolving credit facility with CTC (“CTC Credit Facility”) maturing in
December 2023. The CTC Credit Facility bears interest at a rate based on a stipulated bank prime rate or bankers’ acceptance
plus a margin.
As of December 31, 2022, the REIT had no draws on the CTC Credit Facility (December 31, 2021 – $79,300, interest rate of
2.61%).
The Bank Credit Facility and the CTC Credit Facility are herein collectively referred to as the “Credit Facilities”.
The table below summarizes the details of the Credit Facilities as at December 31, 2022:
(in thousands of Canadian dollars)
Bank Credit Facility
CTC Credit Facility 1
1Uncommitted facility subject to CTC discretion.
Maximum draw
amount Cash advances
Letters of
credit
Available to be
drawn
$
$
300,000 $
99,884 $
4,999 $
195,117
300,000 $
— $
— $
—
CT REIT 2022 ANNUAL REPORT 31
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following section contains forward-looking information and readers are cautioned that actual results may vary.
6.11 Capital Strategy
Management expects the REIT’s future debt will be in the form of:
•
•
•
•
Class C LP Units (treated as debt for accounting purposes);
funds drawn on the Credit Facilities;
unsecured public debt; and
secured debt.
Management’s objectives are to access an optimal cost of capital with the most flexible terms, to have a maturity/redemption
schedule (for fixed term obligations) spread over a time horizon so as to manage refinancing risk and to be in a position to
finance acquisition and development opportunities when they become available. The Declaration of Trust and the Trust
Indenture limit the REIT’s overall indebtedness ratio to 60% of total aggregate assets, excluding convertible debentures, and
65% including convertible debentures.
As at December 31, 2022, CT REIT’s indebtedness ratio was 40.7%. Refer to section 6.6 of this MD&A for the definition and
calculation of CT REIT’s indebtedness ratio.
As at December 31, 2022, CT REIT was in compliance with the financial covenants contained in the Declaration of Trust, the
Trust Indenture and the Credit Facilities.
For the year ended December 31, 2022, CT REIT’s interest coverage ratio was 3.67 times. Refer to section 6.5 of this MD&A
for the definition and calculation of CT REIT’s interest coverage ratio.
Assuming a future economic environment that is stable, management does not foresee any material impediments to
refinancing future debt maturities.
The following section contains forward-looking information and readers are cautioned that actual results may vary.
6.12 Commitments and Contingencies
As at December 31, 2022, CT REIT had obligations of $245,547 (December 31, 2021 - $273,915) in future payments for the
completion of developments, as described in section 4.6 of this MD&A. Included in the commitment is $227,453 due to CTC.
CT REIT believes it has sufficient liquidity to fund these future commitments as a result of (i) its conservative use of leverage
on the balance sheet; (ii) liquidity on hand; (iii) its Credit Facilities; (iv) an investment grade credit rating; (v) unencumbered
assets; and (vi) sufficient operating cash flow retained in the business.
32 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
6.13 Base Shelf Prospectus
Under CT REIT’s short form base shelf prospectus (the “Base Shelf Prospectus”), it may raise up to $2.0 billion of debt and/or
equity (including the sale of Units by CTC) over the 25-month period ending June 4, 2023.
6.14 Normal Course Issuer Bid
On November 25, 2022, CT REIT received approval from the TSX to purchase up to 3,300,000 Units during the 12-month
period commencing November 29, 2022, and ending November 28, 2023 by way of a normal course issuer bid.
7.0 EQUITY
7.1 Authorized Capital and Outstanding Units
CT REIT is authorized to issue an unlimited number of units. As at December 31, 2022, CT REIT had a total of 107,501,944
Units outstanding, 33,989,508 of which were held by CTC, and 127,193,833 Class B LP Units outstanding (together with a
corresponding number of Special Voting Units, as hereinafter defined), all of which were held by CTC.
Class B LP Units are economically equivalent to Units, are accompanied by a special voting unit (“Special Voting Unit”) and
are exchangeable at the option of the holder for Units (subject to certain conditions). Holders of the Class B LP Units are
entitled to receive distributions when declared by the Partnership equal to the per Unit amount of distributions payable on the
Units. However, Class B LP Units have limited voting rights over the Partnership.
The following tables summarize the total number of units issued:
Total outstanding at beginning of year
Units issued 1
Total outstanding at end of period
1 1,197,656 issued pursuant to the REIT’s distribution reinvestment plan.
Total outstanding at beginning of year
Units issued 1
Total outstanding at end of year
1 1,162,913 issued pursuant to the REIT’s distribution reinvestment plan.
As at December 31, 2022
Units
Class B LP
Units
Total
106,304,288
126,880,857
233,185,145
1,197,656
312,976
1,510,632
107,501,944
127,193,833
234,695,777
As at December 31, 2021
Units Class B LP Units
Total
105,103,391
125,866,203
230,969,594
1,200,897
1,014,654
2,215,551
106,304,288
126,880,857
233,185,145
Each Unit is transferable and represents an equal, undivided beneficial interest in the REIT and in any distributions from the
REIT. Each Unit entitles the holder to one vote at all meetings of voting unitholders.
Special Voting Units are only issued in tandem with Class B LP Units or in limited circumstances to holders of the Class C LP
Units and are not transferable separately from the Class B LP Units or Class C LP Units to which they relate. Each Special
Voting Unit entitles the holder thereof to one vote at all meetings of voting unitholders or with respect to any written resolution
CT REIT 2022 ANNUAL REPORT 33
MANAGEMENT'S DISCUSSION AND ANALYSIS
of voting unitholders. Except for the right to attend meetings and vote on resolutions, Special Voting Units do not confer upon
the holders thereof any other rights.
Net income attributable to unitholders and weighted average Units outstanding used in determining basic and diluted net
income per unit are calculated as follows:
(in thousands of Canadian dollars, except unit amounts)
For the Year ended December 31, 2022
Units
Class B LP
Units
Total
Net income attributable to unitholders - basic
$
148,264 $
176,349 $
324,613
Income effect of settling Class C LP Units with Class B LP Units
Net income attributable to unitholders - diluted
Weighted average units outstanding - basic
Dilutive effect of other unit plans
Dilutive effect of settling Class C LP Units with Class B LP Units
Weighted average number of units outstanding - diluted
63,962
$
388,575
106,893,856
127,123,521
234,017,377
288,433
93,706,035
328,011,845
For the Year ended December 31, 2021
(in thousands of Canadian dollars, except unit amounts)
Units Class B LP Units
Total
Net income attributable to unitholders - basic
$
208,169 $
248,690 $
456,859
Income effect of settling Class C LP Units with Class B LP Units
Net income attributable to unitholders - diluted
Weighted average units outstanding - basic
Dilutive effect of other unit plans
Dilutive effect of settling Class C LP Units with Class B LP Units
Weighted average number of units outstanding - diluted
7.2 Equity
(in thousands of Canadian dollars)
As at
Equity - beginning of period, as previously reported
Net income and comprehensive income for the period
Issuance of Class B LP Units, net of issue costs
Distributions to non-controlling interests
Distributions to Unitholders
Issuance of Units under Distribution Reinvestment Plan and other
63,962
$
520,821
105,714,887
126,311,774
232,026,661
298,145
86,182,413
318,507,219
December 31, 2022
December 31, 2021
$
3,678,149 $
3,375,870
324,613
5,617
(108,827)
(91,537)
19,158
456,859
17,248
(104,175)
(87,176)
19,523
Equity - end of the period
$
3,827,173 $
3,678,149
34 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following section contains forward-looking information and readers are cautioned that actual results may vary.
7.3 Distributions
CT REIT’s primary business goal is to accumulate a portfolio of high-quality real estate assets and deliver the benefits of such
real estate ownership to unitholders. The primary benefit to unitholders is expected to be reliable, durable and growing
distributions over time.
In determining the amount of the monthly distributions paid to unitholders, the Board applies discretionary judgment to forward-
looking cash flow information, such as forecasts and budgets, in addition to many other factors including provisions in the
Declaration of Trust, the macro-economic and industry-specific environment, debt maturities, covenants and taxable income.
The Board regularly reviews CT REIT’s rate of distributions to ensure an appropriate level of distributions. The Board has
discretion over the determination of monthly and annual distributions.
On December 15, 2022, CT REIT’s Board declared a distribution of $0.07232 per unit payable on January 16, 2023 to holders
of Units and Class B LP Units of record on December 30, 2022.
On January 13, 2023, CT REIT’s Board declared a distribution of $0.07232 per unit payable on February 15, 2023 to holders
of Units and Class B LP Units of record on January 31, 2023.
One of CT REIT’s objectives is to grow monthly distributions. The distribution payments and increases since December 31,
2014 are as follows:
Year
2022
2021
2020
2019
2018
2017
2016
2015
2014
Effective date 1
Monthly distribution
per unit
% increase
July
July
$0.07232
$0.06994
3.4 %
4.5 %
Annualized
distribution
per unit
$0.868
$0.839
Annualized
distribution
increase
per unit
$0.029
$0.036
January / September
$0.06562 / $0.06693
4.0 % / 2.0 %
$0.787 / $0.803
$0.030 / $0.016
January
January
January
January
January
January
$0.06310
$0.06067
$0.05833
$0.05667
$0.05525
$0.05417
4.0 %
4.0 %
2.9 %
2.6 %
2.0 %
—
$0.757
$0.728
$0.700
$0.680
$0.663
$0.650
$0.029
$0.028
$0.020
$0.017
$0.013
—
1 Month upon which the payment of the monthly distribution increase became effective.
CT REIT 2022 ANNUAL REPORT 35
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021
2022
2021
Distributions before distribution reinvestment - paid
Distribution reinvestment
Distributions net of distribution reinvestment - paid
Distributions per unit - paid
$
$
$
50,873 $
48,860 $
199,699 $
190,502
4,745
4,805
19,158
18,895
46,128 $
44,055 $
180,541 $
171,607
0.217 $
0.210 $
0.854 $
0.822
Distributions for the three months ended December 31, 2022 are higher than the same period in the prior year due to
increases in the rate of distribution which became effective with the monthly distributions paid in July 2022.
Distributions for the year ended December 31, 2022 are higher than the same period in the prior year due to increases in the
rate of distribution which became effective with the monthly distributions paid in July 2021 and in July 2022.
Net income prepared in accordance with IFRS recognizes certain revenues and expenses at time intervals that do not match
the receipt or payment of cash. Therefore, in applying judgment, consideration is given to AFFO (a non-GAAP measure of
recurring economic earnings used to assess distribution capacity, refer to section 10.0) and other factors when determining
distributions to unitholders.
CT REIT’s distributions for the three months and year ended December 31, 2022 are less than the REIT’s cash generated
from operating activities, cash generated from operating activities reduced by net interest and other financing charges, and
AFFO, a non-GAAP financial measure, which is an indicator of CT REIT’s distribution capacity.
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021
2022
2021
AFFO 1
Distributions before distribution reinvestment - paid
Excess of AFFO over distributions paid (A) 1
Weighted average units outstanding - diluted (non-GAAP) (B) 2
Excess of AFFO over distributions paid per unit (A)/(B) 2
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
7.4 Book Value Per Unit
$
$
$
68,515 $
64,124 $
268,783 $
256,504
50,873
48,860
199,699
190,502
17,642 $
15,264 $
69,084 $
66,002
234,836,723
233,233,571
234,305,809
232,324,806
0.075 $
0.065 $
0.295 $
0.284
Book value per unit represents total equity from the consolidated balance sheets divided by the sum of the period end Units
and Class B LP Units outstanding. It is an indication of the residual book value available to unitholders. As well, book value per
unit is compared to the REIT’s Unit trading price in order to measure a premium or discount.
(in thousands of Canadian dollars, except for per unit amounts)
As at
Total equity (A)
Period-end Units and Class B LP Units outstanding (B)
Book value per unit (A)/(B)
December 31, 2022
December 31, 2021
$
$
3,827,173 $
3,678,149
234,695,777
233,185,145
16.31 $
15.77
36 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
CT REIT’s book value per unit as at December 31, 2022 increased from the book value per unit as at December 31, 2021
primarily due to net income exceeding distributions.
8.0 RELATED PARTY TRANSACTIONS
On December 31, 2022, CT REIT’s controlling unitholder, CTC, held a 68.7% effective interest in the REIT, through the
ownership of 33,989,508 Units and all of the issued and outstanding Class B LP Units. CTC also owns all of the Class C LP
Units. Refer to section 6.7 of this MD&A for additional information on Class C LP Units.
In addition to its ownership interest, CTC is CT REIT’s most significant tenant representing approximately 91.4% of the total
annualized base minimum rent earned by CT REIT and 92.3% of total GLA as at December 31, 2022.
In the normal course of its operations, CT REIT enters into various transactions with related parties that have been valued at
amounts agreed to between the parties and recognized in the consolidated financial statements. Investment property
transactions with CTC amounted to $203,071 (2021 - $90,247) for the year ended December 31, 2022. Refer to Note 4 to the
consolidated financial statements for additional information.
CT REIT entered into the CTC Credit Facility in December 2019. Refer to section 6.10 of this MD&A for additional information.
CT REIT’s policy is to conduct all transactions and settle all balances, with related parties, on market terms and conditions.
Pursuant to the Declaration of Trust, related party transactions are generally subject to the approval of the independent
trustees of the Board.
CT REIT and CTC are parties to a number of commercial agreements which govern the relationships among such parties,
including the Services Agreement and the Property Management Agreement described below.
Services Agreement
Under the Services Agreement, CTC provides the REIT with certain administrative, information technology, internal audit and
other support services as may be reasonably required from time to time (the “Services”). CTC provides these Services to the
REIT on a cost recovery basis pursuant to which CT REIT reimburses CTC for all costs and expenses incurred by CTC in
connection with providing the Services, plus applicable taxes. The Services Agreement is automatically renewable for one
year terms, unless otherwise terminated in accordance with its terms. The Services Agreement was automatically renewed
for 2023 and CTC will continue to provide such Services on a cost recovery basis.
Property Management Agreement
Under the Property Management Agreement, CTC provides the REIT with certain property management services (the
“Property Management Services”). CTC provides these Property Management Services to the REIT on a cost recovery basis
pursuant to which the REIT reimburses CTC for all costs and expenses incurred by CTC in connection with providing the
Property Management Services, plus applicable taxes. The Property Management Agreement is automatically renewable for
one year terms, unless otherwise terminated in accordance with its terms. The Property Management Agreement was
CT REIT 2022 ANNUAL REPORT 37
MANAGEMENT'S DISCUSSION AND ANALYSIS
automatically renewed for 2023 and CTC will continue to provide such Property Management Services on a cost recovery
basis.
CTC Credit Facility
CT REIT entered into the CTC Credit Facility made as of December 18, 2019 which is automatically renewed for one year
terms, unless otherwise terminated in accordance with its terms. The CTC Credit Facility was automatically renewed in
December 2022. The CTC Credit Facility bears interest at a rate based on a stipulated bank prime rate or bankers’
acceptance, plus a margin.
Refer to CT REIT’s 2021 AIF available on SEDAR at www.sedar.com and on CT REIT’s website at www.ctreit.com under the
tab “Investors” in the Financial Reporting section for additional information on related party agreements and arrangements with
CTC.
The following table summarizes CT REIT’s related party transactions for the period ended December 31, 2022, excluding
acquisition, intensification and development activities which are contained in section 4.0:
(in thousands of Canadian dollars)
For the periods ended December 31,
Rental revenue
Property Management and Services Agreement expense
Distributions on Units
Distributions on Class B LP Units 1
Interest expense on Class C LP Units
Interest expense on the CTC Credit Facility
1 Includes distributions deferred at the election of the holders of the Class B LP Units.
The net balance due to CTC is comprised of the following:
(in thousands of Canadian dollars)
As at
Tenant and other (receivables) payables
Class C LP Units
Amounts payable on Class C LP Units
Loans receivable in respect of payments on Class C LP Units
Other liabilities
Distributions payable on Units and Class B LP Units 1
Loans receivable in respect of distributions on Class B LP Units
CTC Credit Facility 2
Net balance due to CTC
1 Includes distributions deferred at the election of the holders of the Class B LP Units.
2 See section 6.10 for details on the CTC Credit Facility.
38 CT REIT 2022 ANNUAL REPORT
Year Ended
2022
2021
475,851 $
461,135
1,550 $
29,092 $
1,680
28,016
108,827 $
104,175
63,962 $
63,962
958 $
386
$
$
$
$
$
$
December 31, 2022
December 31, 2021
$
(1,331) $
299
1,451,550
1,451,550
63,962
(58,631)
48,713
36,066
(24,409)
—
63,962
(58,631)
3,527
34,149
(22,898)
79,300
$
1,515,920 $
1,551,258
MANAGEMENT'S DISCUSSION AND ANALYSIS
9.0 ACCOUNTING POLICIES AND ESTIMATES
9.1 Significant Areas of Estimation
The preparation of the consolidated financial statements requires management to apply judgments, and to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates are based upon
historical experience and on various other assumptions that are reasonable under the circumstances. The result of ongoing
evaluation of these estimates forms the basis for applying judgment with regards to the carrying values of assets and liabilities
and the reported amounts of revenues and expenses. Actual results may differ from estimates. CT REIT’s critical judgments
and estimates in applying material accounting policies are described in Note 2 of the consolidated financial statements, the
most significant of which is the fair value of investment properties.
Fair Value of Investment Properties
To determine fair value, CT REIT uses the discounted cash flow method. Fair value is estimated by capitalizing the cash flows
that the property can reasonably be expected to produce over its remaining economic life. Properties Under Development are
initially recorded at cost and are adjusted to fair value at each balance sheet date with the fair value adjustment recognized in
earnings.
9.2 Standards, Amendments and Interpretations Issued and Adopted
The following amendment was adopted for the fiscal year ended December 31, 2022, and accordingly, has been applied in
preparing these consolidated financial statements.
Improving accounting policy disclosures and clarifying distinction between accounting policies (Amendments to IAS
1)
In February 2021, the International Accounting Standards Board (“IASB”) issued narrow-scope amendments to IAS 1
Presentation of Financial Statements, IFRS Practice Statement 2 Making Materiality Judgements.
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than their
significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept
of materiality to accounting policy disclosures.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023. Earlier application is
permitted. The implementation of these amendments did not have a significant impact on CT REIT.
CT REIT 2022 ANNUAL REPORT 39
MANAGEMENT'S DISCUSSION AND ANALYSIS
9.3 Standards, Amendments and Interpretations Issued but Not Yet Adopted
The following new standards, amendments and interpretations have been issued but are not effective for the fiscal year ended
December 31, 2022, and, accordingly, have not been applied in preparing these consolidated financial statements. CT REIT is
assessing the potential impact of these amendments.
Improving accounting estimates (Amendments to IAS 8)
In February 2021, the International Accounting Standards Board (“IASB”) issued narrow-scope amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
Amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting
estimates. That distinction is important because changes in accounting estimates are applied prospectively only to future
transactions and other future events, whereas changes in accounting policies are generally applied retrospectively to past
transactions and other past events.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023. Earlier application is
permitted. The implementation of these amendments is not expected to have a significant impact on CT REIT.
40 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.0 SPECIFIED FINANCIAL MEASURES
CT REIT uses specified financial measures as defined by the Canadian Securities Administrators (“CSA”)’s National
Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure issued on August 25, 2021. CT REIT believes these
specified financial measures provide useful information to both management and investors in measuring the financial
performance of CT REIT and its ability to meet its principal objective of creating Unitholder value over the long term by
generating reliable, durable and growing monthly cash distributions on a tax-efficient basis.
These specified financial measures include non-GAAP financial measures and non-GAAP ratios which do not have a
standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures and ratios
presented by other publicly traded entities and should not be construed as an alternative to other financial measures
determined in accordance with GAAP.
10.1 Non-GAAP Financial Measures
Non-GAAP financial measures are not standardized financial measures under the IFRS financial reporting framework used to
prepare the REIT’s financial statements to which the measure relates. As such, non-GAAP financial measures may not be
comparable to similar financial measures disclosed by other public entities.
Certain non-GAAP financial measures for the real estate industry have been defined by the Real Property Association of
Canada (“REALPAC”) under its publications, “REALPAC Funds From Operations & Adjusted Funds From Operations for
IFRS” (“REALPAC FFO & AFFO”) and “REALPAC Adjusted Cashflow from Operations for IFRS” (“REALPAC ACFO”). The
purpose of the publications is to provide guidance on the definition of certain non-GAAP financial measures to promote
consistent disclosure amongst reporting issuers.
Management has identified the following non-GAAP financial measures in this MD&A:
•
•
•
•
•
•
•
•
•
•
•
•
Net Operating Income (“NOI”)
Same store NOI
Same property NOI
Intensifications NOI
Acquisitions, developments, dispositions NOI
Funds from Operations (“FFO”)
Adjusted Funds from Operations (“AFFO”)
Capital expenditure reserve
Adjusted Cash Flow from Operations (“ACFO”)
Earnings Before Interest, Taxes and Fair Value (“EBITFV”)
Excess of AFFO over distributions paid
Non-operating adjustments to working capital
CT REIT 2022 ANNUAL REPORT 41
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (a) Net Operating Income
NOI is a non-GAAP financial measure defined as property revenue less property expense, adjusted for straight-line rent. The
most directly comparable primary financial statement measure is property revenue. Management believes that NOI is a useful
key indicator of performance as it represents a measure of property operations over which management has control. NOI is
also a key input in determining the fair value of the portfolio of Properties. NOI should not be considered as an alternative to
property revenue or net income and comprehensive income, both of which are determined in accordance with IFRS.
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021 Change
2022
2021 Change
Property revenue
Less:
Property expense
$
135,175 $
129,537
4.4 % $
532,795 $
514,537
3.5 %
(27,833)
(27,054)
2.9 %
(111,133)
(107,290)
3.6 %
Property straight-line rent revenue
(579)
(1,552)
(62.7) %
(1,844)
(6,168)
(70.1) %
Net operating income
$
106,763 $
100,931
5.8 % $
419,818 $
401,079
4.7 %
10.1 (b) Same Store NOI
Same store NOI is a non-GAAP financial measure which reports the period-over-period performance of the same asset base
having consistent GLA in both periods. CT REIT management believes same store NOI is a useful measure to gauge the
change in asset productivity and asset value. The most directly comparable primary financial statement measure is property
revenue. Same store NOI should not be considered as an alternative to property revenue or net income and comprehensive
income, both of which are determined in accordance with IFRS.
10.1 (c) Same Property NOI
Same property NOI is a non-GAAP financial measure that is consistent with the definition of same store NOI above, except
that same property includes the NOI impact of intensifications. Management believes same property NOI is a useful measure
to gauge the change in asset productivity and asset value, as well as measure the additional return earned by incremental
capital investments in existing assets. The most directly comparable primary financial statement measure is property revenue.
Same property NOI should not be considered as an alternative to property revenue or net income and comprehensive income,
both of which are determined in accordance with IFRS.
10.1 (d) Intensifications NOI
Intensifications NOI is a non-GAAP financial measure that is consistent with the definition of NOI above with respect to same
property having increased GLA relative to the comparative period. CT REIT management believes intensifications NOI is a
useful measure to understand the impact of increased GLA on asset productivity and asset value for same property. The most
directly comparable primary financial statement measure is property revenue. Intensifications NOI should not be considered as
an alternative to property revenue or net income and comprehensive income, both of which are determined in accordance with
IFRS.
42 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (e) Acquisitions, Developments and Dispositions NOI
Acquisitions, developments and dispositions NOI is a non-GAAP financial measure that is consistent with the definition of NOI
above with respect to new property or dispositions of property not included in same property NOI. CT REIT management
believes acquisitions, developments and dispositions NOI is a useful measure to gauge the change in asset productivity and
asset value. The most directly comparable primary financial statement measure is property revenue. Acquisitions,
developments and dispositions NOI should not be considered as an alternative to property revenue or net income and
comprehensive income, both of which are determined in accordance with IFRS.
The following table summarizes the same store and same property components of NOI:
(in thousands of Canadian dollars)
For the periods ended December 31,
Three Months Ended
Year Ended
2022
2021
Change 1
2022
2021
Change 1
Same store
Intensifications
2022
2021
Same property
Acquisitions, developments and dispositions
2022
2021
Net operating income
Add:
Property expense
$ 102,374 $
99,756
2.6 % $ 405,706 $ 396,022
2.4 %
1,954
95
—
20
— %
3,520
NM
741
—
273
$ 104,423 $
99,776
4.7 % $ 409,967 $ 396,295
1,004
1,336
712
443
41.0 %
3,341
NM
6,510
3,660
1,124
$ 106,763 $ 100,931
5.8 % $ 419,818 $ 401,079
— %
NM
3.4 %
(8.7) %
NM
4.7 %
27,833
27,054
2.9 %
111,133
107,290
3.6 %
Property straight-line rent revenue
579
1,552
(62.7) %
1,844
6,168
(70.1) %
Property Revenue
1 NM - not meaningful.
$ 135,175 $ 129,537
4.4 % $ 532,795 $ 514,537
3.5 %
10.1 (f) Funds From Operations and Adjusted Funds From Operations
The following table reconciles GAAP net income and comprehensive income to FFO and further reconciles FFO to AFFO:
(in thousands of Canadian dollars)
For the periods ended December 31,
Three Months Ended
Year Ended
2022
2021 Change 1
2022
2021 Change 1
Net Income and comprehensive income
$
74,749 $ 125,366
(40.4) % $ 324,613 $ 456,859
(28.9) %
Fair value adjustment on investment property
860
(53,254)
NM
(27,845)
(169,911)
(83.6) %
GP income tax expense
Lease principal payments on right-of-use assets
Fair value adjustment of unit-based compensation
Internal leasing expense
Funds from operations
Property straight-line rent revenue
Direct leasing costs 2, 3
Capital expenditure reserve 2
(495)
(145)
276
325
(465)
6.5 %
(115)
(101)
13.9 %
(230)
(37.0) %
(564)
(1,052)
(46.4) %
244
274
13.1 %
18.6 %
(866)
981
990
780
NM
25.8 %
$
75,570 $
71,935
5.1 % $ 296,204 $ 287,565
3.0 %
(579)
(233)
(1,552)
(62.7) %
(1,844)
(6,168)
(70.1) %
(268)
(13.1) %
(547)
(506)
8.1 %
(6,243)
(5,991)
4.2 %
(25,030)
(24,387)
2.6 %
Adjusted funds from operations
$
68,515 $
64,124
6.8 % $ 268,783 $ 256,504
4.8 %
1 NM - not meaningful.
2 Comparatives have been restated to conform with current year’s presentation.
3 Excludes internal and external leasing costs related to development projects.
CT REIT 2022 ANNUAL REPORT 43
MANAGEMENT'S DISCUSSION AND ANALYSIS
Funds From Operations
FFO is a non-GAAP financial measure of operating performance used by the real estate industry, particularly by those publicly
traded entities that own and operate income-producing properties. The most directly comparable primary financial statement
measure is net income and comprehensive income. FFO should not be considered as an alternative to net income or cash
flows provided by operating activities determined in accordance with IFRS. CT REIT calculates its FFO in accordance with
REALPAC FFO & AFFO. The use of FFO, together with the required IFRS presentations, has been included for the purpose of
improving the understanding of the operating results of CT REIT.
Management believes that FFO is a useful measure of operating performance that, when compared period-over-period,
reflects the impact on operations of trends in occupancy levels, rental rates, operating costs and property taxes, acquisition
activities and interest costs, and provides a perspective of the financial performance that is not immediately apparent from net
income determined in accordance with IFRS.
FFO adds back to net income items that do not arise from operating activities, such as fair value adjustments. FFO, however,
still includes non-cash revenues related to accounting for straight-line rent and makes no deduction for the recurring capital
expenditures necessary to sustain the existing earnings stream.
Adjusted Funds From Operations
AFFO is a non-GAAP financial measure of recurring economic earnings used in the real estate industry to assess an entity’s
distribution capacity. The most directly comparable primary financial statement measure is net income and comprehensive
income. AFFO should not be considered as an alternative to net income or cash flows provided by operating activities
determined in accordance with IFRS. CT REIT calculates its AFFO in accordance with REALPAC FFO & AFFO.
CT REIT calculates AFFO by adjusting FFO for non-cash income and expense items such as amortization of straight-line
rents. AFFO is also adjusted for a reserve for maintaining productive capacity required for sustaining property infrastructure
and revenue from real estate properties and direct leasing costs. As property capital expenditures do not occur evenly during
the fiscal year or from year to year, the capital expenditure reserve in the AFFO calculation, which is used as an input in
assessing the REIT’s distribution payout ratio, is intended to reflect an average annual spending level. The reserve is primarily
based on average expenditures as determined by building condition reports prepared by independent consultants.
Management believes that AFFO is a useful measure of operating performance similar to FFO as described above, adjusted
for the impact of non-cash income and expense items.
44 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (g) Capital Expenditure Reserve
The following table compares and reconciles recoverable capital expenditures during the 2013-2022 period to the capital
expenditure reserve used in the calculation of AFFO:
(in thousands of Canadian dollars)
For the periods indicated
Period ended December 31, 2013
Year ended December 31, 2014
Year ended December 31, 2015
Year ended December 31, 2016
Year ended December 31, 2017
Year ended December 31, 2018
Year ended December 31, 2019
Year ended December 31, 2020
2021
Q1
Q2
Q3
Q4
Year ended December 31, 2021
2022
Q1
Q2
Q3
Q4
Year ended December 31, 2022
Total
1 Comparatives have been restated to conform with current year’s presentation.
Capital
expenditure
reserve 1
Recoverable
capital
expenditures
2,843 $
— $
15,465 $
17,052 $
17,077 $
14,834 $
18,395 $
15,570 $
20,486 $
18,962 $
22,517 $
17,699 $
23,431 $
20,549 $
24,254 $
18,091 $
6,132 $
1,029 $
6,118
6,146
5,991
15,104
9,916
7,945
24,387 $
33,994 $
6,213 $
6,227 $
6,347 $
1,966 $
2,502 $
7,464 $
6,243 $
14,903 $
25,030 $
26,835 $
Variance
2,843
(1,587)
2,243
2,825
1,524
4,818
2,882
6,163
5,103
(8,986)
(3,770)
(1,954)
(9,607)
4,247
3,725
(1,117)
(8,660)
(1,805)
193,885 $
183,586 $
10,299
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
The capital expenditure reserve is a non-GAAP financial measure and management believes the reserve is a useful measure
to understand the normalized capital expenditures required to maintain property infrastructure. Recoverable capital
expenditures are the most directly comparable measure that is disclosed in the REIT’s primary financial statements. The
capital expenditure reserve should not be considered as an alternative to recoverable capital expenditures, which is
determined in accordance with IFRS.
The capital expenditure reserve exceeded recoverable capital expenditures by $10,299 during the period from 2013 through
December 31, 2022. The capital expenditure reserve per square foot has increased since 2013, which reflects changes in
asset mix (primarily due to an increase in multi-tenanted retail investment properties) and inflation in expected costs.
Management expects there will be periods in the future where recoverable capital expenditures will exceed the capital
expenditure reserve. The current period reserve is based upon unit costs that are anticipated to be realized in work to be
completed in the current period.
CT REIT 2022 ANNUAL REPORT 45
MANAGEMENT'S DISCUSSION AND ANALYSIS
The capital expenditure reserve varies from the capital expenditures incurred due to the seasonal nature of the expenditures.
As such, CT REIT views the capital expenditure reserve as a meaningful measure. Refer to section 4.11 for additional
information.
10.1 (h) Adjusted Cash Flow from Operations
ACFO is a non-GAAP financial measure developed by REALPAC for use by the real estate industry as a sustainable
economic cash flow metric. ACFO should not be considered as an alternative to cash flows provided by operating activities
determined in accordance with IFRS. CT REIT calculates its ACFO in accordance with REALPAC ACFO. Management
believes that the use of ACFO, combined with the required IFRS presentations, improves the understanding of the operating
cash flow of CT REIT.
CT REIT calculates ACFO from cash flow generated from operating activities by adjusting for non-operating adjustments to
changes in working capital and other, net interest and other financing charges, capital expenditure reserve, and lease
payments. The most directly comparable GAAP measure in the primary financial statements is Cash Generated from
Operating Activities. A reconciliation from the IFRS term “Cash Generated from Operating Activities” (refer to the Consolidated
Statements of Cash Flows for the year ended December 31, 2022 and December 31, 2021) to ACFO is as follows:
(in thousands of Canadian dollars)
For the periods ended December 31,
Three Months Ended
Year Ended
2022
2021 Change 1
2022
2021 Change 1
Cash generated from operating activities
$ 123,937 $ 117,018
5.9 % $ 399,273 $ 407,201
(1.9) %
Non-operating adjustments to changes in working capital and other2
(308)
(3,385)
(90.9) %
5,193
(3,969)
NM
Net interest and other financing charges
(27,703)
(26,429)
4.8 % (110,416) (105,706)
4.5 %
External leasing expenses not related to development 2
(77)
(139)
(44.6) %
(77)
(139)
(44.6) %
Capital expenditure reserve 2
(6,243)
(5,991)
4.2 %
(25,030)
(24,387)
2.6 %
Lease principal payments on right-of-use assets
(145)
(230)
(37.0) %
(564)
(1,052)
(46.4) %
Adjusted cashflow from operations 2
$ 89,461 $ 80,844
10.7 % $ 268,379 $ 271,948
(1.3) %
1 NM - not meaningful.
2 Comparatives have been restated to conform with current year’s presentation.
10.1 (i) Earnings Before Interest and Other Financing Costs, Taxes and Fair Value Adjustments
EBITFV is a non-GAAP financial measure of a REIT’s operating cash flow and it is used in addition to IFRS net income
because it excludes major non-cash items (including fair value adjustments), interest expense and other financing costs,
income tax expense, losses or gains on disposition of property, and other non-recurring items that may occur under IFRS that
management considers non-operating in nature. The most directly comparable GAAP measure in the primary financial
statements is net income and comprehensive income. EBITFV should not be considered as an alternative to net income and
comprehensive income or cash flows provided by operating activities determined in accordance with IFRS.
EBITFV is used as an input in some of CT REIT’s debt metrics, providing information with respect to certain financial ratios
that CT REIT uses in measuring its debt profile and assessing its ability to satisfy its obligations, including servicing its debt.
46 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three months and year ended December 31, 2022, EBITFV was calculated as follows:
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021
Change 1
2022
2021
Change 1
Net income and comprehensive income
$
74,749 $
125,366
(40.4) % $
324,613 $
456,859
(28.9) %
Fair value adjustment on investment properties
Fair value adjustment on unit-based awards
860
276
(53,254)
NM
(27,845)
(169,911)
(83.6)
244
13.1
(866)
990
NM
Interest expense and other financing charges
27,743
26,431
5.0 %
110,672
105,720
4.7 %
GP income tax expense
(495)
(465)
6.5 %
(115)
(101)
13.9 %
EBITFV
1 NM - not meaningful.
$
103,133 $
98,322
4.9 % $
406,459 $
393,557
3.3 %
10.1 (j) Excess of AFFO over Distributions Paid
Excess of AFFO over distributions paid is a non-GAAP financial measure. Management believes this measure is useful as it is
an indicator of CT REIT’s distribution capacity. Net income and comprehensive income is the most directly comparable
financial measure that is disclosed in the REIT’s primary financial statements. Refer to the table in 10.1 (f) reconciling net
income and comprehensive income to AFFO.
(in thousands of Canadian dollars)
For the periods ended December 31,
AFFO
Distributions before distribution reinvestment - paid
Excess of AFFO over distributions paid
Three Months Ended
Year Ended
2022
2021
2022
2021
$
$
68,515 $
64,124 $
268,783 $
256,504
50,873
48,860
199,699
190,502
17,642 $
15,264 $
69,084 $
66,002
10.1 (k) Non-operating Adjustments to Working Capital
Non-operating adjustments to working capital is a non-GAAP financial measure used in the calculation of ACFO described
above. The most directly comparable primary financial statement measure is changes in working capital and other. This
measure should not be considered as an alternative to changes in working capital and other determined in accordance with
IFRS. CT REIT calculates its non-operating adjustments to working capital in accordance with REALPAC ACFO. Management
believes non-operating adjustments to working capital is a useful improvement to the understanding of the operating cash flow
of CT REIT, by eliminating fluctuations due to changes in accounts receivable, accounts payable and other working capital
items that are not indicative of sustainable cash available for distribution to unitholders.
(in thousands of Canadian dollars)
For the periods ended December 31,
Changes in working capital and other
Add/(deduct):
Change in tenant and other receivables
Change in other non-current liabilities
Change in other liabilities
Other
Non-operating adjustments to changes in working capital and
other 1
1 Comparatives have been restated to conform with current year’s presentation.
Three months ended
Year ended
2022
2021
2022
2021
(21,699)
(20,494) $
5,952 $
(20,816)
9,292
866
11,722
(489)
(2,087)
1,083
18,999
(886)
(256)
(346)
1,053
(1,210)
1,253
192
16,699
(1,297)
(308)
(3,385)
5,193 $
(3,969)
CT REIT 2022 ANNUAL REPORT 47
MANAGEMENT'S DISCUSSION AND ANALYSIS
The composition of non-operating adjustments to working capital is made up of:
(in thousands of Canadian dollars)
For the periods ended December 31,
Other non-current assets
Other current assets
Tenant and other receivables
Other liabilities
Non-operating adjustments to changes in working capital and
other 1
1 Comparatives have been restated to conform with current year’s presentation.
10.2 Non-GAAP Ratios
Three months ended
Year ended
2022
(247)
2021
2022
(4) $
(382) $
(12,104)
(16,837)
(3,077)
15,120
(2,419)
15,875
1,299
593
3,683
2021
(46)
(214)
(772)
(2,937)
(308)
(3,385) $
5,193 $
(3,969)
Non-GAAP ratios are not standardized financial measures under the IFRS financial reporting framework used to prepare the
REIT’s financial statements to which the measure relates. As such, non-GAAP ratios may not be comparable to similar
financial measures disclosed by other public entities.
Management has identified the following non-GAAP ratios in this MD&A:
•
•
•
•
•
•
•
•
•
AFFO payout ratio
FFO per unit - basic
FFO per unit - diluted (non-GAAP)
AFFO per unit - basic
AFFO per unit - diluted (non-GAAP)
Excess of AFFO over distributions paid per unit
Total indebtedness to EBITFV
Interest coverage ratio
Adjusted general and administrative expense as a percent of property revenue
10.2 (a) AFFO Payout Ratio
The AFFO payout ratio is a non-GAAP ratio which is a measure of the sustainability of the REIT’s distribution payout.
Management believes this is a useful measure to investors since this metric provides transparency on performance.
Management considers the AFFO payout ratio to be the best measure of the REIT’s distribution capacity. The AFFO payout
ratio is not a standardized financial measure under IFRS and should not be considered as an alternative to other ratios
determined in accordance with IFRS. The component of the AFFO payout ratio, which is a non-GAAP financial measure is
AFFO and the composition of the AFFO payout ratio is as follows:
Three Months Ended
Year Ended
For the periods ended December 31,
2022
2021
Change
2022
2021
Change
Distribution per unit - paid (A)
AFFO per unit - diluted (non-GAAP) 1 (B)
$
$
0.217
0.292
$
$
0.210
0.275
3.3 % $
0.854
6.2 % $
1.147
$
$
0.822
1.104
AFFO payout ratio (A)/(B)
74.3 %
76.4 %
(2.7) %
74.5 %
74.5 %
1 For the purposes of calculating diluted per unit amounts, diluted units include restricted and deferred units issued under various plans and excludes the effects of settling
4.1 %
3.9 %
— %
the Class C LP Units with Class B LP Units.
48 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.2 (b) FFO per unit - Basic, FFO per unit - Diluted (non-GAAP), AFFO per unit - Basic and AFFO per unit - Diluted
(non-GAAP)
FFO per unit - basic, FFO per unit - diluted (non-GAAP), AFFO per unit - basic and AFFO per unit - diluted (non-GAAP) are
non-GAAP ratios and reflect FFO and AFFO on a weighted average per unit basis. Management believes these non-GAAP
ratios are useful measures to investors since the measures indicate the impact of FFO and AFFO respectively in relation to an
individual per unit investment in the REIT. For the purpose of calculating diluted per unit amounts, diluted units include
restricted and deferred units issued under various plans and exclude the effects of settling the Class C LP Units with Class B
LP Units.
Management believes that FFO per unit ratios are useful measures of operating performance that, when compared period-
over-period, reflect the impact on operations of trends in occupancy levels, rental rates, operating costs and property taxes,
acquisition activities and interest costs, and provides a perspective of the financial performance that is not immediately
apparent from net income per unit determined in accordance with IFRS. Management believes that AFFO per unit ratios are
useful measures of operating performance similar to FFO as described above, adjusted for the impact of non-cash income and
expense items. The FFO per unit and AFFO per unit ratios are not standardized financial measures under IFRS and should
not be considered as an alternative to other ratios determined in accordance with IFRS. The component of the FFO per unit
ratios which is a non-GAAP financial measure is FFO and the component of AFFO per unit ratios which is a non-GAAP
financial measure is AFFO.
For the periods ended December 31,
Funds from operations/unit - basic
Funds from operations/unit - diluted (non-GAAP)
For the periods ended December 31,
Adjusted funds from operations/unit - basic
Adjusted funds from operations/unit - diluted (non-
GAAP)
Three Months Ended
Year Ended
2022
2021
Change
2022
2021
Change
0.322 $
0.309
4.2 % $
1.266 $
1.239
0.322 $
0.308
4.5 % $
1.264 $
1.238
2.2 %
2.1 %
Three Months Ended
Year Ended
2022
2021
Change
2022
2021
Change
0.292 $
0.275
6.2 % $
1.149 $
1.105
4.0 %
0.292 $
0.275
6.2 % $
1.147 $
1.104
3.9 %
$
$
$
$
Management calculates the weighted average units outstanding - diluted (non-GAAP) by excluding the full conversion of the
Class C LP Units to Class B LP Units which is not considered a likely scenario. As such, the REIT’s fully diluted per unit FFO
and AFFO amounts are calculated excluding the effects of settling the Class C LP Units with Class B LP Units, which
management considers as a more meaningful measure.
10.2 (c) Excess of AFFO over Distributions Paid per unit
Excess of AFFO over distributions paid per unit is a non-GAAP ratio and reflects excess of AFFO over distributions on a
weighted average per unit basis. Management believes this non-GAAP ratio is a useful measure to investors since it is an
indicator of CT REIT’s distribution capacity in relation to an individual per unit investment in the REIT. The excess of AFFO
over distributions paid per unit is not a standardized financial measure under IFRS and should not be considered as an
alternative to other ratios determined in accordance with IFRS. The component of the excess of AFFO over distributions paid
CT REIT 2022 ANNUAL REPORT 49
MANAGEMENT'S DISCUSSION AND ANALYSIS
per unit which is a non-GAAP financial measure is excess of AFFO over distributions paid. The composition of the excess of
AFFO over distributions paid per unit is as follows:
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
Excess of AFFO over distributions paid (A)
Weighted average units outstanding - diluted (non-GAAP) (B)
Excess of AFFO over distributions paid per unit (A)/(B)
2022
2021
2022
2021
17,642 $
15,264 $
69,084 $
66,002
234,836,723
233,233,571
234,305,809
232,324,806
0.075 $
0.065 $
0.295 $
0.284
$
$
10.2 (d) Total Indebtedness to EBITFV
Total indebtedness to EBITFV is a non-GAAP ratio. Management believes this non-GAAP ratio is a useful measure to
investors since it provides an understanding of the REIT’s ability to meet its debt obligations in relation to the degree it is
leveraged. Total indebtedness to EBITFV should not be considered as an alternative to other ratios determined in accordance
with IFRS. The component of total indebtedness to EBITFV which is a non-GAAP financial measure is EBITFV.
The composition of this ratio is as follows:
(in thousands of Canadian dollars)
As at
Total indebtedness
EBITFV
Total indebtedness / EBITFV
December 31, 2022
December 31, 2021
$
$
2,787,634 $
406,459
6.86
2,677,861
393,557
6.80
10.2 (e) Interest Coverage Ratio
Interest coverage ratio is a non-GAAP ratio which management believes to be a useful indicator of an entity’s ability to service
its debt. Generally, the higher the ratio is, the lower the risk of default on debt. This non-GAAP ratio is not a standardized
financial measure under IFRS and should not be considered as an alternative to other ratios determined in accordance with
IFRS. The component of interest coverage ratio which is a non-GAAP financial measure is EBITFV.
(in thousands of Canadian dollars)
For the periods ended December 31,
EBITFV (A)
Interest expense and other financing charges (B)
Three Months Ended
Year Ended
2022
2021
2022
2021
$
$
103,133 $
98,322 $
406,459 $
393,557
27,743 $
26,431 $
110,672 $
105,720
Interest coverage ratio (A)/(B)
3.72
3.72
3.67
3.72
10.2 (f) Adjusted General and Administrative Expense as a Percent of Property Revenue
Adjusted general and administrative expense as a percent of property revenue is a non-GAAP ratio. Management believes this
ratio is a useful measure since it is an indicator of an entity’s ability to manage its general and administrative expenses in
relation to property revenue without the influence of non-controllable fair value adjustments on unit-based awards. This non-
GAAP ratio is not a standardized financial measure under IFRS and should not be considered as an alternative to other ratios
determined in accordance with IFRS. The component of adjusted general and administrative expense as a percent of property
revenue which is a non-GAAP financial measure is adjusted general and administrative expense.
50 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in thousands of Canadian dollars)
For the year ended December 31,
Personnel expense 1
Services Agreement with CTC
Public entity and other 1
General and administrative expense
Fair value adjustment of unit based compensation
Adjusted general and administrative expense (A)
Property revenue (B)
Year Ended
2022
9,708
$
1,094
3,676
2021
9,637
1,081
3,875
14,478
$
14,593
(866)
15,344
$
532,795
990
13,603
514,537
$
$
$
$
Adjusted general and administrative expense % of property revenue (A/B)
2.9 %
2.6 %
1 1 Includes unit-based awards, including (gain) loss adjustments as a result of the change in the fair market value of the Units of $(866) (YTD 2021 - $990) year ended December 31, 2022.
CT REIT 2022 ANNUAL REPORT 51
MANAGEMENT'S DISCUSSION AND ANALYSIS
11.0 SELECTED QUARTERLY CONSOLIDATED INFORMATION
(in thousands of Canadian dollars,
except per unit amounts)
As at and for the quarter ended
Q4
2022
Q3
Q2
Q1
Q4
2021
Q3
Q2
Q1
Property revenue
Net income
Net income per unit
- basic
- diluted
FFO per unit - diluted (non-GAAP) 1
AFFO per unit - diluted (non-GAAP) 1
$ 135,175 $ 133,155 $ 132,515 $ 131,950 $ 129,537 $ 125,537 $ 129,560 $ 129,903
$ 74,749 $ 77,014 $ 79,771 $ 93,079 $ 125,366 $ 78,307 $ 178,628 $ 74,558
$
$
$
$
0.319 $
0.329 $
0.341 $
0.399 $
0.538 $
0.337 $
0.770 $
0.323
0.276 $
0.285 $
0.296 $
0.345 $
0.443 $
0.300 $
0.610 $
0.281
0.322 $
0.321 $
0.313 $
0.307 $
0.308 $
0.312 $
0.310 $
0.308
0.292 $
0.292 $
0.284 $
0.278 $
0.275 $
0.279 $
0.277 $
0.273
Total assets
Total indebtedness
$ 6,844,789 $ 6,763,640 $ 6,702,583 $ 6,592,386 $ 6,500,102 $ 6,365,761 $ 6,320,435 $ 6,185,305
$ 2,787,634 $ 2,747,368 $ 2,697,073 $ 2,697,056 $ 2,677,861 $ 2,614,382 $ 2,629,518 $ 2,630,244
Total distributions, net of distribution
reinvestment, to unitholders - paid
Total distributions per unit - paid
Book value per unit
Market price per unit
- high
- low
- close (end of period)
1 Non-GAAP ratio.
$ 46,128 $ 46,011 $ 44,282 $ 44,120 $ 44,055 $ 43,937 $ 41,807 $ 41,808
$
$
$
$
$
0.217 $
0.217 $
0.212 $
0.210 $
0.210 $
0.210 $
0.201 $
0.201
16.31 $
16.21 $
16.10 $
15.97 $
15.77 $
15.44 $
15.31 $
14.74
16.23 $
17.31 $
18.46 $
18.41 $
18.42 $
18.05 $
17.09 $
16.51
14.21 $
14.46 $
15.25 $
16.02 $
16.49 $
16.38 $
16.07 $
15.11
15.59 $
15.01 $
16.57 $
17.68 $
17.32 $
17.03 $
16.38 $
16.35
(in thousands of Canadian dollars)
As at and for the quarter ended
Q4
2022
Q3
Q2
Q1
Q4
2021
Q3
Q2
Q1
Net Income and comprehensive
income
Fair value adjustment on investment
property
GP income tax expense
Lease principal payments on right-of-
use assets
Fair value adjustment of unit-based
compensation
Internal leasing expense
Funds from operations
Property straight-line rent revenue
Direct leasing costs 1, 2
Capital expenditure reserve 1
$ 74,749 $ 77,014 $ 79,771 $ 93,079 $ 125,366 $ 78,307 $ 178,628 $ 74,558
860
(495)
(608)
(6,020)
(22,077)
(53,254)
(5,849) (106,462)
(4,346)
(181)
20
541
(465)
(181)
(118)
663
(145)
(213)
(94)
(112)
(230)
(230)
(367)
(225)
276
325
(834)
219
(499)
234
191
203
244
274
344
144
50
201
352
161
$ 75,570 $ 75,397 $ 73,412 $ 71,825 $ 71,935 $ 72,535 $ 71,932 $ 71,163
(579)
(233)
(350)
(105)
(453)
(112)
(462)
(1,552)
(1,418)
(1,464)
(1,734)
(97)
(268)
(68)
(94)
(76)
(6,243)
(6,347)
(6,227)
(6,213)
(5,991)
(6,146)
(6,118)
(6,132)
Adjusted funds from operations
$ 68,515 $ 68,595 $ 66,620 $ 65,053 $ 64,124 $ 64,903 $ 64,256 $ 63,221
1 Comparatives have been restated to conform with current year’s presentation.
2 Excludes internal and external leasing costs related to development projects.
Property revenue, distributions and other financial and operational results noted above have grown at a steady rate. However,
macroeconomic factors (including, but not limited to, inflationary pressures, higher interest rates, and increasing
unemployment) and market trends may have an influence on consumer spending, the demand for space, occupancy levels
and, consequently, the REIT’s operating performance, the impact of which is difficult to predict.
Refer to CT REIT’s respective annual and interim MD&A’s issued for a discussion and analysis relating to the above periods.
52 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
12.0 ENTERPRISE RISK MANAGEMENT
Enterprise Risk Management Framework
To preserve and enhance Unitholder value over the long term, CT REIT takes a balanced approach to risk taking together
with effective risk management. The effective management of risk within CT REIT is a key priority for the Board and senior
management, as such the REIT has adopted an Enterprise Risk Management Framework (“ERM Framework”) for identifying,
assessing, monitoring, mitigating and reporting key risks.
The ERM Framework is designed to provide an integrated approach to the management of risks, through a disciplined
manner that:
•
•
•
•
Safeguards the REIT’s reputation;
Support the achievement of the REIT’s strategic objectives, including financial goals;
Preserves and enhances Unitholder value; and
Supports business planning and operations by providing a cross-functional perspective to risk management,
integrated with strategic planning and reporting processes.
Risk Governance
The foundation of the REIT’s ERM Framework is a governance approach that includes a comprehensive set of policies that,
together with the REIT’s Declaration of Trust, require the identification, assessment, monitoring, mitigation and reporting of all
Key Risks on a timely basis. The key elements of risk governance are the Board and Chief Executive Officer, supported by
senior management and the three lines of defense operating model (which includes (i) business and support functions, (ii)
oversight functions and (iii) internal audit). Clearly defined roles and responsibilities, coupled with timely monitoring and
reporting, assist in supporting a strong risk culture and effective governance of risk.
Fundamental to risk governance at the REIT is the oversight by senior management and the Audit Committee of all Key Risks
and emerging risks faced by the REIT. Members of senior management of the REIT assist the Chief Executive Officer in
discharging responsibilities with respect to managing strategies in alignment with the REIT’s risk appetite, recommending
various risk-related policies for the Board’s approval and evaluating the effectiveness of controls the REIT has in place to
mitigate risk and support the REIT’s strategy. The REIT monitors its risk exposures to assess that its business activities are
operating within approved limits or guidelines and risk appetite. Exceptions, if any, are reported to the Chief Financial Officer,
the Chief Executive Officer and to the Audit Committee and the Board, as appropriate.
Key Risks
A key element of the ERM Framework is the identification and assessment of the REIT’s Key Risks. A Key Risk is defined
as one that, alone or in combination with other interrelated risks, could have a material adverse effect on the REIT’s reputation,
financial position, and/or ability to achieve its strategic objectives. Management has developed mitigation plans for each of the
Key Risks, which are reviewed regularly by senior management and reported to the Audit Committee and the Board. Although
the REIT believes the measures taken to mitigate risks are reasonable, there can be no assurance that they will effectively
CT REIT 2022 ANNUAL REPORT 53
MANAGEMENT'S DISCUSSION AND ANALYSIS
control all risks that may have a negative impact. In addition, there are numerous other risk factors that are difficult to predict
and could adversely affect the REIT’s reputation, financial results, operations and strategic objectives.
The coronavirus (COVID-19) disease (the “Pandemic”) has had an impact on Canadian and global economic activity since
March 2020. The duration and long-term adverse effects of the Pandemic on CT REIT remain uncertain. The REIT has
implemented a number of comprehensive and evolving operational and risk management strategies to support its business
and protect the health and safety of its employees and tenants, as well as its tenants’ employees and customers, in a manner
that aims to, and to date has successfully been able to, reduce impacts on Key Risks.
The following table provides an overview of each of the REIT’s key risks and related risk management strategies. Further
information on the REIT’s key risks is presented in the REIT’s 2022 AIF. CT REIT cautions that the discussion of risks,
including those risks described in the REIT’s 2022 AIF, is not exhaustive. When considering whether to purchase or sell Units
of the REIT, investors and others should carefully consider these factors as well as other uncertainties, potential events and
industry specific factors that may adversely impact the REIT’s future results.
54 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
External Economic Environment
Risk Management Strategy
The REIT
is subject
to risks resulting
from
fluctuations or
The REIT regularly monitors and analyzes external economic,
fundamental changes
in
the external business environment,
demographic, consumer behaviour and competitive developments in
including those driven or compounded by the Pandemic. These
Canada related to its business. Results are shared with the REIT
fluctuations or fundamental shifts in the macroeconomic environment
executives, who are accountable for any necessary amendments to
as well as the regions and local marketplaces where the REIT
the strategic and operational plans and for on-going investment
conducts its business could include:
decisions in order to respond to evolving market and economic
• changes in the current economic environment and uncertainty with
trends.
respect to potential future economic disruption including recession,
depression, or high inflation impacting business and consumer
confidence and spending;
• changes in the economic stability of local markets such as business
layoffs, industry slow-downs, changing demographics and other
factors impacting tenants’ revenues and their ability to pay rent, and
the REIT’s ability to lease space, renew leases and derive income
from the properties in the affected market;
• changes in the economic condition and regulatory environment of
the regions in which the REIT’s properties are concentrated, which
may have a material adverse effect on the REIT’s business, cash
flows, financial condition, results of operations and ability to make
distributions to Unitholders;
• changes in retail shopping behaviours and habits of consumers and
the introduction of new “technologies” and competitors impacting the
relevance of the products, sales channels, or services offered by the
REIT’s key tenant, which may result in a negative impact on their
financial position culminating in a decrease in the demand for
physical space, which could adversely affect the REIT’s financial
performance; and
• increased competition amongst investors, developers, owners and
operators of properties similar to those of the REIT could negatively
impact the availability of suitable acquisition opportunities thereby
increasing the REIT’s cost of acquisition as well as its’ ability to lease
properties, renew leases and achieve rental increases, which may
adversely impact the REIT’s financial condition and results of
operations.
CT REIT 2022 ANNUAL REPORT 55
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
Key Business Relationship
Risk Management Strategy
The REIT’s relationship with its majority Unitholder, CTC, is integral
The REIT benefits from the stability offered by CTC businesses
to its business strategy and could affect the REIT’s cash flows,
including Canadian Tire Retail, one of Canada’s most shopped
operating results, overall financial performance and its ability to
general merchandise retailers with high recognition and a strong
make distributions. Key factors inherent to this relationship include:
reputation
throughout
the communities
it serves. Appropriate
• situations where the interests of CTC and the REIT are in conflict,
governance structures, including policies, processes and other
CTC may utilize its ownership interest in, and contractual rights with
management activities and practices are in place to maintain and
the REIT, to further CTC’s own interest which may not be the same
monitor the relationship between the REIT and CTC. In addition,
as the REIT’s interest in all cases, causing the REIT not to be able to
Management regularly monitors the operating results and credit
operate in a manner that is to its favour, which could adversely affect
ratings of CTC. To mitigate Pandemic impacts, the REIT has worked
the REIT’s cash flows, operating results, valuation, and overall
closely with CTC and its other tenants to help maintain safe facilities
financial condition;
and business operations for their employees and customers,
• the dependence of the REIT’s revenues on the ability of its key
following guidance from public health authorities.
tenant, CTC, to meet its rent obligations and renew its tenancies.
While CTC has held investment grade credit ratings for over 20
years, there is no assurance that it will maintain such ratings or that
its financial position will not change over time. The future financial
performance and operating results of CTC’s business are subject to
inherent risks, perceptions and uncertainties, including the uncertain
long term impact of the Pandemic on its operations and customer
behaviours. A downturn in CTC’s business resulting in an inability to
meet their obligations under their leases or if a significant amount of
available space in the properties was not able to be leased on
economically favourable lease terms could have a material effect on
the financial performance of the REIT, its cash flows, and the REIT’s
ability to make distributions to Unitholders; and
• the REIT’s dependency on the services of key personnel including
certain CTC personnel who supply necessary services to operate the
REIT for its effective management and governance. Failure to
receive these services or the need to replace the service provider in
a short period of time could have a material adverse effect on the
REIT.
56 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
Financial
Risk Management Strategy
Risks associated with macroeconomic conditions which are highly
The REIT has a Board-approved financial risk management policy in
cyclical and volatile could have a material effect on the REIT’s
place that governs the management of capital, funding, and other
financial position and its ability to achieve its strategic goals and
financial risks. The indebtedness and Class C LP Units of the REIT
aspirations. Such risks include:
are predominantly at fixed rates and its variable interest rate
• fundamental changes in the economic environment, significant
exposure is minimal. The weighted average term to redemption/
events such as the Pandemic, or volatility in the financial markets
maturity of the REIT’s debt portfolio is managed to generally align
resulting in changes in interest rates that affect the value of real
with the weighted average term to maturity of the REIT’s assets. The
estate, the value of the REIT’s Units, the economics of acquisition
REIT manages refinancing risk by maintaining a diversified debt
activity and the availability of capital impacting the financial position
redeeming/ maturity schedule to limit the amount of debt maturing in
of the REIT and its ability to make distributions to its Unitholders; and
any one year. The REIT may use interest rate hedges from time to
• the REIT’s ability to manage fluctuations in interest rates, access to
time to manage interest rate risk and to provide more certainty
capital and liquidity, the price of the REIT’s Units and the REIT’s
regarding the FFO available to unitholders, subject to the REIT’s
degree of leverage. Failure to develop, implement, and execute
investment and guidelines and operating policies. In response to the
effective strategies to manage these risks may result in insufficient
Pandemic, the REIT increased its focus on maintaining liquidity and
capital to absorb unexpected losses and/or changes in asset value
a strong balance sheet and ensuring continued access to capital.
negatively affecting the REIT’s financial performance and increasing
the REIT’s vulnerability to a downturn in business or the economy.
Legal and Regulatory Compliance
Failure to adhere to laws and regulations by the REIT may result in
The REIT has appropriate governance structures, including policies,
regulatory related issues or decrease investor confidence and a
processes and controls in place to comply with legal and regulatory
decline in the REIT’s Unit price. Changes to laws and regulations
requirements, including but not limited to the REIT’s ability to
applicable to the REIT may adversely affect the REIT’s financial
continue to satisfy the conditions to qualify as a closed end mutual
condition, results of operation, and distributions to Unitholders,
fund trust and to comply with environmental laws and address any
including:
material environmental issues, including climate change.
• changes in income tax laws such that the REIT would not qualify as
Environmental risks continue to evolve as they relate to the global
a mutual fund trust for purposes of the Income Tax Act (“ITA”),
transition to a net-zero economy and physical climate change risks.
including the treatment of real estate investment trusts and mutual
fund trusts, or the exclusion from the definition of “SIFT TRUST” for a
trust qualifying as a “real estate investment trust” for a taxation year
under the ITA, which could have a material and adverse impact on
the value of the units, and on distributions to unitholders; and
• changes in various federal, provincial, territorial and municipal laws
relating to environmental matters, including climate change, which
may result in the REIT bearing the risk of cost-intensive assessment,
technologies, and the removal of contamination, hazardous or other
regulated substances causing an adverse effect on the REIT’s
financial condition, results of operation, cash available for distribution
to unitholders.
CT REIT 2022 ANNUAL REPORT 57
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
Operations
Risk Management Strategy
The REIT is subject to the risk that a direct or indirect loss of
The REIT has appropriate governance structures, including policies,
operating capabilities may occur due to:
processes, contracts, service agreements and other management
• inadequate or failed operations processes (property management,
activities in place to maintain the operational performance of the
development,
redevelopment and
renovation
risks such as
REIT and to support the REIT’s reputation, business and strategic
substantial unanticipated delays and expenses or the inability to
objectives.
initiate or complete activities) that could have an adverse effect on
CT REIT is subject to the risk that a direct or indirect loss of
the REIT’s reputation, financial condition, results of operations, cash
operating capabilities may occur due to property, development,
flow, trading price of the Units, distributions to unitholders and the
redevelopment and renovation risks, disasters, health events such
ability of the REIT to satisfy its principal and interest obligations;
as pandemics, cyber incidents, climate change, ineffective business
• internal or outsourced business activities and business disruptions
continuity and contingency planning, and talent shortages.
(such as disasters, health crises such as the Pandemic, cyber
Further government actions in response to the Pandemic and future
incidents, and climate change) and ineffective business continuity
pandemics could have additional adverse impact on the REIT’s
and contingency planning, which could adversely affect
the
operations and financial performance.
reputation, operations and financial performance of the REIT;
The health and well-being of CT REIT’s employees, tenants, tenants’
• Government issued guidelines and restrictions in response to the
employees and customers, has remained a top priority throughout
Pandemic that have resulted in the implementation of operational
the Pandemic and the REIT has continued to take necessary
measures that impact REIT properties, including the temporary
measures and precautions to help protect and support them,
closure of
tenants’ businesses, reduced hours and capacity,
reflecting best guidance by government and public health authorities.
enhanced cleaning protocols and actions to promote physical
distancing; and
• talent shortages due to external pressure or the inability to
effectively attract and retain talented and experienced employees,
which may negatively impact the REIT’s ability to operate its
business and execute its strategy.
13.0 INTERNAL CONTROLS AND PROCEDURES
13.1 Disclosure Controls and Procedures
Management is responsible for establishing and maintaining a system of controls and procedures over the public disclosure of
financial and non-financial information regarding CT REIT. Such controls and procedures are designed to provide reasonable
assurance that all relevant information is gathered and reported, on a timely basis, to senior management, including the CEO
and the Chief Financial Officer (“CFO”), so that they can make appropriate decisions regarding public disclosure.
CT REIT’s system of disclosure controls and procedures include, but are not limited to, its Disclosure Policy, its Code of
Conduct, the effective functioning of its Disclosure Committee, procedures in place to systematically identify matters
warranting consideration of disclosure by the Disclosure Committee, verification processes for individual financial and non-
financial metrics, and information contained in annual and interim filings, including the consolidated financial statements,
MD&A, AIF and other documents and external communications.
As required by CSA National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”),
an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of CT REIT’s disclosure controls and
58 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
procedures was conducted, under the supervision of management, including the CEO and CFO, as at December 31, 2022.
The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate
in the circumstances. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the
system of disclosure controls and procedures were effective as at December 31, 2022.
13.2 Internal Control Over Financial Reporting
Management is also responsible for establishing and maintaining appropriate internal controls over financial reporting. CT
REIT’s internal controls over financial reporting include, but are not limited to, detailed policies and procedures related to
financial accounting, reporting and controls over systems that process and summarize transactions. CT REIT’s procedures for
financial reporting also include the active involvement of qualified financial professionals, senior management and its Audit
Committee.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
As also required by NI 52-109, management, including the CEO and CFO, evaluated the adequacy of the design (quarterly)
and effective operation (annually) of CT REIT’s internal controls over financial reporting as defined in NI 52-109, as at
December 31, 2022. In making this assessment, management, including the CEO and CFO, used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). This
evaluation included review of the documentation of controls, evaluation of the design and testing the operating effectiveness of
controls, and a conclusion about this evaluation. Based on that evaluation, the CEO and the CFO have concluded that the
design and operation of CT REIT’s internal controls over financial reporting were effective as at December 31, 2022, in
providing reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial
statements for external purposes in accordance with IFRS.
13.3 Changes in Internal Control Over Financial Reporting
During the quarter and year ended December 31, 2022, there have been no changes in CT REIT’s internal controls over
financial reporting that have materially affected, or are reasonably likely to materially affect, CT REIT’s internal controls over
financial reporting.
CT REIT 2022 ANNUAL REPORT 59
MANAGEMENT'S DISCUSSION AND ANALYSIS
14.0 FORWARD-LOOKING INFORMATION
This MD&A, and the documents incorporated by reference herein, contain forward-looking statements that involve a number of
risks and uncertainties, including statements regarding the outlook for CT REIT’s business and results of operations. Forward-
looking statements are provided for the purposes of providing information about CT REIT’s future outlook and anticipated
events or results and may include statements regarding known and unknown risks, uncertainties and other factors that may
cause the actual results to differ materially from those indicated. Such factors include but are not limited to general economic
conditions; financial position; business strategy; availability of acquisition opportunities; budgets; capital expenditures; financial
results, including fair value adjustments and cash flow assumptions upon which they are based; cash and liquidity; taxes; and
plans and objectives of or involving CT REIT. In addition, the long-term adverse effects of the Pandemic on the REIT remain
uncertain. Statements regarding future acquisitions, developments, distributions, results, performance, achievements, and
prospects or opportunities for CT REIT or the real estate industry are forward-looking statements. In some cases, forward-
looking information can be identified by such terms such as “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”,
“plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue”, “likely”, “schedule”, or the negative thereof or
other similar expressions concerning matters that are not historical facts.
Some of the specific forward-looking statements in this document include, but are not limited to, statements with respect to CT
REIT’s:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
growth strategy and objectives under section 2.0;
fair value of property portfolio under section 4.4;
development and related activities under section 4.6, including with respect to the redevelopment and tenancy at
Canada Square;
leasing activities under section 4.10;
recoverable capital costs under section 4.11;
capital expenditures to fund acquisitions and development activities under section 6.1;
capital strategy under section 6.11;
commitments as at December 31, 2022 under section 6.12;
distributions under section 7.3;
capital expenditures under section 10.1 (g);
access to available sources of debt and/or equity financing;
expected tax treatment of CT REIT and its Distributions to unitholders;
ability to expand its asset base, make accretive acquisitions, develop or intensify its Properties and participate with
CTC in the development or intensification of the Properties; and
ability to continue to qualify as a “real estate investment trust”, as defined pursuant to the ITA.
CT REIT has based these forward-looking statements on factors and assumptions about future events and financial trends that
it believes may affect its financial condition, results of operations, business strategy and financial needs. Such factors and
assumptions include but are not limited to whether the Canadian economy will stabilize and the timing and extent of further
changes to inflation; that tax laws will remain unchanged; that the REIT will continue to manage its liquidity and debt
covenants; that conditions within the real estate market, including competition for acquisitions, will normalize to historical levels
60 CT REIT 2022 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
in the near- to medium-term; that Canadian capital markets will provide CT REIT with access to equity and/or debt at
reasonable rates when required; that the redevelopment and related activities with respect to Canada Square will proceed as
planned; and that CTC will continue its involvement with the REIT on the basis described in its 2022 AIF.
Although the forward-looking statements contained in this MD&A are based upon assumptions that the REIT believes are
reasonable, given information currently available to management, there can be no assurance that actual results will be
consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks
and uncertainties, many of which are beyond the REIT’s control, that may cause CT REIT’s, or the industry’s, actual results,
performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied
by such forward-looking statements. These risks and uncertainties include, among other things, the factors discussed in
section 12.0 of this MD&A and under the “Risk Factors” section of the 2022 AIF.
For more information on the risks, uncertainties and assumptions that could cause CT REIT’s actual results to differ from
current expectations, please also refer to CT REIT’s public filings available on SEDAR at www.sedar.com and by a link at
www.ctreit.com.
CT REIT cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also
materially and adversely affect its results. Investors and other readers are urged to consider the foregoing risks, uncertainties,
factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance
on such forward-looking information. Statements that include forward-looking information do not take into account the effect
that transactions or non-recurring or other special items announced or occurring after the statements are made can have on
CT REIT’s business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other
charges announced or occurring after such statements are made. The forward-looking information in this MD&A is based on
certain factors and assumptions made as of the date hereof or the date of the relevant document incorporated herein by
reference, as applicable. CT REIT does not undertake to update the forward-looking information, whether written or oral, that
may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as required
by applicable securities laws.
Information contained in or otherwise accessible through the websites referenced in this MD&A does not form part of this
MD&A and is not incorporated by reference into this MD&A. All references to such websites are inactive textual references and
are for information only.
CT REIT 2022 ANNUAL REPORT 61
MANAGEMENT'S DISCUSSION AND ANALYSIS
Commitment to disclosure and investor communication
The Investors section of the REIT’s website, accessible by a link at www.ctreit.com includes the following documents and
information of interest to investors:
•
•
Annual Information Form;
Consolidated financial statements and accompanying notes for the year ended December 31, 2022;
• Management Information Circular;
•
•
•
the Base Shelf Prospectus and related prospectus supplements;
quarterly financial statements and related MD&As; and
conference call webcasts (archived for one year).
Additional information about the REIT has been filed electronically with various securities regulators in Canada through
SEDAR and is available online at www.sedar.com.
If you would
like
to contact
the
Investor Relations department directly, call 647-518-4461 or email
investor.relations@ctreit.com.
February 14, 2023
62 CT REIT 2022 ANNUAL REPORT
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
Management’s Responsibility for Financial Statements
Independent Auditor’s Report
Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Note 1
Nature of CT Real Estate Investment Trust
Note 2
Basis of Presentation
Note 3 Material Accounting Policy Information
Note 4
Investment Properties
Note 5
Other assets
Note 6
Class C LP Units
Note 7 Mortgages payable
Note 8
Debentures
Note 9
Leases
Note 10 Other liabilities
Note 11 Credit Facilities
Note 12 Equity
Note 13 Unit-Based Compensation Plans
Note 14 Non-controlling interests
Note 15 Revenues and Expenses
Note 16 General and Administrative Expense
Note 17 Net Interest and Other Financing Charges
Note 18 Changes in Working Capital and Other
Note 19 Segmented Information
Note 20 Commitments and Contingencies
Note 21 Related-Party Transactions
Note 22 Financial Instruments and Risk Management
Note 23 Capital Management and Liquidity
Glossary of Terms
64
65
68
69
70
71
72
72
76
80
82
83
84
85
85
87
87
88
90
91
92
93
93
93
94
94
94
96
98
101
CT REIT 2022 ANNUAL REPORT 63
Management’s Responsibility for Financial Statements
The management of CT Real Estate Investment Trust (“CT REIT”) is responsible for the integrity and reliability of the
accompanying consolidated financial statements. These consolidated financial statements have been prepared by
management in accordance with International Financial Reporting Standards, and include amounts based on judgments and
estimates. All financial information in our Management’s Discussion and Analysis is consistent with these consolidated
financial statements.
Management is responsible for establishing and maintaining adequate systems of internal control over financial reporting.
These systems are designed to provide reasonable assurance that the financial records are reliable and form a proper basis
for the timely and accurate preparation of financial statements. Management has assessed the effectiveness of CT REIT’s
internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and concluded that CT REIT’s internal
control over financial reporting was effective as at the date of these consolidated statements.
The Board of Trustees oversees management’s responsibilities for the consolidated financial statements primarily through the
activities of its Audit Committee, which is comprised solely of trustees who are neither officers nor employees of CT REIT.
This Committee meets with management and CT REIT’s independent auditors, Deloitte LLP, to review the consolidated
financial statements and recommend approval to the Board of Trustees. The Audit Committee is responsible for making
recommendations to the Board of Trustees with respect to the appointment of and, subject to the approval of the Unitholders
authorizing the Board of Trustees to do so, approving the remuneration and terms of engagement of CT REIT’s auditors. The
Audit Committee also meets with the auditors, without the presence of management, to discuss the results of their audit.
The consolidated financial statements have been audited by Deloitte LLP, in accordance with Canadian generally accepted
auditing standards. Their report is presented below.
<< Kevin Salsberg >>
<< Lesley Gibson >>
Kevin Salsberg
President and Chief Executive Officer
Lesley Gibson
Chief Financial Officer
February 14, 2023
64 CT REIT 2022 ANNUAL REPORT
Independent Auditor's Report
To the Unitholders and Board of Trustees of
CT Real Estate Investment Trust
Opinion
We have audited the consolidated financial statements of CT Real Estate Investment Trust (the "REIT"), which comprise the
consolidated balance sheets as at December 31, 2022 and 2021, and the consolidated statements of income and
comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial
statements, including a summary of material accounting policy information (collectively referred to as the "financial
statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the REIT
as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance
with International Financial Reporting Standards ("IFRS").
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS"). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the REIT in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated
financial statements for the year ended December 31, 2022. This matter was 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
this matter.
Fair Value of Investment Properties — Refer to Note 4 to the financial statements
Key Audit Matter Description
The REIT measures investment properties at fair value subsequent to acquisition. The fair value of each investment property is
estimated using the discounted cash flow (“DCF”) method. This method requires management to make estimates and
assumptions.
The assumptions with the highest degree of subjectivity and impact on fair values are the discount rates and terminal
capitalization rates. Auditing these assumptions required a high degree of auditor judgment and this resulted in an increased
extent of audit effort, including the need to involve fair value specialists.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the discount rates and terminal capitalization rates used to determine the fair value of the
investment properties included the following, among others:
• Evaluated the effectiveness of controls over management’s process for determining the fair value of investment properties,
including those over the determination of the discount rates and terminal capitalization rates.
• With the assistance of fair value specialists, evaluated the reasonableness of management’s discount rates and terminal
capitalization rates by considering recent market transactions and industry surveys.
Other Information
Management is responsible for the other information. The other information comprises:
• Management's Discussion and Analysis
CT REIT 2022 ANNUAL REPORT 65
• The information, other than the financial statements and our auditor’s report thereon, in the CT REIT 2022 Annual Report
(the "Annual Report").
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of
assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have
performed on this other information, we conclude that there is a material misstatement of this other information, we are
required to report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor's report. If, based on the work we will
perform on this other information, we conclude that there is a material misstatement of this other information, we are required
to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and
for such internal control as management determines is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the REIT’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 REIT or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the REIT's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS 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 financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the REIT'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 REIT's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the REIT to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
66 CT REIT 2022 ANNUAL REPORT
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 Adam Charles Burke.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Ontario
February 14, 2023
CT REIT 2022 ANNUAL REPORT 67
Consolidated Balance Sheets
(Canadian dollars, in thousands)
As at
Assets
Non-current assets
Investment properties
Other assets
Current assets
Tenant and other receivables
Other assets
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Class C LP Units
Mortgages payable
Debentures
Lease liabilities
Other liabilities
Current liabilities
Mortgages payable
Credit facilities
Debentures
Lease liabilities
Other liabilities
Distributions payable
Total liabilities
Equity
Unitholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
Note
December 31, 2022
December 31, 2021
4
5
5
6
7
8
9
10
7
11
8
9
10
12
$
6,833,000 $
6,489,000
1,863
6,834,863
1,658
6,490,658
$
$
3,734
3,581
2,611
9,926
2,884
3,005
3,555
9,444
6,844,789 $
6,500,102
1,451,550 $
1,451,550
9,128
1,170,905
102,223
5,150
65,316
921,528
74,707
5,497
2,738,956
2,518,598
56,167
99,884
—
649
104,987
16,973
278,660
3,017,616
1,698,250
2,128,923
3,827,173
10,233
79,300
149,934
1,067
46,512
16,309
303,355
2,821,953
1,622,365
2,055,784
3,678,149
6,500,102
12
12, 14
$
6,844,789 $
The related notes form an integral part of these consolidated financial statements.
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