BTB Real Estate Investment Trust (TSE:BTB.UN) executives highlighted steady property values, active leasing and ongoing efforts to address several vacancies as the REIT discussed fourth-quarter and full-year 2025 results for the period ended Dec. 31, 2025.
Portfolio update and 2025 transactions
President and CEO Michel Léonard said the REIT owned approximately C$1.2 billion of real estate, with close to 60% of the portfolio externally appraised during 2025. CFO Marc-André Lefebvre added that investment property value remained stable at C$1.2 billion at year-end and that BTB externally appraised 58% of its properties. The appraisal process resulted in a C$4.7 million loss, representing 0.4% of total portfolio value, while the weighted average cap rate across the portfolio was 6.7%, unchanged from year-end 2024.
Léonard also noted BTB continued working on zoning changes for certain sites as part of its densification initiatives.
Leasing results and occupancy
Senior Director of Leasing Stéphanie Léonard outlined leasing activity and said BTB completed a substantial amount of renewal and new leasing volume in 2025. Management cited total leasing activity of 742,000 square feet for the year, comprised of 470,000 square feet of renewals and 268,000 square feet of new leases, while also reporting that lease renewals totaled 474,000 square feet. The REIT reported an average rent increase on renewals of 10.6% for the year.
BTB ended 2025 with an occupancy rate of 91.3%, which management said was slightly lower than the prior year. The decline was attributed primarily to a 132,000-square-foot vacancy in Laval (about 2.2% of the portfolio’s occupancy impact), alongside other vacancies in Ottawa and Edmonton.
Management pointed to several notable leasing transactions and expansions completed without downtime between outgoing and incoming tenants, which it said helped maintain occupancy while increasing net operating income (NOI) at the affected properties. Key examples included:
- A new lease with Crown Tax Company for 80,000 square feet in industrial space in Montreal.
- A 30,000-square-foot lease with Value Village in necessity-based retail in Montreal.
- A 30,000-square-foot industrial lease with XCMG Canada in Edmonton.
In addition, Léonard said several tenants expanded within BTB’s portfolio, including the Government of Canada (about 14,000 square feet added in Quebec City under a 15-year lease), the City of Saint-Jean-sur-Richelieu’s police station (nearly 4,000 square feet added), and Field Effect Software Company (about 3,000 square feet added in Ottawa).
On rental spreads, management reported a 6.7% average increase in renewal rates for the quarter and 10.6% for the year, with suburban office renewals up 5.8% for the quarter and 12.4% for the year. Necessity-based retail renewals increased 7.8% for the quarter and 6.4% for the year. Management noted there were no industrial renewals completed in the quarter.
Vacancies and leasing pipeline
Management discussed several vacancies affecting occupancy. For the Laval industrial vacancy, Léonard said BTB remained in discussions with a large international tenant for the entire premises, while also engaging with other prospects interested in portions of the space. CEO Michel Léonard told analysts that the decision-making process with the international tenant has been lengthy, and he declined to provide specific timing, but said BTB believes the property will find a user during 2026.
Additional occupancy pressure included:
- 28,000 square feet in Ottawa vacated by a government-based tenant whose funding was not renewed; management said leasing efforts were underway and the space is easily subdividable.
- 24,000 square feet of industrial vacancy in Edmonton following a tenant departure tied to that tenant constructing its own building; management said Avison Young was mandated and there was leasing traction.
- 33,000 square feet in Edmonton vacated after BTB terminated a lease due to recurring tenant default, which management said was done to mitigate risk.
Financial performance, distributions, and balance sheet
Lefebvre said fourth-quarter rental revenue was C$32.3 million, down 1% from the prior-year quarter. NOI and cash NOI decreased 4.4% and 5.1%, respectively, while cash same-property NOI decreased 3.3%, driven by weakness in industrial and office. Management attributed industrial impacts to a planned tenant departure in Edmonton (over 24,000 square feet), free rent granted to XCMG, and the impact of a new lease tied to the investor group that purchased Lion Electric. In office, management cited free rent granted to new tenants in Ottawa and non-recoverable one-time expenses.
For the full year, management said NOI was stable versus 2024 and cash NOI increased 1.9%. Lefebvre attributed the year-over-year cash NOI increase to several factors, including lease cancellation payments (including C$1.1 million from an industrial tenant with a planned departure at the end of Q1 2026, and a C$1.0 million partial cancellation payment recorded in Q1 from a suburban office tenant whose space has already been re-leased), higher renewal rental rates, and a C$0.7 million decrease related to dispositions.
BTB reported FFO adjusted per unit of C$0.097 for the quarter (down C$0.012 year over year) and AFFO adjusted per unit of C$0.088 (down C$0.013). For the year, management reported AFFO adjusted per unit of C$0.388, up C$0.007 from 2024. Management also reiterated that BTB maintained its distribution at C$0.075 per unit for the quarter, or C$0.30 annualized. The AFFO adjusted payout ratio was about 77% for the year, and management also cited payout ratios of 73.9% on an FFO basis and 77.3% on an AFFO basis.
On leverage, Léonard said BTB’s mortgage debt ratio declined to 51.3% and total debt ratio to 57%. Lefebvre said the weighted average term and interest rate on the mortgage portfolio were 2.3 years and 4.5%, respectively. BTB ended the quarter with more than C$5 million in cash and C$25 million available on credit facilities.
Capital allocation and 2026 outlook
In Q&A, Léonard said BTB’s only significant known non-renewal on its “radar” was a federal government lease in Ottawa at 2204 Walkley Road, roughly 100,000 square feet, expiring at the end of August. Management said it had mandated Colliers to seek new tenants and noted interest, including a prospect that toured the building for 50,000 square feet. Léonard also said the government may consider another department for the space, though discussions often occur closer to lease end. When asked about the potential NOI impact if the space were fully vacated, Léonard cited a rough estimate of about C$30 per square foot on a gross basis.
On growth, Léonard said BTB could consider raising capital if unit price momentum continues, which he said could enable the REIT to resume growth after COVID. He reiterated a longer-term goal of reaching 60% industrial exposure, adding that raising capital could help BTB buy industrial assets to move toward that target. He also said BTB would consider acquiring more retail but would not look to acquire more office, noting the REIT is disposing of office assets. Léonard said cap rates on retail acquisition opportunities had compressed versus expectations, and he acknowledged the possibility of monetizing retail assets and redeploying proceeds into industrial as a consideration.
Looking into 2026, management said it was addressing vacancies and expressed hope of ending the year “on a higher note” than the end of 2025. The leasing team also cited sustained activity in its markets, including what it described as opportunities tied to return-to-office mandates.
About BTB Real Estate Investment Trust (TSE:BTB.UN)
BTB is a real estate investment trust listed on the Toronto Stock Exchange. BTB invests in industrial, suburban office and necessity-based retail properties across Canada for the benefit of their investors. As of today, BTB owns and manages 72 properties, representing a total leasable area of approximately 6 million square feet. People and their stories are at the heart of our success.
