BTB Realty has another good quarter
On March23 BTB Realty reported fourth quarter and year-end results.Both were good.BTB previously owned primarily a number of small industrial and retail complexes in the immediate Montreal area.Now it is spreading out towards Quebec City and Ottawa.It is still buying properties in the Montreal area but not in Montreal itself. Also the average size of it's properties are getting bigger and more expensive.Also now BTB is buying fewer properties that are highly leveraged and putting more cash in.
Annual highlights For the year, rental income increased by 6% while net operating income increased by 8%.AFFO per share increased by 12%.AFFO is the best measure of earnings per share (for a REIT) and it showed a good performance.The fourth quarter was even better.Annual rental income was up by 7.5%while net operating income increased by 11%.AFFO per share was up another 13% over 2013.BTB improves it's properties and so was able to renew 425,000 square feet of leases with a 9% rent increase.Also some of it's properties are bought without tenants and leases and they added 205,000 square feet of new leases.Consequently their occupancy rate went from 91.9%to 92.7%.BTB now has $586 million of assets under it's management.
Quarterly results
BTB's quarterly trend was even better than that for 2014.Rental income increased by 7.5% while net operating income went up by 10.5% and AFFO per share was up 13% over Q4 2013.BTB continued it's buying and acquired a new property in Ottawa and one in Delson (south of Montreal).These are smaller than ones bought at the end of 2014.And it looks like the down payment was not that large but BTB reports that it's mortgage debt ratio fell from 57.4 % to 56.3%.This is still a little high but it is falling.These last two acquisitions broke two trends that BTB was following.It was starting to buy more expensive buildings with larger down payments.However the Delson property cost $22 million which is above the average cost of past properties.The second new trend it is making is that it is starting to diversify away from Montreal as it bought a small property in Ottawa.
Financial Strategy
BTB is still a small tier REIT but it has grown considerably in 2013 and 2014.It was buying mostly small industrial and retail complexes around Montreal.This kept it's mortgage debt ratio high and it's interest rate high.Now it is diversifying in a number of ways.First it is buying bigger buildings and using a larger cash portion.The mortgage debt ratio is falling as is the average interest rate.This allowed BTB to raise almost $25 million in an equity issue in 2014 at a reasonable price.And now it is geographically diversifying also.It is buying in the Quebec City area as well as in the Ottawa area
A Comparison of REITs
BTB is in a special category of REITs.It is quite larger than the microcap REITs like Lakehouse or Lanesborough.It is even bigger than a large small tier REIT like Holloway.Holloway has shown itself to be quite aggressive and has made a significant acquisition.Yet BTB is bigger by making a number of profitable purchases.It is also bigger than Temple Hotels;Temple's assets are larger but it's market cap and shareholder equity is less.But BTB is not yet in the intermediate tier of companies like Innvest and Interrent.It probably needs another small equity issue to balance it's debt and help it grow.But before it does BTB needs it's share price to move up with it's peers.This would put BTB share price closer to $6.00 and below Innvest and Interrent.After all it's yield and price/earnings ratio is better than almost all of these other REITs.
Annual highlights For the year, rental income increased by 6% while net operating income increased by 8%.AFFO per share increased by 12%.AFFO is the best measure of earnings per share (for a REIT) and it showed a good performance.The fourth quarter was even better.Annual rental income was up by 7.5%while net operating income increased by 11%.AFFO per share was up another 13% over 2013.BTB improves it's properties and so was able to renew 425,000 square feet of leases with a 9% rent increase.Also some of it's properties are bought without tenants and leases and they added 205,000 square feet of new leases.Consequently their occupancy rate went from 91.9%to 92.7%.BTB now has $586 million of assets under it's management.
Quarterly results
BTB's quarterly trend was even better than that for 2014.Rental income increased by 7.5% while net operating income went up by 10.5% and AFFO per share was up 13% over Q4 2013.BTB continued it's buying and acquired a new property in Ottawa and one in Delson (south of Montreal).These are smaller than ones bought at the end of 2014.And it looks like the down payment was not that large but BTB reports that it's mortgage debt ratio fell from 57.4 % to 56.3%.This is still a little high but it is falling.These last two acquisitions broke two trends that BTB was following.It was starting to buy more expensive buildings with larger down payments.However the Delson property cost $22 million which is above the average cost of past properties.The second new trend it is making is that it is starting to diversify away from Montreal as it bought a small property in Ottawa.
Financial Strategy
BTB is still a small tier REIT but it has grown considerably in 2013 and 2014.It was buying mostly small industrial and retail complexes around Montreal.This kept it's mortgage debt ratio high and it's interest rate high.Now it is diversifying in a number of ways.First it is buying bigger buildings and using a larger cash portion.The mortgage debt ratio is falling as is the average interest rate.This allowed BTB to raise almost $25 million in an equity issue in 2014 at a reasonable price.And now it is geographically diversifying also.It is buying in the Quebec City area as well as in the Ottawa area
A Comparison of REITs
BTB is in a special category of REITs.It is quite larger than the microcap REITs like Lakehouse or Lanesborough.It is even bigger than a large small tier REIT like Holloway.Holloway has shown itself to be quite aggressive and has made a significant acquisition.Yet BTB is bigger by making a number of profitable purchases.It is also bigger than Temple Hotels;Temple's assets are larger but it's market cap and shareholder equity is less.But BTB is not yet in the intermediate tier of companies like Innvest and Interrent.It probably needs another small equity issue to balance it's debt and help it grow.But before it does BTB needs it's share price to move up with it's peers.This would put BTB share price closer to $6.00 and below Innvest and Interrent.After all it's yield and price/earnings ratio is better than almost all of these other REITs.
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