True North Commercial REIT Reports Q1-2025 Results

/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/

Completed 146,000 square feet of new and renewed leases during Q1-2025 with a weighted average lease term of 5.6 years and 1.6% leasing spread on renewed leases

REIT substantially completed the renewal of 2025 debt maturities at relatively attractive interest rates, further strengthening the REIT's financial position

TORONTO, May 12, 2025 /CNW/ - True North Commercial Real Estate Investment Trust (TSX: TNT.UN) (the "REIT") today announced its financial results for the three months ended March 31, 2025 ("Q1-2025").

"We are pleased to start the year with strong leasing momentum, completing 146,000 square feet of new or renewed leases, highlighting the REIT's commitment to maintain strong relationships with tenants which translated into reported occupancy within its core portfolio of 92%," stated Daniel Drimmer, the REIT's Chief Executive Officer. "The REIT also substantially completed the refinancing or renewal of its 2025 debt maturities  at relatively favourable interest rates, which continued to strengthen the REIT's financial position."

Q1-2025 highlights

• On March 18, 2025, the REIT announced the reinstatement of the monthly distribution ("Distribution Reinstatement") to Unitholders, which commenced with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per trust unit of the REIT ("Unit") per month.
• The REIT's core portfolio occupancy⁽¹⁾ excluding assets held for sale at the end of Q1-2025 was approximately 92% which remained above the average occupancy for the markets in which the REIT operates. The REIT also had a weighted average lease term ("WALT")⁽¹⁾ of 4.2 years excluding investment properties held for sale.
• The REIT contractually leased or renewed approximately 146,000 square feet with a WALT of 5.6 years with positive leasing spreads on renewals reported at 1.6% for the quarter.
• Q1-2025 same property net operating income ("Same Property NOI")⁽¹⁾ increased by approximately 5.1% including certain amounts earned for termination income in both periods. Q1-2025 Same Property NOI normalized to exclude termination income, free rent in both periods and the REIT's Alberta portfolio would have increased by approximately 0.3%.
• The REIT's Q1-2025 revenue and Net Operating Income ("NOI")⁽¹⁾ decreased relative to the three months ended March 31, 2024 ("Q1-2024") by 4% and 12%, respectively, primarily due to the disposition activity in 2024 (the "Primary Variance Driver") and a decrease in occupancy for the REIT's held for sale properties, partially offset by contractual rent increases and higher termination income received from a tenant in the Greater Toronto Area ("GTA") Ontario portfolio in Q1-2025 relative to the amounts received in Q1-2024.
• The REIT's Q1-2025 funds from operations ("FFO")⁽¹⁾ and adjusted funds from operations ("AFFO")⁽¹⁾ decreased by $759 and $831, respectively when compared to the same period in 2024 primarily due to the Primary Variance Driver, reduction in occupancy for the REIT's held for sale properties and increase in interest costs, partially offset by normalized Same Property NOI growth outlined above. Q1-2025 FFO and AFFO basic and diluted per Unit⁽¹⁾ remained consistent at $0.56 and $0.57, respectively, compared to the same period in 2024, driven by a reduction in the number of Units as a result of the REIT's normal course issuer bid ("NCIB") program, offset by the reasons noted above for FFO and AFFO.
• During Q1-2025, the REIT successfully completed $129,600 of refinancing or approximately 52% of the 2025 maturities and $4,500 of new financing at a weighted average interest rate of approximately 4.78% and weighted average term of approximately 3.6 years. Subsequent to March 31, 2025, the REIT successfully completed the refinancing of certain first mortgages totaling approximately $75,900 at an average interest rate of 4.68% representing approximately 30% of the 2025 debt maturities and has substantially finalized terms on an additional approximately $23,200 or 9% of 2025 debt maturities which are expected to be finalized by the second quarter of 2025. As a result, the REIT has substantially completed the renewal or refinancing of its 2025 debt maturities.

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¹ This is a non-IFRS financial measure, refer to "Non-IFRS measures".

Subsequent events

• On April 23, 2025, the REIT renewed the NCIB program as approved by the TSX ("2025 NCIB"). Under the 2025 NCIB, the REIT has the ability to purchase for cancellation up to a maximum of 1,227,090 of its Units, representing 10% of the REIT's public float of 12,270,901 Units as of April 3, 2025 through the facilities of the TSX or through a Canadian alternative trading system and in accordance with applicable regulatory requirements at a price per Unit equal to the market price at the time of acquisition.

Key performance indicators

		Q1-2025	Q1-2024
Number of properties^(1)		40	44
Portfolio gross leasable area ("GLA")^(1)		4,619,000 sf	4,792,600 sf
Occupancy^(1)(2)		92 %	90 %
WALT^(1)		4.2 years	4.4 years
Revenue from government and credit rated tenants^(1)		74 %	77 %
Revenue		$               31,086	$              32,464
NOI		14,665	16,586
Net income and comprehensive income		563	5,138
Same Property NOI^(3)		19,000	19,053
FFO		$                8,082	$                 8,841
FFO per Unit - basic		0.56	0.56
FFO per Unit - diluted		0.56	0.56
AFFO		$                8,229	$                9,060
AFFO per Unit - basic		0.57	0.57
AFFO per Unit - diluted		0.57	0.57
AFFO payout ratio - diluted^(4)		10 %	— %
Distributions declared		$                   828	$                       —

⁽¹⁾ This is presented as at the end of the applicable reporting period, rather than for the quarter.

⁽²⁾ Represents same property occupancy excluding assets classified as held for sale as at March 31, 2025. The REIT occupancy for all assets owned as at the end of each reporting period (including any held for sale assets) was 86% as at the end of Q1-2025 (Q1-2024 was 88%).

⁽³⁾ Represents Same Property NOI including assets classified as held for sale during Q1-2025 and Q1-2024. Same Property NOI excluding assets classified as held for sale have been presented separately in this press release (see "Same Property NOI").

⁽⁴⁾ This is a non-IFRS financial measure, refer to "Non-IFRS measures".

Operating results

Q1-2025 revenue and NOI decreased relative to the same period in 2024 by 4% and 12%, respectively, primarily due to the Primary Variance Driver and a decrease in occupancy for the REIT's held for sale properties, partially offset by contractual rent increases and higher termination income received from a tenant in the GTA Ontario portfolio in Q1-2025 relative to the amounts received in Q1-2024. Q1-2025 Same Property NOI increased by approximately 5.1% including certain amounts earned for termination income in both periods. Q1-2025 Same Property NOI normalized to exclude termination income, free rent in both periods and the REIT's Alberta portfolio would have increased by approximately 0.3%.

Q1-2025 FFO and AFFO decreased by $759 and $831, respectively when compared to the same period in 2024 primarily due to the Primary Variance Driver, reduction in occupancy for the REIT's held for sale properties and increase in interest costs, partially offset by normalized Same Property NOI growth outlined above.

Q1-2025 FFO and AFFO basic and diluted per Unit remained consistent at $0.56 and $0.57, respectively, compared to the same period in 2024, driven by reasons noted above for FFO and AFFO, being offset by a reduction in the number of Units as a result of the REIT's NCIB program.

On March 18, 2025, the REIT announced the Distribution Reinstatement to Unitholders, which commenced with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per Unit per month. Assuming distributions were paid for each month during Q1-2025, the AFFO payout ratio would have been approximately 30%.

Same Property NOI

Occupancy^(1)		As at March 31			Same Property NOI^(1)
		2025	2024				Q1-2025	Q1-2024	Variance	Variance %
Alberta		87.6 %	93.1 %		Alberta		$          2,881	$          3,186	$          (305)	(9.6) %
British Columbia		74.8 %	100.0 %		British Columbia		587	797	(210)	(26.3) %
New Brunswick		89.8 %	86.7 %		New Brunswick		1,292	1,261	31	2.5 %
Nova Scotia		89.1 %	81.0 %		Nova Scotia		1,329	1,100	229	20.8 %
Ontario		94.5 %	95.7 %		Ontario		13,597	12,391	1,206	9.7 %
Total		92.1 %	93.1 %				$       19,686	$        18,735	$             951	5.1 %
^(1)Excluding assets held for sale.

Q1-2025 Same Property NOI excluding assets held for sale increased by approximately 5% compared to the same period in 2024. Same Property NOI included termination income of approximately $1,327 (Q1-2024 - $nil) and free rent credits of $186 (Q1-2024 - $72).

Q1-2025 Alberta Same Property NOI decreased by 10% primarily attributable to the downsizing of a tenant in the Calgary portfolio. Q1-2025 British Columbia Same Property NOI decreased by 26% primarily as a result of an expiring lease not renewed at the beginning of 2025. Occupancy and Same Property NOI on the remaining properties in British Columbia remained consistent.

Q1-2025 New Brunswick Same Property NOI increased by 3% compared to Q1-2024 due to a new lease with a government tenant that started in February 2025. Q1-2025 Nova Scotia Same Property NOI increased by 21% as a result of the increase in occupancy between the two periods driven by strong leasing activity.

Q1-2025 Ontario Same Property NOI increased by 10% relative to Q1-2024 primarily due to termination income received from a tenant in the GTA Ontario portfolio. Q1-2025 Ontario Same Property NOI excluding the impact of termination income and free rent would have been relatively consistent with the same period in the prior year.

Debt and liquidity

		March 31, 2025	December 31, 2024
Indebtedness to GBV ratio^(1)		61.7 %	61.8 %
Interest coverage ratio^(1)		2.19  x	2.21  x
Indebtedness^(1) - weighted average fixed interest rate		4.23 %	3.94 %
Indebtedness - weighted average term to maturity		2.58 years	2.16 years
^(1)This is a non-IFRS financial measure, refer to "Non-IFRS measures".

At the end of Q1-2025, the REIT had access to available funds ("Available Funds")⁽¹⁾ of approximately $56,612, and a weighted average term to maturity of 2.58 years in its mortgage portfolio with a weighted average fixed interest rate of 4.23%. Subsequent to March 31, 2025, the REIT successfully completed refinancing of certain first mortgages totaling approximately $75,900 at an average interest rate of 4.68%.

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¹ This is a non-IFRS financial measure, refer to "Non-IFRS measures".

About the REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT currently owns and operates a portfolio of 40 commercial properties consisting of approximately 4.6 million square feet in urban and select strategic secondary markets across Canada focusing on long term leases with government and credit rated tenants.

The REIT is focused on growing its portfolio principally through acquisitions across Canada and such other jurisdictions where opportunities exist. Additional information concerning the REIT is available at www.sedarplus.ca or the REIT's website at www.truenorthreit.com.

Non-IFRS measures

Certain terms used in this press release such as FFO, AFFO, FFO and AFFO payout ratios, NOI, Same Property NOI, indebtedness ("Indebtedness"), gross book value ("GBV"), Indebtedness to GBV ratio, net earnings before interest, tax, depreciation and amortization and fair value gain (loss) on financial instruments and investment properties ("Adjusted EBITDA"), interest coverage ratio, net asset value ("NAV") per Unit, Available Funds, occupancy and WALT are not measures defined by IFRS Accounting Standards ("IFRS") as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and should not be compared to or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. FFO, AFFO, FFO and AFFO payout ratios, NOI, Same Property NOI, Indebtedness, GBV, Indebtedness to GBV ratio, Adjusted EBITDA, interest coverage ratio, adjusted cash provided by operating activities, NAV per Unit, Available Funds, occupancy and WALT as computed by the REIT may not be comparable to similar measures presented by other issuers. The REIT uses these measures to better assess the REIT's underlying performance and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for Q1-2025 and the Annual Information Form are available on the REIT's profile at www.sedarplus.ca.

Reconciliation of non-IFRS financial measures

The following tables reconcile the non-IFRS financial measures to the comparable IFRS measures for Q1-2025 and Q1-2024. These non-IFRS financial measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other issuers.

NOI

The following table calculates the REIT's NOI, a non-IFRS financial measure:

		Q1-2025	Q1-2024
Revenue		$                  31,086	$                 32,464
Expenses:
Property operating		(11,488)	(10,802)
Realty taxes		(4,933)	(5,076)
NOI		14,665	16,586

Same Property NOI

Same Property NOI is measured as the NOI for the properties owned and operated by the REIT for the current and comparative period. The following table reconciles the REIT's Same Property NOI to NOI:

		Q1-2025	Q1-2024
Number of properties		40	40
Revenue		$                  31,086	$                 30,878
Expenses:
Property operating		(11,488)	(10,309)
Realty taxes		(4,933)	(4,892)
		$                  14,665	$                  15,677
Add:
Amortization of leasing costs and tenant inducements		3,510	2,425
Straight-line rent		825	951
Same Property NOI		$                 19,000	$                  19,053
Less: NOI related to properties held for sale included in the above		(686)	318
Same Property NOI excluding investment properties held for sale		$                  19,686	$                  18,735
Reconciliation to condensed consolidated interim financial statements:
Acquisition, dispositions and investment properties held for sale		(707)	1,107
Amortization of leasing costs and tenant inducements		(3,489)	(2,408)
Straight-line rent		(825)	(848)
NOI		$                  14,665	$                  16,586

FFO and AFFO

The following table reconciles the REIT's FFO and AFFO to net income and comprehensive income, for Q1-2025 and Q1-2024:

		Q1-2025	Q1-2024
Net income and comprehensive income		$                   563	$                 5,138
Add (deduct):
Fair value adjustment of Unit-based compensation		(66)	(46)
Fair value adjustment of investment properties and investment properties held for sale		3,832	1,898
Fair value adjustment of Class B LP Units		(306)	(337)
Distributions on Class B LP Units		24	—
Unrealized loss (gain) on change in fair value of derivative instruments		525	(253)
Amortization of leasing costs and tenant inducements		3,510	2,441
FFO		$                8,082	$                 8,841
Add (deduct):
Unit-based compensation expense		122	81
Amortization of financing costs		330	363
Amortization of mortgage discounts		(3)	(8)
Instalment note receipts		11	12
Straight-line rent		826	966
Capital reserve		(1,139)	(1,195)
AFFO		$                8,229	$                9,060
FFO per Unit:
Basic		$                  0.56	$                  0.56
Diluted		0.56	0.56
AFFO per Unit:
Basic		$                  0.57	$                  0.57
Diluted		0.57	0.57
AFFO payout ratio:
Basic		10 %	— %
Diluted		10 %	— %
Distributions declared		$                   828	$                       —
Weighted average Units outstanding (000s):
Basic		14,458	15,861
Add:
Unit options and incentive Units		78	10
Diluted		14,536	15,871

Indebtedness to GBV ratio

The table below calculates the REIT's Indebtedness to GBV ratio as at March 31, 2025 and December 31, 2024. The Indebtedness to GBV ratio is calculated by dividing the Indebtedness by GBV:

		March 31, 2025	December 31, 2024
Total assets		$         1,236,573	$          1,240,231
Deferred financing costs		6,243	6,308
GBV^(1)		$          1,242,816	$         1,246,539
Mortgage payable		$            735,642	$            737,574
Credit facility ("Credit Facility")		28,570	30,170
Unamortized financing costs and mark to market mortgage adjustments		2,289	2,264
Indebtedness		$            766,501	$           770,008
Indebtedness to GBV ratio		61.7 %	61.8 %
^(1) This is a non-IFRS financial measure, refer to "Non-IFRS measures".

Adjusted EBITDA

The table below reconciles the REIT's Adjusted EBITDA to net loss and comprehensive loss for the twelve months period ended March 31, 2025 and 2024:

		Twelve months ended March 31
		2025	2024
Net loss and comprehensive loss		$               (25,528)	$                (42,478)
Add (deduct):
Interest expense		31,619	33,237
Fair value adjustment of Unit-based compensation		177	(318)
Transaction costs on sale of investment properties		1,969	1,132
Fair value adjustment of investment properties and investment properties held for sale		45,142	75,631
Fair value adjustment of Class B LP Units		245	(4,611)
Distributions on Class B LP Units		24	426
Unrealized loss on change in fair value of derivative instruments		2,886	63
Amortization of leasing costs, tenant inducements, mortgage premium and financing costs		12,704	11,014
Adjusted EBITDA^(1)		$                 69,238	$                 74,096
^(1) This is a non-IFRS financial measure, refer to "Non-IFRS measures".

Interest coverage ratio

The table below calculates the REIT's interest coverage ratio for the twelve months period ended March 31, 2025 and 2024. The interest coverage ratio is calculated by dividing Adjusted EBITDA by interest expense.

		Twelve months ended March 31
		2025	2024
Adjusted EBITDA		$               69,238	$               74,096
Interest expense		31,619	33,237
Interest coverage ratio		2.19 x	2.23  x

Available Funds

The table below calculates the REIT's Available Funds as at March 31, 2025 and December 31, 2024:

		March 31, 2025	December 31, 2024
Cash		$                   10,182	$                   12,331
Undrawn Credit Facility		46,430	44,830
Available Funds		$                  56,612	$                   57,161

Forward-looking statements

Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are provided for the purposes of assisting the reader in understanding the REIT's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, performance, debt financing, achievements, events, prospects or opportunities for the REIT or the real estate industry and may include statements regarding the financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes, distributions, plans, the benefits and renewal of the NCIB, or through other capital programs, the impact of the consolidation (the "Unit Consolidation") and objectives of or involving the REIT. In some cases, forward-looking information can be identified by such terms as "may", "might", "will", "could", "should", "would", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", or the negative thereof or other similar expressions suggesting future outcomes or events.

Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the REIT's control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: risks and uncertainties related to the Units and trading value of the Units; risks related to the REIT and its business; fluctuating interest rates and general economic conditions, including potential higher levels of inflation; the impact of any tariffs and retaliatory tariffs on the economy, credit, market, operational and liquidity risks generally; occupancy levels and defaults, including the failure to fulfill contractual obligations by tenants; lease renewals and rental increases; the ability to re-lease and secure new tenants for vacant space; the timing and ability of the REIT to acquire or sell certain properties; work-from-home flexibility initiatives on the business, operations and financial condition of the REIT and its tenants, as well as on consumer behavior and the economy in general; the ability to enforce leases, perform capital expenditure work, increase rents, raise capital through the issuance of Units or other securities of the REIT; the benefits of the NCIB, or through other capital programs; the impact of the Unit Consolidation; the ability of the REIT to continue to pay distributions in future periods; and obtain mortgage financing on the REIT's properties and for potential acquisitions or to refinance debt at maturity on similar terms. The foregoing is not an exhaustive list of factors that may affect the REIT's forward-looking statements. Other risks and uncertainties not presently known to the REIT could also cause actual results or events to differ materially from those expressed in its forward-looking statements. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements.

Information contained in forward-looking statements is based upon certain material assumptions applied in drawing a conclusion or making a forecast or projection, including management's perception of historical trends, current conditions and expected future developments, as well as other considerations believed to be appropriate in the circumstances. There can be no assurance regarding: (a) work-from-home initiatives on the REIT's business, operations and performance, including the performance of its Units; (b) the REIT's ability to mitigate any impacts related to fluctuating interest rates, potential higher levels of inflation; the impact of any current or future tariffs and the shift to hybrid working; (c) the factors, risks and uncertainties expressed above in regards to the hybrid work environment on the commercial real estate industry and property occupancy levels; (d) credit, market, operational, and liquidity risks generally; (e) the availability of investment opportunities for growth in Canada and the timing and ability of the REIT to acquire or sell certain properties; (f) repurchasing Units under the NCIB; (g) Starlight Group Property Holdings Inc., or any of its affiliates, continuing as asset manager of the REIT in accordance with its current asset management agreement; (h) the benefits of the NCIB, or through other capital programs; (i) the impact of the Unit Consolidation; (j) the availability of debt financing for potential acquisitions or refinancing loans at maturity on similar terms; (k) the ability of the REIT to continue to pay distributions in future periods; and (l) other risks inherent to the REIT's business and/or factors beyond its control which could have a material adverse effect on the REIT.

The forward-looking statements made relate only to events or information as of the date on which the statements are made. Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

SOURCE True North Commercial Real Estate Investment Trust

For further information: Daniel Drimmer, Chief Executive Officer, [phone] or Martin Liddell, Chief Financial Officer, [phone]