Crombie Real Estate Investment Trust (TSE:CRR.UN) reported higher third-quarter property revenue and funds from operations per unit, as rent increases and new leasing supported growth across its grocery-anchored portfolio.
The trust also agreed after quarter-end to acquire 13 fully occupied Ontario retail properties for CAD 134 million, excluding closing and transaction costs. The deal is expected to close in the fourth quarter and initially will be funded through Crombie’s unsecured revolving credit facility.
Third-quarter property revenue rose 6.2% year over year to CAD 127.6 million, while net property income increased 7.2% to CAD 85.2 million. Funds from operations (FFO) totaled CAD 63.9 million, or CAD 0.34 per unit, up 3% on a per-unit basis. Adjusted FFO was CAD 57.1 million, or CAD 0.30 per unit, unchanged per unit from a year earlier.
Renewal rates and occupancy rise
Crombie completed 107,000 square feet of lease renewals during the quarter at a first-year rent increase of 13.9% over expiring rates. President and CEO Mark Holly said that was the trust’s strongest renewal spread in more than five years and its eighth consecutive quarter of double-digit spreads.
Chief Financial Officer Kara Cameron said the increase was primarily driven by retail renewals. Comparing expiring rates with the weighted average rent over the full renewal term, the increase was 16.7%.
Committed occupancy matched a record high of 97.7%, while economic occupancy was 96.8%. Cameron attributed the improvement from the second quarter to new leasing and the sale of Charlotte Mall in New Brunswick. Commercial same-asset property cash net operating income rose 2.7% in the quarter and 3.2% year to date, supported by leasing and contractual rent increases.
Executive Vice President of Leasing, Operations, and Corporate Development Arie Bitton told analysts that nothing unusual had inflated the renewal spread. Many tenants had been locked into leases for more than 10 years, he said, and Crombie had benefited from supply-and-demand conditions as those rents came up for renewal.
Ontario acquisition and asset sales
The Ontario portfolio totals about 588,000 square feet. Nine properties are anchored by Sobeys, two by Walmart Supercentres and two by Shoppers Drug Mart, Holly said. He described the transaction as an off-market deal with a private seller that was not sourced through Empire, Sobeys’ parent company.
Bitton said the portfolio had a weighted average lease term of 4.6 years and relatively few fixed-rate renewals. Holly declined to provide an underwritten net operating income growth figure, but said the portfolio’s growth profile was higher than that of Crombie’s existing business. He cited potential rent increases and future store modernizations, as well as some opportunities to add space.
During the quarter, Crombie sold Charlotte Mall, a 116,000-square-foot retail property in St. Stephen, New Brunswick. After quarter-end, it sold County Fair Mall in New Minas, Nova Scotia, for CAD 5.5 million before costs, including CAD 2.7 million in vendor take-back financing over three years. Crombie retained the Empire grocery component through a long-term lease.
Holly said the sales reduced exposure to lower-growth properties with vacancies and maintenance capital needs. He told analysts there were not many more comparable assets in the portfolio, although Crombie continually reviews properties that do not contribute to its growth profile.
Development and balance sheet
Crombie invested CAD 6 million in its modernization program with Empire during the quarter, bringing the year-to-date total to CAD 23.1 million across 24 projects. It also completed a retail project at Faubourg Contrecœur, adding about 27,000 square feet at Crombie’s share.
The trust’s non-major development pipeline under construction grew to approximately 120,000 square feet from about 30,000 at the end of June. Holly said those shorter-duration projects target yields on cost of 6% to 8%. The pipeline includes grocery-anchored developments in Windsor, Nova Scotia, and Martensville, Saskatchewan.
At The Marlstone in Halifax, 40% of units were committed at September 30, up from 22% at the end of June. Bitton said the figure had subsequently reached roughly 42.5% and that the stabilization timeline had not changed.
Crombie ended the quarter with CAD 591.5 million in available liquidity and debt equal to 41.9% of gross fair value. Cameron said approximately CAD 280 million of mortgages bearing an average rate of about 3.36% mature in 2027, and the trust is actively assessing refinancing options.
About Crombie Real Estate Investment Trust (TSE:CRR.UN)
Crombie invests in real estate with a vision of enriching communities together by building spaces and value today that leave a positive impact on tomorrow. As one of the country’s leading owners, operators, and developers of quality real estate assets, Crombie’s portfolio primarily includes grocery-anchored retail, retail-related industrial, and mixed-use residential properties. As at September 30, 2025, our portfolio contained 306 properties comprising approximately 18.8 million square feet, inclusive of joint ventures at Crombie’s share, and a significant pipeline of future development projects.
