Our Tenants, Clients Above All Annual Report 2018 Michelle Laflamme President and CEO, EMOVI
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Our tenants, clients above all Annual Report 2018 Michelle Laflamme President and CEO, EMOVI (Cover photo) As a company operating in Located at the corner of the specialized medical field, Mozart Street and Saint-Laurent we have very specific needs Boulevard, the property was in terms of space and amenities. perfect for us. Every convenience When we spotted our current was within walking distance, office premises in the heart thus contributing to our of Montreal’s Mile-Ex employees’ quality of life, and neighbourhood, the BTB the surrounding area was home team immediately made it to a number of companies whose clear they intended to be businesses were complementary a partner for our solutions to our own. All of the adjustments rather than a simple landlord. and details that BTB arranged for us in short order confirmed Their attentive ear, their we were making the right choice. responsiveness in answering ou questions, their tremendous With BTB, we feel like clients in flexibility and their painstaking every sense of the word instead thoroughness convinced us of just tenants. It’s so refreshing! that we had found a long-term solution for making our business vision a reality. 3 We are redefining the real estate industry and implementing standards of excellence that ensure our clients are treated with the respect they deserve. BTB Annual Report 2018 Report Annual BTB 4 Our greatest pride is the steadfast dedication of each of our employees and partners to the well-being of our clients and their ability Properties to see them as 67 drivers of growth. BTB Annual Report 2018 Report Annual BTB 5 Highlights $87.4 M $855M Rental income Total assets 92.2% 5.4M Payout ratio on Number of square feet distributable income(1) 91.0% 55.8% Occupancy rate Mortgage debt ratio BTB Annual Report 2018 Report Annual BTB (1) Non-IFRS financial measures. See appropriate sections of the Management Discussion and Analysis for definition and reconciliation to the closest IFRS measure. 6 Highlights Evolution of rental Income* Evolution of net operating income* (in thousands of dollars) (in thousands of dollars) 2013 63,435 2013 35,336 2014 67,170 2014 37,983 2015 72,892 2015 41,294 2016 73,384 2016 41,339 2017 76,039 2017 40,394 2018 87,423 2018 47,637 Evolution of distributable income* Evolution of total leasable area* (in thousands of dollars) (in thousands of square feet) 2013 12,610 2013 4,580 2014 16,626 2014 4,822 2015 18,733 2015 5,095 2016 19,711 2016 5,144 2017 19,721 2017 5,435 2018 23,897 2018 5,432 st BTB Annual Report 2018 Report Annual BTB * For the years ending December 31 Relative Value 100 150 140 160 180 120 130 170 110 90 80 st markets the on Performance (per leasable area) Breakdown portfolio of geographical by region January 1 , 2014 17.6% Ottawa area 27.0% Quebec city Greater BTB’s Total Return Total BTB’s April 1st, 2014 st July 1 , 2014 st 3.7% area London October 1 , 2014 0.5 Sherbrooke % January 1st, 2015 S&P/TSX Index Return Total st April 1 , 2015 July 1st, 2015 51.1% area Montreal Greater October 1st, 2015 January 1st, 2016 April 1st, 2016 July 1st, 2016 (per leasable area) Breakdown asset by type 39.59% Office S&P/TSX Capped REIT Index Return Total October 1st, 2016 January 1st, 2017 st April 1 , 2017 27.67% Industrial July 1st, 2017 October 1st, 2017 24.58% Retail January 1st, 2018 2018 Report Annual BTB April 1st, 2018 st July 1 , 2018 8.16% Mixed-use October 1st, 2018 December 31, 2018 7 8 The true value of our assets is knowing that our tenants can find in them a work environment that responds to their needs in every respect. BTB Annual Report 2018 Report Annual BTB 9 Message from the Chairman of the Board of Trustees and from the President and Chief Executive Officer The true reward for our team is Our staff’s dedication to attracting In the coming year, we will continue knowing that our clients can find a and, more importantly, retaining clients to strive to maximize the value of work environment that corresponds by offering spaces that better suit our assets to meet the evolving needs to their needs in every respect, their requirements speaks volumes of clients to help drive our long-term both now and in the future. about the depth of our commitment. success and add value to our portfolio. Our employees’ contributions and The client-BTB relationship: our work environment led to BTB’s Growing our leasing operations our greatest asset recognition as a “Great Place to Work” in Canada in 2018. During the year, our leasing operations The best word to describe the past yielded positive results, with more year at BTB would be “client-centric.” than 546,000 square feet leased to Consolidating our assets Even though our core mission is to new clients and 455,000 square feet acquire, enhance and effectively Our “client first” perspective of lease renewals. We also succeeded manage office, commercial and has shaped our efforts to reposition in leasing out properties that had been industrial properties, the true value approximately 20% of our portfolio suffering from chronic vacancy. For of our business lies in the relationships by focusing on higher-quality example, the public transit company we cultivate with the clients who properties to cater to the changing EXO rented all of the vacant office occupy our buildings. needs of our clients. Accordingly, space in our property in Sainte- we disposed of 11 properties, for Thérèse, while Johns Manville Canada In today’s global economy, decisions a total of $48.9 million. Some of the (a Berkshire Hathaway company) about office, industrial and commercial properties we sold generated a return leased 68,000 square feet of industrial spaces are constantly being redefined on investment of more than 100%. space in Cornwall, thus filling a void and the way we work is changing left by an earlier-than-anticipated dramatically. In this context, we The sale of these assets allowed us tenant departure. believe it is critical to remain ahead to purchase six higher-quality properties of the curve in fulfilling the needs and with a stronger net operating income Moreover, although our financial expectations of our clients. No matter than that generated by the divested results were affected by the the size of the space they lease, it is up properties, for a total purchase price bankruptcy of Pharmetics, a major to us to prove that, with BTB, they have of $101.6 million. tenant, we managed to sign a long- found a business partner dedicated to term lease with Nuera Entreprises at supporting their growth and success. The following properties were the end of 2018 for the entire space For instance, we signed deals to acquired during the past year: formerly occupied by the relocate tenants in one of our properties • 1327-1333 Sainte-Catherine Street pharmaceutical manufacturer. to another property in our portfolio. West and 1405-1411 Crescent Street, We also concluded agreements Montreal, Quebec; We ended the year with a 91.0% with tenants in several of our buildings occupancy rate for our 5.4-million- • 625-730 De la Concorde Street, square-foot portfolio, which constitutes to meet their expansion needs. 2018 Report Annual BTB Lévis, Quebec, also known as an increase from the 89.3% occupancy Méga-Centre Rive-Sud; rate posted for the third quarter • 3111 and 3131 Saint-Martin Boulevard of 2018. For the first time in the past West, Laval, Quebec. five quarters, the same-property net operating income (SPNOI) of the portfolio rose by 6.9% in 2018. 10 A business strategy We would like to take this that is paying off opportunity to restate our appreciation for the passion and dedication that Board of Our strategy to acquire properties, every single member of our team has attract new tenants and retain clients shown in making BTB a “Great Place helped us obtain results that are Trustees to Work” and an environment where commensurate with our expectations effective management and growth as well as those of our unitholders. go hand in hand. We would also like Rental income was up from to highlight the dynamic ongoing $76.0 million in 2017 to $87.4 million efforts of our Board of Trustees. in 2018, while net operating income Their synergy is truly remarkable. was up more than $7 million, growing Although the results of 2018 from $40.4 million to $47.6 million. point to a positive long-term outlook, BTB’s net income for 2018 shot up we will persist in our efforts to from $28.2 million to $41.3 million, reposition our portfolio and strive generating an increase in distributable to attract and retain commercial income from $19.7 million to clients who are poised to embrace $23.9 million. the challenges of tomorrow. The total value of BTB’s assets As we are fond of saying, we are also trended upward during the year, committed to serving all of our clients, posting an increase of more than 12% one client at a time. (from $762 million to $855 million). In addition, strategic choices in terms of asset acquisitions and dispositions, paired with sound property management, allowed us to lower our debt ratio from 65.0% to 62.5%. For everyone at BTB, these results confirm that, when we join forces to reach out to and retain a more discerning and sophisticated client base, we can improve the quality of our portfolio and continue to make our mark in a fiercely competitive industry.