CT Real Estate Investment Trust - Price Target Update
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CT REIT (CRT.UN-TSX) was established in Oct-2013 to acquire ownership of retail shopping centre properties previously owned directly by Canadian Tire Corp.(CTC-TSX). CTC has been in business for over 90 years. Canadian Tire offers a range of products and services to Canadians through a portfolio of the leading retail banners in Canada including Canadian Tire, Mark's, Sport Chek, and Sports Experts. Canadian Tire (CTR) is CT REIT's largest tenant occupying 93.7% of leasable area and providing 93.8% of annualized base minimum rent. The Canadian Tire store leases contain contractual annual rent escalations of approximately 1.5% per year, on average, over the initial term of the leases and have an average remaining lease term of 12 years at an average base rent of $13.31 per sq. ft.
The initial portfolio was valued at $3.6B comprised of 258 properties with 19M sq. ft. of leasable area, three distributions centres, and six development properties compared to 315 retail properties, four distribution centres, one mixed-use property and five properties under development comprising 25.2M sq. ft. at Sept-30-2016. This includes a one-third interest in Canada Square, a mixed-use commercial property in Toronto, ON. A total of 1,196 stores are operated under various CTC Banners.
By leasable area 42% of properties are located in Ontario, Quebec- 25%, western Canada- 25% and Atlantic Canada-8%. In total approximately 50% of properties are located in one of six major Canadian urban centres. The properties are located in each of the provinces and in two territories across Canada; eight buildings are situated on leased land. Assuming all extension periods are exercised, the land leases have terms between 27 and 52 years with an average remaining lease term of 38 years.
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