I'm sorry. Is that your booking time? All right. Let me locate that for you real quick. Just a second. All right. May I have your first name and last name, please? And Mr. Anderson, what is the name of your company? All right. Are you joining as one of the participants or one of the presenters? All right. I will be placing you now. Bear with me. Thank you.
2025. All lines have been placed on mute to prevent any background noise. Should you wish to follow the presentation in greater detail, management has made a presentation available on BTB's website at www.btbreit.com/investors/presentations/quarterly-meeting-presentations. After the speaker's remarks, there will be a question and answer period reserved exclusively for analysts. If you would like to ask a question during this time, simply press star followed by the number one on your keypad. Before turning the meeting over to management, please be advised that some of the statements that may be made during this call may be forward-looking in nature. Such statements involve numerous factors and assumptions and are subject to inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections, and other forward-looking statements will not be achieved.
Several important factors could cause BTB Real Estate Investment Trust's actual results to differ materially from the expectations expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors that could influence actual results are described in BTB Real Estate Investment Trust's management discussion and analysis and in its annual information form, which will file on SEDAR and on BTB's website at www.btbreit.com/investor-reports. I would like to remind everyone that this conference call is being recorded. Thank you. I will now turn the conference over to Mr. Michel Léonard, President and Chief Executive Officer, accompanied today by Mr. Marc-André Lefevbre, Vice President and Chief Financial Officer, Bruno Meunier, Vice President of Operations, Ms. Stephanie Léonard, Senior Director of Leasing, and Mr. Charles Dorais Bédard, Senior Director of Finance. Monsieur Léonard, you may begin.
Thank you, Sylvie, and welcome all to our conference call this morning for the results, as Sylvie mentioned, of the Q1 2025. We're sitting on 6.1 million sq ft of real estate divided amongst 75 properties for a total asset value of CAD 1.3 billion. The investment activity was quiet during the first quarter as a result of the dispositions that are ongoing. During the first quarter, we have put on the market three properties located in Saint-Jean-sur-Richelieu, as we had previously disclosed during our Q4 conference call, namely 145 Saint-Joseph Boulevard, 325 McDonald Street, and 1000 du Séminaire Nord. We retained the services of the brokerage division of National Bank in order to sell these three buildings. Regarding our densification efforts, while we are still active in zoning change to create the added residential aspect in order to densify three properties under review.
Our real estate portfolio is divided amongst industrial properties at 37%, suburban office at 41%, and necessity-based retail at 22%. As far as our geographical diversification, it has not changed. Montreal still represents 53% of our assets, 21% for Quebec City, 2% in Trois-Rivières, 13% in Ottawa, 4% in Saskatoon, and 7% in Edmonton. Regarding our key metrics for the first quarter, again, the total fair value of our investment properties at CAD 1.2 billion, the renewal activity and new leases activity at 138,000 sq ft, and our occupancy rate at 92.5%. The other event for the quarter is that we issued Series I convertible debenture bearing a coupon at 7.25% for total proceeds of CAD 40.25 million. It was concluded on February 28, 2030. We are pleased to note that this issue was oversubscribed.
First amongst that, we then suspended the distribution reinvestment plan in order to control the number of outstanding units and stop dilution. Then, out of the proceeds of the raise of the Series I convertible debenture, we fully redeemed and paid prior to maturity the Series H debentures for a total value of CAD 19.9 million. Also, during the Q1, Winners took possession of our first ground-up development of the property in Lévis, Quebec, and they started operation in February in that store. Regarding our leasing activity, I now turn the presentation to Stephanie, who is going to take you through the main leasing and renewal activity that took place during the quarter.
All right. Good morning, everyone. For those of you that are following us online, if you are, we are currently at page eight of our slide deck. For our new leasing activity, our total activity for the quarter, the combination of new leases and lease renewals, totals 138,000 sq ft. During the fourth quarter, sorry, during the first quarter, we leased a total of 68,726 sq ft to new tenants, bringing our committed occupancy rate to 92.5%, as Michel noted. It is to note that a 20 basis point decrease, we recorded a 20 basis point decrease since the previous quarter, or a 200 basis point decrease since Q1 2024, so our comparable quarter, which is primarily due to the announced tenant bankruptcy in our industrial segment, which we discussed in our Q4 reporting.
Our in-place occupancy rate at the end of the first quarter stood at 91.7%. The difference between our in-place and our committed occupancy rate is mainly due to the timing of new office and retail transactions and the respective pre-occupancy periods. The tenants will be recorded in place as of Q2 and Q4 of this year for 2025, and with similar timing for the respective revenue. In terms of the new leases that were signed during the quarter, you could actually look at pages 10 and page 10 of our slide deck for more color in terms of which properties they're located in. We secured a long-term tenancy with the Government of Canada in our suburban office segment, representing a total transaction of 22,000 sq ft.
To note that 13,000 sq ft is a new transaction for an expansion into new premises and for a 15-year term, and a lease renewal for the current premises of 8,610 sq ft. For a total transaction of 22,000 sq ft for a 15-year term. We signed another 30,362 sq ft transaction with Value Village in our necessity-based retail segment in our property located in Saint-Jean-sur-Richelieu, Montérégie, and that's a 10-year lease with Value Village. During the first quarter, 46.4% of new leases were concluded in our suburban office segment. I think it does demonstrate that our assets are well-positioned, strategically positioned within our different markets. In terms of our renewal activities, you could look at page 11 of our slide deck as well to get additional color in terms of where the renewals are located.
During the first quarter, we renewed about 82,000 sq ft with clients whose leases came to maturity during the quarter. The most significant renewals during the first quarter were concluded with Dollarama for about 10,000 sq ft located in Dollard-des-Ormeaux in our Montreal portfolio, the Government of Canada, as I've just discussed, in Quebec City for their 15-year term for 8,610 sq ft, and Soplex Insurance Solutions in Quebec City as well, representing roughly 7,700 sq ft. Overall, we managed to achieve a 5.1% lease renewal spread across all business segments for the quarter. In terms of our occupancy rate, again, we're looking at page 9 of our slide deck. As previously mentioned, we closed the quarter with a 92.5% occupancy rate, a 200 basis point decrease in comparison to the same quarter.
In respect to our geographical occupancy rates, you'll notice that our committed occupancy rates for Quebec City, Trois-Rivières, and Ottawa all showed increases in respect to the same quarter of 2024. Specifically, our committed occupancy rate in Quebec City increased by 1.9% in Q1 2025, again, in respect to Q1 of 2024. Our committed occupancy rate in Trois-Rivières increased by 2.7%, and our committed occupancy rate for Ottawa increased by 0.5%. For our portfolio located in Western Canada, we remained at 100% occupancy for the first quarter, which is identical to the first quarter of 2024. On this note, I'd like to turn the presentation over to Marc-André for our financial review.
Thank you, Stephanie. Good morning, everyone. I will now go over our financial highlights section, which starts on page 13 of our presentation. The financial results for the first quarter of 2025 once again reflect the strength of our leasing and operational efforts, as well as our financial prudence, resulting in an improved liquidity profile. For the three months ended March 31st, 2025, rental revenues stood at CAD 34.4 million, which is a strong increase of 5.4% compared to the same quarter last year. Net operating income totaled CAD 19.8 million for Q1 2025, and this is an increase of 8% compared to the same quarter last year. The increase in NOI is related to several factors, namely a cancellation payment of CAD 1 million from a tenant in the suburban office segment. Note that this space has already been leased by BTB. Second, operating improvements.
Third, higher rent achieved in lease renewals. Lastly, organic increases in rent for in-place leases. Looking at same property NOI, it increased by 7.3% for the quarter compared to the same period last year. FFO adjusted per unit was CAD $0.111 for the quarter, an increase of 8.8% from the same period last year. The increase is mainly explained by the increase in NOI that I just explained, a decrease in administrative expenses, and an increase in net financial expenses before fair value adjustments. FFO adjusted per unit was negatively impacted by an increase in the weighted average number of units outstanding of 1.3 million units compared to the same period last year. As Michel mentioned, on February 25, BTB suspended its distribution reinvestment plan.
We maintain our distribution to unitholders at CAD 0.075 per unit for the quarter, which represents an annualized distribution of CAD 0.30 per unit. The AFFO adjusted payout ratio was 72.7% for Q1 2025, an improvement from 83.9% for the same period last year. The lower payout was mainly attributable to the increase in NOI. The value of our investment properties remained virtually unchanged at CAD 1.2 billion at the end of the first quarter. Note that we did not make any portfolio-wide changes to our cap rates this quarter and that the weighted average cap rate for the entire portfolio stood at 6.7%, which is the exact same as year-end 2024. We concluded the quarter with a total debt ratio of 57.7%. The weighted average term and interest rates on our mortgage portfolio is 2.6 years and 4.35%, respectively.
In January 2025, we increased our liquidity position through the issuance of a CAD 40 million convertible debenture, Series I. The coupon on that debenture was 7.25%, and term was five years. As Michel previously outlined, the net proceeds from this offering were used to repay the outstanding convertible debenture, Series H, for CAD 20 million, and the balance of the funds were used to repay a portion of the outstanding amount on our credit facilities. Finally, at the end of the year, we held CAD 5.5 million in cash, and CAD 25.2 million was available under our credit facilities for a total liquidity amount of almost CAD 31 million. This is a significant improvement versus the CAD 13 million of liquidity we had at year-end. I will now turn the presentation over to Bruno Meunier, our Vice President of Operations, to discuss our ESG achievements and initiatives.
Thank you, Marc-André. Hello, everyone. We'll go through our ESG islands. Despite the fact that there seems to be a global lack of interest in ESG factors within many large companies, at BTB, we believe it's important to continue what we started. Continue to follow our roadmap while prioritizing what has value to our buildings. For example, 60% of our suburban office and necessity-based retail buildings have environmental certification, either BOMA BEST or LEED. This is also a requirement from our tenants and attracts several other high-quality tenants. We plan to certify the remaining of our suburban office and necessity-based retail before the end of the year. We also expect to obtain our GRESB assessment this year. For those who are not familiar with GRESB, that means Global Real Estate Sustainability Benchmark. To achieve this, we have successfully compiled the energy consumption data for 98% of our buildings.
This will allow us to analyze the energy performance of our buildings in order to clearly define the energy savings project to prioritize. If we reduce our energy costs related to the additional rent, we can increase our base rent and give more value to our properties. Also, with our energy data analysis, we will be able to plan our decarbonization strategy for the coming years. In addition to all that, we have 14 BIs installed on the roofs of our buildings. We plan to install six more by the end of 2025. We also continue to survey our staff and customers annually. We see an improvement in the satisfaction levels of our employees and customers year after year. Finally, we continue to donate to several charities and to volunteer work. For instance, two weeks ago, we made sandwiches to feed the homeless in the Montreal area.
This completes our presentation, and we will now open the call for questions. Sylvie, can we please have the first question online?
Thank you. This is a conferencing operator. At this time, I would like to remind everyone that analysts may now ask their questions by pressing Star followed by the number one on your telephone keypad. Again, if you would like to ask a question, please press Star and then number one. We will now pause briefly to compile the Q&A roster. Your first question will be from Matt Kornack at National Bank Financial. Please go ahead.
Good morning, guys. Just wanted to quickly touch on the economic environment that we're currently sitting in. If you could give us a sense by asset class if you're seeing any impact, at least from a tenant standpoint, in terms of timelines or actual leasing decisions at this point relative to trade and the economy, etc.
Matt, it's very quiet on that front. As you see from the velocity of our lease renewals, it's quite strong. There doesn't seem to be a lot of noise regarding their ability to renew their leases pursuant to what we hear from the tariffs—you can call it a war, the tariff war—that exists between the United States and the world.
If I could add on as well, Matt, just in terms of the timing for transactions and the length to negotiate transactions, I think in terms of what we've noticed anyway since the economic situation, the tariffs, and all of that, there hasn't been that much impact in terms of timing of transactions. I'd say I don't want to use the next word that I'm going to use, but since COVID, transactions do take a little bit more time. More people are involved. However, we've seen that trend since COVID, not because of tariffs, and it hasn't heightened because of tariffs or anything like that. There is no halting in decision-making process. It's just the fact that since COVID, businesses have taken more steps into a shorter real estate strategy, if I could say that.
Sure. No, that makes sense. Maybe just in terms of what you're thinking from a capital allocation standpoint and your strategic plan, I know there was a shift towards industrial. You can get industrial assets now at the higher implied cap rate, so that's attractive. I think that sector is maybe taking a little bit of a hit in terms of perceived risk. Has that changed your capital allocation or strategic view on what this REIT should be going forward, or are you sticking with kind of that plan of moving more into industrial?
Our goal is to reach 60% industrial. We have never addressed the pure play aspect of BTB to the market. There is a good reason for BTB to go towards being 60% industrial. I think that is the use of capital because the office segment is really capital-intensive. As a result of it being intensive, contrary to, say, the industrial segment that is less capital, it is less capital-intensive, but you still have capital to deploy within this segment anyway. It seems to make sense to us in order to pursue it to 60%. Overall, up until now, we have not bet the bank on industrial. We know that the segment is a lot softer than it was. We know that it creates great buying opportunities.
Hence, the fact that, as I mentioned, we used your brokerage division in order to put three properties on the market in order to glean some capital in order to look at the industrial market. So far, I think that being diversified—and I'll know that this is not a label that people love—but being diversified, I think that it creates a certain certainty as far as the distribution is concerned, the safety of the distribution is concerned. It also creates for our investors because, obviously, our investors are not these large institutional groups that prefer to do their own diversification. As far as being an investment vehicle for the private investors, I think that the diversification could pan out very, very well for them anyway. We haven't bet the bank.
We're going in the direction of 60% industrial, and that's so far the decision that has been made, and we're continuing on that front. Obviously, the investment in industrial is going to be more analyzed, if I can use that word, in order to ensure the safety of the investment, as you sort of alluded to. For us, we're taking careful steps, and we're not just selling to sell. As I mentioned before, we're not selling at a discount, and we're not force selling. We're not into a force sale activity, and we want to take care of our NOI, and we want to take care of the payment of our distribution as well.
That makes sense. On the bankruptcy that you had in the industrial segment, I know that you had to do some cleanup of that property. Can you give us a sense of any activity that you've seen from prospective tenants? I know there were a few different options. Possibly it gets demised, maybe it doesn't. Any sense as to what's happening there?
Yeah. So we do have prospects for the space. What we're looking at right now is the potential of dividing the building between two prospects. There is an option in front of us. Still, many conditions to go to, many—I mean, hoops to jump through right now, but we have one option to do a full tenancy. So just one tenant within the property. But we also do have an option to do two tenants. In my opinion, I do believe that this property is better suited for a maximum of two tenants. I believe I discussed that, touched base on that during our Q4 call, just in terms of the positioning, the size, parking, and the different criteria for different tenants. I think that's what we're looking at, and what we're contemplating right now is between one to two tenants.
Okay. Thanks. Last one for me, just as we look out through the balance of the year from an in-place versus committed leasing standpoint, I think you mentioned that you're going to converge by Q4 to the 92.5% or so of committed from current in-place levels. Is there anything other—either new leasing on vacant space that would take it higher or potential non-renewals of large tenants that would potentially take your occupancy lower? Is your expectation kind of to converge at that 92.5%?
Our expectation is to converge. We're working our 2025 renewals. We have certain new leases coming down the pipeline as well. I think we're going to have some good things to report in future.
Looking forward to it. Thanks, guys.
Thank you. This is the conference operator again. If analysts would like to ask questions, please press Star and then number one on your telephone keypad. Next question will be from Sumayya Syed at CIBC. Please go ahead.
Thanks. Good morning. Just on the renewal activity in the quarter on the office side, you did have a government tenant renew and expand. I guess you had about overall 5% spreads on the office side. Would the typical government renewal be associated with an option, or would that just be renewed at market rates?
Are you asking if the tenant had an option to renew? Okay. Because the tenant, this was a brand new—it was a brand new transaction with a client. There was no pre-existing option, if that was your question.
Yeah. Okay. Just moving on to the debt side of things, it looks like you do have commitment letters for a portion of the debt that's coming due this year. Just wondering, what are your refinancing expectations for the remaining mortgages coming up this year?
Yeah. Hi, Sumayya. So look, I mean, for the remainder of the year, we do not expect any issues with our refinancing. When we look at Q2 2025, if you break it down by segment, we have about CAD 27 million to refinance, four properties. That is for the industrial segment. We anticipate a negative spread of 35 basis points. We have one retail property for about—call this—CAD 9.5 million. We think there will be a negative spread of 180 basis points. And that is because that property is the lowest existing rate of the entire portfolio at BTB. So we have a very, very favorable in-place interest rate. And then we have two office properties totaling CAD 6 million to be refinanced. The estimated spread will be—should be—stable for both properties. When we look to the second half of the year, we will have—call it—we will have—sorry, sorry.
The weighted average interest rate on the upcoming mortgages for the second half is 4.8%. The split per segment is CAD 42 million for office, CAD 8 million for industrial, and CAD 15 million for retail. We are expecting a negative spread of 30 basis points. That breaks it down to CAD 3.85.
That's good color. I think just to switch back to the leasing side of things. Stephanie mentioned some prospects for the Laval industrial asset. In terms of the rents that are being discussed or negotiated, is that still kind of holding true to where they would have been maybe two or four months ago?
I would say that they're holding based on what I had mentioned our Q4 call. I believe what I had mentioned was that we were expecting rates still in the double-digit figures in the mid to lower teen levels. Three to four months ago, let's say, maybe even a year ago, we were still in that industrial boom. Now industrial is coming back to normalized levels. I'm hopeful that we'll be leasing in the double-digit rent. However, it's not the crazy double-digit rent that we saw a couple of years ago since we're getting back to normal rates. I sustain the rates that I projected in Q4.
Okay. That's all from me. Thank you.
Thank you. At this time, it appears there are no further questions. Please go ahead, Mr. Léonard.
Thank you very much for joining us this morning. I think the points that have been noted which are important is that our lease renewals are still going strong. New leases, we have good velocity. Our rental revenue is up by 5.4%. Our NOI is up by 8%. Our same property NOI is up by 7.3%. Our AFFO payout ratio stands at 72.7%, and our FFO payout ratio at 67.4%. Overall, a great quarter for BTB, and we're looking forward to seeing you and speaking with you again for the results of the Q2. Thank you very much for joining us this morning.
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.