CT REIT Secures $300M in Debt to Fortify Balance Sheet Amid Rate Hikes

TORONTO, ON – May 22, 2026 – CT Real Estate Investment Trust (TSX: CRT.UN) has successfully arranged a $300 million private placement of senior unsecured debentures, a strategic financial maneuver aimed at refinancing maturing debt and strengthening its capital position in a challenging interest rate environment. The move underscores the company's proactive approach to balance sheet management and highlights continued investor confidence in its stable, retail-focused portfolio.

The new Series K Debentures, announced on May 21, will carry a coupon of 4.357% and mature in 5.5 years. This offering, led by RBC Capital Markets and CIBC Capital Markets, is expected to close around May 28, 2026. The proceeds are earmarked for significant debt restructuring, demonstrating a forward-thinking strategy as the real estate sector adapts to a new economic reality.

A Proactive Stance on Capital Management

The primary driver for this new debt issuance is the impending maturity of CT REIT's $200 million Series D Senior Unsecured Debentures on June 1, 2026. Those debentures, issued a decade ago in a vastly different economic climate, carried a coupon of just 3.289%. By refinancing this debt with the new 4.357% Series K Debentures, the REIT is locking in its financing costs for the next half-decade, albeit at a higher rate reflective of the current market.

This increase of over 100 basis points in borrowing cost is a clear indicator of the broader macroeconomic shift. However, by acting now, CT REIT avoids the uncertainty of refinancing at a potentially even less favorable time. This proactive management of its debt maturity ladder is a hallmark of fiscally prudent entities within the capital-intensive real estate sector.

Furthermore, the offering raises $100 million in new capital beyond what is needed for the Series D repayment. According to the trust, these additional funds will be used to pay down amounts on its existing credit facilities and for general business purposes. This not only improves the REIT's immediate liquidity but also provides a cushion for future operational needs or strategic initiatives, enhancing its overall financial flexibility.

Underpinning Stability with Investor Confidence

The successful placement of a $300 million offering is a testament to the market's continued faith in CT REIT's business model and financial stability. The offering is expected to receive an investment-grade credit rating of 'BBB' with a stable trend from Morningstar DBRS. For debt investors, a 'BBB' rating signifies adequate credit quality and a manageable risk profile. The 'stable' trend indicates that the rating agency does not anticipate a negative change in the REIT's creditworthiness in the near term.

This confidence is built upon a foundation of strong operational performance and a unique, symbiotic relationship with its primary tenant, Canadian Tire Corporation, Limited (CTC). As of the first quarter of 2026, CTC occupied 92.1% of CT REIT's total gross leasable area and accounted for 90.9% of its annualized base minimum rent. This deep integration, coupled with CTC's own 'BBB' credit rating, provides an unparalleled level of income security and predictability for the REIT.

Recent financial results further bolster this narrative. In its Q1 2026 report, CT REIT posted a 4.7% increase in Net Operating Income (NOI) and a robust occupancy rate of 99.4% across its portfolio of over 375 properties. Its interest coverage ratio stood at a healthy 3.52 times, indicating it generates more than enough income to service its existing debt obligations, a key metric for creditors.

Navigating the Broader Real Estate Climate

CT REIT's financing activities do not occur in a vacuum. They serve as a barometer for the wider Canadian real estate investment trust sector, which is collectively navigating the crosswinds of persistent inflation and higher borrowing costs. The 5-year Government of Canada bond yield, a key benchmark for fixed-rate debt, has been hovering around 3.2%. The approximate 115-basis-point spread on CT REIT's new debentures is a reflection of the credit risk premium that even stable, investment-grade corporations must pay in today's market.

For years, REITs benefited from a prolonged period of historically low interest rates, allowing for cheap financing and aggressive expansion. That era has decisively ended. Now, the focus has shifted from growth-at-all-costs to disciplined capital allocation and defensive balance sheet management. REITs across the country are scrutinizing their debt maturity profiles and, like CT REIT, are increasingly opting to refinance well in advance of deadlines to mitigate risk.

This environment favors established players like CT REIT, which have strong tenant relationships, high-quality assets, and proven access to capital markets. The ability to successfully issue new debt, even at a higher cost, is a competitive advantage that separates the sector's leaders from more vulnerable entities. The transaction reinforces the idea that while the cost of capital has risen for everyone, investor appetite remains strong for well-managed companies with durable cash flows and a clear strategic vision. The move effectively trades a higher interest expense for greater certainty and stability, a prudent exchange in the current economic landscape.