Nova Scotia-based Crombie REIT (CRR-UN-T) announced it has acquired a portfolio of 13 necessity-based retail properties in Ontario, totalling 588,000 square feet, for $134 million, excluding closing and transaction costs.

Crombie made the announcement in its Q3 financial report, released Wednesday evening, noting the deal occurred subsequent to the end of the quarter. 

The company entered into a binding agreement on Oct. 13 for the properties - nine of which are anchored by Sobeys, two by Walmart Supercentres and two by Shoppers Drug Mart.

"This portfolio is a mix of regional markets, major markets and VECTOM, with an implied cap rate falling between our MD&A disclosed cap rates of major and regional markets," president and CEO Mark Holly said on the company's conference call to discuss the Q3 results.

Crombie chief financial officer Kara Cameron said the transaction would be funded on closing through the REIT's unsecured revolving credit facility. 

The specific locations of the 13 properties were not divulged.

Other acquisition and disposition activity

In Q3, Crombie also acquired two land parcels in Windsor, N.S., totalling 10.8 acres, for $4.4 million, excluding closing and transaction costs.

The REIT also sold off two retail properties:

• Charlotte Mall - a 116,000-square-foot retail property in St. Stephen, N.B. for gross proceeds of $5.5 million.
• County Fair Mall - a 271,000-square-foot property in New Minas, N.S. for $5.5 million, of which $2.7 million was in the form of vendor take-back financing for three years. Crombie retained the grocery store at the mall on a long-lease basis. This transaction closed on Oct. 29, subsequent to the end of quarter.

"These dispositions reduce our exposure to lower-growth assets with higher vacancies at high-maintenance capex, and frees up capital to be redeployed into higher-quality properties," Holly said on the conference call.

"Every dollar we allocate has to answer the same question: Does it make this platform stronger and increase our long-term value per unit?" 

Leasing activity

In terms of leasing activity, committed occupancy rose by 20 basis points (to 97.7 per cent), but economic occupancy decreased by 40 basis points (to 96.8 per cent from 97.2 per cent in Q3 2025). 

Property revenue increased by 6.2 per cent over the same period, rising to $127,586,000.

Operating income attributable to unitholders, however, fell 8.7 per cent when compared to Q3 2025, while FFO increased three per cent to $0.34 from $0.33.

Crombie said the drop in operating income "was primarily due to impairment of investment properties, increased interest expense from the net issuance of senior unsecured notes in 2026, and a reduction in development management fees." 

New commercial leases increased occupancy by 121,000 square feet at Sept. 30, at an average first-year rate of $28.44 per square foot, the company said.

Renewal activity consisted of 107,000 square feet of retail renewals, reflecting a 13.9 per cent increase over expiring rental rates.

Commercial same-asset property cash NOI increased during Q3 by 2.7 per cent to $86.5 million from $84.3 million.

Development activity

Crombie reported no major development activity, which it categorizes as projects over $50 million, following the completion of The Marlstone, a 19-storey, mixed-use, purpose-built residential rental development in Halifax.

The Marlstone was developed in a 50/50 joint venture partnership with Montez Corp., with construction completing in Q2. Holly said that as of Sept. 30, 40 per cent of the units are now committed, up from 22 per cent at the close of Q2.

Non-major development on projects under $50 million is a growth and optimization focus for the REIT. Holly said non-major development investments are shorter duration projects with a targeted yield on cost in the six to eight per cent range.

The non-major construction pipeline rose to 120,000 square feet, up from 30,000 at the end of Q2, with four new projects starting in Q3. It included two grocery-anchored greenfield projects: one in Windsor, N.S., and Phase One in Martensville, Sask., where construction began on roughly 48,000 sq. ft.

"As necessity-based retailers continue to expand, existing retail space alone cannot accommodate their growth, creating opportunities for us to support that expansion through new development," Holly said on the conference call.

About Crombie REIT

Crombie REIT is an owner, operator and developer of commercial and residential real estate assets. Its portfolio primarily includes grocery-anchored retail, retail-related industrial, and mixed-use residential properties. The REIT has a longstanding relationship with Empire Company, the Canadian owner and operator of Sobeys and other grocery and retail banners, whose stores anchor many of its retail properties.