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BTB Real Estate capitalizing on Quebec real estate market

Q&A with Michel Leonard, CEO, president and founder of BTB Real Estate Investment Trust.

Michel Leonard, CEO, president and founder
BTB Real Estate Investment Trust
Ticker: BTB.UN
Ranking: #2 in Diversified Industries
Market Capitalization, Dec. 31, 2011: $65 million

Tell us a bit about your business.

We own roughly 3.3 million square feet of commercial, industrial and retail real estate properties. Most of that is in Quebec — a third is in Quebec City — and in Ontario we have about 500,000 square feet.


When did the company start and when did you list on the venture exchange?

We started in October of 2006 and went to the market the same month. We made our first acquisition, with the money we raised, in February 2007. Then we suffered through the downturn. We didn’t buy anything during the recession. We waited to get more property until the recovery in 2010.

Why did you start the business?

While there are a lot of REITs in Canada, there weren’t many in Quebec. Today, there are only two, including ourselves. So there was an investment possibility. But there was also what I call a “Quebec discount”. Investors still seem to be troubled by what happened in Quebec in the 1970s, the PQ taking over and referendums, so there’s not a lot of investing in that province. So I was able to pay less for properties than what the rest of Canada would pay for in other locations.

How did you — and do you — raise money from investors?

I explain what I just said — that there is an opportunity to make money in Quebec. We initially raised about $23 million dollars. I also add that our leverage is roughly 55%, which means some properties have much less of a mortgage to loan value than others.

What did you do last year that investors should know?

We raised a lot of money during 2011 — about $46 million by way of debentures and $21 million by way of new units. That allowed us to do a few things. In 2010 we had a line of acquisition of $22.8 million, which we used to buy properties. We paid that off. We also invested about $48 million in new buildings.

Our occupancy rate also went up from 90% in 2010 to 91% in 2011, which is significant when you have more than 3 million of square feet. As well, revenues went up by 20% and the total value of our assets rose by 23%.

What does the future hold?

We still want to grow. Our total asset value is roughly $360 million now and we want to grow these assets to $500 million. That means a lot of acquisitions and we feel that we can materialize this. It’s just concentrating on making purchases and in order to purchase, we have to get funding in the public markets again. So, during course of the year, we may be back to raise money.