Crombie REIT (TSX:CRR) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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View the webcast at https://www.gowebcasting.com/events/crombie-real-estate-investment-trust/2026/11/05/q3-2026-conference-call/play
Summary
Crombie REIT reported strong Q3 results, with 3% growth in FFO per unit supported by a 2.7% increase in commercial same-asset property cash NOI.
The company completed significant strategic acquisitions, including a $134 million portfolio of 13 necessity-based retail properties in Ontario, enhancing its grocery-anchored platform.
Crombie REIT executed over 107,000 square feet of lease renewals with a first-year growth rate of 13.9%, maintaining a high committed occupancy rate of 97.7%.
The company continues to invest in modernization and greenfield projects, adding substantial square footage to its portfolio with a focus on necessity-based retail expansion.
Management expressed confidence in the strength of the balance sheet, with available liquidity of $591.5 million and a disciplined approach to capital allocation and debt management.
Full Transcript
OPERATOR
Good morning everyone and welcome to Crombie REIT’s third quarter conference call. At this time all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on November 5, 2026. I would now like to turn the conference over to Meghna Nair, Manager of Investor Relations at Crombie.
Please go ahead.
Meghna Nair (Manager of Investor Relations)
Good day everyone and welcome to Crombie REIT’s third quarter 2026 conference call and webcast. Thank you for joining us. This call is being recorded in live audio and it’s available on our website at www.crombie.ca. Slides to accompany today’s call are available on the Investors section of our website under Investor Resources, Presentations. Joining me on the call today are Mark Collie, President and Chief Executive Officer; Kara Cameron, Chief Financial Officer; and Ari Bhattan, Executive Vice President, Leasing Operations and Corporate Development.
Today’s discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management’s assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our management’s discussion and analysis and annual information form, for a discussion of these risk factors.
Our discussion will also include expected yield on cost for capital expenditures. Please refer to the Development section of our management’s discussion and analysis for additional information on assumptions and risks. I will now turn the call over to Mark, who will begin the discussion with comments on Crombie’s strategy and outlook. Kara will review Crombie’s operating and financial results and Mark will conclude with a few final remarks. Over to you, Mark.
Mark Collie (President and Chief Executive Officer)
Thank you, Meghna. Good morning everyone. In a dynamic economic environment, our grocery-anchored platform again delivered consistent and dependable results. Today I’m going to focus my comments on two value drivers within our strategy: Own and Operate, and Optimize. Starting with Own and Operate, this is where the operational excellence comes to life. In Q3, the team completed 107,000 square feet of lease renewals at a first-year growth rate of 13.9%, our strongest in more than five years and our eighth consecutive quarter of double-digit renewal spreads. Committed occupancy in the quarter matched our record high of 97.7%. Kara will walk through the leasing details in a moment, but the headline is another quarter of disciplined execution supporting commercial same-asset property cash NOI growth of 2.7% in the quarter and 3.2% year to date.
What drives the consistency is a portfolio built with purpose and our team’s focus on operational excellence. We operate one national platform across three market classes and in every one of them the proposition is consistently the necessity-based retail located at the heart of communities with a coast-to-coast presence serving the everyday needs of Canadian communities. That is what produces durable, dependable cash flow quarter after quarter. That cash flow came through again in the third quarter with FFO per unit growing 3% over the prior year.
Portfolio management is central to Own and Operate and we continue to selectively deploy capital into assets that strengthen our grocery-anchored platform and support long-term cash flow growth. During the quarter we completed the acquisition of two land parcels totaling 10.8 acres in Windsor, Nova Scotia for approximately $4.4 million and, subsequent to quarter end, we entered into a binding agreement to acquire a portfolio of 13 necessity-based retail properties in Ontario totaling approximately 588,000 square feet for $134 million.
Excluding closing and transaction costs, this portfolio is a mix of regional markets, major markets, and is expected to trade with an implied cap rate falling between our MD&A disclosed cap rates for major and regional markets. Nine of the properties are anchored by Sobeys, two by Walmart Supercenters, and two by Shoppers Drug Mart, all 100% leased and occupied. The transaction is anticipated to close in Q4. On the disposition side, in the quarter we sold Charlotte Mall, a 116,000 square foot retail property in St. Stephen, New Brunswick, and subsequent to the quarter we sold County Fair Mall, a 271,000 square foot retail property in New Minas, Nova Scotia, where we kept the Empire grocery store and its income on a long-term lease. These dispositions reduce our exposure to lower-growth assets with higher vacancies and high maintenance capex and free up capital to be redeployed into higher-quality properties. Every dollar we allocate has to answer the same question: does it make this platform stronger and increase our long-term value per unit?
Turning to Optimize, the objective and focus is simple: unlock embedded value within our existing portfolio. Every property we own has a plan, whether through anchor modernizations, intensification that adds new pads and GLA, through redevelopment opportunities, and from time to time through dispositions and capital recycling. Q3 was a strong quarter for optimization investments. We invested $6 million in our modernization program with Empire, bringing our year-to-date investments to $23.1 million across 24 projects.
These investments continue to show up in our leasing spreads, our commercial same-asset property cash NOI, and FFO growth. Beyond modernizations we continue to add square footage to the portfolio through greenfield and land-use intensifications. In Q3 we completed one greenfield project at Faubourg Montreal adding approximately 27,000 square feet at Crombie’s share. This new retail property is anchored by IGA Extra alongside Dollarama, both of which opened this summer, and a McDonald’s which is expected to open by year end. We also added four new projects to our non-major pipeline in the quarter including two grocery-anchored greenfield developments.
The first is in Windsor, Nova Scotia, the recently acquired land parcel I mentioned earlier in my remarks, and the second is Martinsville, Saskatchewan, where we began phase one construction of approximately 48,000 square feet on a portion of the eight-acre site. 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 developments.
That takes the non-major development pipeline we have under construction to approximately 120,000 square feet, up roughly from 30,000 square feet at the end of June. And as a reminder, non-major development investments are shorter-duration projects with a targeted yield on cost in the 6% to 8% range. With regards to major investments, we’re focused on two items. First, The Marlstone in Halifax, where we continue to make great progress in the lease-up. At September 30, 40% of the units were committed, up from 22% at the end of June. And second, entitlements, where we continue to advance select projects through rezoning and development permits. Nothing in our major development pipeline is committed to construction and almost all of those sites earn income today, so we can secure approvals ahead of any capital commitment and keep flexibility on timing and scale.
Q3 reflects the same disciplined approach to capital allocation that has guided us for years. We keep adding quality necessity-based real estate, recycling capital out of assets that no longer fit, modernize and intensify, and operate with excellence. With that I’ll turn the call over to Kara.
Kara Cameron (Chief Financial Officer)
Thank you, Mark, and good morning, everyone. Our third quarter results reinforce the strength of our platform and our disciplined approach to capital allocation. Strong leasing, continued growth in commercial same-asset property cash NOI, and growth in FFO per unit — the numbers keep telling the same story. Our strategy is working. Let me start with leasing. During the quarter, we completed 107,000 square feet of renewals at a first-year increase of 13.9% over expiring rental rates. This was driven primarily by renewals at our retail properties. As we’ve consistently emphasized, we focus on growth over the full duration of the lease. For the quarter, we secured a 16.7% increase when comparing expiring rates to the weighted average rental rate over the renewal term. Year to date, new commercial leases increased occupancy by 121,000 square feet at an average first-year rate of $28.44 per square foot.
At quarter end, we had 170,000 square feet of committed space at an average first-year rate of $30.39 per square foot, with tenants expected to take possession throughout 2026 and 2027. Committed occupancy was 97.7% and economic occupancy was 96.8%. The increase from the second quarter reflects new leasing activity and the disposition of Charlotte Mall in New Brunswick. That leasing activity, together with contractual rent step-ups, drove commercial same-asset property cash NOI growth of 2.7% for the quarter and 3.2% year to date.
Turning to property revenue, property revenue for the quarter was $127.6 million, up 6.2%, and net property income was $85.2 million, up 7.2% year over year, driven primarily by acquisitions, renewals, and new leasing. Revenue from management and development services was $3.1 million compared to $4.4 million in the third quarter of 2025, which included the one-time recognition of $2.1 million of deferred revenue related to development management services provided to a third party.
Year to date, revenue from management and development services was $9.6 million, up 8.5%. Finance costs were $26.2 million in the quarter, up $1.8 million from the prior year, primarily reflecting the issuance of our Series N senior unsecured notes, partially offset by the redemption of Series F senior unsecured notes in the quarter. For Q3, FFO was $63.9 million, or $0.34 per unit, up 3% year over year. AFFO was $57.1 million, or $0.30 per unit, unchanged year over year.
These results reflect growth in property revenue from acquisitions, new leasing, and renewals, partially offset by reduced development management fees and higher interest expense. Turning to the balance sheet, which remains a foundation of our strategy and a source of our resilience, we ended the quarter with available liquidity of $591.5 million. Our unencumbered asset pool continued to grow, reaching a fair value of $4.3 billion, up from $3.9 billion at year end, primarily on acquisitions, higher property values, and mortgage maturities. Debt to gross fair value was 41.9%. Debt to trailing twelve-month adjusted EBITDA was 7.91 times, and interest coverage was 3.33 times.
Approximately 94% of our debt, inclusive of joint ventures at Crombie REIT, carries fixed rates, and the weighted average term to maturity on our fixed-rate debt is 3.9 years. Our maturities remain well staggered, and our liquidity, unencumbered asset pool, and access to multiple funding levers give us the flexibility to address them. Our payout ratios were 67.1% of FFO and 75.1% of AFFO for the quarter. As Mark mentioned, subsequent to quarter end we entered into a binding agreement to acquire the Ontario portfolio for $134 million, excluding closing and transaction costs. We currently expect to fund the transaction on closing through our unsecured revolving credit facility on October 29th. We also completed the disposition of County Fair Mall that Mark described for $5.5 million before closing and transaction costs, including a $2.7 million vendor take-back financing over three years.
We retained the grocery component through a long-term lease. Overall, the third quarter was another quarter of steady, dependable execution. Leasing was strong, commercial same-asset property cash NOI continued to grow, and we managed capital and the balance sheet with discipline, keeping Crombie positioned for both stability and measured growth. With that, I’ll turn it back to Mark.
Mark Collie (President and Chief Executive Officer)
Thank you, Kara. I noted at the outset that in a dynamic environment this platform again delivered steady, dependable results. Our strategy continues to deliver — owning and operating essential real estate at the heart of Canadian communities, deploying capital with discipline, and growing cash flow while compounding long-term value for our unitholders. I want to thank our team across the country. Their execution and commitments are what turn our strategy into results, quarter in and quarter out.
With that, we’ll open the call for questions.
OPERATOR
We will now begin the question-and-answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as callers join the queue. Our first question today is from Lorne Kalmar with Desjardins. Please go ahead.
Lorne Kalmar (Analyst)
Thanks. Good morning, and congrats on a good print last night. Just starting on the non-major, Mark, I think you noted a pretty material uptick in projects quarter over quarter, sitting about $90 million right now. Do you think that’s a sustainable level that you can keep the pipeline at, or do you expect it to either trend up or down over the next little bit?
Mark Collie (President and Chief Executive Officer)
Good morning, Lorne. Thanks for the question. So on the non-major side, as you know, we have them in two categories. We have them on modernizations, and then we have land use intensification, which includes greenfield. We’ve moved that needle quite significantly from Q2. So we were at 30,000 square feet last quarter; we’re now somewhere in the neighborhood of 120,000 square feet. We had a commitment of $90 million. We’ve got $60 million still to go.
When you look at what’s in there, we’ve got two greenfields, and those are grocery-anchored that we’re really excited about. One greenfield actually just came off this quarter, which we talked about in our prepared remarks. We continue to look at greenfield opportunities. We continue to be aligned with our strategic partner, so where we can invest in it, we’re going to. We also are doing land use intensifications — we talked about this a little bit at our analyst day — where we’ve got a number of locations where we believe that we can add more LUI, and we’re very active on that front.
So what you also saw in the uptick on the 120,000 square feet were a couple more pad opportunities, and the team is actively working on a stock of about 10 to 20 locations where we think we can put more intensification. On the modernization side, when you look at our year-to-date total, we’re about $23 to $24 million. You compare that to last year — we’re about a million dollars apart from this time last year to where we are this year. We’ve always talked about that being a repeatable lever. So it’s a long way of saying yes, we’re very excited about where we are today. We see the sustainability in the modernizations, we see the sustainability in LUI, and we continue to look for opportunities at more greenfields.
Lorne Kalmar (Analyst)
Okay, and then I guess is Empire a big driver of that greenfield pipeline? Is that fair to say? Okay. And then just maybe flipping over to the portfolio acquisition that you guys announced post-quarter, I think you said you’re going to put it initially on the line. Are there plans for permanent financing in the near term? And then maybe just wondering what the rest of the acquisition pipeline looks like.
Kara Cameron (Chief Financial Officer)
Hi, Lorne, I’ll take the first part of that question. Right now we have multiple sources of funding and lots of liquidity on the balance sheet, so this transaction made a lot of sense for the revolver at this point in time, and so we’re happy with where we placed it. It’s a good cost of capital for us. And like I said, we continue to look at the balance sheet and assess that against acquisition opportunities and other opportunities within the portfolio, as Mark just described on LUI and modernizations.
And so right now that made sense for this transaction.
Mark Collie (President and Chief Executive Officer)
So as Kara calls out those sources, you kind of look at the uses, Lorne. So on that other part of your question on the acquisition side, we’ve got about $150 million that we have invested in. This adds another $134. We then look at non-majors, which is a part of that optimization part of our platform — we talked a little bit about that on your first question — our major investments, and then our distribution. So we’re really comfortable where we are.
We’re making really good investments. The underwriting team, as we’ve talked about for a number of quarters, have been very active in underwriting opportunities, and we’re really happy with the ability to tuck in this Ontario portfolio. We think it really supports our narrative and our strategy and our long-term focus.
Lorne Kalmar (Analyst)
Okay, maybe just to follow up, are you guys seeing a good amount of opportunity out there on the acquisition side that would fit within the portfolio? Thank you, Mark.
Mark Collie (President and Chief Executive Officer)
We’ve underwritten quite a bit, but we’re only executing on the things that absolutely tuck in right to our portfolio.
Lorne Kalmar (Analyst)
Perfect. Thanks so much. I’ll turn it back.
Mark Collie (President and Chief Executive Officer)
Thanks, Lorne.
OPERATOR
The next question comes from Brad Sturges with Raymond James. Please go ahead.
Brad Sturges (Analyst)
Hey, good morning. Just following on the same line of questions there Lorne had on the acquisition. I think you said the going-in cap rate was somewhere between the major and the regional cap rate from IFRS perspective. Just curious what the upside potential would be to that yield — whether there’s embedded mark-to-market on the rents or leasing upside. Just curious to understand a little bit more on the growth perspective, what you see with the portfolio.
Mark Collie (President and Chief Executive Officer)
Good morning, Brad. That portfolio is 100% leased and occupied. But when you kind of look at this portfolio and we’re tucking it in, it added about a percentage point to the asset class of retail. It’s added about 3% to our overall GLA. Increases, obviously, our fair value increases, our essential-needs AMR. When you look at the portfolio itself, it’s 13 properties, about 22 tenants. We called out in our prepared remarks nine Empires, two Walmart Supercenters, two Shoppers Drug Mart — that represents the lion’s share of the AMR.
When we look also at the portfolio, we think about it long term. So when we think about long term, we think about our non-major development investments through modernizations — so as we think about those key anchor tenants, were we able to add a modernization that will help drive longer-term FFO growth? We also look at them from an LUI perspective. As we’ve talked about at our teach-in day, we talked a little bit about being able to optimize the portfolio by adding additional square footage.
In terms of the mark-to-market opportunities, the overall weighted average lease term is somewhere in the neighborhood of about five years — at 4.6 years — so there is opportunity on the mark to market across the 22 tenants.
Brad Sturges (Analyst)
Would there be much in the way in terms of opportunity on land intensification, or is it more, like, from a non-major development spend, it’s more the modernizations of stores over time?
Mark Collie (President and Chief Executive Officer)
It’s likely more the modernizations than it would be LUI, but there are opportunities for LUI. We’re looking at every single one now and figuring out when. It’s not a matter of if; it’s a matter of when. And what does that look like?
Brad Sturges (Analyst)
Okay. And then a couple of dispositions as well. Is there anything else in the pipeline right now in terms of assets you’ve come at your mark for sale?
Mark Collie (President and Chief Executive Officer)
So when we look at dispositions over the last number of years, we’ve been disposing of some assets that just don’t support the growth profile of the business. They had chronic vacancies, they had a maintenance capex exposure. And so when we look at how we allocate our capital, we just didn’t think it was a good use of our capital to invest. So we have been selling some of those ones that don’t contribute and we’ve done two more. Is there much more in the portfolio like that?
No, we’re always looking at the bottom ones that don’t contribute and making a decision on how to invest in it. And sometimes through that choice, the investment is to not invest and then sell it into the local market. So there’s, you know, we’re always looking at it.
OPERATOR
The next question is from Mario Sarek with Scotiabank. Please go ahead.
Mario Sarek (Analyst)
Hi, good morning. Just coming back to the $134 million acquisition, the 4.6 year WALT, can you comment on the kind of 22 tenants or the total GLA? What percentage would have kind of fixed rate renewals versus going to market?
Ari Bhattan (Executive Vice President, Leasing Operations and Corporate Development)
Morning, Mario. Sorry, there’s not many that have fixed rate renewals and, you know, throughout our underwriting process and as we were in due diligence, we were already approving 2027 renewals. And what I could tell you is that this portfolio is exactly within our wheelhouse. It’s all essential needs. And the renewals that we were approving are fairly reflective of the renewal rates that you’re seeing us perform in our standing portfolio. So I would say that’s probably more of what’s to come.
Mario Sarek (Analyst)
So, with the renewals, the modernizations potentially adding a bit of density, what type of kind of structural NOI growth are you underwriting for or have you underwritten for this portfolio?
Kara Cameron (Chief Financial Officer)
Mario, we’re not going to go into NOI growth and what that looks like, but what we can tell you is this portfolio’s growth profile is greater than sort of the base business. And as we look at what Ari talked about on the renewals and how we’re trending on that, you’re seeing that sort of growth on the base grow. And this is going to tuck in really nicely to the portfolio.
Mario Sarek (Analyst)
Okay. Cedric Grassi, how long did the process take in terms of coming to this acquisition? And it sounds like the pipeline is pretty active. Are there comparable type transactions over the next kind of six months, nine months that you foresee undertaking? And secondly, kind of rates have been kind of bouncing around back and forth for the past six to nine months. How does kind of volatility in the underlying sovereign bond yield impact the cap rates that you’re willing to pay?
Mark Collie (President and Chief Executive Officer)
On the first part of the question, we’ve talked about this for a number of quarters now. Our underwriting team has been very active. We’ve underwritten more than we’ve actually moved forward on. And we have moved forward on a few, $150 million year to date, and now this. They take time and there’s a lot of moving parts in them. And we’re disciplined on which ones we want to proceed on and which ones we don’t proceed on. And sometimes you go into second round bidding and you still walk away.
So it’s hard to give you a pinpoint answer, Mario, on how long they take. Some take months, others take multiple months. In terms of what we’re seeing in the market and volatility in the market — seems like we say this every quarter — the market seems to be consistently volatile. The one good thing about our platform, when you look at the balance sheet and what Kara and her team have done, it’s in phenomenal shape. And so our weighted average maturity on our debt ladder is just over four years. The average interest rate is 4.2. It’s in a really, really good spot, which gives us confidence to be able to buy something like this when your balance sheet is in such great shape.
Kara, if there’s anything else that you want to add?
Kara Cameron (Chief Financial Officer)
No, I just think the macro volatility is something that we manage and watch. I’ll just reiterate the fact that our maturity profile and debt ladder is well in hand with lots of nice pockets and a steady renewal that we’re looking at. So no concerns from a balance sheet perspective. In fact, this is the exact reason why we focus so much on it — to build us up to be able to invest in these ways and add assets to the portfolio that are within our strategy and are going to add value to our portfolio overall.
So very pleased with the way things are.
Mario Sarek (Analyst)
Where would kind of five-year secured and unsecured debt costs be for you today?
Kara Cameron (Chief Financial Officer)
The five-year is sitting at about 100 basis point spread and the 10-year is about 150. I will say there’s lots of movements. It was interesting last quarter we were seeing secured spreads actually above some of the unsecureds. And this quarter we’re seeing the secured spreads come in a little bit tighter. So it’s something that we’re watching all the time, but that’s approximately where we’re at today.
Mario Sarek (Analyst)
And 150 net is unsecured or unsecured? Just to clarify.
Kara Cameron (Chief Financial Officer)
Unsecured.
Mario Sarek (Analyst)
Maybe just shifting really quickly to the operational side. I think the 14% blended lease spread on 100,000 square feet is very strong. Was there anything in particular within that 100,000 square feet that was renewed that artificially increased the spread higher than what you would assume, or is it fairly characteristic of the market today?
Ari Bhattan (Executive Vice President, Leasing Operations and Corporate Development)
Nothing out of the norm. We’re really pushing our leasing team to drive those results, just given a lot of what we’re all hearing about the supply-demand constraints, etc. A lot of these tenants were coming off initial lease terms, so they were not the first renewal terms. So they had been locked in for 10-plus years in a lot of cases. And we didn’t have any significant fixed rate renewals in this quarter either that would have potentially driven that down.
So again, all on the retail side this quarter and just the product of a team that’s really pushing and taking advantage of the current supply-demand, and just catching up with the mark-to-market that these leases have been locked in over those years.
Mario Sarek (Analyst)
Got it. Okay. And then just like the occupancy sequentially went up 20 basis points quarter over quarter. How much of that would have been the sale of Charlotte Mall?
Kara Cameron (Chief Financial Officer)
I don’t have that exact figure for you. It was a component. There was also some additional lease-up as well. But I would say we’ll have to get back to you specifically, Mario.
Mario Sarek (Analyst)
Okay. My last one for me is that the bad debt expense looks like it ticked up a little bit in the quarter. Can you maybe elaborate on the driver and what to expect on that line item going forward?
Kara Cameron (Chief Financial Officer)
Hi, Mario. Nothing material in the bad debt expense for the quarter. It was a bit of a cleanup exercise as we go through reconciliations, but nothing material that I would point to there.
Mario Sarek (Analyst)
Okay, thank you.
Kara Cameron (Chief Financial Officer)
Thanks, Mario.
OPERATOR
The next question is from Zach Zervos with CIBC. Please go ahead.
Zach Zervos (Analyst)
Hi, good morning. So, starting off, I was wondering if you could talk about the marketing process on the Voilà facility in Alberta. When you expect to have that sold and/or re-tenanted?
Mark Collie (President and Chief Executive Officer)
Hey, Zach. So are you asking about our warehouse that we own in Calgary? Yeah, we own that property in Calgary. We developed it. It’s under a long-term lease with our partner at Empire. We are not marketing it for sale. We are actively working with Empire on sort of what the longer-term plan is for the asset. But at this point we’re more than happy with the asset. It’s leased. So I hope that answers your question.
Zach Zervos (Analyst)
Yep. Yeah, sure thing. And then on the second one for me, it’s more of a modeling question, but for TI amortization, we noted that it stepped down meaningfully in the quarter. We assume most of this is attributable to office leasing. So just wondering if that was true and just a run rate moving forward, would you expect more leasing to require TIs or should this amortization come down?
Kara Cameron (Chief Financial Officer)
So on the leasing of TIs, it was a one-time item, so we’re not expecting that as a run rate.
Zach Zervos (Analyst)
Okay, thank you. I’ll turn it back.
OPERATOR
The next question is from Juliano Thornhill with National Bank. Please go ahead.
Juliano Thornhill (Analyst)
Hey guys. Good morning everyone. Just a couple questions. Would you be able to disclose the occupancy on the county mall that was sold after the quarter and the potential hit there? And then secondly to that, is there any room for occupancy to increase in the portfolio that you acquired? I may have missed that in the prepared remarks.
Kara Cameron (Chief Financial Officer)
The property was about half full. And I would say that certainly with that property leaving our portfolio, we are going to see the denominator change with a little bit less vacancy. But again, that’s not the primary driver of that disposition. It really is about enhancing our portfolio growth profile and continuing to execute on our standing portfolio. So I would say that there will be some byproduct of that disposition with respect to occupancy, but we’re continuing to drive occupancy elsewhere in our standing portfolio, whether that’s LUI or filling some of the existing vacancy, which, as you know, there’s not much left of these days.
Juliano Thornhill (Analyst)
And just on the acquisition, was that like fully occupied, the $134 million?
Kara Cameron (Chief Financial Officer)
It’s 100% occupied.
Juliano Thornhill (Analyst)
Okay. And then just my other question was just, you have a pretty good mortgage maturity coming due in 2027. Could you provide a little bit more timing as well as rates and the plan for that mortgage maturity?
Kara Cameron (Chief Financial Officer)
Sure. Hi, it’s Kara. So we’ve got approximately $280 million in mortgages coming due next year at an average rate of about 3.36%. So it’s something that we are actively working on today and in discussions with, looking at refinancing those mortgages. So it’s an active analysis on our part right now.
Juliano Thornhill (Analyst)
And would that be like Q1 or Q4? Do you have a date there?
Kara Cameron (Chief Financial Officer)
So there’s about $90 million that will happen sporadically over the year. And then there’s a larger one that comes due at the end of the year. That’s the Davies Street.
Juliano Thornhill (Analyst)
Okay, thank you. I’ll turn it back.
Kara Cameron (Chief Financial Officer)
Thank you.
OPERATOR
The next question is from Sam Damiani with TD Cowen. Please go ahead.
Sam Damiani (Analyst)
Thank you. Maybe just to pick up where Juliano left off there, that Zephyr mortgage — I think there was talk at the Investor Day in Halifax of maybe going conventional there. Or are you still looking at CMHC financing on that refi?
Kara Cameron (Chief Financial Officer)
Right now we’re looking at all options. So we talked a lot about volatility in the market and assessing our options. And so back to just all of the financial flexibility that we have in the balance sheet. So we’re looking at CMHC, we’re looking at conventional. Those options are very much available to us. So we’ll watch as we come closer to the end of next year and how things progress during 2027, just where rates are at and where secured are. So something we’ll just have to actively monitor.
Sam Damiani (Analyst)
Okay, understood. And I guess not to spend too much time on it, but just on the Ontario portfolio, is the intention to assume the leases with Empire as they are or make any modifications to them on or shortly after closing?
Mark Collie (President and Chief Executive Officer)
We’re going to assume them as they are, Sam.
Sam Damiani (Analyst)
Okay. And is there a plan to, I guess, bring the leverage down after that acquisition is completed, or are you comfortable running Crombie at the leverage level that you’ll be at after that is closed?
Kara Cameron (Chief Financial Officer)
Hi, Sam. So there will be natural deleveraging as we start to earn income on that portfolio. It’s a pretty small blip overall. This is the tuck-in portfolio that we’re really pleased to take inside, but it’s not a major increase in our leverage metrics. So we’ll be looking to take that down with the EBIT contribution over the longer term.
Sam Damiani (Analyst)
Makes sense. And last one for me, just was there any unusual contributions to NOI or deductions at the interest expense line in Q3? All right, thank you. I’ll turn it back.
Kara Cameron (Chief Financial Officer)
Thanks, Sam.
OPERATOR
Once again, if you have a question, please press star then one. Please stand by as we poll for questions. The next question is from Pami Beer with RBC Capital Markets. Please go ahead.
Mark Collie (President and Chief Executive Officer)
It wasn’t a fully marketed deal. We sourced it and engaged in the opportunity. It wasn’t through Empire. This is a third-party portfolio that we had purchased off market. We’re not disclosing the vendor at this point in time, but I can tell you that it was private. We’re always looking at opportunities. We talked about this at our teach-in day in September. We’ve talked about it over the last number of quarters. We’re underwriting lots of opportunities, and where we see the value and where it strategically aligns with what we’re trying to execute against, we will tuck them in.
But we saw earlier in the year a lot of necessity-based opportunities come, and we looked at a few of them, and we passed on some, and this one here, we saw great value as we engaged on this one. Oh, from this vendor? No, at this point this is it. Our stabilization timeline has not changed. We’re about 200 bps above where we were. So around 42 and a half, roughly, at this point in time. Thank you.
OPERATOR
This concludes the question and answer session and today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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