Q2 2025 First Capital Real Estate Investment Trust Earnings Call

Operator: All participants, please stand by. Your conference is now ready to begin. Good afternoon and thank you for standing by. Welcome to the Q2 2025 conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press star one on your telephone keypad. I will now liken the conference over to Alison. Please proceed with your presentation.

Operator: All participants, please stand by. Your conference is now ready to begin. Good afternoon, and thank you for standing by. Welcome to the Q2 2025 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press star one on your telephone keypad. I would now like to turn the conference over to Alison. Please proceed with your presentation.

Operator: Your conference is now ready to begin. Good afternoon, and thank you for standing by. Welcome to the Q2 2025 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press star one on your telephone keypad. I would now like to turn the conference over to Alison. Please proceed with your presentation. Thank you, and good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements.

Alison Harnick: Thank you, and good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements.

Alison Harnick: Thank you and good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. A summary of these underlying assumptions, risks, and uncertainties is contained in our securities filing, including our Q2 MVNA, our MVNA for the year ended December 31st, 2024, and our current AIF, all of which are available on CDAR Plus and our website. These forward-looking statements are made as of today's date and accept as required by Securities Law. We undertake no obligation to publicly update or resend any such statements.

Operator: A summary of these underlying assumptions, risks, and uncertainties is contained in our securities filing, including our Q2 MD&A, our MD&A for the year ended 31 December 2024, and our current AIF, all of which are available on SEDAR+ and our website. These forward-looking statements are made as of today's date, and except as required by securities laws, we undertake no obligation to publicly update or revise any such statements. During today's call, we will also be referencing certain non-IFRS financial measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these as a complement to IFRS measures to aid in assessing the REIT's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this call.

Alison Harnick: A summary of these underlying assumptions, risks, and uncertainties is contained in our securities filing, including our Q2 MD&A, our MD&A for the year ended 31 December 2024, and our current AIF, all of which are available on SEDAR+ and our website. These forward-looking statements are made as of today's date, and except as required by securities laws, we undertake no obligation to publicly update or revise any such statements. During today's call, we will also be referencing certain non-IFRS financial measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these as a complement to IFRS measures to aid in assessing the REIT's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this call.

Alison Harnick: During today's call, we will also be referencing certain non-IFRS financial measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides data that complements IFRS measures to aid in assessing the REIT's performance. These non-IFRS measures are further defined and discussed in our MVNA, which should be read in conjunction with this call. I'll now turn the call over to Adam.

Operator: I'll now turn the call over to Adam. Okay. Thank you very much, Alison. Good afternoon, everyone. Thank you for joining us today for our Q2 conference call. We're very pleased to deliver another strong quarter of operating and financial results. It truly has been a great first half of 2025. In Q2, same property, cash, NOI grew by a healthy 6.2%. This excludes lease termination fees and bad debt expense, which happen to have a very small impact. In round numbers, a little over 2% of the NOI growth was from increased occupancy and new tenants starting to pay cash rent at One Blue or East. All other factors, which are primarily higher rents across the balance of the portfolio, contributed to about 4% of the same property NOI growth. Last quarter, we matched our all-time high occupancy of 96.9%.

Alison Harnick: I'll now turn the call over to Adam.

Adam Paul: Okay. Thank you very much, Alison. Good afternoon, everyone. Thank you for joining us today for our Q2 conference call. We're very pleased to deliver another strong quarter of operating and financial results. It truly has been a great first half of 2025. In Q2, same property, cash, NOI grew by a healthy 6.2%. This excludes lease termination fees and bad debt expense, which happen to have a very small impact. In round numbers, a little over 2% of the NOI growth was from increased occupancy and new tenants starting to pay cash rent at One Blue or East. All other factors, which are primarily higher rents across the balance of the portfolio, contributed to about 4% of the same property NOI growth. Last quarter, we matched our all-time high occupancy of 96.9%.

Adam Paul: Okay. Thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today for our Q2 conference call. We're very pleased to deliver another strong quarter of operating and financial results. It truly has been a great first half of 2025. In the second quarter, same property cash NOI grew by a healthy 6.2%. This excludes lease termination fees and bad debt expense, which happen to have a very small impact. In round numbers, a little over 2% of the NOI growth was from increased occupancy and new tenants starting to pay cash rent at One Bluer East. All other factors, which are primarily higher rents across the balance of the portfolio, contributed to about 4% of the same property and a wide growth. Last quarter, we matched our all-time high occupancy of 96.9%. In the quarter, we set a new FCR occupancy record at 97.2%.

Operator: This quarter, we set a new FCR occupancy record at 97.2%. Another new record set this quarter was our average in-place net rental rate, which stood at CAD 24.44 per sq ft. During Q2, we renewed just over 625,000 sq ft across approximately 150 spaces. This included a 150,000-sq-ft Walmart with a typical fixed flat renewal. We also renewed four grocery stores and seven pharmacies that were completed at market rents. In total, net rental rates in year one of the renewal terms averaged CAD 26.10 per sq ft, representing a year-one renewal rent increase of 16.2%. Approximately 80% of our renewed leases in Q2 included contractual rent escalations throughout the renewal terms. This resulted in a renewal lift of approximately 21% when comparing net rents in the last year of the expiring terms to the average net rents during the renewal terms.

Adam Paul: This quarter, we set a new FCR occupancy record at 97.2%. Another new record set this quarter was our average in-place net rental rate, which stood at CAD 24.44 per sq ft. During Q2, we renewed just over 625,000 sq ft across approximately 150 spaces. This included a 150,000-sq-ft Walmart with a typical fixed flat renewal. We also renewed four grocery stores and seven pharmacies that were completed at market rents. In total, net rental rates in year one of the renewal terms averaged CAD 26.10 per sq ft, representing a year-one renewal rent increase of 16.2%. Approximately 80% of our renewed leases in Q2 included contractual rent escalations throughout the renewal terms. This resulted in a renewal lift of approximately 21% when comparing net rents in the last year of the expiring terms to the average net rents during the renewal terms.

Adam Paul: Another new record set this quarter was our average in-place net rental rate, which stood at $24.44 per square foot. During Q2, we renewed just over 625,000 square feet across approximately 150 spaces. This included a 150,000 square foot Walmart with a typical fixed flat renewal. We also renewed four grocery stores and seven pharmacies that were completed at market rents. In total, net rental rates in year one of the renewal terms averaged $26.10 per square foot, representing a year-one renewal rent increase of 16.2%. Approximately 80% of our renewed leases in the second quarter included contractual rent escalations throughout the renewal terms. This resulted in a renewal rate of approximately 21% when compared to net rents in the last year of the expiring terms to the average net rents during the renewal terms.

Adam Paul: In addition to renewal leasing, we also completed approximately 105,000 square feet of new leasing and FCR share across 42 spaces, carrying an average year-one rent of just over $30 per square foot. Leasing continues to be very strong, which does not surprise us. We own great assets, and our leasing team understands what's going on from a macro perspective. This environment has been in the making for quite some time. The last number of years have been characterized by high population growth against a very low supply of new grocery-anchored shopping centers. Said another way, the customer base of FCR tenants has grown, while grocery-anchored retail square footage per capita has declined. Over that time, land and construction costs have risen, meaning the replacement cost of the space our tenants occupy has increased.

Operator: In addition to renewal leasing, we also completed approximately 105,000 sq ft of new leasing at FCR's share across 42 spaces, carrying an average year-one rent of just over CAD 30 per sq ft. Leasing continues to be very strong, which does not surprise us. We own great assets, and our leasing team understands what's going on from a macro perspective. This environment has been in the making for quite some time. The last number of years have been characterized by high population growth against a very low supply of new gross-ranked shopping centers. Said another way, the customer base of FCR tenants has grown, while gross-ranked retail square footage per capita has declined. Over that time, land and construction costs have risen, meaning the replacement cost of the space our tenants occupy has increased.

Adam Paul: In addition to renewal leasing, we also completed approximately 105,000 sq ft of new leasing at FCR's share across 42 spaces, carrying an average year-one rent of just over CAD 30 per sq ft. Leasing continues to be very strong, which does not surprise us. We own great assets, and our leasing team understands what's going on from a macro perspective. This environment has been in the making for quite some time. The last number of years have been characterized by high population growth against a very low supply of new gross-ranked shopping centers. Said another way, the customer base of FCR tenants has grown, while gross-ranked retail square footage per capita has declined. Over that time, land and construction costs have risen, meaning the replacement cost of the space our tenants occupy has increased.

Operator: This has culminated in the current environment in which many FCR-type retailers are seeking to grow their store networks. With economic rents remaining well in excess of both market rents and in-place rents, new supply in the trade areas where our properties are located will continue to be muted. For these reasons, we see a very long runway for accelerated and sustained rent growth for our portfolio. We're now halfway through our three-year strategic plan that we presented to our investors at the beginning of 2024. At its heart, the plan is focused on delivering our primary investor objectives. These primary objectives are quite simply delivering, on a per-unit basis, stability and consistent growth in FFO, growth in net asset value, and absolutely stable, reliable monthly cash distributions to our investors, and growth in those distributions over time.

Adam Paul: This has culminated in the current environment in which many FCR-type retailers are seeking to grow their store networks. With economic rents remaining well in excess of both market rents and in-place rents, new supply in the trade areas where our properties are located will continue to be muted. For these reasons, we see a very long runway for accelerated and sustained rent growth for our portfolio. We're now halfway through our three-year strategic plan that we presented to our investors at the beginning of 2024. At its heart, the plan is focused on delivering our primary investor objectives. These primary objectives are quite simply delivering, on a per-unit basis, stability and consistent growth in FFO, growth in net asset value, and absolutely stable, reliable monthly cash distributions to our investors, and growth in those distributions over time.

Adam Paul: This has culminated in the current environment in which many FCR-type retailers are seeking to grow their store networks. With economic rents remaining well in excess of both market rents and in-place rents, new supply in the trade areas where our properties are located will continue to be muted. For these reasons, we see a very long runway for accelerated and sustained rent growth for our portfolio. We're now halfway through our three-year strategic plan that we presented to our investors at the beginning of 2024. At its heart, the plan is focused on delivering our primary investor objectives. These primary objectives are quite simply delivering on a per-unit basis, stability and consistent growth in FFO, growth in net asset value, and absolutely stable, reliable monthly cash distributions to our investors and growth in those distributions over time.

Operator: With a focus on these objectives, the three-year plan that we outlined for investors was designed to deliver on two key metrics. The first is delivering Operating FFO per-unit growth of at least 3% on average over the three-year time frame. The second key metric is achieving a net debt-to-adjusted EBITDA ratio that is in the low 8x range by the end of 2026. I am pleased to say that we are tracking well to deliver on both metrics. Through the first 18 months of the plan, our Operating FFO per-unit CAGR, excluding several positive but non-recurring items, is approximately 5%. We're tracking ahead on OFFO. Debt-to-EBITDA has improved to 9x, or the low 9s adjusting for those same non-recurring items. This is exactly where we expected our debt-to-EBITDA to be at this time.

Adam Paul: With a focus on these objectives, the three-year plan that we outlined for investors was designed to deliver on two key metrics. The first is delivering Operating FFO per-unit growth of at least 3% on average over the three-year time frame. The second key metric is achieving a net debt-to-adjusted EBITDA ratio that is in the low 8x range by the end of 2026. I am pleased to say that we are tracking well to deliver on both metrics. Through the first 18 months of the plan, our Operating FFO per-unit CAGR, excluding several positive but non-recurring items, is approximately 5%. We're tracking ahead on OFFO. Debt-to-EBITDA has improved to 9x, or the low 9s adjusting for those same non-recurring items. This is exactly where we expected our debt-to-EBITDA to be at this time.

Adam Paul: With a focus on these objectives, the three-year plan that we outlined for investors was designed to deliver on two key metrics. The first is delivering operating FFO per unit growth of at least 3% on average over the three-year timeframe. The second key metric is achieving a net debt-to-adjusted EBITDA ratio that is in the low eight times range by the end of 2026. I am pleased to say that we are tracking well to deliver on both metrics. Through the first 18 months of the plan, our operating FFO per unit figure, excluding several positive but non-recurring items, is approximately 5%. We're tracking ahead on OFFO. Debt-to-EBITDA has improved to nine times or below nine, adjusting for those same non-recurring items. This is exactly where we expected our debt-to-EBITDA to be at this time.

Operator: We're very pleased with our results to date on our 3-year plan, and we look forward to updating you further on our progress as we continue to execute. With that, I will now pass things over to Neil. Thanks, Adam, and good afternoon, everyone. Consistent with our usual practice, we have a slide deck available on our website at www.fcr.ca. In my remarks today, I will make some references to that presentation. If we start with slide 6, FCR earned Operating FFO of CAD 73 million during Q2. On a year-over-year basis, this was an increase of 6% from CAD 68 million. OFFO per unit was CAD 0.33, also equating to an increase of 6% from CAD 0.319 in Q2 2024. Overall, these are very strong results, with most of the growth coming from core operations.

Adam Paul: So we're very pleased with our results to date on our three-year plan, and we look forward to updating you further on our progress as we continue to execute. And with that, I will now pass things over to Neil. Thanks, Adam, and good afternoon, everyone. Consistent with our usual practice, we have a slide deck available on our website at www.fcr.ca. And in my remarks today, I will make some references to that presentation. So we start with slide six. FCR earned operating FFO of $73 million during the second quarter. On a year-over-year basis, this was an increase of 6% from $68 million. OFFO per unit was 33 cents, also equating to an increase of 6% from 31.9 cents in Q2 2024. Overall, these are very strong results with most of the growth coming from core operations.

Adam Paul: We're very pleased with our results to date on our 3-year plan, and we look forward to updating you further on our progress as we continue to execute. With that, I will now pass things over to Neil.

Neil Downey: Thanks, Adam, and good afternoon, everyone. Consistent with our usual practice, we have a slide deck available on our website at www.fcr.ca. In my remarks today, I will make some references to that presentation. If we start with slide 6, FCR earned Operating FFO of CAD 73 million during Q2. On a year-over-year basis, this was an increase of 6% from CAD 68 million. OFFO per unit was CAD 0.33, also equating to an increase of 6% from CAD 0.319 in Q2 2024. Overall, these are very strong results, with most of the growth coming from core operations.

Operator: I will note that in totality, there is approximately $2 million of income or about one penny per unit within Q2 2025 OFFO that may not necessarily repeat in subsequent quarters. These contributions are spread across several line items. In this regard, there is approximately $900,000 in net operating income, including prior year CAM and tax recoveries and a small $300,000 bad debt recovery. Elsewhere in the P&L, there is approximately $1.2 million of non-recurring fees and other income. A few more points of note on income and expenses, starting with net operating income. Firstly, same property NOI, where strong growth was at the core of the Q2 performance. Same property NOI, excluding bad debt recoveries and lease termination fees, increased by 6.2%, representing a year-over-year increase of $6.5 million to $111 million in the quarter.

Neil Downey: I will note that in totality, there is approximately $2 million of income or about one penny per unit within Q2 2025 OFFO that may not necessarily repeat in subsequent quarters. These contributions are spread across several line items. In this regard, there is approximately $900,000 in net operating income, including prior year CAM and tax recoveries and a small $300,000 bad debt recovery. Elsewhere in the P&L, there is approximately $1.2 million of non-recurring fees and other income. A few more points of note on income and expenses, starting with net operating income. Firstly, same property NOI, where strong growth was at the core of the Q2 performance. Same property NOI, excluding bad debt recoveries and lease termination fees, increased by 6.2%, representing a year-over-year increase of $6.5 million to $111 million in the quarter.

Adam Paul: I will note that in totality, there is approximately $2 million of income or about one penny per unit within Q2 2025 OFFO that may not necessarily repeat in subsequent quarters. These contributions are spread across several line items. In this regard, there's approximately $900,000 in net operating income, including prior-year cam and tax recoveries and a small $300,000 bad debt recovery. Elsewhere in the P&L, there's approximately $1.2 million of non-recurring fees and other income. So a few more points of note on income and expenses, starting with net operating income. Firstly, same property NOI, where strong growth was at the core of the second quarter of performance. Same property NOI excluding bad debt recoveries and lease termination fees increased by 6.2%, representing a year-over-year increase of $6.5 million to $111 million in the quarter.

Operator: As Adam referenced, approximately one-third of that growth was due to the conversion of straight-line rent to cash rents during the quarter. This is something that we specifically discussed on this very same quarterly conference call one year ago. At that time, it was an important element of our conviction in strong performance for 2025. Secondly, on a year-over-year basis, the NOI lost from dispositions is approximately CAD 1.5 million. This relates to property sales totaling CAD 140 million from the Q3 of last year to the end of the Q2 of this year. Thirdly, within the other non-same property NOI line, the CAD 1.2 million decline that you see relates to straight-line rent, which decreased by CAD 1.6 million year-over-year. Therefore, the year-over-year growth in cash NOI in this line item was actually about CAD 400,000.

Neil Downey: As Adam referenced, approximately one-third of that growth was due to the conversion of straight-line rent to cash rents during the quarter. This is something that we specifically discussed on this very same quarterly conference call one year ago. At that time, it was an important element of our conviction in strong performance for 2025. Secondly, on a year-over-year basis, the NOI lost from dispositions is approximately CAD 1.5 million. This relates to property sales totaling CAD 140 million from the Q3 of last year to the end of the Q2 of this year. Thirdly, within the other non-same property NOI line, the CAD 1.2 million decline that you see relates to straight-line rent, which decreased by CAD 1.6 million year-over-year. Therefore, the year-over-year growth in cash NOI in this line item was actually about CAD 400,000.

Adam Paul: As Adam referenced, approximately one-third of that growth was due to the conversion of straight line rent to cash rents during the quarter. This is something that we specifically discussed on this very same quarterly conference call one year ago, and at that time, it was an important element of our conviction in strong performance for 2025. Secondly, on a year-over-year basis, the NOI lost from dispositions is approximately $1.5 million. This relates to property sales totaling $140 million from the third quarter of last year to the end of the second quarter of this year. And thirdly, within the other non-same property NOI line, the $1.2 million decline that you see relates to straight line rent, which decreased by $1.6 million year over year. Therefore, the year-over-year growth in cash NOI in this line item was actually about $400,000.

Operator: Further down the FFO statement, general and administrative expenses of CAD 10.7 million declined by about 6% year-over-year. You shouldn't read too much into this decline. The timing of expenses can move around a bit from quarter to quarter. In general, we expect a recurring quarterly run rate of about CAD 11 million this year for 2025 G&A expenses of approximately CAD 44 million. Moving to slide 7, first half results have generated same property NOI growth, excluding lease termination fees and bad debt of 5.7%. With this very strong performance to date and a constructive outlook for the balance of the year, we expect FCR to deliver 2025 same property NOI growth of approximately 5%. This compares to an expectation of approximately 4% that we cited on the Q1 conference call in early May. Slides 8 and 9 cover key operating metrics, some of which Adam already touched upon.

Neil Downey: Further down the FFO statement, general and administrative expenses of CAD 10.7 million declined by about 6% year-over-year. You shouldn't read too much into this decline. The timing of expenses can move around a bit from quarter to quarter. In general, we expect a recurring quarterly run rate of about CAD 11 million this year for 2025 G&A expenses of approximately CAD 44 million.

Adam Paul: Further down the FFO statement, general and administrative expenses of $10.7 million declined by about 6% year over year. You shouldn't read too much into this decline. The timing of expenses can move around a bit from quarter to quarter. And in general, we expect a recurring quarterly run rate of about $11 million this year for 2025 G&A expenses of approximately $44 million. Moving to slide seven, first half results have generated same property NOI growth, excluding lease termination fees and bad debt of 5.7%. With this very strong performance to date and a constructive outlook for the balance of the year, we expect FCR to deliver 2025 same property NOI growth of approximately 5%. This compares to an expectation of approximately 4% that we cited on the Q1 conference call in early May. Slides eight and nine cover key operating metrics, some of which Adam already touched upon.

Neil Downey: Moving to slide 7, first half results have generated same property NOI growth, excluding lease termination fees and bad debt of 5.7%. With this very strong performance to date and a constructive outlook for the balance of the year, we expect FCR to deliver 2025 same property NOI growth of approximately 5%. This compares to an expectation of approximately 4% that we cited on the Q1 conference call in early May. Slides 8 and 9 cover key operating metrics, some of which Adam already touched upon.

Adam Paul: In short, the themes remain consistent again through the second quarter with continued and broad strength across key occupancy, leasing velocity, leasing spreads, and rental rate metrics. Slides 10 and 11 provide various distribution payout ratio metrics. During Q2 and on a year-to-date basis, FCR's AFFO and ACFFO payout ratios are running at a mid-80% level. Advancing to slide 12, the REIT's June 30th net asset value was $22.20 per unit. This is an increase of 14 cents from Q1's $22.06 and a year-over-year increase of about 2% from $21.82 cents. The NAV change during the quarter included only a few small value movements, which resulted in a net fair value increase of $4 million in the REIT's income statement. Turning next to capital investments as outlined on slide 13. During Q2, $53 million of capital was invested in the business, bringing the first half to $125 million of investment.

Operator: In short, the themes remain consistent again through Q2, with continued and broad strength across key occupancy, leasing velocity, leasing spreads, and rental rate metrics. Slides 10 and 11 provide various distribution payout ratio metrics. During Q2 and on a year-to-date basis, FCR's AFFO and ACFFO payout ratios are running at a mid-80% level. Advancing to slide 12, the 30 June net asset value was $22.20 per unit. This is an increase of $0.14 from Q1's $22.06 and a year-over-year increase of about 2% from $21.82. The NAV change during the quarter included only a few small value movements, which resulted in a net fair value increase of $4 million in the REIT income statement. Turning next to capital investments, as outlined on slide 13, during Q2, $53 million of capital was invested in the business, bringing the first half to $125 million of investment.

Neil Downey: In short, the themes remain consistent again through Q2, with continued and broad strength across key occupancy, leasing velocity, leasing spreads, and rental rate metrics. Slides 10 and 11 provide various distribution payout ratio metrics. During Q2 and on a year-to-date basis, FCR's AFFO and ACFFO payout ratios are running at a mid-80% level. Advancing to slide 12, the 30 June net asset value was $22.20 per unit. This is an increase of $0.14 from Q1's $22.06 and a year-over-year increase of about 2% from $21.82. The NAV change during the quarter included only a few small value movements, which resulted in a net fair value increase of $4 million in the REIT income statement. Turning next to capital investments, as outlined on slide 13, during Q2, $53 million of capital was invested in the business, bringing the first half to $125 million of investment.

Operator: Q2 capital deployment included CAD 37 million of development expenditures and nearly CAD 16 million of investments into leasing costs and CapEx into the operating portfolio. The most significant development expenditures during the quarter related to our Young & Roselawn development, our Humbertown shopping center redevelopment, where phases 2 and 3 are advancing, and our 1071 King project, which is now nicely up and out of the ground with second-level forming in progress. On the topic of development, and will not specifically cover it in this slide, I will note that the value of our density and development land that is included within our IFRS values was CAD 424 million at 30 June 2025. This is little changed during the quarter. Notably, within the aggregate value are 2 properties that are classified as held for sale. 1 of those properties was sold last week, and the other has a Q4 closing date.

Neil Downey: Q2 capital deployment included CAD 37 million of development expenditures and nearly CAD 16 million of investments into leasing costs and CapEx into the operating portfolio. The most significant development expenditures during the quarter related to our Young & Roselawn development, our Humbertown shopping center redevelopment, where phases 2 and 3 are advancing, and our 1071 King project, which is now nicely up and out of the ground with second-level forming in progress.

Adam Paul: Q2 capital deployment included $37 million of development expenditures and nearly $16 million of investment into leasing costs and capex into the operating portfolio. The most significant development expenditures during the quarter related to our Young and Roseland development, our Humbertown Shopping Center redevelopment, where phases two and three are advancing, and our 1071 Kin project, which is now nicely up and out of the ground with second level forming in progress. On the topic of development, and we'll not specifically cover it in this slide, I will note that the value of our density and development land that's included within our IFRS values was $424 million at June 30th, 2025. This is little change during the quarter. Notably, within the Aggregate Valley Group, our two properties that are classified as held for sale. One of those properties was sold last week, and the other has a Q4 closing date.

Neil Downey: On the topic of development, and will not specifically cover it in this slide, I will note that the value of our density and development land that is included within our IFRS values was CAD 424 million at 30 June 2025. This is little changed during the quarter. Notably, within the aggregate value are 2 properties that are classified as held for sale. 1 of those properties was sold last week, and the other has a Q4 closing date.

Operator: Net of contracted or recently completed sales, the balance of density and development land is really only about CAD 357 million or CAD 1.65 on a per-unit basis. Slide 14 summarizes some key financing activities. During Q2, we repaid CAD 140 million of debt with a 3.3% weighted average interest rate. As we mentioned on our last call, we repaid in mid-April a CAD 75 million term loan. Further to that, on 2 June, we repaid a maturing CAD 56 million mortgage that was secured by our Royal Oak Centre, Calgary. The major new financing activity during Q2 was the issuance of CAD 300 million of Series E debentures on 13 June. The financing carried an eight-year term and a 4.83% coupon. The offering had exceptional demand with an order book of CAD 1.8 billion from approximately 50 buyers.

Adam Paul: So net of contracted or recently completed sales, the balance of density and development land is really only about $357 million or $1.65 on a per-unit basis. Slide 14 summarizes some key financing activities. During Q2, we repaid $140 million of debt with a 3.3% weighted average interest rate. As we mentioned on our last call, we repaid in mid-April a $75 million term loan. And further to that, on June 2nd, we repaid a maturing $56 million mortgage that was secured by our Royal Oak Center, Calgary. The major new financing activity during Q2 was the issuance of $300 million of Series E debentures on June 13th. The financing carries an eight-year term and a 4.83% coupon. The offering had exceptional demand with an order book of $1.8 billion from approximately 50 buyers.

Neil Downey: Net of contracted or recently completed sales, the balance of density and development land is really only about CAD 357 million or CAD 1.65 on a per-unit basis. Slide 14 summarizes some key financing activities. During Q2, we repaid CAD 140 million of debt with a 3.3% weighted average interest rate. As we mentioned on our last call, we repaid in mid-April a CAD 75 million term loan. Further to that, on 2 June, we repaid a maturing CAD 56 million mortgage that was secured by our Royal Oak Centre, Calgary. The major new financing activity during Q2 was the issuance of CAD 300 million of Series E debentures on 13 June. The financing carried an eight-year term and a 4.83% coupon. The offering had exceptional demand with an order book of CAD 1.8 billion from approximately 50 buyers.

Operator: The new issue spread was 159 basis points over Canada's, marking the tightest FCR spread ever for an eight-year unsecured debenture and one of the tightest eight-year offering spreads for any Canadian REITs. Overall, we were very pleased with the outcome of the offering. At 30 June and still today, we continue to carry most of the net proceeds of that offering in the form of cash. This cash is earmarked to repay the CAD 300 million of maturing Series S debentures that have an effective interest rate of 4.2% this coming Thursday, which is 31 July. To wrap up, on slides 15 through 17, these summarize some key credit metrics and the debt maturity profile. FCR is in a very strong financial position. The REIT ended Q2 with more than CAD 900 million of liquidity in the form of the cash I just mentioned plus undrawn revolvers.

Neil Downey: The new issue spread was 159 basis points over Canada's, marking the tightest FCR spread ever for an eight-year unsecured debenture and one of the tightest eight-year offering spreads for any Canadian REITs. Overall, we were very pleased with the outcome of the offering. At 30 June and still today, we continue to carry most of the net proceeds of that offering in the form of cash. This cash is earmarked to repay the CAD 300 million of maturing Series S debentures that have an effective interest rate of 4.2% this coming Thursday, which is 31 July. To wrap up, on slides 15 through 17, these summarize some key credit metrics and the debt maturity profile. FCR is in a very strong financial position. The REIT ended Q2 with more than CAD 900 million of liquidity in the form of the cash I just mentioned plus undrawn revolvers.

Adam Paul: The new issue spread was 159 basis points over candidates, marking the tightest FCR spread ever for an eight-year unsecured debenture and one of the tightest eight-year offering spreads for any Canadian REIT. Overall, we were very pleased with the outcome of the offering. At June 30th, and still today, we continue to carry most of the net proceeds of that offering in the form of cash. This cash is earmarked to repay the $300 million of maturing Series S debentures that had an effective interest rate of 4.2% this coming Thursday, which is July 31st. To wrap up, on slides 15 through 17, please summarize the key credit metrics and the debt maturity profile. FCR is in a very strong financial position. The REIT ended Q2 with more than $900 million of liquidity in the form of the cash I just mentioned, plus undrawn revolvers.

Adam Paul: FCR's undercovered asset pool had a total value of $6.6 billion, equating to 70% of total assets, and its secured debt-to-total assets ratio was a low 15%. This concludes my remarks, and I'm now pleased to turn the session to Jordy to elaborate further on investing and related activities.

Operator: FCR's unencumbered asset pool had a total value of CAD 6.6 billion, equating to 70% of total assets, and its secured debt-to-total assets ratio was a low 15%. This concludes my remarks, and I'm now pleased to turn the session to Jordy to elaborate further on investing and related activities. Thank you, Neil, and good afternoon. Today, I'm going to provide an update on our investment, development, and entitlement activities. In Q2, we closed or entered into buying agreements on three properties with gross proceeds of CAD 77 million. The first property we sold is Place Anjou, and closing occurred last week. It's a 4.7-acre site in Montreal's East End with two freestanding retail buildings totaling 52,000 square foot of GLA. It's occupied by a Toys R Us and a Maison En Gros.

Neil Downey: FCR's unencumbered asset pool had a total value of CAD 6.6 billion, equating to 70% of total assets, and its secured debt-to-total assets ratio was a low 15%. This concludes my remarks, and I'm now pleased to turn the session to Jordy to elaborate further on investing and related activities.

Jordan Robins: Thank you, Neil, and good afternoon. Today, I'm going to provide an update on our investment, development, and entitlement activities. In Q2, we closed or entered into buying agreements on three properties with gross proceeds of CAD 77 million. The first property we sold is Place Anjou, and closing occurred last week. It's a 4.7-acre site in Montreal's East End with two freestanding retail buildings totaling 52,000 square foot of GLA. It's occupied by a Toys R Us and a Maison En Gros.

Jordie Robins: Thank you, Neil, and good afternoon. Today, I'm going to provide an update on our investment, development, and entitlement activities. In Q2, we closed or entered into buying agreements on three properties with gross proceeds of $77 million. The first property we sold is Pas-Anjou and closing occurred last week. It's a 4.7-acre site in Montreal's east end with two freestanding retail buildings totaling 52,000 square foot of GLA. It's occupied by Toys R Us and a Maison Anglaise. The $33 million sale price equated to a mid-2% yield based upon income and claims, and it was sold at a premium of approximately 30% over our IFRS value. In addition to these metrics, what's notable with these is that our work to crystallize this value actually started in 2018.

Operator: The CAD 33 million sale price equated to a mid-2% yield based upon income in place. It was sold at a premium of approximately 30% over our IFRS value. In addition to these metrics, what's notable with these is that our work to crystallize this value actually started in 2018. It was that year when the Lévesque government announced plans to extend the Blue Line from Saint Michel to a new terminus directly adjacent to Place Anjou. We had correctly predicted that this 8-kilometer, 5-station Blue Line transit extension would result in residential intensification in the broader node. Shortly after the announcement, we submitted for and in 2023 secured approvals for the first phase of a redevelopment, which contemplates 370,000 square feet of residential density.

Jordan Robins: The CAD 33 million sale price equated to a mid-2% yield based upon income in place. It was sold at a premium of approximately 30% over our IFRS value. In addition to these metrics, what's notable with these is that our work to crystallize this value actually started in 2018. It was that year when the Lévesque government announced plans to extend the Blue Line from Saint Michel to a new terminus directly adjacent to Place Anjou. We had correctly predicted that this 8-kilometer, 5-station Blue Line transit extension would result in residential intensification in the broader node. Shortly after the announcement, we submitted for and in 2023 secured approvals for the first phase of a redevelopment, which contemplates 370,000 square feet of residential density.

Jordie Robins: It was that year when the municipal government announced plans to extend the Blue Line from Saint-Michel to a new terminus directly adjacent to Place Pas-Anjou. We had correctly predicted that this eight-kilometer, five-station Blue Line transit extension would result in a residential intensification in the broader node. So shortly after the announcement, we submitted for and in 2023 secured approvals for the first phase of a redevelopment, which contemplates 370,000 square feet of residential density. We marketed for sale this first phase, but ultimately negotiated the sale of all of those based on the value of the added right density and the additional anticipated density totaling approximately 950,000 square feet. This past quarter, we also entered into a buying agreement to sell our Montgomery Assembly for a total consideration of $42 million. Assembled between 2019 and 2022, the Montgomery Assembly is a three-quarter of an acre development site.

Operator: We marketed for sale this first phase but ultimately negotiated the sale of all of the lands based upon the value of the as-of-right density and the additional anticipated density totaling approximately 950,000 sq ft. This past quarter, we also entered into a buying agreement to sell our Montgomery Assembly for a total consideration of $42 million. Assembled between 2019 and 2022, the Montgomery Assembly is a three-quarter of an acre development site. It's comprised of 13 contiguous homes on the north side of Montgomery Avenue between Young Street and Duplex, three blocks north of Edmonton Avenue. In 2024, following extensive engagement with city staff and local residents and after an appeal to the Ontario Land Tribunal, we secured approval to permit the development of a 27-story high-rise tower of approximately 250,000 sq ft of gross floor area.

Jordan Robins: We marketed for sale this first phase but ultimately negotiated the sale of all of the lands based upon the value of the as-of-right density and the additional anticipated density totaling approximately 950,000 sq ft. This past quarter, we also entered into a buying agreement to sell our Montgomery Assembly for a total consideration of $42 million. Assembled between 2019 and 2022, the Montgomery Assembly is a three-quarter of an acre development site. It's comprised of 13 contiguous homes on the north side of Montgomery Avenue between Young Street and Duplex, three blocks north of Edmonton Avenue. In 2024, following extensive engagement with city staff and local residents and after an appeal to the Ontario Land Tribunal, we secured approval to permit the development of a 27-story high-rise tower of approximately 250,000 sq ft of gross floor area.

Jordie Robins: It's comprised of 13 contiguous homes on the north side of Montgomery Avenue between Young Street and Duplex, three blocks north of Edmonton Avenue. In 2022, following extensive engagement with city staff and local residents, and after an appeal to the Ontario Land Trybun, we secured approvals to permit the development of a 27-story high-rise tower of approximately 250,000 square feet of gross floor area. The sale price equates to approximately $170 per buildable square foot, which compares favorably to similar recent transactions and is approximately 25% above FCR's Q1 2025 IFRS value. As part of the sale, we took back a $12 million mortgage for 12 months, carrying a 7% interest rate paid monthly. Our active developments are also progressing well. At Young and Roseland, we remain on schedule and on budget.

Operator: The sale price equates to approximately CAD 170 per buildable sq ft, which compares favorably to similar recent transactions and is approximately 25% above FCR's Q1 2025 IFRS value. As part of the sale, we took back a CAD 12 million mortgage for 12 months carrying a 7% interest rate paid monthly. Our active developments are also progressing well. At Young & Roselawn, we remain on schedule and on budget. You'll recall we own 50% of this 636-unit residential rental building with 65,000 sq ft of retail space and serve as the development manager. We set out to design Young & Roselawn as a zero-carbon building. In Q2, the project received the Zero Carbon Building Design Certification by Canada Green Building Council. The ground floor slab will be completed this month, and formwork is progressing to the second floor. 81% of the project costs are now awarded.

Jordan Robins: The sale price equates to approximately CAD 170 per buildable sq ft, which compares favorably to similar recent transactions and is approximately 25% above FCR's Q1 2025 IFRS value. As part of the sale, we took back a CAD 12 million mortgage for 12 months carrying a 7% interest rate paid monthly. Our active developments are also progressing well. At Young & Roselawn, we remain on schedule and on budget. You'll recall we own 50% of this 636-unit residential rental building with 65,000 sq ft of retail space and serve as the development manager. We set out to design Young & Roselawn as a zero-carbon building. In Q2, the project received the Zero Carbon Building Design Certification by Canada Green Building Council. The ground floor slab will be completed this month, and formwork is progressing to the second floor. 81% of the project costs are now awarded.

Jordie Robins: You'll recall we own 50% of this 636-unit residential rental building with 65,000 square feet of retail space and serve as the development manager. We set out to design Young and Roseland as a zero-carbon building. In Q2, the project received the Zero Carbon Building Design Certification by Canada Green Building Council. The grout and floor slab will be completed this month, and full work is progressing to the second floor. 81% of the project costs are now awarded. We continue to receive strong interest from a variety of retailers for the 65,000 square feet of large and smaller format retail space that we're developing at Roseland. With time on our side from a demand and a market rent perspective, we have no plans to enter into commitments for the space until next year at the earliest.

Operator: We continue to receive strong interest from a variety of retailers for the 65,000 sq ft of large and smaller format retail space that we're developing at Roselawn. With time on our side from a demand and a market rent perspective, we have no plans to enter into commitments for the space until next year at the earliest. Construction of our 1071 King Street West development project in Liberty Village also remains on schedule and on budget. Formwork for the second floor slab is underway. You'll recall we own 25% of this 298-unit, 225,000 sq ft purpose-built residential rental project, which includes 6,000 sq ft of at-grade retail space. Phases two and three of our Humbertown shopping center redevelopment continue to advance as well. Included in phase two, we expect a new and enlarged 34,000 sq ft Loblaws store to open the middle of next year.

Jordan Robins: We continue to receive strong interest from a variety of retailers for the 65,000 sq ft of large and smaller format retail space that we're developing at Roselawn. With time on our side from a demand and a market rent perspective, we have no plans to enter into commitments for the space until next year at the earliest. Construction of our 1071 King Street West development project in Liberty Village also remains on schedule and on budget. Formwork for the second floor slab is underway. You'll recall we own 25% of this 298-unit, 225,000 sq ft purpose-built residential rental project, which includes 6,000 sq ft of at-grade retail space. Phases two and three of our Humbertown shopping center redevelopment continue to advance as well. Included in phase two, we expect a new and enlarged 34,000 sq ft Loblaws store to open the middle of next year.

Jordie Robins: Construction of our 1071 King Street West development project in Liberty Village also remains on schedule and on budget. Form work for the second floor slab is underway. You'll recall we own 25% of this 290-unit, 225,000 square foot purpose-built residential rental project, which includes 6,000 square feet of at-grade retail space. Phases two and three of our Humbertown Shopping Center redevelopment continue to advance as well. Included in phase two, we expect a new and enlarged 34,000 square foot Loblaws store to open in the middle of next year. Within phase three, the newly created 20,000 square foot shopper Strugmark and the Scotiabank, along with a number of others other to-be-announced tenants, are on target for completion in late 2026.

Operator: Within phase three, the newly created 20,000 sq ft Shoppers Drug Mart and the Scotiabank, along with a number of other to-be-announced tenants, are on target for completion in late 2026. On completion, we'll have added a total of 23,000 sq ft of GLA, removed all of its enclosed common area, and Humbertown will look and feel like a brand new grocery and pharmacy-anchored shopping center. Looking at the related financial returns, we'll have invested approximately CAD 45 million on this redevelopment and will generate an unlevered return that exceeds 7%. We have other redevelopment opportunities in the planning and construction stage, including several of our enclosed centers and the redevelopment of the former Molson Pub site in Calgary. I look forward to updating you on all of this activity in future quarters.

Jordan Robins: Within phase three, the newly created 20,000 sq ft Shoppers Drug Mart and the Scotiabank, along with a number of other to-be-announced tenants, are on target for completion in late 2026. On completion, we'll have added a total of 23,000 sq ft of GLA, removed all of its enclosed common area, and Humbertown will look and feel like a brand new grocery and pharmacy-anchored shopping center. Looking at the related financial returns, we'll have invested approximately CAD 45 million on this redevelopment and will generate an unlevered return that exceeds 7%. We have other redevelopment opportunities in the planning and construction stage, including several of our enclosed centers and the redevelopment of the former Molson Pub site in Calgary. I look forward to updating you on all of this activity in future quarters.

Jordie Robins: On completion, we'll have added a total of 23,000 square feet of GLA, removed all of its enclosed common area, and Humbertown will look and feel like a brand new grocery and pharmacy-anchored shopping center. Looking at the related financial returns, we'll have invested approximately $45 million on this redevelopment and will generate an unlevered return that exceeds 7%. We have other redevelopment opportunities in the planning and construction stage, including several of our enclosed centers and a redevelopment of the former Molson Pub site in Calgary. I look forward to updating you on all of this activity of future quarters. Turning to entitlements, in 2025, we anticipate we will receive approvals for an additional 1.7 million square feet of incremental density add share. During this year, we also expect to submit rezoning applications for a further 1.8 million square feet of incremental density.

Operator: Turning to entitlements, in 2025, we anticipate we will receive approvals for an additional 1.7 million square feet of incremental density at share. During this year, we also expect to submit rezoning applications for a further 1.8 million square feet of incremental density. This past quarter, we submitted entitlement applications for nearly 1.1 million square feet of this contemplated space. To date, netting out the density we've already sold, we've submitted for entitlements on approximately 18 million square feet of incremental density. This represents 79% of our 23 million square foot pipeline. Once secured, the value of this approved density will be crystallized either through the sale of 100% interest, as is the case with Montgomery and Anjou, or a partial sale to a strategic partner like Young & Roselawn. We continue to advance our objectives and feel very good about our progress to date.

Jordan Robins: Turning to entitlements, in 2025, we anticipate we will receive approvals for an additional 1.7 million square feet of incremental density at share. During this year, we also expect to submit rezoning applications for a further 1.8 million square feet of incremental density. This past quarter, we submitted entitlement applications for nearly 1.1 million square feet of this contemplated space. To date, netting out the density we've already sold, we've submitted for entitlements on approximately 18 million square feet of incremental density. This represents 79% of our 23 million square foot pipeline. Once secured, the value of this approved density will be crystallized either through the sale of 100% interest, as is the case with Montgomery and Anjou, or a partial sale to a strategic partner like Young & Roselawn. We continue to advance our objectives and feel very good about our progress to date.

Jordie Robins: This past quarter, we submitted entitlement applications for nearly 1.1 million square feet of this contemplated space. To date, netting out the density we've already sold, we've submitted for entitlements on approximately 18 million square feet of incremental density. This represents 79% of our 23 million square foot pipeline. Once secured, the value of this approved density will be crystallized either through the sale of 100% interest, as is the case with Montgomery and Aljou, or a partial sale to a strategic partner like Young and Roseland. We continue to advance our objectives and feel very good about our progress to date. Thank you for your time today and your continued support of FCR. And with that, operators, we can now open it up for questions.

Operator: Thank you for your time today and your continued support of FCR. With that, operator, we can now open it up for questions. Thank you. Please press star one at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from Lorne Kalmar from Desjardins. Please go ahead. Your line is open. Thanks. Good afternoon, everyone. Neil, you mentioned the increase in the same property and a growth outlook. Is there any change quarter-over-quarter that drove the increase, or was there just an element of conservatism built into the prior outlook? Yeah. Hi, Lorne. Good afternoon. No, I would say it's just a progression of the results through the year. We came into 2025 with the view that it would be, I'll call it, above trend year.

Jordan Robins: Thank you for your time today and your continued support of FCR. With that, operator, we can now open it up for questions.

Operator: Thank you. Please press star one at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from Lorne Kalmar from Desjardins. Please go ahead. Your line is open.

Operator: Thank you. Please press star one at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from Lauren Calmar from Desjardins. Please go ahead. Your line is open.

Lorne Kalmar: Thanks. Good afternoon, everyone. Neil, you mentioned the increase in the same property and a growth outlook. Is there any change quarter-over-quarter that drove the increase, or was there just an element of conservatism built into the prior outlook?

Analyst: Thanks. Good afternoon, everyone. Neil, you mentioned the increase in the same property and like growth outlook. Was there any change quarter over quarter that drove the increase, or was there just an element of conservatism built into the buyer outlook?

Neil Downey: Yeah. Hi, Lorne. Good afternoon. No, I would say it's just a progression of the results through the year. We came into 2025 with the view that it would be, I'll call it, above trend year. That is continuing to materialize and adding to our confidence that we think we can deliver about 5% organic growth for the year.

Adam Paul: Yeah, hi, Lauren. Good afternoon. You know, I would say it's just a progression of the results through the year. You know, we came into 2025 with the view that it would be, I'll call it, above a trend year. And you know, that is continuing to materialize and adding to our confidence that we think we can deliver about 5% organic growth for the year.

Operator: That is continuing to materialize and adding to our confidence that we think we can deliver about 5% organic growth for the year. Okay. Fair enough. Then just on the revenues from temporary tenant storage, etc., etc., it was up CAD 1 million sequentially. I know you called out some one-time items at NOI. Would that be part of that bucket? No, not specifically. Oh, okay. I guess another way back to that, do you guys kind of expect that to be the trend going forward for that line item? There is a bit of seasonality in that line item, Lorne, I believe. Okay. Thank you for that. Then just one last one. Maybe getting a little bit ahead of myself here, but looking at the average rents on 2026 expiries, it's quite a bit higher than any of the years prior to 2030.

Lorne Kalmar: Okay. Fair enough. Then just on the revenues from temporary tenant storage, etc., etc., it was up CAD 1 million sequentially. I know you called out some one-time items at NOI. Would that be part of that bucket?

Analyst: Okay. Fair enough. And then just on the revenues from temporary tenant storage, etc., etc., was up a million bucks sequentially. I know you called out some one-time items in NOI. Would that be part of that bucket?

Neil Downey: No, not specifically.

Adam Paul: No, not specifically.

Lorne Kalmar: Oh, okay. I guess another way back to that, do you guys kind of expect that to be the trend going forward for that line item?

Analyst: Oh, okay. So I guess another way back to that, do you guys kind of expect that to be the trend going forward for that line item?

Neil Downey: There is a bit of seasonality in that line item, Lorne, I believe.

Adam Paul: There is a bit of seasonality in that line item, Lauren, I believe.

Lorne Kalmar: Okay. Thank you for that. Then just one last one. Maybe getting a little bit ahead of myself here, but looking at the average rents on 2026 expiries, it's quite a bit higher than any of the years prior to 2030. Is this just a function of where the lease expiries are, or should we expect a step down in rent growth versus 2025?

Analyst: Okay. Thank you for that. And then just one last one. Maybe getting a little bit ahead of myself here, but looking at the average rents on 2026 expires, it's quite a bit higher than any of the years prior to 2030. Is this just a function of where the lease expiry are, or should we expect a step-down in rent growth versus 2025?

Operator: Is this just a function of where the lease expiries are, or should we expect a step down in rent growth versus 2025? Yeah. I mean, it's a good question, Lorne. What I would describe when you see expiring rents that are higher than normal, the composition of the space is typically different. I mentioned this particular quarter, we had an expiring Walmart at 150,000 sq ft. That was a single-digit net rent. Next year, we do not have any Walmarts that are expiring. That's one thing in isolation that moves the needle. I can tell you from our perspective, the type of rent growth that we've been experiencing in percentage terms, we expect to continue in 2026. Now, withstanding on the surface, the average rent that's expiring is higher than some other years.

Adam Paul: Yeah. I mean, it's a good question, Lorne. What I would describe when you see expiring rents that are higher than normal, the composition of the space is typically different. I mentioned this particular quarter, we had an expiring Walmart at 150,000 sq ft. That was a single-digit net rent. Next year, we do not have any Walmarts that are expiring. That's one thing in isolation that moves the needle. I can tell you from our perspective, the type of rent growth that we've been experiencing in percentage terms, we expect to continue in 2026. Now, withstanding on the surface, the average rent that's expiring is higher than some other years.

Adam Paul: Yeah, it's, Adam, and I hear your question, Lauren. But what I've described when you see expiring rents that are higher than normal, the composition of the space is typically different. So you know, I mentioned this particular quarter, we had an expiring Walmart at 150,000 square feet. That was a small digit net rent. Next year, we do not have any Walmarts that are expiring. So that's one thing in isolation that moves the needle. So I can tell you from our perspective, the type of rent growth that we've been experiencing in percentage terms, we expect to continue in 2026, notwithstanding on the surface, the average rent that's expiring is higher than some other years. It's a function of the nature of the space and the type of tenants that are expiring.

Operator: It's a function of the nature of the space and the type of tenants that are expiring. Okay. Great. Thank you so much. I will turn it back. Thank you. Thank you. The next question is from Mike. Mike, it is from BMO. Please go ahead. Your line is open. Thanks, operator. Congratulations on the strong Q2 results. Just one question for me. I guess you guys are maybe a little bit like I have a CAD 350 to CAD 375 million of disposed left to do to sort of get to that CAD 750 million target. I just wanted to give some thoughts or color around what the composition of the balance might look like just in terms of the split between density and maybe potentially some of the income-producing but still non-core assets in your portfolio. Thanks for your question, Mike.

Adam Paul: It's a function of the nature of the space and the type of tenants that are expiring.

Lorne Kalmar: Okay. Great. Thank you so much. I will turn it back.

Analyst: Okay. Great. Thank you so much. I will turn it back.

Operator: Thank you. Thank you. The next question is from Mike. Mike, it is from BMO. Please go ahead. Your line is open.

Adam Paul: Thank you.

Operator: Thank you. The next question is from Mike. Mike is from BMO. Please go ahead. Your line is open.

Michael Markidis: Thanks, operator. Congratulations on the strong Q2 results. Just one question for me. I guess you guys are maybe a little bit like I have a CAD 350 to CAD 375 million of disposed left to do to sort of get to that CAD 750 million target. I just wanted to give some thoughts or color around what the composition of the balance might look like just in terms of the split between density and maybe potentially some of the income-producing but still non-core assets in your portfolio.

Analyst: Thanks, operator. Congratulations on the strong second quarter results. Just one question for me. I guess you guys are maybe a little bit like I was 350 to 375 million of dispos left to do just to get to that 750 target. I'm just wondering if you can give some thoughts or color around what that the composition of the balance might look like just in terms of the split between density and maybe potentially some of the income-producing but still non-core assets in the on-call portfolio.

Adam Paul: Thanks for your question, Mike.

Adam Paul: So the insurance question, Mike, I would say in this particular case, it's really the good indication of the future. So if you look at, you know, the 400 million that we've either sold or contracted to sell since the beginning of the plan, it's been a mix of low-yielding assets by developments like Mount Gungree or low-yielding assets like Anjou and some others that we've sold. When we look at the remaining part of the plan and the composition of the assets, it's very similar. So roughly even split between lower-yielding income properties and development sites. And so hopefully, that gives you some clarification around what to expect, very similar to what you've seen so far.

Operator: I would say in this particular case, history is a good indication of the future. If you look at the CAD 400 million that we've either sold or contracted to sell since the beginning of the plan, it's been a mix of no-yielding assets like development sites like Montgomery or low-yielding assets like Anjou and some others that we've sold. When we look at the remaining part of the plan and the composition of the assets, it's very similar. Roughly, even split between lower-yielding income properties and development sites. Hopefully, that gives you some clarification around what to expect, very similar to what you've seen so far. Okay. No, appreciate that. Thanks. Just if we exit the Walmart this quarter, then the leasing spread looks even better. I recognize that you do have these sometimes from quarter-to-quarter in your portfolio.

Adam Paul: I would say in this particular case, history is a good indication of the future. If you look at the CAD 400 million that we've either sold or contracted to sell since the beginning of the plan, it's been a mix of no-yielding assets like development sites like Montgomery or low-yielding assets like Anjou and some others that we've sold. When we look at the remaining part of the plan and the composition of the assets, it's very similar. Roughly, even split between lower-yielding income properties and development sites. Hopefully, that gives you some clarification around what to expect, very similar to what you've seen so far.

Michael Markidis: Okay. No, appreciate that. Thanks. Just if we exit the Walmart this quarter, then the leasing spread looks even better. I recognize that you do have these sometimes from quarter-to-quarter in your portfolio. If we thought about just flat renewals or very punitive fixed-rate steps, I guess punitive for you, not for the person who occupies the space, what would be the proportion of your portfolio that's subject to these type of fixed-rate renewals in the future?

Analyst: Okay. No, I appreciate that. Thanks. And then just, you know, if we exit the Walmart this quarter, then the leasing spread looks even better. I recognize that you do have these sometimes from quarter to quarter in your portfolio. If we thought about just flat renewal or very punitive fixed-rate steps, I guess punitive for you, not for the the person who occupies the space, what would be the proportion of your portfolio that's subject to these types of fixed-rate renewals in the future?

Operator: If we thought about just flat renewals or very punitive fixed-rate steps, I guess punitive for you, not for the person who occupies the space, what would be the proportion of your portfolio that's subject to these type of fixed-rate renewals in the future? Well, I have to get back on what percentage is subject to fixed-rate renewals. What we've seen, not necessarily quarter-over-quarter but year-over-year, there's been a fairly high degree of consistency for several years now. We're still saddled with a very small number of sporadic fixed-rate renewals. We typically don't give them ourselves. These are properties where we bought them and consequently bought the leases years ago. Let's get back to you on a little more color on the exact percentage. One thing I can tell you is it's been fairly consistent year-over-year.

Adam Paul: Well, I have to get back on what percentage is subject to fixed-rate renewals. What we've seen, not necessarily quarter-over-quarter but year-over-year, there's been a fairly high degree of consistency for several years now. We're still saddled with a very small number of sporadic fixed-rate renewals. We typically don't give them ourselves. These are properties where we bought them and consequently bought the leases years ago. Let's get back to you on a little more color on the exact percentage. One thing I can tell you is it's been fairly consistent year-over-year.

Adam Paul: Well, I don't think the exact John, what percentage is subject to fixed-rate renewals, but what we've seen, not necessarily quarter to quarter, but year to year, there's been a fairly high degree of consistency for several years now. So you know, we're still saddled with a very small number of of sporadic fixed-rate renewals. We typically don't do them ourselves. So these are properties where we bought them and consequently bought the leases years ago. But so let's get back to you on a little more color on the exact percentage. But one thing I can tell you is it's been fairly consistent year to year. And when we look over the next few years, that remains the case.

Operator: When we look over the next few years, that remains the case. Okay. No, that's fair. I guess just last one. I promised this time last one when I said that. Obviously, market rents have had to grow a good amount to get to where we are today. How would you characterize the pace of market rent growth sort of over the past 3 to 6 months? Do you expect that we've plateaued here for the next little while, and we're just going to continue to eat into mark-to-market, or do you think market rent growth will continue to progress at a reasonable tempo over the next several years? Yeah. Look, we see all the makings for it to continue to progress and grow at an above-average rate relative to the historical norm. It's really a function of what we touched on today.

Adam Paul: When we look over the next few years, that remains the case.

Michael Markidis: Okay. No, that's fair. I guess just last one. I promised this time last one when I said that. Obviously, market rents have had to grow a good amount to get to where we are today. How would you characterize the pace of market rent growth sort of over the past 3 to 6 months? Do you expect that we've plateaued here for the next little while, and we're just going to continue to eat into mark-to-market, or do you think market rent growth will continue to progress at a reasonable tempo over the next several years?

Analyst: Okay. No, that's fair. And I guess just last one, I promise this is time last one when I say that. Obviously, market rents have had to grow a good amount to get to where we are today. How would you characterize the pace of market rent growth sort of over the past three to six months and how do you expect that we've plateaued here for the next little while and we're just going to continue to eat into market to market, or do you think market rent growth will continue to progress at a reasonable effect over the next several years?

Adam Paul: Yeah. Look, we see all the makings for it to continue to progress and grow at an above-average rate relative to the historical norm. It's really a function of what we touched on today.

Adam Paul: Yeah. Look, we'd be all in waiting for it to continue to progress and grow at an above-average rate relative to the historical norm. And it's really a function of what we touched on today. You know, if you take the timeframe from, say, 2017 to today, we've seen the Canadian population grow by nearly 5 million people or about 13%. That growth has been focused on the urban areas. So the trade areas where our properties are located have benefited disproportionately from that growth. And we've seen very little supply of our product type. You've seen inflation positively impact our tenant base in terms of top-line sales, but equally as important, we know that they've protected profit margins. So their store profitability is up. Their renting capability is up. And we're seeing broad-based growth.

Operator: If you take the time frame from, say, 2017 to today, we've seen the Canadian population grow by nearly 5 million people or about 13%. That growth has been focused on the urban areas. The trade areas where our properties are located have benefited disproportionately from that growth. We've seen very little supply of our product type. You've seen inflation positively impact our tenant base in terms of top-line sales. Equally as important, we know that they've protected profit margins. Their store profitability is up. Their rent-paying capability is up. We're seeing broad-based growth. I mentioned that we had 4 grocery stores and 7 pharmacies, renewals in the quarter, all of which were owned by grocery stores. The rent increase on those were just as good or better than the average for the quarter.

Adam Paul: If you take the time frame from, say, 2017 to today, we've seen the Canadian population grow by nearly 5 million people or about 13%. That growth has been focused on the urban areas. The trade areas where our properties are located have benefited disproportionately from that growth. We've seen very little supply of our product type. You've seen inflation positively impact our tenant base in terms of top-line sales. Equally as important, we know that they've protected profit margins. Their store profitability is up. Their rent-paying capability is up. We're seeing broad-based growth. I mentioned that we had 4 grocery stores and 7 pharmacies, renewals in the quarter, all of which were owned by grocery stores. The rent increase on those were just as good or better than the average for the quarter.

Adam Paul: Like, you know, I mentioned that we had four grocery stores and seven pharmacies renewals in the quarter all, which were owned by grocery stores. But the rent increase on those were just as good or better than the average for the quarter. So we're seeing a broad base, and we see all the makings for continued market rent growth. The economic rents are still way above in place for market rents today. And so, you know, you're not going to see the full supply as a result of that, which means you know market rents are poised to continue to grow at an above-average rate. That's what we hope, and that's what we expect to see. And that's currently what's been playing out in the business and coming through our results.

Operator: We're seeing it broad-based, and we see all the makings for continued market rent growth. Economic rents are still way above in-place or market rents today. You're not going to see meaningful supply as a result of that, which means market rents are poised to continue to grow at an above-average rate. That's what we hope, and that's what we expect to see. That's currently what's been playing out in the business and coming through our results. Oh, that's very good color. Thanks, Adam. Congrats again. A little early, but hope you guys enjoy your long weekend. Okay. Excellent. Thank you. You as well. Thank you. The next question is from Pammi Bir from RBC Capital Markets. Please go ahead. Your line is open. Thanks. Hi, everyone. I guess a pretty positive outcome on the Montgomery land transaction.

Adam Paul: We're seeing it broad-based, and we see all the makings for continued market rent growth. Economic rents are still way above in-place or market rents today. You're not going to see meaningful supply as a result of that, which means market rents are poised to continue to grow at an above-average rate. That's what we hope, and that's what we expect to see. That's currently what's been playing out in the business and coming through our results.

Michael Markidis: Oh, that's very good color. Thanks, Adam. Congrats again. A little early, but hope you guys enjoy your long weekend.

Analyst: Oh, that's very good color. Thanks, Adam. Congrats again, and a little early, but I hope you guys enjoy your long weekend.

Adam Paul: Okay. Excellent. Thank you. You as well.

Adam Paul: Okay. Excellent. Thank you. You as well.

Operator: Thank you. The next question is from Pammi Bir from RBC Capital Markets. Please go ahead. Your line is open.

Operator: Thank you. The next question is from Tommy Bear from RBC Capital Markets. Please go ahead. Your line is open.

Pammi Bir: Thanks. Hi, everyone. I guess a pretty positive outcome on the Montgomery land transaction.

Analyst: Thanks, Ed. Hi, everyone. I got a pretty positive outcome on the Montgomery Land transaction. Can you maybe just provide some background on the buyer there? And you know, as you kind of work through some of these slower housing markets, have you seen any changes in the buyer landscape, positive or negative?

Operator: Can you maybe just provide some background on the buyer there? As you kind of work through some of these slower housing markets, have you seen any changes in the buyer landscape, positive or negative? Hi, Pammi. I'm Jordy. We can't yet disclose the name of the buyer, but I'll say historically, a condominium developer with a very long and successful history, they are considering doing multifamily rental on the site. I would say they were motivated primarily by the location of the site and the prospect they saw for success and growth, particularly its proximity to transit. As you know, you've got the Young University line, and you've got obviously the East-West, Edmonton LRT. Both of those elements and the surrounding 500,000-person trade area was of huge value to them and hit the threshold that they were seeking. Got it.

Pammi Bir: Can you maybe just provide some background on the buyer there? As you kind of work through some of these slower housing markets, have you seen any changes in the buyer landscape, positive or negative?

Jordan Robins: Hi, Pammi. I'm Jordy. We can't yet disclose the name of the buyer, but I'll say historically, a condominium developer with a very long and successful history, they are considering doing multifamily rental on the site. I would say they were motivated primarily by the location of the site and the prospect they saw for success and growth, particularly its proximity to transit. As you know, you've got the Young University line, and you've got obviously the East-West, Edmonton LRT. Both of those elements and the surrounding 500,000-person trade area was of huge value to them and hit the threshold that they were seeking.

Jordie Robins: I'm Bob Manchuri. We can't yet disclose the name of the buyer, but I'll say historically, a condominium developer with a very long and successful history. They are considering doing multifamily rental on the site. And I would say, you know, they were motivated primarily by the location of the site and the prospect they saw for success and growth, particularly its proximity to transit. As you know, you've got the Young University line, and you've got, obviously, the east-west at Edmonton LRT. And both of those elements and the surrounding 500,000-person trade area was of huge value to them and hit the threshold that they were seeking.

Pammi Bir: Got it. As you kind of think about the balance of the year, are there any more transactions that might be in any advanced stages in negotiations or that you expect to close before year-end?

Analyst: Got it. As you kind of think about the balance of the year, are there any more transactions that might might be in any advanced stages in negotiations or that you expect to close before year end?

Operator: As you kind of think about the balance of the year, are there any more transactions that might be in any advanced stages in negotiations or that you expect to close before year-end? Hey, Pammi. Look, we've been at this for a while now, and it's been a patient, focused, methodical approach. It has not been easy, notwithstanding the success that Jordan and his team have had. At any given time, we have multiple transactions underway. There are various stages. Obviously, the ones that get done, others we continue to work on. Our full expectation is that we certainly get more done this year, but it would be premature to say which properties or what quantum. Importantly, we're on track for a 3-year plan. We believe that we will get that done, maybe a bit chunky or lumpy in terms of quarter to quarter.

Adam Paul: Hey, Pammi. Look, we've been at this for a while now, and it's been a patient, focused, methodical approach. It has not been easy, notwithstanding the success that Jordan and his team have had. At any given time, we have multiple transactions underway. There are various stages. Obviously, the ones that get done, others we continue to work on. Our full expectation is that we certainly get more done this year, but it would be premature to say which properties or what quantum. Importantly, we're on track for a 3-year plan. We believe that we will get that done, maybe a bit chunky or lumpy in terms of quarter to quarter.

Adam Paul: Hey, Bob, look, we've been at this for a while now, and it's been a patient, focused, methodical approach. And it has not been easy, notwithstanding the success that Jordy and his team have had. And so at any given time, we have multiple transactions underway. They're at various stages. Obviously, you know the ones that get done, the others we continue to work on. And so our whole expectation is that we certainly get more done this year, but it would be premature to say whether, you know, which properties or what quantum. Importantly, we're on track for a three-year plan. We believe that we will get that done. It may be a bit chunky or lumpy in terms of quarter to quarter, but we can't tell you we're working on other transactions, and we'll update you as they progress to an appropriate stage.

Operator: We can't tell you we're working on other transactions, and we'll update you as they progress to an appropriate stage. Got it. Okay. Maybe just switching gears, just given the consistent strength that we've seen in the grocery-anchored space, how would you characterize the depth of the private market demand for acquisitions at this stage? Are you seeing any new capital being formed, domestic or foreign, that might perhaps put some pressure on cap rates? Yeah. The demand is pretty good. I think probably something that's more likely to drive cap rates lower in the short term is where interest rates go. Cap rates have been pretty sticky.

Adam Paul: We can't tell you we're working on other transactions, and we'll update you as they progress to an appropriate stage.

Pammi Bir: Got it. Okay. Maybe just switching gears, just given the consistent strength that we've seen in the grocery-anchored space, how would you characterize the depth of the private market demand for acquisitions at this stage? Are you seeing any new capital being formed, domestic or foreign, that might perhaps put some pressure on cap rates?

Analyst: Got it. Okay. Maybe just switching gears, just given you know the consistent strength that we've seen in the grocery-anchored space, how would you characterize the the depth of the private market demand for acquisitions at this stage? And are you seeing any new capital being formed, domestic or foreign, that might perhaps put some pressure on cap rates?

Adam Paul: Yeah. The demand is pretty good. I think probably something that's more likely to drive cap rates lower in the short term is where interest rates go. Cap rates have been pretty sticky.

Adam Paul: The demand is pretty good. I think probably something that's more likely to drive the cap rate lower in the short term is where interest rates go. So cap rates have been pretty sticky, but when you look at where you can finance grocery and your shopping centers and take secured debt, which is accessible to almost everyone, you'll find your money generally in the low floors. That's very different than where it was 12 to 18 months ago, where cap rates are still appraising out at a similar level. So I would say that's one area to watch. In terms of new capital, cool yet, it's interesting because there's a lot of dialogue out there about how, you know, grocery-anchored retail is amongst the most favored asset classes.

Operator: When you look at where you can finance grocery-anchored shopping centers and take secured debt, which is accessible to almost everyone, 5-year money generally in the low 4s, that's very different than where it was 12 to 18 months ago. Cap rates are still appraising out at a similar level. I would say that's one area to watch in terms of new capital pools. Yeah. It's interesting because there's a lot of dialogue out there about how grocery-anchored retail is amongst the most favored asset classes. Some of the people saying that are not in a position to buy yet, namely some of the pension funds, where they're still dealing with their allocation in other real estate subsectors and trying to get those balances in order.

Adam Paul: When you look at where you can finance grocery-anchored shopping centers and take secured debt, which is accessible to almost everyone, 5-year money generally in the low 4s, that's very different than where it was 12 to 18 months ago. Cap rates are still appraising out at a similar level. I would say that's one area to watch in terms of new capital pools. Yeah. It's interesting because there's a lot of dialogue out there about how grocery-anchored retail is amongst the most favored asset classes. Some of the people saying that are not in a position to buy yet, namely some of the pension funds, where they're still dealing with their allocation in other real estate subsectors and trying to get those balances in order.

Adam Paul: And some of the people saying that are not in a position to buy yet, namely some of the pension funds where they're still dealing with their allocation and other real estate subsectors and trying to get those balances in order. So I think that would be the other place to watch in terms of large capital pools that start to more aggressively pursue retail.

Operator: I think that would be the other place to watch in terms of large capital pools that start to more aggressively pursue retail. Would you consider partnering with some of these pension funds on the core portfolio, if that's a means for them, to maybe gain some exposure? The short answer is not likely. Again, everything we do comes back to the key investor objectives that we're trying to deliver. By partnering in isolation on a meaningful component of our core grocery-anchored portfolio, it just doesn't achieve that. Where it would be more likely is if we came across a large new opportunity to invest in grocery-anchored retail because over the next 18 months, call it the balance of our three-year plan, we've got a defined limited amount of acquisition capital available.

Adam Paul: I think that would be the other place to watch in terms of large capital pools that start to more aggressively pursue retail.

Pammi Bir: Would you consider partnering with some of these pension funds on the core portfolio, if that's a means for them, to maybe gain some exposure?

Analyst: And you know, would you consider partnering with some of these pension funds if, you know, on the core portfolio, if that's a means for them, you know, to maybe gain some exposure?

Adam Paul: The short answer is not likely. Again, everything we do comes back to the key investor objectives that we're trying to deliver. By partnering in isolation on a meaningful component of our core grocery-anchored portfolio, it just doesn't achieve that. Where it would be more likely is if we came across a large new opportunity to invest in grocery-anchored retail because over the next 18 months, call it the balance of our three-year plan, we've got a defined limited amount of acquisition capital available.

Adam Paul: The short answer is not likely. Again, everything we do comes back to the key investor objectives that we're trying to deliver. And by partnering in isolation on a meaningful component of our core grocery-anchored portfolio, it just doesn't achieve that. Where it would be more likely is if we came across a large new opportunity to invest in in grocery-anchored retail. Because over the next 18 months, you know, all of the balance of our three-year plan, we've got a defined limited amount of acquisition capital available. So if there was an opportunity that exceeded that, that's when it would make sense for us. But when we start looking out beyond 2026, you know, we start to see a business plan that allows for a lot more investment in acquisitions than we've seen over the last couple of years. And so, again, it'll be a function of opportunity.

Operator: If there was an opportunity that exceeded that's when it would make sense for us. When we start looking out beyond 2026, we start to see a business plan that allows for a lot more investment in acquisitions than we've seen over the last couple of years. Again, it'll be a function of opportunity. From our perspective, to be selling down our core grocery-anchored shopping center portfolio in any meaningful way, the only way it would rationally make sense is if it was part of a much larger transaction that involved the investment in new grocery-anchored shopping centers. Great. Thanks very much. I'll turn it back, Adam. Thanks very much, Pami. Thank you. The next question is from Sam Damiani from TD Cowen. Please go ahead. Your line is open. Thanks. Good afternoon.

Adam Paul: If there was an opportunity that exceeded that's when it would make sense for us. When we start looking out beyond 2026, we start to see a business plan that allows for a lot more investment in acquisitions than we've seen over the last couple of years. Again, it'll be a function of opportunity. From our perspective, to be selling down our core grocery-anchored shopping center portfolio in any meaningful way, the only way it would rationally make sense is if it was part of a much larger transaction that involved the investment in new grocery-anchored shopping centers.

Adam Paul: But from our perspective, to be selling down our core grocery-anchored shopping center portfolio in any meaningful way, the only way it would rationally make sense is if it was part of a much larger transaction that involved the investment in new grocery-anchored shopping centers.

Pammi Bir: Great. Thanks very much. I'll turn it back, Adam.

Analyst: Great. Thanks very much. I'll send it back, Adam.

Adam Paul: Thanks very much, Pami.

Adam Paul: Thanks very much, Bob.

Operator: Thank you. The next question is from Sam Damiani from TD Cowen. Please go ahead. Your line is open.

Operator: Thank you. The next question is from Sam Damiani from TD Cowan. Please go ahead. Your line is open.

Sam Damiani: Thanks. Good afternoon.

Sam Damiani: Thanks. Good afternoon. And I guess just to finish up on Tommy's question there, it sounds like what you're saying, Adam, is that the sort of the low eight times debt deep dock is kind of where you see the business stabilizing beyond 26 and, and you know, henceforth being able to, you know, redeploy capital and no longer needing to pay down debt. Is that a fair assumption the way you're thinking about it?

Operator: I guess just to finish off on Pammi's question there, it sounds like what you're saying, Adam, is that sort of the low-eight times, debt deep, da da is kind of where you see the business stabilizing beyond 2026 and henceforth being able to redeploy capital and no longer needing to pay down debt. Is that a fair assumption, the way you're thinking about it? In part, Sam. If you run through our activities and make the assumption that we will continue to sell low and no-yielding assets for many years to come, which is a safe assumption, then the question becomes, does the use of capital from those proceeds change? Right now, call it roughly evenly split between debt repayment and real estate investment activities. Part of the strategy work that we will do over the balance of the year is exactly that.

Sam Damiani: I guess just to finish off on Pammi's question there, it sounds like what you're saying, Adam, is that sort of the low-eight times, debt deep, da da is kind of where you see the business stabilizing beyond 2026 and henceforth being able to redeploy capital and no longer needing to pay down debt. Is that a fair assumption, the way you're thinking about it?

Adam Paul: In part, Sam. If you run through our activities and make the assumption that we will continue to sell low and no-yielding assets for many years to come, which is a safe assumption, then the question becomes, does the use of capital from those proceeds change? Right now, call it roughly evenly split between debt repayment and real estate investment activities. Part of the strategy work that we will do over the balance of the year is exactly that.

Adam Paul: In part, Sam. So if you run through our our our activities and make the assumption that we will continue to sell low and low-yielding assets for many years to come, which is a safe assumption, then the question becomes, does the use of capital from those proceeds change? Right now, you know, call it roughly evenly split between debt repayment and real estate investment activities. And so part of the strategy work that we will do over the balance of the year is is exactly that. And our plan is to come to our investors sometime early next year, likely in the form of another investor day, and present present what our plans are. But that's where the work lies this year for the board and management.

Operator: Our plan is to come to our investors sometime early next year, likely in the form of another investor day, and present what our plans are. That's where the work lies this year for the board and management. If you simply kind of extend our 3-year plan with some reasonable expectations in terms of run rate on NOI growth, etc., then what you do see is leverage easily does continue to come down absent meaningful investment. The decisions to be made is, do we deploy more growth capital instead of doing that or not? What's better for our investors? That's the work that we will do. That makes sense. Very helpful. Just to, I guess, tie the bow on the 2026 lease rule, it does have higher rents, which you addressed. That was pretty clear.

Adam Paul: Our plan is to come to our investors sometime early next year, likely in the form of another investor day, and present what our plans are. That's where the work lies this year for the board and management. If you simply kind of extend our 3-year plan with some reasonable expectations in terms of run rate on NOI growth, etc., then what you do see is leverage easily does continue to come down absent meaningful investment. The decisions to be made is, do we deploy more growth capital instead of doing that or not? What's better for our investors? That's the work that we will do.

Adam Paul: But if you simply kind of, you know, extend our three-year plan with, you know, some reasonable expectations in terms of run rate on end-of-life growth, etc., then what you do see is leverage easily does continue to come down absent meaningful investment. And so, you know, the decisions to be made is do we deploy more growth capital instead of doing that or not? What's better for our investors? That's what we'll, that's the work that we will do.

Sam Damiani: That makes sense. Very helpful. Just to, I guess, tie the bow on the 2026 lease rule, it does have higher rents, which you addressed. That was pretty clear. There's also a lower amount of leases actually rolling as well. Does that also suggest maybe the same property NOI growth next year could be a little lower?

Sam Damiani: That makes sense. Very helpful. And just to, I guess, tie the bow on the 2026 lease roll, it does have higher rents, which you addressed. That was pretty clear. But there's also a lower amount of leases actually rolling as well. So does that also suggest maybe the same property in a wide growth next year, you know, could be a little, it could be a little lower?

Operator: There's also a lower amount of leases actually rolling as well. Does that also suggest maybe the same property NOI growth next year could be a little lower? No. The short answer is no. The way we've characterized 2026 same property NOI growth from the time we started talking about it, which is when we launched our three-year plan, is we expect it to be a normal year. If you look at our history, our average same property NOI growth is 3%. We've said that the future looks better than the past for some of the reasons I spoke to in terms of why the fundamentals for grocery-anchored retail have changed. That means we expect better than 3% as a normal same property NOI growth rate. That would be the case for next year.

Adam Paul: No. The short answer is no. The way we've characterized 2026 same property NOI growth from the time we started talking about it, which is when we launched our three-year plan, is we expect it to be a normal year. If you look at our history, our average same property NOI growth is 3%. We've said that the future looks better than the past for some of the reasons I spoke to in terms of why the fundamentals for grocery-anchored retail have changed. That means we expect better than 3% as a normal same property NOI growth rate. That would be the case for next year.

Adam Paul: Well, the short answer is no. We've, you know, the way we've characterized 2026 property in a wide growth from the time we started talking about it, which is when we launched our three-year plan, is we said it would be, we expect it to be a normal year. And if you look at our history, our average same property in a wide growth is 3%. And we've said that the future looks better than the past for some of the reasons I spoke to in terms of why the fundamentals for growth strength and retail have changed. So that means we expect better than 3% as a normal same property analyze growth rate, and that would be the case for next year.

Operator: Okay. Okay. That's helpful. Just a couple little ones to finish off here. I guess what we're looking out over the next couple of years, I know there's one or two redevelopments that might get initiated. I'm just thinking, is there any sort of deleasing that could take place in the next year or so that could detract a little bit from NOI as you prepare one or two projects for redevelopment? Yeah. It's possible that there's a little bit of that, but we would describe it at this stage as non-material and not something that would be pronounced enough for us to recommend you to adjust your models. If that changes, we'll let you know. At this point, it would be quite small. Okay.

Sam Damiani: Okay. Okay. That's helpful. Just a couple little ones to finish off here. I guess what we're looking out over the next couple of years, I know there's one or two redevelopments that might get initiated. I'm just thinking, is there any sort of deleasing that could take place in the next year or so that could detract a little bit from NOI as you prepare one or two projects for redevelopment?

Sam Damiani: Okay. Okay. That's helpful. And just a couple of little ones to finish off here. On, I guess, what we're looking at over the next couple of years, I know there's, you know, there's one or two redevelopments that might get initiated. And I'm just thinking, is there any sort of deleasing that could take place in the next year or so that could you track a little bit from NOI as you prepare one or two projects for for redevelopment?

Adam Paul: Yeah. It's possible that there's a little bit of that, but we would describe it at this stage as non-material and not something that would be pronounced enough for us to recommend you to adjust your models. If that changes, we'll let you know. At this point, it would be quite small.

Adam Paul: Yeah. And then it's possible that there's a little bit of that, but we would describe it at this stage as non-material and not something that would be pronounced enough for us to recommend you to adjust your models. If that changes, we'll let you know. But at this point, it would be quite small.

Sam Damiani: Okay. Just finally, also, I guess tacking on to 1 of the questions earlier was just on the dispositions, any thoughts on the timing of exiting any of the Yorkville assets in the next year or so?

Sam Damiani: Okay. And just finally, also, I guess, tacking onto one of the questions earlier was just on the dispositions, any thoughts on the timing of exiting any of the Yorkville assets in the next year or so?

Operator: Just finally, also, I guess tacking on to 1 of the questions earlier was just on the dispositions, any thoughts on the timing of exiting any of the Yorkville assets in the next year or so? Yeah. I'd say there's a strong likelihood that we exit a component of the Yorkville portfolio over the next year and a half. Without getting into specific detail, there's a component that we think based on the asset management and leasing activities that we've undertaken recently, we think they'd be ready to be sold in that timeframe. I think it's a pretty clear picture. Okay. Thanks. Congrats again on a great quarter. Thank you very much, Sam. Thank you. Once again, please press star 1 on the device's keypad if you have a question. The next question is from Matt Kornack from National Bank Financial. Please go ahead.

Adam Paul: Yeah. I'd say there's a strong likelihood that we exit a component of the Yorkville portfolio over the next year and a half. Without getting into specific detail, there's a component that we think based on the asset management and leasing activities that we've undertaken recently, we think they'd be ready to be sold in that timeframe. I think it's a pretty clear picture.

Adam Paul: Yeah. I'd say there's a strong likelihood that we exit a component of the Yorkville portfolio over the next year, year and a half. Without getting into specific detail, there's a component that we think based on the asset management and leasing activities that we've undertaken recently, we think they'd be ready to be sold in that timeframe.

Sam Damiani: It's a pretty clear picture. Okay. Thanks. And congrats again on a great quarter.

Sam Damiani: Okay. Thanks. Congrats again on a great quarter.

Adam Paul: Thank you very much, Sam.

Adam Paul: Thank you very much, Sam.

Operator: Thank you. Once again, please press star 1 on the device's keypad if you have a question. The next question is from Matt Kornack from National Bank Financial. Please go ahead. Your line is open.

Operator: Thank you. Once again, please press star one on the device's keypad if you have a question. The next question is from Matt Cornack from National Buying Financial. Please go ahead. Your line is open.

Operator: Your line is open. Hey, guys. Just given the evolution of the landlord-tenant relationship and the strength of your product, are you taking this opportunity to kind of curate the tenant offering differently and maybe push out some underperforming tenants and bring in better-performing tenants given the comfort around occupancy? How should we think about kind of how you're dealing with the strategy within leasing, within the centers themselves? Well, hopefully, you've been thinking we've been doing that for a long time because we have, who spent a lot of time, including at the executive level one, on tenant mix, probably more time than most people think. Getting that mix right is really, really important to us. Certainly, when you have a stronger environment like we've had, there's a little bit more flexibility.

Matt Kornack: Hey, guys. Just given the evolution of the landlord-tenant relationship and the strength of your product, are you taking this opportunity to kind of curate the tenant offering differently and maybe push out some underperforming tenants and bring in better-performing tenants given the comfort around occupancy? How should we think about kind of how you're dealing with the strategy within leasing, within the centers themselves?

Analyst: Hey, guys. Just given the evolution of the landlord-tenant relationship and the strength of your product, are you taking this opportunity to kind of curate the tenant offering differently and maybe push out some underperforming tenants and bring in better-performing tenants given the comfort around occupancy? Or how should we think about kind of how you're dealing with the strategy within leasing within the sectors themselves?

Adam Paul: Well, hopefully, you've been thinking we've been doing that for a long time because we have, who spent a lot of time, including at the executive level one, on tenant mix, probably more time than most people think. Getting that mix right is really, really important to us. Certainly, when you have a stronger environment like we've had, there's a little bit more flexibility.

Adam Paul: Well, I believe you've been thinking we've been doing that for a long time because we have. We spent a lot of time, you know, really at the executive level on tenant mix, probably more time than most people think. But getting that mix right is really, really important to us. And certainly, when you have a stronger environment like we have.There's

Operator: a little bit more flexibility. I would say tenant mix is around the margin on that front. Where it's become more impactful are in things like operating cost recoveries. you know, but as you know from looking at our financials, not all tenants pay their full proportion share of operating cost recoveries. The last year and a half, we've been fixing between 50 and 100 leases a year, mostly anger tenants, to improve, the way they pay operating cost recoveries. you know, use restrictions, no bills. These are, a lot of the things that are more easily attainable in this environment. But I would describe our approach to tenant mix as hyper-focused for a long, long time, and, I wouldn't say that that's changed now.

Operator: I would say tenant mix is around the margin on that front where it's become more impactful are on things like operating cost recoveries. As you know from looking at our financials, not all tenants pay their full proportion share of operating cost recoveries. The last year and a half, we've been fixing between 50 and 100 leases a year, mostly anchor tenants, to improve the way they pay operating cost recoveries, use restrictions, no-builds. These are a lot of the things that are more easily attainable in this environment. I would describe our approach to tenant mix as hyper-focused for a long, long time. I wouldn't say that that's changed now. Makes sense. Maybe a Neil question with regards to where are you, Adam? Where those operating cost recoveries and tax recoveries can trend to?

Adam Paul: I would say tenant mix is around the margin on that front where it's become more impactful are on things like operating cost recoveries. As you know from looking at our financials, not all tenants pay their full proportion share of operating cost recoveries. The last year and a half, we've been fixing between 50 and 100 leases a year, mostly anchor tenants, to improve the way they pay operating cost recoveries, use restrictions, no-builds. These are a lot of the things that are more easily attainable in this environment. I would describe our approach to tenant mix as hyper-focused for a long, long time. I wouldn't say that that's changed now.

Matt Kornack: Makes sense. Maybe a Neil question with regards to where are you, Adam? Where those operating cost recoveries and tax recoveries can trend to? I know this quarter was high, and it sounds like there were some one-time items in it. Is that something that you see kind of evolving and moving closer to, I don't know, what the ultimate percentage that you think you can achieve?

David Brown: Makes sense. maybe a a Neil question with regards to where or or you, Adam, where those, operating cost recoveries, and tax recoveries can trend to. I know this quarter was high. It sounds like there was some one-time item in it. But, is that something that you see kind of evolving and and moving closer to? I don't know what the ultimate percentage that you think you can achieve.

Operator: I know this quarter was high, and it sounds like there were some one-time items in it. Is that something that you see kind of evolving and moving closer to, I don't know, what the ultimate percentage that you think you can achieve? Yeah. Okay, Matt. I'll say two things on that front. Firstly, with reference to the prior year CAM and tax adjustments, I did highlight them in my prepared remarks as something that I think I described as may not necessarily repeat in subsequent quarters. The flip side of that is they may also repeat in subsequent quarters. We're, I think, the only reason to actually disclose is those prior year CAM and tax adjustments. To the best of my knowledge, they happen in every commercial real estate business.

Neil Downey: Yeah. Okay, Matt. I'll say two things on that front. Firstly, with reference to the prior year CAM and tax adjustments, I did highlight them in my prepared remarks as something that I think I described as may not necessarily repeat in subsequent quarters. The flip side of that is they may also repeat in subsequent quarters. We're, I think, the only reason to actually disclose is those prior year CAM and tax adjustments. To the best of my knowledge, they happen in every commercial real estate business.

Operator: Yeah. Okay. Bad, so I'll say two things on that front. Firstly, with reference to the prior year CAM and tax adjustments, you know, I did highlight that in my prepared remarks as something that I think I described as may not necessarily repeat in subsequent quarters. But the flip side of that is they may also repeat in subsequent quarters. So, you know, we're, I think, the only reason that actually discloses those prior year CAM and tax adjustments. To the best of my knowledge, they happen in every commercial real estate business. And, you know, when we're building our tenants and making our accruals for recoveries, we certainly don't want to, you know, over-accrue.

Operator: When we're billing our tenants and making our accruals for recoveries, we certainly don't want to over-accrue. In erring on the side of caution versus too much optimism, we would rather have a prior year CAM and tax recovery show up in a subsequent year than a reversal. Those, I would say, are not necessarily repeatable, but they may repeat. If you look in our financial statements for Q2 of 2025, Q2 of 2024, the first half of 2025, and the first half of 2024, there was actually a net recovery in all of those periods. That's a bit of a long-winded answer to point number one. Point number two is, look, we're simply trying to drive growth in net operating income.

Neil Downey: When we're billing our tenants and making our accruals for recoveries, we certainly don't want to over-accrue. In erring on the side of caution versus too much optimism, we would rather have a prior year CAM and tax recovery show up in a subsequent year than a reversal. Those, I would say, are not necessarily repeatable, but they may repeat. If you look in our financial statements for Q2 of 2025, Q2 of 2024, the first half of 2025, and the first half of 2024, there was actually a net recovery in all of those periods. That's a bit of a long-winded answer to point number one. Point number two is, look, we're simply trying to drive growth in net operating income.

Operator: And we would, you know, in erring on the side of of caution versus too much optimism, we would rather have a prior year CAM and tax recovery show up in a subsequent year than a reversal. So, you know, those, I would say, are not necessarily repeatable, but they may repeat. And if you look at our financial statements for Q2 of 2025, Q2 of 2024, and the first half of 2025, and the first half of 2024, there was actually a net recovery in all of those periods. So that's a bit of a long-winded answer to point number one. point number two is, okay, we're we're simply trying to drive, growth in net operating income.

Operator: We're using all of the tools available to drive that growth, including lease renewal spreads, including contractual rental costs, and including fixing or amending shortfalls when we enter into lease negotiations. It's all part of the toolkit. The job or the objective, obviously, is maximum NOI growth. That's really all I can say on that front as opposed to giving some sort of specific forecast or target as to what we think we can get those recovery ratios to. It's a process that takes time, right? Sure. Yep. Makes sense. It's showing up in your figures. The last one, maybe for me, again, on the accounting side, you've made big progress this quarter in some of the conversion of your straight-line to cash rent. Is that done, or do you still expect a little bit more improvement in Q3 on that front? Yeah.

Operator: And we're using all the tools available to drive that growth, including lease renewal spreads, including contractual rental offers, and including, you know, fixing or amending shortfalls when we enter into lease negotiations. So it's all part of the toolkit. The job or the objective, obviously, is maximum NOI growth. And that's really all I can say on that front, as opposed to giving some sort of specific, you know, forecast or target as to what we think we can, you know, get those recovery ratios to. It's a process that takes that takes time, right?

Neil Downey: We're using all of the tools available to drive that growth, including lease renewal spreads, including contractual rental costs, and including fixing or amending shortfalls when we enter into lease negotiations. It's all part of the toolkit. The job or the objective, obviously, is maximum NOI growth. That's really all I can say on that front as opposed to giving some sort of specific forecast or target as to what we think we can get those recovery ratios to. It's a process that takes time, right?

Matt Kornack: Sure. Yep. Makes sense. It's showing up in your figures. The last one, maybe for me, again, on the accounting side, you've made big progress this quarter in some of the conversion of your straight-line to cash rent. Is that done, or do you still expect a little bit more improvement in Q3 on that front?

David Brown: Sure. No, makes sense. and it's showing up in your figures. the last one may be for me, again, on the accounting side. you've made big progress this quarter in some of the conversion of your, straight line to cash rent. Is, is, is that done, or do you still expect a little bit more improvement in Q3 on that front?

Neil Downey: Yeah. I think the short answer is that that has probably normalized at this point on a quarterly run-rate basis, at least in the near term.

Operator: Yeah, I think the short answer is that that is probably normalized at this point on a quarterly run rate basis, at least in the near term.

Operator: I think the short answer is that that has probably normalized at this point on a quarterly run-rate basis, at least in the near term. Okay. Makes sense. Thanks, Sam. Okay. Thank you, Matt. Thank you. There are no further questions registered at this time. I will turn the call back to Mr. Adam Paul. Okay. Thank you very much, operator. Thank you, everyone, for your interest in FCR and your time today. Have a wonderful afternoon. Take care. Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.

Matt Kornack: Okay. Makes sense. Thanks, Sam.

David Brown: Interesting. Thanks, Adam.

Neil Downey: Okay. Thank you, Matt.

Operator: Okay. Thank you, Matt.

Operator: Thank you. There are no further questions registered at this time. I will turn the call back to Mr. Adam Paul.

Operator: Thank you. There are no further questions registered at this time. I will turn the call back to Mr. Adam Paul.

Adam Paul: Okay. Thank you very much, operator. Thank you, everyone, for your interest in FCR and your time today. Have a wonderful afternoon. Take care.

Operator: Okay. Thank you very much, operator. Thank you, everyone, for your interest in FCR and your time today. Have a wonderful afternoon. Take care.

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.