Q3 2025 Canadian Apartment Properties Real Estate Investment Trust Earnings Call

And then on your call today.

During the presentation you can register a question by pressing star followed by one on your telephone keypad.

If you change your mind. Please press star followed by two on your telephone keypad.

I will now hand over to Nicole Dolan Investor Relations at Canadian apartment property right to begin. Please go ahead.

Thank you operator, and good morning, everyone before we begin let me remind everyone that during our conference call. This morning. We may include forward looking statements about expected future events and the financial and operating results of Capri, which are subject to certain risks and uncertainties. We direct your attention to slide two in our other regulatory filings for important information about these.

I will now turn the call over to Mark Kenny President and CEO.

Julian Schonfeldt: This mechanism has delivered meaningful value by allowing us to invest in our own high-quality portfolio at an implied cap rate well above market comparables without due diligence, with quick execution, and minimal transaction costs. Subject to market conditions and other strategic priorities, we plan to continue leveraging this tool to maximize unit over returns. With that, I'll hand it over to Stephen to review our results.

Thanks, Nicole and good morning, everyone join.

Joining me. This morning is Stephen Ko, our Chief Financial Officer, Julian Sean <unk>, our Chief investment Officer.

I'll start with a high level update on our progress in 2025 are summarized on slide four so.

So far this year, we sold $411 million in noncore underperforming Canadian properties on a consolidated basis, we have disposed of $783 million and European assets.

Mark Kenney: Thanks, Julian. In today's operating environment, our seasoned and agile leasing and retention strategies are playing an increasingly crucial role in sustaining performance and driving value. On slide nine, while occupancy softened slightly given recent market dynamics, it remained healthy at 97.8% on 30 September 2024 for the total Canadian residential portfolio. Across occupied suites, our average monthly rent increased by 5.7% year over year to $1,709. Turning to slide ten, robust rent growth was supplemented by prudent cost control. You can see that the same property expenditures increased by 1.3% compared to Q3 last year. However, excluding realty taxes and utilities, operating costs were down by 2.5%, driven mainly by lower R&M costs. Several initiatives contributed to this, including more competitive quoting and closed bidding processes, stricter approval thresholds, enhancements to our procurement practices, and improved sourcing and tendering through software optimization.

With the sale proceeds we've invested 366 million into the purchase of nine high quality low capex properties located in some of the candidates both highly sought after neighborhoods we've.

We've also allocated $200 million tour and CIB program repurchasing cap rates trust units at a weighted average price of $43.

Speaker #1: Hello everyone , and thank you for joining the Canadian Apartment Properties REIT . Third quarter 2025 results conference call . My name is Claire and I will be coordinating your call today during the presentation , you can register a question by pressing star , followed by one on your telephone keypad .

With this being well under well below our diluted NAV per unit of $56 as of September 30, yet it continues to represent a highly accretive use of capital.

Operationally, our same property Canadian portfolio was 97, 8% occupied a period at across which we achieved four 4% growth in average monthly rent combined with disciplined cost management. We were pleased to report our same property NOI margin expanded to 66, 4% in Q3.

Speaker #1: If you change your mind , please press star , followed by two on your telephone keypad . I will now hand over to Nicole Dolan Investor Relations at Canadian Apartment Properties .

Speaker #1: To begin , please go ahead .

Speaker #2: Thank you . Operator and good morning , everyone . Before we begin , let me remind everyone that during our conference call this morning , we may include forward looking statements about expected future events and the financial and operating results of Capri , which are subject to certain risks and uncertainties .

We've also strengthened cap rates balance sheet with leverage decreasing to 37, 7% as at September 32025.

With that overview I will now turn the call over to Julian to provide an update on our capital allocation progress. Thanks, Marc on.

Speaker #2: We direct your attention to slide two and our other regulatory filings for important information about these statements . I will now turn the call over to Mark Kenney president and CEO .

Mark Kenney: These operational efforts drove a 0.8% point increase in our same property NOI margin to 66.4% for the quarter. Diluted FFO per unit was up by 0.6% for the three months ended 30 September 2025, primarily due to NCIB repurchases and, to a lesser extent, reduced interest expense on credit facilities and mortgages payable. These gains were partially offset by lower NOI from asset dispositions. However, with sale proceeds used in part to repay debt, CAPREIT successfully decreased its debt-to-gross book value ratio by 3.2% since 30 September 2024. I mean, sorry, higher vacancy also weighted on performance versus prior year periods, including elevated vacancy in the Netherlands tied to ERES's disposition program, which intentionally holds more suites vacant each month in order to maximize sale value. Results for the nine months ended 30 September 2025 are summarized on slide 11.

On slide six you'll see the significant progress we've made on our portfolio repositioning program, we've been actively divesting underperforming assets and redeploying proceeds into strategically aligned mid market apartment that come with low capital investment requirements and strong cash flow yield.

Speaker #3: Thanks , Nicole , and good morning , everyone . Joining me this morning is Steven Coe , our chief Financial officer . And Julian Schonfeldt , our chief investment officer .

Speaker #3: I'll start with a high level update on our progress in 2025 . As summarized on slide four . So far this year , we've sold $411 million in non-core , underperforming Canadian properties .

This upgrading of strengthening the performance of our affordable while maintain portfolio and reduced our noncore exposure, which is now at only 11% in Canada and 2% in Europe. Looking ahead, we're committed to advancing this transformation simplifying the business and returning to our roots as a pure play provider of Canadian.

Speaker #3: And a consolidated basis . We've disposed of $783 million in European assets with the sale proceeds . We've invested $366 million into the purchase of nine high quality , low CapEx properties located in some of Canada's most highly sought after neighbourhoods .

Apartment properties.

Our N CIB is another important component of our capital allocation strategy as shown on slide seven we executed $200 million of accretive repurchases in 2025, bringing total activity since inception in 2000 $22 million to $866 million.

Speaker #3: We've also allocated $200 million to our NCIB program , repurchasing Caprice Trust units at a weighted average price of $43 . With this being well under , well below our diluted Nav per unit of $56 as of September 30th , it continues to represent a highly accretive use of capital .

This mechanism has delivered meaningful value by allowing us to invest in our own high quality portfolio at an implied cap rate well above market comparable without due diligence with quick execution and minimal transaction costs subject to market conditions and other strategic priorities. We plan to continue leveraging this tool to maximize.

Speaker #3: Operationally , our same property , Canadian portfolio was 97.8% occupied at period end , across which we achieved 4.4% growth in average monthly rent .

Mark Kenney: With heightened cost pressures in the beginning of the year, our nine-month same property NOI margin held approximately flat compared to the same period in 2024, while our total portfolio margin declined to 65.2%. This reflects those early headwinds, despite strong performance in the second and third quarters. Slide 12 provides an overview of our balance sheet, which remains one of the most resilient in our peer group. At period end, we had CAD 281 million in available liquidity, including CAD 84 million in Canadian cash and CAD 197 million in unused capacity on our acquisition and operating facility. This flexible financial position enables us to continue acting swiftly and decisively on accretive market opportunities as they arise. On that note, I will turn the call back over to Mark to wrap up.

Speaker #3: Combined with disciplined cost management , we are pleased to report our same property NOI margin expanded to 66.4% in Q3 . We've also strengthened balance sheet with leverage decreasing to 37.7% as of September 30th , 2025 , with that overview , I will now turn the call over to Julien to provide an update on our capital allocation progress .

Unitholder returns.

With that I'll hand, it over to Steven to review our results.

Thanks, Julien in today's operating environment, a seasoned and agile leasing and retention strategies are playing an increasingly crucial role in sustaining performance and driving value on.

Speaker #4: Thanks , Marc . On slide six , you'll see the significant progress we've made on our portfolio repositioning program . We've been actively divesting underperforming assets and redeploying proceeds into strategically aligned mid-market apartments that come with low capital investment requirements and strong cash flow yields .

On slide nine while occupancy softened slightly given recent market dynamics remained healthy at 97, 8% at September 30 for the total Canadian residential portfolio.

Across occupied suites, our average monthly rent increased by five 7% year over year to $1709.

Speaker #4: This upgrading has strengthened the performance of our affordable , well-maintained portfolio and reduced our non-core exposure , which is now at only 11% in Canada and 2% in Europe .

Turning to slide 10 robust rent growth was supplemented by prudent cost control you can see that the same property expenditures.

Julian Schonfeldt: Thanks, Stephen. In summary, our third quarter 2025 performance underscores the enduring strength and stability of our affordable apartment portfolio in Canada, the value created through strategic capital recycling, the effectiveness of our rigorous property management, and the resilience of our conservative financial framework. Importantly, these elements all work together to support one primary objective: increase free cash flow generation. We view this as essential to sustaining earnings growth and enhancing long-term unitholder value. On slide 14, as we approach year-end, we remain focused on driving continued progress across all areas of our business and reinforcing CAPREIT's long-standing position as a trusted choice for living, working, and investing. We would now be pleased to take any of your questions.

Speaker #4: Looking ahead , we're committed to advancing this transformation , simplifying the business and returning to our roots as a pure play provider of Canadian Apartment Properties .

Increased by one 3% compared to Q3 last year, however, excluding realty taxes and utilities operating costs were down by two 5% driven mainly by lower R&M costs.

Speaker #4: Our NCIB is another important component of our capital allocation strategy . As shown on slide seven . We executed $200 million of accretive repurchases in 2025 , bringing total activity since inception in 2022 to 866 million .

Several initiatives contributed to this including more competitive quoting and closed bidding processes.

Victor approval thresholds and enhancements to our procurement practices and improved sourcing and tendering through software optimization.

His operational efforts drove a 0.8% point increase in our same property NOI margin to 66, 4% for the quarter.

Speaker #4: This mechanism has delivered meaningful value by allowing us to invest in our own high quality portfolio at an implied cap rate well above market comparables .

Diluted ethical per unit was up by <unk>, 6% for the three months ended September 32025, primarily due to and CIB repurchases and to a lesser extent reduced interest expense on our credit facilities and mortgages payable. These.

Speaker #4: Without due diligence , with quick execution and minimal transaction costs subject to market conditions and other strategic priorities . We plan to continue leveraging this tool to maximize unitholder returns .

Operator: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Jonathan Kelcher from TD Cowen. Your line is now open. Please go ahead.

Speaker #4: With that , I'll hand it over to Steven to review our results . Thanks , Julien .

These gains were partially offset by lower NOI from asset dispositions. However, with sale proceeds used in part to repay debt Capri successfully decreased our debt to gross book value ratio by three 2% since September 32024, However, I mean, sorry higher vacancy also weighted on.

Speaker #3: In today's .

Speaker #5: Operating environment , our seasoned and agile leasing and retention strategies are playing an increasingly crucial role in sustaining performance and driving value . On slide nine , while occupancy softened slightly given recent market dynamics , it remained healthy at 97.8% .

Jonathan Kelcher: Thanks. Good morning. First question, just on the capital allocation and the NCIB specifically, with the stock below $40 here, can we expect you to sort of increase the pace or pick up the pace going into year-end and the beginning of next year?

Performance versus prior year periods, including elevated vacancy in the Netherlands tied to erase this disposition program, which intentionally holds more suites peak in each month in order to maximize sale value.

Speaker #5: On September 30th . For the total Canadian residential portfolio across occupied suites . Our average monthly rent increased by 5.7% year over year to $1,709 .

Results for the nine months ended September 32025 are summarized on slide 11.

Speaker #5: Turning to slide ten . Robust rent growth was supplemented by prudent cost control . You can see that the same property expenditures increased by 1.3% compared to Q3 last year .

With heightened cost pressures in the beginning of the year. Our nine months same property NOI margin held approximately flat compared to the same period in 2024, while our total portfolio margin declined to 65, 2%. This reflects those early headwinds despite strong performance in the second and third quarters.

Julian Schonfeldt: Well, there's no question that at today's stock price level, there's extremely compelling value for anybody purchasing the unit. That's something that we got in our stack of capital allocation, and it remains in that stack.

Speaker #5: However , excluding realty taxes and utilities , operating costs were down by 2.5% , driven mainly by lower Ram costs . Several initiatives contributed to this , including more competitive quoting and closed bidding processes , stricter approval thresholds and enhancements to our procurement practices , and improved sourcing and tendering through software optimization .

Slide 12 provides an overview of our balance sheet, which remains one of the most resilient in our peer group.

Jonathan Kelcher: Okay. I guess shifting to operations, the uplifts on turnover, obviously, being weighed down by above-market leases turning. How far do you think you're into that? How much longer do you think that's going to really weigh on the turnover stats?

At period end, we had $281 million in available liquidity, including $84 million and Canadian cash and $197 million and unused capacity on our acquisition and operating facility.

Speaker #5: These operational efforts drove a 0.8% point increase in our same property . NOI margin to 66.4% for the quarter . Diluted FFO per unit was up by 0.6% for the three months ended September 30th , 2025 , primarily due to NCIB repurchases and to a lesser extent , reduced interest expense on credit facilities and mortgages payable .

This flexible financial position enables us to continue acting swiftly and decisively on accretive market opportunities as they arise.

Mark Kenney: Yeah, I think we're, hey Jonathan, I think we're still probably 12 to 18 months away, but I would say as we see a lot of the turnover represented by those above-market leases, we're going to get through that over time.

On that note I will turn the call back over to Mark to wrap up thanks Steven.

Speaker #5: These gains were partially offset by lower NOI from asset dispositions . However , with sale proceeds used in part to repay debt . Capri successfully decreases debt to gross book value ratio by 3.2% .

In summary, our third quarter 2025 performance underscores the enduring strength and stability of our affordable apartment portfolio in Canada, the value created through strategic capital recycling the effectiveness of our rigorous property management and the resilience of our Conservative financial framework importantly, these elements all work.

Jonathan Kelcher: Do you think the kind of 3% to 4% where you are right now is kind of the bottom and maybe start to grow from there in the back half of next year?

Speaker #5: Since September 30th , 2020 . For . However , higher vacancy also waited on performance versus prior year periods , including elevated vacancy in the Netherlands tied to erases disposition program , which intentionally holds more suites vacant each month in order to maximize sale value .

Mark Kenney: Yeah, I think that's a pretty reasonable range.

Together to support one primary objective increase free cash flow generation, we view this as an essential to sustaining earnings growth and enhancing long term unit holder value.

Jonathan Kelcher: Okay, thanks. I'll turn it back.

Operator: Thank you. Our next question comes from Brad Sturges from Raymond James. Brad, your line is now open. Please go ahead.

Speaker #5: Results for the nine months ended September 30th , 2025 are summarized on slide 11 , with heightened cost pressures in the beginning of the year .

On slide 14, as we approach year end, we remain focused on driving continued progress across all areas of our business and reinforcing cap rates long standing position as the trusted choice for living working and investing we would now be pleased to take any of your questions.

Brad Sturges: Hey, good morning. Just to follow up on John's capital allocation question, what would be holding you back on the NCIB here today? Are you seeing more opportunities on the acquisition side that might compete for that capital, or what would be the reason for the, I guess, the cautious tone there?

Speaker #5: Our nine month same property , NOI margin held approximately flat compared to the same period in 2024 , while our total portfolio margin declined to 65.2% .

Yeah.

Thank you ask a question. Please press star followed by one on your telephone keypad now.

Speaker #5: This reflects those early headwinds despite stronger performance in the second and third quarters . Slide 12 provides an overview of our balance sheet , which remains one of the most resilient in our peer group .

Julian Schonfeldt: Well, what we have always said is that we've got the three pillars of use of capital, whether it be property acquisitions, NCIB, or paying down debt. We are very focused on our cash flow journey, and the opportunities to buy new construction assets at significantly below replacement cost is one that we had to balance with the other decisions. Okay? Obviously, how we're compelled to allocate capital is dependent on acquisition opportunities, the level that the stock is trading at, and the cost of debt. Going back to what I said in the first case, there is extremely compelling value in the stock price today.

James Your line. Please press star followed by two.

When preparing to ask a question. Please I'm sure you're the boss is unmated Luckily.

Speaker #5: At period end , we had $281 million in available liquidity , including $84 million in Canadian cash and $197 million in unused capacity .

Our first question comes from Jonathan <unk> from CB Callahan. Your line is now open. Please go ahead.

Thanks, Good morning.

First question just on the capital allocation.

Speaker #5: On our acquisition and operating facility. This flexible financial position enables us to continue acting swiftly and decisively on accretive market opportunities as they arise.

And in the CIB, specifically with the stock below 40 Bucks here can we expect you to sort of.

Yeah.

Increase the pace or pick up the pace going into year.

Speaker #5: On that note , I will turn the call back over to Marc to wrap up .

And in the beginning of next year.

Speaker #3: Thanks , Steven . In summary , our third quarter 2025 performance underscores the enduring strength and stability of our affordable apartment portfolio in Canada .

Well, there's no question that at today's stock price level, there is extremely compelling value for anybody purchasing the units. So that's something that we got in our stock of capital allocation and it remains in that stock.

Speaker #3: The value created through strategic capital recycling, the effectiveness of our rigorous property management, and the resilience of our conservative financial framework.

Jonathan Kelcher: Okay, just maybe a question on the acquisition opportunity set today. How has that evolved or improved or not improved over the last few months? What are you seeing in the market today? I know you highlighted some opportunities in Vancouver when we were there a few weeks ago, just maybe an update on the acquisition opportunity.

Speaker #3: Importantly , these elements all work together to support one primary objective increase free cash flow generation . We view this as an essential to sustaining earnings growth and enhancing long term unitholder value .

Okay.

I guess shifting to operations.

Uplifts on turnover, obviously being weighed down by above market leases turning.

Julian Schonfeldt: Thanks, Brad. There remains a lot of product out there to look at, but the bid-ask spread continues to be very wide, with a lot of the product that's coming online now, born during the kind of COVID-elevated construction cost timeline. There's a divergence between what it costs folks to build the buildings and what they're actually worth now. We see a lot of opportunities, but I'd say very few of them are actually executable at prices that make sense for us. We underwrite hundreds of acquisitions a year. We're not seeing that slow down, and it's just you have to be very agile, nimble, and take advantage of opportunities when they are executable, which is generally when there's either vendor distress or the vendor's made an explicit statement or strategy to just get out of them and take whatever the market offers.

Speaker #3: On slide 14 , as we approach year end , we remain focused on driving continued progress across all areas of our business and reinforcing cap rates .

How far do you think you are into that like how much longer do you think that's going to really weigh on.

On the turnover steps.

Speaker #3: Long-standing position as a trusted choice for living, working, and investing. We would now be pleased to take any of your questions.

Yes, I think were Jonathan I think we are still probably 12 to 18 months away, but I would say as we see a lot of the turnover.

Speaker #1: Thank you . To ask a question , please press star , followed by one on your telephone keypad . Now , if you change your mind , please press star followed by two .

Represented by those those above market.

Leases, we're going to get through that overtime.

Speaker #1: When preparing to ask your question , please ensure your device is unmuted locally . Our first question comes from Jonathan Kelcher from TB Callahan .

Okay. So do you think the kind of 3% to 4% where you are right now is kind of at the bottom and maybe start to grow from there in the back half of next year.

Speaker #1: Your line is now open . Please go ahead .

Yes, I think thats, a pretty reasonable range.

Speaker #6: Thanks . Good morning . First question just on the capital allocation and the NCIB specifically with the stock below $40 here , can we expect you to sort of increase the pace or pick up the pace going into year end in the beginning of next year ?

Yeah.

Okay. Thanks, I'll turn it back.

Yeah.

Thank you. Our next question comes from Brad Sturges from Raymond James Your line is now open. Please go ahead.

Julian Schonfeldt: In short, lots of opportunities, but still wide bid-ask spread.

Jonathan Kelcher: Are the better opportunities still more on a one-off basis, or are you seeing product come to the market on a larger portfolio size?

Hey, good morning, just to follow up on John's.

Capital gave some questions just what would be holding you back on the CIB here today.

Speaker #3: Well , there's no question that at today's stock price level , there's extremely compelling value for anybody purchasing the unit . So it's something that we've got in our stack of capital allocation .

Julian Schonfeldt: For the newer construction stuff, it's by and large on a one-off basis. To be honest, it's the right approach. The larger you get, the less of a bid you get. For the most part, I think folks are trying to sell into whatever liquidity there is, which tends to be on the smaller side. Haven't seen too many large portfolios. There's a few, but by and large, it's kind of one-offs.

Are you seeing more opportunities on the acquisition side that.

Mike.

Compete for the for that capital or.

Speaker #3: And it remains in that stack .

What would be the reason for I guess, the cautious tone there.

Well, what we have always said is that we've got the three pillars of use of capital whether it be property acquisitions, and CIB or paying down debt and we are.

Speaker #6: Okay . I guess then shifting to operations , the uplifts on turnover obviously being weighed down by above market leases , turning how how far do you think you're into that .

Jonathan Kelcher: Okay. Great. I'll turn it back. Thank you.

We're very focused on our cash flow journey and the opportunities to buy new construction assets at significantly below replacement cost is one that we had to balance with the other decisions okay.

Operator: Thank you. Our next question comes from Kyle Stanley from Desjardins. Your line is now open. Please go ahead.

Speaker #6: How much longer do you think that's going to really weigh on on the turnover stats ?

Kyle Stanley: Thanks. Morning, guys. Maybe just kind of sticking with the capital allocation theme, what's your outlook for additional capital recycling within Canada in the year ahead? Given your leverage profile is in pretty good spot, is it safer to assume that further success on the capital recycling maybe allows you to just be that much more aggressive on the buyback given the attractive value that you mentioned?

Speaker #5: Yeah , I think we're hey Jonathan , I think we're still probably 12 to 18 months away . But I would say as we see a lot of the turnover represented by those , those above market leases , we're going to get through that over time .

At these obviously are how we're.

Impelled to allocate capital is dependent on acquisition opportunities the level that the stock is trading at and the cost of debt and going back to what I said in the first case, there is extremely compelling value in the stock price today.

Speaker #6: Okay . So do you think the the kind of 3 to 4% where you are right now is kind of the bottom . And maybe start to grow from there in the back half of next year .

Okay, and just maybe just.

Julian Schonfeldt: Yeah, I think we're covering this. We're seeing acquisitions in the mid-4 cap sort of zone, and you're seeing CAPREIT stock trading in the mid-5. I think there's not much more, Kyle, we can say than that.

A question on the acquisition opportunity set today, how has that evolved or.

Speaker #5: Yeah , I think that's a pretty reasonable range .

Improved or not improved over the last few months what are you seeing in the market today I know you highlighted some opportunities of Vancouver, when we were there a few weeks ago, but.

Speaker #6: Okay . Thanks . I'll , I'll turn it back .

Kyle Stanley: Okay. Just on the capital recycling front, I guess your expectations there for the year ahead?

Speaker #1: Thank you . Our next question comes from Brad Sturges from Raymond James . Your line is now open . Please go ahead .

Maybe an update on on.

On the acquisition opportunity.

Thanks, Brad.

There remains a lot of product out there to look at but the bid ask spread continues to be very wide with a lot of the product that's coming online now.

Julian Schonfeldt: Yeah, we're not providing guidance on that at this point.

Speaker #7: Hey . Good morning . Just a follow up on John's capital allocation question . Just what would be holding you back on the NCIB ?

Kyle Stanley: Okay. Moving over to the cost improvement this quarter, that was really encouraging to see on the R&M side. Can you just walk through maybe your ability to continue improving that cost profile, and maybe what's your outlook for potential savings in the year ahead?

Speaker #7: Here today ? Or , you know , are you seeing more opportunities on the acquisition side that might other compete for the for that capital or you know , what would be the the reason for the I guess the cautious tone there .

During our.

Kind of Covid elevated construction cost timeline.

Diversions between what it cost folks to build the buildings and what they are actually worth now so we see a lot of opportunities but I.

I'd say very few of them are actually execute a bull at prices that make sense for us, but we underwrite hundreds of acquisitions a year, we're not seeing that slow down and it's just you have to be.

Speaker #3: Well , what we have always said is that we've got the three pillars of use of capital , whether it be property acquisitions , NCIB or paying down debt .

Julian Schonfeldt: As Stephen pointed out, we're encouraged by technology changes, we're encouraged by our approach, and we look forward to improvements going forward there.

Very agile nimble and.

Speaker #3: And we are very focused on our cash flow journey and the opportunities to buy new construction assets at significantly below replacement cost is one that we had to balance with the other decisions .

Take advantage of opportunities when when when the are executable, which is generally when there's either vendor distressed or the vendors made an explicit statement or strategy to just get out of it and take whatever the market offers so in short lots of opportunities.

Kyle Stanley: Okay, thanks. I will turn it back.

Operator: Thank you. Our next question is from Jimmy Shen from RBC Capital Markets. Your line is now open. Please go ahead.

Speaker #3: Okay , at these , obviously our how we're compelled to allocate capital is dependent on acquisition opportunities . The level that the stock is trading at and the cost of debt .

<unk> bid ask spread.

Jimmy Shan: Thanks. Just to follow up on that $2.3 million R&M savings on the procurement side, can you, I guess I'm still a little confused as to exactly what it is that you've done that's different now that's allowing you to get those savings. When we think about the balance of the year, does the $2.3 million savings sort of sustain through the balance of the year or into next year? How do we think about that?

Alright.

Opportunities still more on a one off basis or are you seeing.

Probably coming to market are more larger portfolio size.

Speaker #3: And going back to what I said in the first case , there is extremely compelling value in the stock price today .

For the newer construction stuff, it's by and large on a one off basis and to be honest. It's the right approach. The larger you get the less of a bid you get and so for the most part.

Speaker #7: Okay . And just maybe just a question on the acquisition opportunity set today . How has that evolved or improved or not improved over the last few months ?

I think folks are trying to sell into whatever liquidity. There is which is it tends to be on the smaller side. So havent seen too many large portfolios.

Julian Schonfeldt: Yeah. Where you've had a real dollar-to-dollar approach to scope in a changing environment like the one that we're seeing today, you've got to just do what is required in the assets. When you're not building into a high-velocity mark-to-market rent environment, you've got to be very cautious of the scope that you do. In terms of the sustainability, we are very confident in our ability to sustain the path that we're now on.

Speaker #7: You know , what are you seeing in the market today ? I know you highlighted some opportunities in Vancouver when we were there a few weeks ago , but just maybe an update on on on the acquisition opportunity .

There's a few but by and large it's kind of one offs.

Okay, Great I'll turn it back thank you.

Speaker #4: Thanks , Brad . There remains a lot of product out there to look at , but the bid ask spread continues to be very wide with a lot of the product that's coming online now .

Thank you. Our next question comes from Kyle Stanley from Desjardins. Your line is now open. Please go ahead.

Thanks, Good morning, guys.

Speaker #4: Born during the kind of Covid elevated construction cost timeline , there's a divergence between what it costs folks to build the buildings and what they're actually worth now .

Just kind of sticking with the capital allocation theme, what's your outlook for additional capital recycling within Canada in the year ahead and given your leverage profile is in pretty good spot as it safer to assume that.

Jimmy Shan: Okay. On the turnover, the cohort of tenants that have above-market rents, do you have a rough percentage of what that represents as a percentage of the portfolio?

Speaker #4: So we see a lot of opportunities , but I'd say very few of them are actually executable at prices that make sense for us .

Further success on the capital recycling, maybe allows you to just be that much more aggressive on the buyback given.

Speaker #4: But , you know , we underwrite hundreds of acquisitions . A year . We're not seeing that slow down . And it's just you have to be very agile and nimble and , you know , take advantage of opportunities when , when , when they are executable , which is generally when there's either vendor distress or the vendors made an explicit statement or strategy to just get out of them .

The value the attractive value that you mentioned.

I think were covering this we're seeing.

Julian Schonfeldt: Yeah, looking at the stats, it's about 20% is representative of the total leases that are above market. Or sorry, below market. Above market. Yeah.

Our acquisitions in the mid four cap.

Sort of zone, and Youre seeing cap rates stock trading in the mid five so I think there's not much more color, we can say than that.

Speaker #4: And what , you know , take whatever the market offers . So in short , lots of opportunities to build wide bid , ask , spread .

Okay, just on the capital recycling front I guess your expectations there for the year ahead.

Jimmy Shan: Above market. What's the average differential between?

Speaker #7: Are the better opportunities still more on a one-off basis, or are you seeing product come to the market on a more larger portfolio size?

Yeah, we're not we're not providing guidance on that at this point.

Okay.

Julian Schonfeldt: It's about, when we look at it, it's about negative 6%.

Moving over to the cost improvement this quarter that was really encouraging to see on the R&M side.

Speaker #4: For the newer construction stuff , it's by and large on a one off basis . And to be honest , it's the right approach .

Jimmy Shan: Okay. Okay. Thanks for that. Thank you.

Can you just walk through maybe your ability to continue improving that cost profile and maybe whats your outlook for potential savings in the year ahead.

Speaker #4: The larger you get , the less of a bid you get . And so for the most part , I think folks are trying to sell into whatever liquidity there is , which is tends to be on the smaller side .

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

Speaker #4: So haven't seen too many large portfolios . There's , there's a there's a few , but by and large it's kind of one offs .

As Stephen pointed out.

Encouraged by technology changes, we are encouraged by our approach and we look forward to improve.

Brad Sturges: Good morning, guys. If we look at the, if I look at it anyways, the Canadian portfolio, it looked like your, I think if we look at turnover in the last several quarters, it was accelerating, and it was still up year over year, but it was only up by 20 basis points in Q3. Is that just an anomaly, or are you starting to see that the increase in turnover is starting to taper off here?

Speaker #7: Okay , great . I'll turn it back . Thank you .

Improvements going forward there.

Speaker #1: Thank you . Our next question comes from Kyle Stanley from Desjardins . Your line is now open . Please go ahead .

Okay. Thanks, I'll turn it back.

Thank you. Our next question is from Jamie Shen from RBC capital markets. Your line is now open. Please go ahead.

Speaker #6: Thanks .

Speaker #8: Morning , guys . Maybe just kind of sticking with the capital allocation theme . What's your outlook for additional capital recycling within Canada in the year ahead ?

Julian Schonfeldt: Well, a couple of factors. The people with COVID leases are definitely moving into market and churning. That'll have some impact. The new construction portfolio will churn at a higher percentage rate than the legacy portfolio, and we are seeing just a generally more affordable rent market, so that the legacy leaseholders are more inclined now to look at options than they would have previously. It's really those three factors.

Thanks, just to follow up on that $2 3 million R&M savings on the procurement side can you maybe some I mean, it was still a little confused as to exactly what it is that you've done.

Speaker #8: And given your leverage profile is in pretty good spot , is it safer to assume that you know further success on capital recycling maybe allows you to just be that much more aggressive on the buyback , given , you know , the value , the attractive value that you mentioned ?

That's different now that's allowing you to get those savings and then when we think about the balance of the year. It does the $2 3 million savings to sustain through the balance of the year or into next year, how do we think about that.

Speaker #3: I think we're covering this . We're seeing acquisitions in the mid four cap sort of zone , and you're seeing cap rate stock trading in the mid five .

Yeah, where you put it.

The real dollar is a dollar approach to scope in a changing environment like the one that we're seeing today.

Speaker #3: So, I think there's not much more we can say than that.

Brad Sturges: I understand why turnover would be higher relative to where we were sort of 12 to 18 months ago. It just looked like the increase in Q3 is starting to taper off. I was just wondering if I'm looking into it too strongly or if you guys have noticed anything where the acceleration in turnover is starting to slow off a bit.

Speaker #8: Okay . But just on the capital recycling front I guess your expectations there for the year ahead .

You've got to just do what is required in the assets when you're not building into our high velocity mark to market rent environment, you've got to be very cautious of scope that you do.

Speaker #3: Yeah . We're not we're not providing guidance on that at this point .

Speaker #8: Okay . Moving over to , you know , the cost improvement this quarter that was really encouraging to see on the Ram side .

Julian Schonfeldt: No, I think, Mike, I think that's based on what we see, that's a pretty normal pace that we're going to see throughout the rest of the year. Again, you do see a lot more in the leasing season of the fall. It does turn over quite a bit, same as the summer season, but there will be probably a little bit of taper off going into Q4.

In terms of the sustainability, we are very confident in our ability to sustain the path that we're now on.

Speaker #8: Can you just walk through maybe your ability to continue improving that cost profile and maybe , you know , what's your outlook for potential savings in the year ahead ?

Okay.

Yeah.

Okay.

Hum.

On the on the turnover.

Cohort of tenants that have above market rents do you have a rough percentage of what.

Speaker #3: Steven pointed out we're encouraged by technology changes . We're encouraged by our approach , and we look forward to improvements going forward . There .

That represents the percentage of the portfolio.

Jimmy Shan: Okay. As you guys think about Q4 and Q1, just with the seasonally slower period, I think you had noted last call that you guys had adjusted rents to sort of become more in tune with market reality. Do you think as traffic slows here into the winter months that further rent adjustments will be required, or do you see market rents right now being stable?

Yes.

Looking at the.

The stats, it's about about 20% is represented.

Speaker #8: Okay , thanks . I will turn it back .

Speaker #1: Thank you . Our next question is from Jimmy Shen from ABC Capital Markets . Your line is now open . Please go ahead .

Of the total leases are above market.

Our bus are below market.

Above.

Although market and.

Speaker #9: Thanks. Just to follow up on that $2.3 million RAM savings on the procurement side, can you, I guess, I'm still a little confused as to exactly what it is that you've done?

And how.

How what's the average differential.

Julian Schonfeldt: Well, we saw a seasonal effect last year, and we were having difficulty reading the environment. We will no doubt have another seasonal effect this year, but we're quite confident that the general marketplace is in stable territories. It's just the seasonal effects do tend to show up in Q4 and Q1.

Between its about when we look at it it's about negative 6%.

Speaker #9: That's different . Now . That's allowing you to get those savings . And then when we think about the balance of the year , does the 2.3 million savings sort of sustain through the balance of the year or into next year ?

Okay.

Yeah.

Okay. Thanks for that thank you.

Thank you.

Speaker #9: How do we think about that ?

Our next question is from Mike Mckee. This from BMO. Your line is now open. Please go ahead.

Speaker #3: Yeah , we've had a real dollar is a dollar approach to scope in a changing environment like the one that we're seeing today .

Jimmy Shan: Okay, no, that's fine. Last one for me, just before I turn it back. On ERES, see the elevated vacancy that you guys have there as you maximize value in the wind-down process? I guess my question would be, is there further vacancy loss that you would expect as that process continues, or should we expect the existing vacancy level for ERES to sort of hold until further notice?

Okay.

Good morning, guys.

Let's see.

If we look at the if I look at it in any way as the Canadian portfolio.

Speaker #3: You know , you've got to just do what is required in the assets when you're not building into a high velocity mark to market .

It looked like your you know I think we look at turnover in the last several quarters. It was accelerating and it would still up year over year, but it was only up by 20 basis points in Q3. So.

Speaker #3: Rent environment , you've got to be very cautious of the scope that you do in terms of the sustainability . We are very confident in our ability to sustain the path that we're now on .

Is that just an anomaly or are you starting to see that the increase in turnover is starting to taper off here.

Julian Schonfeldt: Yeah, it will continue to elevate until there's a completion process there.

Well a couple of factors the people with Covid leases are definitely moving in the market and churning that'll have some impact.

Speaker #9: Okay . On the on the turnover , the cohort of tenants that have above market rents , do you have a rough percentage of what ?

Jimmy Shan: Okay, that's great. Thanks so much, guys.

The new construction portfolio will churn at a higher percentage rate than the legacy portfolio.

Operator: Thank you. Our next question comes from Matt Cormack from CIBC Capital Markets. Your line is now open. Please go ahead.

And we are seeing.

Speaker #9: Of what that represents as a percentage of the portfolio?

General generally more affordable rent market, so that the legacy lease holders are.

Speaker #5: Yeah . Looking at the the the the the stats , it's about about 20% . Is is represented of the total leases that are above market or below market , above market .

Jimmy Shan: Good morning, guys. Stephen, just I guess last quarter, about 24% of your portfolio was minus 6% MTM and sub-2-year leases. Is that a rounded figure, or was the bulk of kind of your turnover this quarter impacted, or at least 50% impacted by kind of sub-2-year leases turning?

More inclined now to look at options than they would have previously.

It's really those three factors.

No I understand why turnover would be higher relative to where we were sort of 2012 to 18 months ago. It just looked like the.

The increase in Q3 was starting to taper off so I was just wondering if I'm.

Speaker #5: Yeah .

Speaker #9: Above market . And and how how what's the average differential between . .

Looking into it too strongly up you guys have noticed anything where turnover accelerates the acceleration and turnover is starting to slow.

Julian Schonfeldt: Yeah, I would say those are the post or more recent leases that are currently above market. Yeah, I think it will take a bit of time to go through. I kind of said it, 12 to 18 months. Again, a lot of the turnover that's occurring in the quarters are related to those tenures. That is turning, approximately representing 50% of the turnover currently. It will take some time, but 12 to 18 months is what we're expecting.

Speaker #5: It's about when we look at it it's about six -6% .

No I think Mike I think thats.

Based on what we see.

Speaker #9: Okay .

Speaker #5: Yeah .

That's a pretty normal pace that we're going to see throughout the rest of the year.

Speaker #9: Okay . Thanks for that . Thank you .

And then.

You do see a lot more in the leasing season of the fall it does turnover quite a bit same as the summer season.

Speaker #1: Thank you . Our next question is from Mike McInnes from BMO . Your line is now open . Please go ahead .

Speaker #10: Good morning guys . Just with the if we look at the if I look at it anyways , the Canadian portfolio , it looked like you're I think if we look at turnover in the last several quarters , it was accelerating and it was still up year over year , but it was only up by 20 basis points in Q3 .

But there will be probably a little bit of taper off into the killing into Q4.

Okay.

And then as you guys think about sort of Q4 and Q1, just with a seasonally slower period I think you had made it.

Jimmy Shan: Okay. I guess broadly, we've seen you guys and your peers kind of hold occupancy at pretty high levels, albeit again taking a bit of a hit on the rent side. We've also seen broader market vacancy increase. Is there a flight to quality here, or are your portfolios relatively well-positioned, or is it that just your peers are holding rents and not trying to drive occupancy at this point, just trying to square that variance?

<unk> noted last call that you guys have adjusted rents to sort of become more.

Speaker #10: So is that just an anomaly or are you starting to see that the increase in turnover is starting to to taper off here ?

In tune with market reality.

Do you think is.

Traffic slows here into the winter months that further rent adjustments will be required or do you see market rents right now being stable.

Speaker #3: Well , a couple of factors . The people with Covid leases are definitely moving in the market and churning . That'll have some impact .

Well, we saw seasonal effect last year and we were.

Speaker #3: The new construction portfolio will churn at a higher percentage rate than the legacy portfolio . And we are seeing just a , you know , a general , generally more affordable rent market so that the legacy leaseholders are are more inclined now to look at options than they would have previously .

Having difficulty reading the environment.

Julian Schonfeldt: Yeah. We're being agile. We're looking at all our pricing. It's all about holding vacancy, sorry, occupancy, high. It's a combination of using incentives, and then within targeted buildings. We know which buildings they are, but it's a strategy that our operations and marketing team are deploying. Yeah, we're trying to keep occupancy up.

Will no doubt have another seasonal effect this year.

But.

I'm quite confident that the.

General marketplaces.

Stable territories.

Just the seasonal effects do tend to show up in Q4 and Q1.

Speaker #3: It's really those those three factors .

Okay, No that's fine and then last one for me, it's before I turn it back.

Speaker #6: No .

Speaker #10: I understand why turnover would be higher relative to where we were sort of 12 to 18 months ago . It just looked like the the increase in Q3 is starting to taper off .

<unk>.

See the elevated vacancy that you guys have there as you maximize value in the.

Speaker #10: So I was just wondering if I'm looking into it too strongly. If you guys have noticed anything where turnover—accelerate the acceleration in turnover—is starting to slow off a bit.

Wind down process I guess my question would be is there further vacant.

Jimmy Shan: Okay. On the incentives front, I know it was about 1% of the portfolio and seems to be holding. It's not maybe ticking down a little bit this quarter. Is your view still that you've set rents at an appropriate price, and incentives are less of a driver at this point?

Vacancy loss that you would expect as that process continues or should we expect that existing vacancy level for the rest of the sort of hold until.

Speaker #5: No , I , I think , Mike , I think that's based on what we see . That's a pretty normal pace that we're going to see throughout the rest of the year .

Further notice.

Yeah. It will it will continue to elevate until.

Julian Schonfeldt: Yeah, correct. I think based on what we've been seeing for the last couple of months, Q3 is a pretty good run rate going forward.

Speaker #5: Again , you do see a lot more in the leasing season of the fall . It does turn over quite a bit . Same as the summer season , but there will be probably a little bit of taper off into the going into Q4 .

There's the completion process there.

Okay.

That's great. Thanks, so much guys.

Jimmy Shan: Okay. Then.

Yeah.

Julian Schonfeldt: We need volume. Winter months, Matt, are definitely the more challenging months. When we get good velocity in the spring and the summer, incentives do tend to ease a little bit. There's a mild adjustment for quarters when you think about the run rate.

Thank you. Our next question comes from Matt Cormack from Bank capital markets. Your line is now open. Please go ahead.

Speaker #10: Okay . And then as you guys think about sort of Q4 and Q1 , just with the seasonally slower period , I think you made it noted last call that you guys had adjusted rents to sort of become more in tune with market reality .

Good morning, guys.

Steven just a I guess last quarter are about 24% of your portfolio was minus 6% M T M and sub two year leases.

Jimmy Shan: I know we focus on R&M when we think of cost constraints, but you also saw this quarter exceed some of the one-time expenses on the processes you're updating. Lower G&A and your CapEx still remained very low on a relative historic basis. Is that all procurement? On the trust expense side, is that kind of sustainable at this point? I know you guys have gone through some rationalization of costs, but just how should we think about that going forward?

20, a rounded figure or once the bulk of kind of your turnover.

Speaker #10: Do you think as . Traffic slows here into the winter months , that further rent adjustments will be required ? Or do you see market rents right now being stable ?

This quarter impacted or at least 50% impacted by a kind of sub two year journey.

Speaker #3: Well , we saw a seasonal effect last year and we were having difficulty reading the environment . We will no doubt have another seasonal effect this year , but we're quite confident that the the general marketplace is in stable territory .

Yeah that is.

I would say those are the posts are more recent leases that are.

Currently above market.

Yeah, I think it will take a bit of time to go through that kind of set a 12 to 18 months again those a lot of the turnover that's occurring in the quarters are related to those 10 years.

Speaker #3: It's just the seasonal effects do tend to show up in Q4 and Q1 .

Julian Schonfeldt: Yeah. We did. We were quite aggressive, I'll say, with our NCIB program, with our debt repayments, and certainly, the high grading of assets has resulted in lower unit counts. The heavy lifting there is, in our view, done. I think you could rely on G&A at a far more stable level. On the CapEx front, we continue to look at scope. We've got a tilt towards energy investments where they make sense. We would want to give thought to the cost of those investments as really being accretive investments. In terms of repairs and maintenance, it's all about scope and rigorous market testing.

Speaker #10: Okay . No that's fine . And then the last one for me , just before I turn it back on , erase , see the elevated vacancy that you guys have there as you maximize value in the wind down process , I guess my question would be , is there further vacancy loss that you would expect ?

So that.

That is turning approximately representing 50% of the turnover currently.

So it will take some time, but.

12 to 18 months is what we're expecting.

Okay.

And then I guess broadly we've seen you guys and your peers kind of hold occupancy at pretty high level, albeit up getting taking a bit of a hit on the rent side, but.

Speaker #10: Is that process continues or should we expect the existing vacancy level for erase to sort of hold until further notice ?

We've also seen broader market vacancy increases there a flight to quality here or your portfolio is relatively well positioned or is it just your peers are holding rents and not trying to drive occupancy at this point just trying to square that.

Speaker #3: Yeah, it'll continue to elevate until there's a completion of the process there.

Speaker #10: Okay . That's great . Thanks so much guys .

<unk>.

Yes.

Speaker #1: Thank you . Our next question comes from Matt Cormack from Bank Capital Markets . Your line is now open . Please go ahead .

We're.

Jimmy Shan: Okay, appreciate the color in it. It seems to be working. Thanks, guys.

We're being agile we're looking at all of our pricing, it's all about holding vacant sorry occupancy high so.

Julian Schonfeldt: Thanks.

Speaker #9: Good morning guys .

Operator: Thank you. Our next question comes from Anish Thapar from Scotiabank. Your line is now open. Please go ahead.

Speaker #6: Stephen . Just I guess last quarter about 24% of your portfolio was -6% MTM and sub two year leases . Is that 20 a rounded figure or was the bulk of your turnover this quarter impacted or at least 50% impacted by kind of sub two year leases turning .

So it's a combination of.

Using incentives and then within targeted buildings, we know which buildings they are.

Anish Thapar: Hi. Good morning. My first question is on incentives. Do you still believe incentives trend at 1% of revenue in 2026? What are your thoughts on bad debt expenses trends as well?

But it's a strategy that our operations and marketing team are deploying so yes, we're trying to keep occupancy up.

Okay and on the incentives front I know there are about 1% of the portfolio.

Julian Schonfeldt: Well, I think on the incentives front, we wouldn't give guidance for the year, but what we're seeing is stability. That's really all that I can say. Looking out is a little bit more, we don't do that. On the bad debt expense, we've seen encouraging things happen in Ontario with respect to attempts by government to make things more efficient at the tribunal. A lot of our portfolio is in Ontario, so that would be a net positive. Not your question, but just the general regulatory environment, what we're talking about, changes to the tribunal, it's quite positive coast to coast right now. Provinces are really tilting their minds to how to get more supply, and how to engage with housing providers. We're encouraged by just the general regulatory front.

Seems to be holding if not maybe ticking down a little bit this quarter.

Speaker #5: Yeah that that is I would say those are the posts or more recent leases that are currently above market . Yeah I think it will take a bit of time to go through that kind of set it 12 to 18 months .

Is your view still that so instead of appropriate pricing incentives or are less of a driver at this point.

Yes, correct I think based on what we've been seeing for the last couple of months.

Speaker #5: Again , those a lot of the turnover . That's occurring in the quarters are related to those tenures . So that will that is turning approximately representing 50% of the turnover currently .

Q3 is a pretty good run rate going forward.

Okay.

And then.

Winter months, Matt are definitely the more challenging.

Our minds when we get good velocity in the spring into summer.

Speaker #5: So, it would take some time. But you know, 12 to 18 months is what we're expecting.

A few tend to ease a little bit so there's a mild adjustment for quarters. When you think about the run rate.

Speaker #8: Okay .

Speaker #6: And then I guess broadly we've seen you guys and your peers kind of hold occupancy at pretty high levels , albeit again , taking a bit of a hit on the rent side .

Okay.

And I know we focus on.

R&M, when we think of the cost constraints, but.

Speaker #6: But we've also seen broader market vacancy increases . Their A flight to quality here . Or are your portfolios relatively well positioned or is it that just your peers are holding rents and not trying to drive occupancy at this point , just trying to square that , that variance ?

You also saw this quarter.

Some of the onetime expenses on that.

Jimmy Shan: Thanks for the color. My second question is, how did the asking rents in your portfolio? Does the primary focus right now remain occupancy stabilization?

Processes, you're updating lower G&A and your Capex still remains very low on a relative historic basis.

Is that all procurement.

Speaker #5: Yeah , we're we're we're we we're being agile . We're looking at all our pricing . It's all about holding vacancy . Sorry occupancy high .

And on the trust expense side is that kind of sustainable at this point I know you guys have gone through some rationalization of costs.

Julian Schonfeldt: Yeah, the asking rents, I guess you're kind of talking about the mark-to-market on our portfolio. It has come down slightly, but it's nowhere near what we saw, you could say, kind of in Q4 of last year or in Q1 of this year. It's pretty much stabilizing based on what we see in the market.

Just how should we think about that going forward.

Speaker #5: So as a combination of using incentives and then within targeted buildings we know which buildings they are . But it's a strategy that our our operations and marketing team are deploying .

Yeah, we did we were quite aggressive.

With our <unk> program with our debt repayments.

And certainly the high grading of assets has resulted in lower unit count.

Speaker #5: So yeah , we're trying to keep occupancy up . .

Jimmy Shan: Does the focus right now remain occupancy stabilization?

On the heavy lifting there is in our view done.

Speaker #6: Okay . And on the incentives front , I know it was about 1% of the portfolio and seems to be holding . If not maybe ticking down a little bit this quarter .

And I think you could rely on on G&A at a far more stable stable level.

Julian Schonfeldt: Yeah. Yeah. I mean, yeah. Yeah. Occupancy is our key priority.

And on the Capex front, we continue to look at scope.

Jimmy Shan: Okay. Sounds good. That's it for me. Thank you.

Speaker #6: It's your view still that you've set rents at an appropriate price . And incentives are less of a driver at this point .

We got a tilt towards energy investments, where they make sense, we would want to give thought to those the cost of those investments is really being accretive investments.

Operator: Thank you. Our next question is from Mike Makitis from BMO. Your line's now open, Mike. Please go ahead.

Speaker #5: Yeah , correct . I think based on what we've been seeing for the last couple of months , Q3 is a pretty good run rate going forward .

And in terms of repairs and maintenance at all of its scope and a rigorous.

Brad Sturges: Thanks, Robert. Just a follow-up. Mark, I know obviously a big focus for you guys is your cash flow journey. I wonder if you could somehow give us—I know it's improving, but where do you see your retained cash flow now annually for the business, and how that would have compared to, say, maybe a couple of years ago?

Speaker #6: We we .

Speaker #3: And winter months that are definitely the more challenging months when we get good velocity in the spring and the summer . Incentives do tend to ease a little bit .

Market testing.

Okay I appreciate the color on it but it seems to be working.

Thanks.

Speaker #3: So there's a mild adjustment for for quarters . When you think about the line rate .

Thank you. Our next question comes from <unk> <unk> from Scotiabank. Your line is now open. Please go ahead.

Speaker #6: And I know we focused on our and M when we think of cost constraints . But we also saw this quarter X the some of the one time expenses on the processes you're updating .

Julian Schonfeldt: Yeah. Just in terms of our journey to get to, you could say, self-sustaining, we were in a couple of years ago, we were growing, we spent a lot of CapEx, and we had a lot of legacy assets. Today, we have now transformed the portfolio into a much newer CAPREIT, a younger CAPREIT, which results in a much stronger economic cash flow. Therefore, I think if we're looking out, it would be a couple of years or till we get to a self-sustaining model. I think the timing, Mike, what we've said is highly dependent on our acquisition disposition program. If we do newer quality, low CapEx acquisitions and at the same time sell dispositions that have higher CapEx burden, we get to the end result much faster. We're trying to balance those two things together.

Hi, Good morning. So my first question is on incentives.

Do you still believe in sensitive strained at 1% of revenue in 2026, and what are your thoughts on bad debt expense of strength as well.

Speaker #6: Lower G&A and your CapEx still remained very low on a on a relative historic basis . Is that all procurement is that like and on the expense side ?

Well I think on the incentives.

Front, we wouldn't give guidance for the year, but what we're seeing is stability.

And that's really all that I can say looking out is a little bit more we don't do that.

Speaker #6: Is that kind of sustainable at this point ? I know you guys have gone through some rationalization of costs , but just how should we think about that going forward ?

And on the bad debt expense, we've seen encouraging things happened in Ontario with respect to attempts by government to make things more efficient at the tribunal a lot of our portfolio was in Ontario, So that would be a net net positive.

Speaker #3: Yeah we did . We were quite aggressive . I'll say with our NCIB program , with our debt repayment and certainly the high grading of assets has resulted in lower unit count , the heavy lifting there is in our view , done .

Not your question, but just the general regulatory environment, what we're talking about.

Speaker #3: And I think you could rely on on G&A to far more stable , stable level . And on the CapEx front , you know , we continue to look at scope .

No changes to the tribunal, it's quite positive coast to coast right now provinces are really.

Tilting their minds to how to get more supply and how do we engage with our housing providers. So we're we're encouraged by the just the general regulatory frame.

Speaker #3: We've got a tilt towards energy investments where they make sense . So we would want to give thought to those . The cost of those investments is really being accretive .

Julian Schonfeldt: At the same time, be relentless on seeking out efficiency within the existing portfolio to help move things along as well. If we do the combination of those things well together, the timeline shrinks, we think, quite quickly.

Yeah. Thanks, Thanks for the color Mike.

Speaker #3: Investments . And in terms of repairs and maintenance , it's all about scope and rigorous market testing .

My question is how did the asking rents in your portfolio.

And that's the primary focus right now remains occupancy stabilization.

Speaker #10: Okay .

Speaker #6: Appreciate the color . And it it seems to be working . Thanks .

Yeah.

Jimmy Shan: Okay. I'll have to look back at the quality of numbers. You guys don't think you're at a self-sustaining point in time yet?

So that's in rents I.

Speaker #3: Thanks .

I guess, you kind of just talk about the mark to market on our rate has come down slightly.

Speaker #1: Thank you . Next question comes from anaesthesia from Scotiabank . Your line is now open . Please go ahead .

But it's nowhere.

Nowhere near what we saw you can say kind of in Q2 for a a lot last year in Q1 of this year.

Julian Schonfeldt: Not at this point. No. To a certain extent, we've really focused on deleverage as the primary focus. We did a lot of that in 2025. The ability to raise cash is absolutely not a problem. The balance sheet is fortified, and our focus will stay there.

Speaker #11: Hi. Good morning. So, my first question is on incentives. Do you still believe in a trend at 1% of revenue in 2026?

It was pretty much stabilizing based on what we see in the market.

And does the focus right now remains occupancy stabilization.

Speaker #11: And what are your thoughts on bad debt expense trends as well?

Yeah Yeah.

Speaker #3: Well , I think on the incentive front , we wouldn't give guidance for the year , but what we're seeing is stability . And that's really all that I can say .

Yeah, Yeah occupancy is our key priority.

Okay. It sounds good that's perfect. That's it for me. Thank you.

Jimmy Shan: Okay, thanks for the clarification. Hope it's fine.

Speaker #3: Looking out is , is a little bit more . We don't do that . And on the bad debt expense , we've seen encouraging things happen in Ontario with respect to attempts by government to make things more efficient at the tribunal , a lot of our portfolio is in Ontario , so that would be a net a net positive , not your question , but just the general regulatory environment .

Thank you.

Operator: Thank you. We currently have no further questions, and I would like to hand back to Mark Kenney for closing remarks.

Next question is from Mark Mahaney from BMO. Your line is now open Mic. Please go ahead.

[noise] copper just a follow up Mark I know, obviously, a big focus for you guys are here.

Julian Schonfeldt: I'd like to thank everybody for your time today. If you have any further questions, please do not hesitate to contact us at any time. Thank you again, and have a great day.

Cash flow journey.

I Wonder if you could somehow.

I know, it's improving but where you see we were retained cash flow.

Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.

Speaker #3: While we're talking about , you know , changes to the tribunal , it's quite positive coast to coast right now , provinces are really tilting their minds to how to get more supply and how to engage with housing providers .

Mm for the business and how 'bout would've compared to say, maybe a couple of years ago.

Yeah. So just in terms of our journey to get to yourselves say self sustaining.

Speaker #3: So we're we're encouraged by the just the general regulatory frame .

It's.

We have we were in a couple of years ago were growing we spent a lot of capex.

Speaker #11: Okay . Thanks . Thanks for the color . My second question is how did the asking rents in your portfolio move quarter over quarter ?

And we added a lot of legacy assets today, we have now transform the portfolio into a much newer cap rate.

Speaker #11: And does the primary focus right now remains occupancy stabilization ?

The younger Capri, which results in a much stronger.

Speaker #5: Yeah . So the asking rents I guess you kind of talking about the mark to market on our portfolio has come down slightly , but it's it's nowhere near what we saw .

Economic cash flow.

And therefore, I think if we're looking out it will be a couple of years or.

Speaker #5: You could say kind of in Q4 of last year or in Q1 of this year . So it's pretty much stabilizing based on what we see in the market .

Till we get to a self sustaining model.

The timing tiny Mike what we've said is highly dependent on our acquisition program. If we do.

Speaker #11: And does the focus right now remains occupancy stabilization ?

Newer newer quality low capex acquisitions and at the same time sell.

Speaker #5: Yeah , yeah . I mean yeah , yeah . Occupancy is our key priority .

Speaker #11: Okay . Sounds good . That's that's it for me . Thank you .

Dispositions that have higher capex burden, we get to the to the end result, much faster. So we're trying to balance those two things together and at the same time the.

Speaker #1: Thank you . Our next question is from Mike McInnes from BMO . Your line is now open . Mike , please go ahead .

<unk> be relentless on seeking an inefficiency within the existing portfolio to help move things along as well if we do the combination of those things well together the timeline shrinks, we think quite quite quickly.

Speaker #10: Just a follow up , Mark . I know obviously a big focus for you guys is your cash flow journey . I wonder if you could somehow give us .

Speaker #10: I know it's improving , but where do you see your retained cash flow now ? Annually for the business and how that would to say maybe a couple of years ago .

Okay, and I'll have to look back and following our numbers, but we can get something here out of stocks at any point in time, yes.

No.

Not at this point.

Speaker #5: Yeah . So just in terms of our journey to get to say , self-sustaining , you know , it's it's we have we were in a couple of years ago .

And to certain extent.

Really focused on deleverage as the as the.

Our primary focus we did a lot of that in 2025.

<unk> ability to raise cash is absolutely not a problem the balance sheet is fortified.

Speaker #5: We were , growing . We spent a lot of CapEx , and we had a lot of legacy assets today . We have now transformed the portfolio into a much newer cap REIT , a younger Capri , which results in a much stronger economic cash flow and therefore , I think if we're , you know , looking out , it would be a couple of years or till we get to a self-sustaining model .

And this will we will stay there.

Okay. Thanks.

Thanks for your participation.

Yeah.

Thank you. We currently have no further questions and I would like to hand back to Mark Kenny for closing remarks.

I'd like to thank everybody for your time today and if you have any further questions. Please do not hesitate to contact us at any time. Thank you again and have a great day.

Speaker #3: I think the timing , the timing . Mike , what we've said is highly dependent on our acquisition disposition program . If we do newer , newer quality , low CapEx acquisitions , and at the same time sell acquisition dispositions that have higher CapEx burden , we get to the to the end result much faster .

This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker #3: So we're trying to balance those those two things together . And at the same time , the relentless on seeking out efficiency within the existing portfolio to help move things along as well .

Speaker #3: If we do the combination of those things well together , the timeline shrinks . We think quite , quite quickly .

Speaker #10: Okay . And I'll have to look back at the model again . Numbers . But you guys don't think you're out of self-sustaining point in time yet .

Speaker #5: No , not not at this point , no .

Speaker #3: And to a certain extent , we've really focused on deleverage as the as the primary focus . We did a lot of that in 2025 .

Speaker #3: So ability to raise cash is absolutely not a problem . The balance sheet is fortified and our focus will will stay there .

Speaker #10: Okay . Thanks for the clarification . Opened by .

Speaker #1: Thank you . We currently have no further questions and I would like to hand back to Mark Kenney for closing remarks .

Speaker #3: I'd like to thank everybody for your time today , and if you have any further questions , please do not hesitate to contact us at any time .

Speaker #3: Thank you again, and have a great day.