Q4 2025 Automotive Properties Real Estate Investment Trust Earnings Call

March 5, 2026

Speaker #2: Following management's remarks, we will conduct a question-and-answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events.

Speaker #2: Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information.

Speaker #2: For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and annual information form, which are available on Cedar Plus.

Speaker #2: Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS.

Operator: Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on 5 March 2026. I would now like to turn the conference over to Milton Lamb. Please go ahead, Mr. Lamb.

Speaker #2: Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on March 5th, 2026. I would now like to turn the conference over to Milton Lamb.

Speaker #2: Please go ahead, Mr. Lamb. Thank you, Morgan. And good morning, everyone. Thank you for joining us. With me today on the call is Andrew Kalra, our Chief Financial Officer.

Milton Lamb: Thank you, Morgan. Good morning, everyone. Thank you for joining us. With me today on the call is Andrew Kalra, our Chief Financial Officer. 2025 was an instrumental year for Automotive Properties REIT. We acquired 13 automotive properties, including our first 3 properties in the United States, for an aggregate purchase price of approximately CAD 200 million. These acquisitions contributed to our significant growth in rental revenue, cash NOI, AFFO per unit in 2025, which supported our distribution increase effective August 2025. Compared to 2024, our property rental revenue increased by 8.5%, cash NOI was up 8.4%, AFFO per unit diluted increased to CAD 0.998 from CAD 0.932.

Speaker #2: 2025 was an instrumental year for automotive properties REIT. We acquired 13 automotive properties including our first three properties in the United States for an aggregate purchase price of approximately $200 million.

Speaker #2: These acquisitions contributed to our significant growth in rental revenue, cash NOI, AFFO per unit in supported our distribution increase effective August of 2025. Compared to 2024, our property rental revenue increased by 8.5%, cash NOI was up 8.4%, and AFFO per unit diluted increased to 99.8 cents from 93.2 cents.

Speaker #2: As the majority of our acquisitions were completed in the second half of the year, our Q4 results show even greater growth, with property rental revenue up 19.3% compared to Q4 a year ago, cash NOI grew 18.6%, and AFFO per unit diluted increased by 25.1 cents from 23.2 cents.

Milton Lamb: As the majority of our acquisitions were completed in the second half of the year, our Q4 results show even greater growth. With property rental revenue up 19.3% compared to Q4 a year ago. Cash NOI grew 18.6% and AFFO per unit diluted increased to CAD 0.251 from CAD 0.232. Our CAD 57.1 million equity offering in the quarter, which helped finance our acquisitions, impacted our Q4 AFFO per unit, but we still generated nearly CAD 0.02 increase to AFFO per unit. Supported by our contractual fixed or CPI adjusted rents annual rent increases, our Same Property Cash NOI increased by 1.9% and 2.1% for Q4 2025 and the full year respectively.

Speaker #2: Our 57.1 million equity offering in the quarter, which helped finance our acquisitions, impacted our Q4 AFFO per unit but we still generated nearly 2 cents increase to AFFO per unit.

Speaker #2: Supported by our contractual fixed or CPI-adjusted rents annual rent increases, our same property cash NOI increased by 1.9% and 2.1% for Q4 2025 and the full year, respectively.

Speaker #2: During Q4, we deployed approximately 57.3 million for the acquisition of four dealership properties in Greater Montreal, including a portfolio of three properties located in Dorval consisting of a full-service Subaru Honda and VW dealership properties tenanted by affiliates of Dilawri, and a full-service Honda dealership in Il Perot tenanted by an affiliate of Group Auto Force.

Milton Lamb: During Q4, we deployed approximately $57.3 million for the acquisition of 4 dealership properties in Greater Montreal, including a portfolio of 3 properties located in Dorval, consisting of a full service Subaru, Honda, and VW dealership properties tenanted by affiliates of Dilawri and a full service Honda dealership in Ile-Perrot, tenanted by an affiliate of Groupe AutoForce, which adds to the 6 property portfolio we previously acquired in Q3, which is also tenanted by affiliates of Groupe AutoForce. We expect to benefit from the full impact of our 2025 acquisitions in 2026. Subsequent to year-end on 1 January, we completed the acquisition of a full service 40,000 sq ft Hyundai dealership situated on 6 acres of land in Quebec City for a purchase price of $13.25 million.

Speaker #2: Which adds to the six property portfolio we previously acquired in Q3, which is also tenanted by affiliates of Group Auto Force. We expect to benefit from the full impact of our 2025 acquisitions in 2026.

Speaker #2: Subsequent to year-end on January 1st, we completed the acquisition of a full-service 40,000-foot Hyundai dealership situated on 6 acres of land in Quebec City for a purchase price of $13.25 million.

Speaker #2: And yesterday, we announced that we've waived conditions for the purchase of the real estate underlying an automotive and service property located at 3280 Corporate View in Vista, California, from our third party, for a purchase price of $16 million U.S. dollars.

Milton Lamb: Yesterday we announced that we've waived conditions for the purchase of the real estate underlying automotive and service property located at 3280 Corporate View in Vista, California from a third party for a purchase price of $16 million. This is located in northern San Diego County. The Vista property is tenanted by Rivian under a midterm net lease that includes contractual fixed annual rent increases with renewal options. The Vista property consists of a 60,000 foot Rivian delivery and service facility that is situated on approximately 3.7 acres of land. The acquisition is expected to close during the first half of 2026, and we expect to fund the purchase price by drawing on our revolving credit facilities. We expect these property acquisitions to drive continued growth in our AFFO per unit, and we are entering 2026 with solid growth momentum.

Speaker #2: This dislocated in northern San Diego County. The Vista properties tenanted by Rivian under a midterm net lease that includes contractual fixed annual rent increases with renewal options.

Speaker #2: The Vista property consists of a 60,000-foot Rivian delivery and service facility that is situated on approximately 3.7 acres of land. The acquisition is expected to close during the first half of 2026, and we expect to fund the purchase price by drawing on revolving credit facilities.

Speaker #2: We expect these property acquisitions to drive continued growth in our AFFO per unit, and we are entering 2026 with solid growth momentum. I'd now like to turn it over to Andrew Kalra to review our Q4 financial results and position in more detail.

Milton Lamb: I'd now like to turn it over to Andrew Kalra to review our Q4 financial results and position in more detail. Andrew.

Speaker #2: Andrew? Thanks, Milton. And good morning, everyone. Our property rental revenue for the quarter increased to $27.9 million, from $23.4 million in Q4 a year ago.

Morgan: Thanks, Milton. Good morning, everyone. Our property rental revenue for the quarter increased to CAD 27.9 million from CAD 23.4 million in Q4 a year ago, reflecting growth from the properties we acquired during and subsequent to Q4 last year, and contractual annual rent increases, partially offset by the reduction of rent from the sale of our Kennedy Lands property in October 2024. Total cash NOI, Same Property Cash NOI for the quarter totaled CAD 23.2 million, CAD 19.6 million, respectively, representing increases of 18.6% and 1.9% compared to Q4 a year ago.

Andrew Kalra: Thanks, Milton. Good morning, everyone. Our property rental revenue for the quarter increased to CAD 27.9 million from CAD 23.4 million in Q4 a year ago, reflecting growth from the properties we acquired during and subsequent to Q4 last year, and contractual annual rent increases, partially offset by the reduction of rent from the sale of our Kennedy Lands property in October 2024. Total cash NOI, Same Property Cash NOI for the quarter totaled CAD 23.2 million, CAD 19.6 million, respectively, representing increases of 18.6% and 1.9% compared to Q4 a year ago.

Speaker #2: Reflecting growth from the properties we acquired during and subsequent to Q4 last year, and contractual annual rent increases, partially offset by the reduction of rent from the sale of our Kennedy Lands property in October 2024.

Speaker #2: Total cash NOI, same property cash NOI for the quarter totaled $23.2 million, $19.6 million of 18.6 and 1.9% compared to Q4 a year ago.

Speaker #2: Interest expense and other financing charges for the quarter were $7.5 million, a 1.9 million increase from Q4 last year, reflecting additional debt incurred to acquire properties during and subsequent to Q4 2024, and increased interest rates.

Morgan: Interest expense and other financing charges for the quarter were CAD 7.5 million, a CAD 1.9 million increase from Q4 last year, reflecting additional debt incurred to acquire properties during and subsequent to Q4 2024 and increased interest rates. Our G&A expenses were CAD 1.8 million for the quarter, a decrease of CAD 0.4 million from Q4 last year, in line with our expectations. Net income and other comprehensive income was CAD 13.9 million, compared to CAD 12 million in Q4 last year.

Andrew Kalra: Interest expense and other financing charges for the quarter were CAD 7.5 million, a CAD 1.9 million increase from Q4 last year, reflecting additional debt incurred to acquire properties during and subsequent to Q4 2024 and increased interest rates. Our G&A expenses were CAD 1.8 million for the quarter, a decrease of CAD 0.4 million from Q4 last year, in line with our expectations. Net income and other comprehensive income was CAD 13.9 million, compared to CAD 12 million in Q4 last year.

Speaker #2: Our G&A expenses were $1.8 million for the quarter, a decrease of 0.4 million from Q4 last year, in line with our expectations. Net income and other comprehensive income was $13.9 million, compared to $12 million in Q4 last year.

Speaker #2: The increase was primarily due to higher NOI and a change in non-cash fair value adjustments for interest rate swaps partially offset by higher interest costs and changes in non-cash fair value adjustments for investment properties and for Class B LP units and unit-based compensation.

Morgan: The increase is primarily due to higher NOI and a change in non-cash fair value adjustments for interest rate swaps, partially offset by higher interest costs and changes in non-cash fair value adjustments for investment properties, and for Class B LP units and unit-based compensation, partially offset by foreign exchange loss of CAD 1 million. FFO and AFFO increased by 20.4% and 18.4% respectively compared to Q4 last year, reflecting higher rental revenue from acquisitions, contractual rent increases partially offset from the reduction of rent from the sale of the Kennedy Lands. On a per unit basis, FFO increased to CAD 0.259 diluted in the quarter, up from CAD 0.236 in Q4 last year. AFFO per unit increased to CAD 0.251, up from CAD 0.232.

Andrew Kalra: The increase is primarily due to higher NOI and a change in non-cash fair value adjustments for interest rate swaps, partially offset by higher interest costs and changes in non-cash fair value adjustments for investment properties, and for Class B LP units and unit-based compensation, partially offset by foreign exchange loss of CAD 1 million. FFO and AFFO increased by 20.4% and 18.4% respectively compared to Q4 last year, reflecting higher rental revenue from acquisitions, contractual rent increases partially offset from the reduction of rent from the sale of the Kennedy Lands. On a per unit basis, FFO increased to CAD 0.259 diluted in the quarter, up from CAD 0.236 in Q4 last year. AFFO per unit increased to CAD 0.251, up from CAD 0.232.

Speaker #2: Partially offset by foreign exchange loss of $1 million. FFO and AFFO increased by 20.4% and 18.4%, respectively, compared to Q4 last year, reflecting higher rental revenue from acquisitions and contractual rent increases, partially offset by the reduction of rent from the sale of the Kennedy Lands.

Speaker #2: On a per-unit basis, FFO increased to 25.9 cents diluted in the quarter, up from 23.6 cents in Q4 last year, and AFFO per unit increased to 25.1 cents, up from 23.2 cents.

Speaker #2: We paid unit holders distributions of $11.32 million or $20.6 cents per unit, representing an AFFO payout ratio of 82.1%, compared with 86.6% in Q4 last year, reflecting the positive impact of the properties acquired during and subsequent to Q4 last year, and contractual rent increases partially offset by the reduction of rent from the sale of the Kennedy Lands and the increase in our monthly cash distributions effective August 2025.

Morgan: We paid unitholders distributions of $11.32 million or $0.206 per unit, representing an AFFO payout ratio of 82.1% compared with 86.6% in Q4 last year, reflecting the positive impact of the properties acquired during and subsequent to Q4 last year, and contractual rent increases, partially offset by the reduction of rent from the sale of the Kennedy Lands and the increase in our monthly cash distributions effective August 2025. The cap rate applicable to our portfolio was 6.75% at year-end, which is essentially flat quarter-over-quarter. The $6.8 million fair value adjustment for the year was primarily related to write-off of closing costs, including land transfer, land transfer taxes associated with the new acquisitions.

Andrew Kalra: We paid unitholders distributions of $11.32 million or $0.206 per unit, representing an AFFO payout ratio of 82.1% compared with 86.6% in Q4 last year, reflecting the positive impact of the properties acquired during and subsequent to Q4 last year, and contractual rent increases, partially offset by the reduction of rent from the sale of the Kennedy Lands and the increase in our monthly cash distributions effective August 2025. The cap rate applicable to our portfolio was 6.75% at year-end, which is essentially flat quarter-over-quarter. The $6.8 million fair value adjustment for the year was primarily related to write-off of closing costs, including land transfer, land transfer taxes associated with the new acquisitions.

Speaker #2: The cap rate applicable to our portfolio was 6.75% at year-end, which is essentially flat quarter over quarter. The 6.8 million fair value adjustment for the year was primarily related to write-off of closing costs including land transfer taxes associated with the new acquisitions.

Speaker #2: We continue to be proactive with our debt strategy, to limit our exposure to interest rate fluctuations, enhance our financial flexibility. During the quarter, we renewed or entered into 25 million of floating to fixed interest rate swaps for a term of 5 to 6 years at a rate or under 4.5%.

Morgan: We continue to be proactive with our debt strategy to limit our exposure to interest rate fluctuations, enhance our financial flexibility. During the quarter, we renewed or entered into CAD 25 million of floating to fixed interest rate swaps for a term of 5 to 6 years at a rate or under 4.5%. We increased the amount of the non-revolving portion of Facility 3 by CAD 40 million and extended the maturity to March 2028 at the same credit spread. At year-end, we had a Debt to GBV ratio of 49.9%, providing further acquisition capacity. Subsequent to year-end, we entered into floating to fixed interest rate swaps within Facility 3 in the amount of CAD 45 million, for terms ranging from 5 to 7 years, with interest rates between 4.45% and 4.59%.

Andrew Kalra: We continue to be proactive with our debt strategy to limit our exposure to interest rate fluctuations, enhance our financial flexibility. During the quarter, we renewed or entered into CAD 25 million of floating to fixed interest rate swaps for a term of 5 to 6 years at a rate or under 4.5%. We increased the amount of the non-revolving portion of Facility 3 by CAD 40 million and extended the maturity to March 2028 at the same credit spread. At year-end, we had a Debt to GBV ratio of 49.9%, providing further acquisition capacity. Subsequent to year-end, we entered into floating to fixed interest rate swaps within Facility 3 in the amount of CAD 45 million, for terms ranging from 5 to 7 years, with interest rates between 4.45% and 4.59%.

Speaker #2: We increased the amount of the non-revolving portion of facility 3 by $40 million and extended the maturity to March 2028, as at the same credit spread.

Speaker #2: At year-end, we had a debt-to-GBV ratio of 49.9%, providing further acquisition capacity. Subsequent to year-end, we entered into floating to fixed interest rate swaps within facility 3 in the amount of $45 million, for terms ranging from 5 to 7 years with interest rates between 4.45 and 4.59%, and we increased the amount of the revolving portion of facility 1 by 25 million and extended the maturity from June 2027 to June 2029.

Morgan: We increased the amount of the revolving portion of Facility 1 by CAD 25 million and extended the maturity from June 2027 to June 2029. As at the date of this MD&A, on a trailing 12-month basis, the borrowing capacity under our three credit facilities increased by an aggregate CAD 140 million. We extended maturities. We have a well-balanced level of annual maturities with less than CAD 40 million of swaps maturing over the next 12 months. We have a weighted average interest rate term and mortgages remaining of 4.1 years at year-end.

Andrew Kalra: We increased the amount of the revolving portion of Facility 1 by CAD 25 million and extended the maturity from June 2027 to June 2029. As at the date of this MD&A, on a trailing 12-month basis, the borrowing capacity under our three credit facilities increased by an aggregate CAD 140 million. We extended maturities. We have a well-balanced level of annual maturities with less than CAD 40 million of swaps maturing over the next 12 months. We have a weighted average interest rate term and mortgages remaining of 4.1 years at year-end.

Speaker #2: As at the date of the MDNA, on a trailing 12-month basis, the borrowing capacity under our three credit facilities increased by an aggregate of $140 million and we extended maturities.

Speaker #2: We have a well-balanced level of annual maturities, with less than $40 million of swaps maturing over the next 12 months. We have a weighted average interest rate term and mortgages remaining of 4.1 years at year-end. As at March 4th, 87% of our debt was fixed through interest rate swaps and mortgages, and we had approximately $102.3 million of undrawn capacity under our revolving credit facilities and 10 unencumbered properties with an aggregate value of approximately $132.2 million.

Morgan: As at 4 March, 87% of our debt was fixed through interest rate swaps and mortgages. We had approximately CAD 102.3 million of undrawn capacity under our revolving credit facilities and 10 unencumbered properties with an aggregate value of approximately CAD 130.2 million. I'd like to turn the call back to Milton for closing remarks. Thank you very much.

Andrew Kalra: As at 4 March, 87% of our debt was fixed through interest rate swaps and mortgages. We had approximately CAD 102.3 million of undrawn capacity under our revolving credit facilities and 10 unencumbered properties with an aggregate value of approximately CAD 130.2 million. I'd like to turn the call back to Milton for closing remarks. Thank you very much.

Speaker #2: I'd like to turn the call back to Milton for closing remarks. Thank you very much.

Speaker #1: Great. Thanks, Andrew. 2025 marks our 10th anniversary since the creation of the REIT, and over that period, we've established ourselves as an important partner to major automotive dealership groups and OEMs in Canada, and now in the United States.

Milton Lamb: Great. Thanks, Andrew. 2025 marks our tenth anniversary since the creation of the REIT, and over that period, we've established ourselves as an important partner to major automotive dealership groups and OEMs in Canada and now in the United States. As a result, we've successfully diversified our tenant base, market presence, and brand representation while more than tripling the value of our investment properties. We further built upon this progress in 2025 and strengthened our position for growth through the acquisitions of 13 properties for an aggregate purchase price of approximately CAD 200 million. Our entry in the US, combined with our entry into heavy equipment dealership vertical late last year, has broadened both our revenue base and our potential acquisition pipeline. We are successfully executing on our key objectives, including driving AFFO per unit to build value for unitholders.

Speaker #1: As a result, we've successfully diversified our tenant base, market presence, and brand representation while more than tripling the value of our investment properties. We further built upon this progress in 2025 and strengthened our position for growth through the acquisitions of 13 properties for an aggregate purchase price of approximately $200 million, our entry in the US combined with our entry into heavy equipment dealership vertical late last year has broadened both our revenue base and our potential acquisition pipeline.

Speaker #1: We are successfully executing on our key objectives including driving AFFO per unit to build value for unit holders. We're pleased to have implemented a 2.2% increase to unit holder distributions this past year and looking ahead, you can expect us to continue to build on this positive factors to drive unit holder value supported by a growing property featuring essential retail and service properties, with 100% rent collection since our IPO over 10 years ago, prime metropolitan markets anchored by GDP and population growth, high-quality tenants, with resilient business models, attractive single-tenant net lease structures, and embedded fixed or CPI-adjusted rental growth.

Milton Lamb: We're pleased to have implemented a 2.2 increase to unitholder distributions this past year. Looking ahead, you can expect us to continue to build on these positive factors to drive unitholder value, supported by a growing property portfolio featuring essential retail and service properties with 100% rent collection since our IPO over 10 years ago, prime metropolitan markets anchored by GDP and population growth, high-quality tenants with resilient business models, attractive single-tenant net lease structures, and embedded fixed or CPI-adjusted rental growth. We look forward to benefiting from a full year of the financial impact of our 2025 acquisitions in 2026. That concludes our remarks. Now I'd like to open it up for questions. Morgan, please go ahead.

Speaker #1: We look forward to benefiting from a full year of the financial impact of our 2025 acquisitions in 2026. That concludes our remarks. Now I'd like to open it up for questions.

Speaker #1: Morgan, please go ahead.

Speaker #3: Thank you. We will now begin the question-and-answer session. During this period, we do ask that you limit your questions to one with a follow-up.

Operator: Thank you. We will now begin the question-and-answer session. During this period, we do ask that you limit your questions to 1 with a follow-up. If you would like to ask a question, please press star then the number 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from Sairam Srinivas with ATB Capital Markets. Your line is open.

Speaker #3: If you would like to ask a question, please press star, then the number one, on your telephone keypad to raise your hand and join the queue.

Speaker #3: If you would like to withdraw your question, simply press star, one, again. Your first question comes from Saron Servinas, with ATB Pharma Capital Markets.

Speaker #3: Your line is open.

Speaker #4: Thank you, Abrida. Good morning, guys. Congratulations.

Sairam Srinivas: Hi there, operator. Good morning, guys. Congratulations-

Speaker #1: Good morning.

Milton Lamb: Good morning.

Sairam Srinivas: on a very good 2025. You know, obviously, 2025 has been very active for the acquisitions pipeline, and it looks like 2026 is looking active as well. Can you comment on the outlook ahead and what you're seeing developing in your markets?

Speaker #4: On a very good 2025. Obviously, 2025 has been very active for the acquisitions pipeline, and it looks like 2026 is looking active as well.

Speaker #4: So, can you comment on the outlook ahead and what you're seeing developing in your markets?

Speaker #1: Yeah. I mean, we experienced during COVID and just after a bit of euphoria, where some of the pricing on these properties went to a level that we were not comfortable proceeding at.

Milton Lamb: Yeah, I mean, we experienced during COVID and just after a bit of euphoria, where some of the pricing on these properties went to a level that we were not comfortable, proceeding at. That's now normalized to what we've traditionally seen, where, you know, we can buy properties in that, you know, call it 6.5 to low 7s and put financing in place in the mid 5s, sorry, in the mid 4s. That allows us to, you know, be at a number and opportunities that are appealing to us. We're still being selective. As you can tell, looking at Florida and California, plus Montreal, you know, these are markets that are very healthy for real estate and the economy overall.

Speaker #1: That's now normalized to what we've traditionally seen, where we can buy properties in that, call it, six-and-a-half to low sevens, and put financing in place in the mid-fives.

Speaker #1: Sorry, in the mid-fours. That allows us to be at a number and opportunities that are appealing to us. We're still being selective. And as you can tell, looking at Florida and California, plus Montreal, these are markets that are very healthy for real estate.

Speaker #1: And the economy overall.

Speaker #4: That's definitely the case. And maybe just to follow up there, looking at the US, you're essentially focusing on Rivian and Tesla that have entered dealerships there.

Sairam Srinivas: That's definitely the case. Maybe just to follow up there, looking in the US, you're essentially been focusing on Rivian and Tesla-tenanted dealerships there. Is that part of your broader strategy as well in terms of the US market?

Speaker #4: Is that part of your broader strategy as well in terms of the U.S. market?

Milton Lamb: As a broad strategy, we certainly believe, you know, we watched Tesla for a while before we did our first, and then, you know, currently we have seven. We're excited about what Rivian's doing with the R2 that'll launch shortly. You know, there tends to be some merchant developers in the States that are providing long-term leases with Rivian and Tesla in major markets that, you know, when we underwrite the real estate, both for the existing tenant and for the actual, you know, dirt building an area that we're excited about. It is not our sole strategy. We still believe that we will look for and be able to complete some automotive, you know, traditional dealership properties as well. It's early days, but we still think there will be a diversified portfolio that we end up building out.

Speaker #1: As a broad strategy, we certainly believe we watched Tesla for a while before we did our first, and then currently, we have seven. We're excited about what Rivian's doing with the R2 that'll launch shortly.

Speaker #1: So there tends to be some merchant developers in the States that are providing long-term leases with Rivian and Tesla in major markets that when we underwrite the real estate, both for the existing tenant and for the actual dirt building an area, that we're excited about.

Speaker #1: It is not our sole strategy. We still believe that we will look for and be able to complete some automotive traditional dealership properties as well.

Speaker #1: It's early days. But we still think that it'll be a diversified portfolio that we end up building out.

Sairam Srinivas: That's great, Colin, Milton. Thank you so much. I'll turn it back.

Speaker #4: That's great, Colin Milton. Thank you so much. I'll turn it back.

Speaker #3: Your next question comes from Jonathan Kelter, with TD Cowen. Your line is open.

Operator: Your next question comes from Jonathan Kelcher with TD Cowen. Your line is open.

Speaker #1: Thanks, good morning. I guess I just continuing on that last line of questioning, pro forma, when this deal closed, when this deal closes, what percent of your net rents will come from Rivian?

Jonathan Kelcher: Thanks. Good morning. I guess, just continuing on that last line of questioning. pro forma, when this deal closes, what % of your net rents will come from Rivian?

Milton Lamb: We don't give forward-looking exact, but it's gonna be under 5%. I mean, it may be three properties, but these are not very large properties. Again, we certainly underwrite it for the dirt underneath. We like the assets, and we like the tenant.

Speaker #1: We don't give forward-looking exact, but it's going to be under 5%. I mean, it may be three properties, but these are not very large properties.

Speaker #1: And again, we certainly underwrite it for the dirt underneath. We like the assets. And we like the tenant.

Speaker #4: Okay. Helpful. And then just, I guess, well, second follow-up/second question, just on the balance sheet, you talked about pushing 45.9 million post-quarter into fixed rate.

Jonathan Kelcher: Okay. helpful. Then just, Well, second follow-up/second question, just on the balance sheet, you talked about pushing $45.9 million post-quarter into fixed rate. At Q4, you were 20% floating. What would you be pro forma right now?

Speaker #4: Q4, you were 20% floating. What would you be pro forma right now?

Speaker #1: In terms of our swaps coming due, over the next 24 months, we've got about 40. We're going to push with the acquisitions, we use our evolving balance or evolver will go up.

Milton Lamb: In terms of our swaps coming due, over the next 24 months, we got about 40. With the acquisitions, we use our revolving balance, our revolver will go up.

Jonathan Kelcher: Yeah.

Milton Lamb: With respect to as at the date of the MD&A, our overall non-revolving is 87% fixed.

Speaker #1: And then, with respect to as-at the date of the MD&A, our overall non-revolving is 87% fixed. So we're in a comfortable zone. And we ended up doing swaps at an opportune time in the beginning of February.

Milton Lamb: With respect to as at the date of the MD&A, our overall non-revolving is 87% fixed.

Jonathan Kelcher: Okay.

Milton Lamb: We're in a comfortable zone and.

Jonathan Kelcher: Yep

Milton Lamb: ... we ended up doing swaps in an opportune time in the beginning of February and got some good rates as well.

Jonathan Kelcher: Yep

Speaker #1: And got some good rates as well.

Jonathan Kelcher: Perfect. I'll turn it back. Thanks.

Speaker #4: Perfect. I'll turn it back. Thanks. Thank you.

Milton Lamb: Thank you.

Jonathan Kelcher: Thank you.

Operator: Once again, to ask a question at this time, please press star then the number 1 on your telephone keypad. Your next question comes from Jimmy Shan with RBC Capital Markets. Your line is open.

Speaker #3: Once again, to ask a question at this time, please press star, then the number one, on your telephone keypad. Your next question comes from Jimmy Shan with RBC Capital Markets.

Speaker #3: Your line is open.

Jimmy Shan: Thanks. Just in terms of the acquisition pace?

Speaker #5: Thanks. So just in terms of the acquisition pace, this year, do you expect it to be as active as last year?

Milton Lamb: Yeah

Jimmy Shan: ... this year, do you expect it to be as active as last year?

Milton Lamb: I think we're building some momentum both in Canada and the US, you know, we went through some of the math a few moments ago, so that works. I think we have to be selective, and we continue to be selective. For us, it's a cost to capital, balancing with the opportunities that we see. We expect to see some opportunities, and it'll be an interesting year. We still believe that our multiple reflects a bit of a hangover of, you know, USMCA affecting auto, and they don't finish that sentence that says auto manufacturing. I think we're caught in the word scramble of a title of six words versus seven words making a big difference in how we're viewed.

Speaker #1: I think we're building some momentum both in Canada and the US. And we went through some of the math a few moments ago. So that works.

Speaker #1: I think we have to be selective. And we continue to be selective. So for us, it's a cost-to-capital balancing with the opportunities that we see.

Speaker #1: So it'll be we expect to see some opportunities. And it'll be an interesting year. But we still believe that our multiple reflects a bit of a hangover of USMCA affecting auto.

Speaker #1: And they don't finish that sentence that says auto manufacturing. So I think we're caught in the word scramble of a title of six words versus seven words, making a big difference.

Speaker #1: And how we're viewed. So once that dissipates, I think our cost of capital will come back in line. And we're pretty excited about what our pipeline can and should be.

Milton Lamb: Once that dissipates, I think our cost of capital come back in line, and we're pretty excited on what our pipeline can and should be.

Jimmy Shan: Okay. As you build out the US portfolio, how are you thinking about the markets you wanna be in? You wanna build a critical mass first, or you now you're just looking at the credit and you're kind of market agnostic?

Speaker #5: Okay. As you build the US portfolio, so how are you thinking about the markets you want to be in? You want to build a critical mass first, or you now are just looking at the credit, and you're kind of market agnostic?

Milton Lamb: No, we've never been market agnostic. I guess I'd answer that two ways. One is the underlying kind of philosophy of the REIT has always been metropolitan with population growth and GDP growth. Certainly, there is more markets in the US than in Canada just by the sheer size that fit that category. The good news is, on a net lease business, we don't have those operating need for capabilities risk management. It tends to be a bit more of an asset manager as opposed to a property manager leasing level. We still do like, call it that southeast market, and then as you kind of move over into the Arizona, Texas, and Californias. We like to see the dirt and the underlying economy and population supporting the real estate that we buy.

Speaker #1: Yeah. No, we've never been market agnostic. So I guess I'd answer that in two ways. One is the underlying kind of philosophy of the REIT is always being metropolitan with population growth and GDP growth.

Speaker #1: Certainly, there's more markets in the US than in Canada, just by the sheer size. That fit that category. The good news is, on a net lease business, we don't have those operating need for capabilities, risk management.

Speaker #1: It tends to be a bit more of an asset manager as opposed to a property manager, leasing level. But we still do like call it that Southeast market.

Speaker #1: And then as you kind of move over into Arizona, Texas, and California, we like to see the dirt and the underlying economy and population supporting the real estate that we buy.

Milton Lamb: It helps our tenants, and it helps the dirt.

Speaker #1: It helps our tenants. And it helps the dirt.

Jimmy Shan: Yeah. Okay. Sorry, just one last. Do you have any update on the Pfaff, the Audi space there in Vaughan?

Speaker #5: Yeah, okay. Sorry, just one last—do you have any update on the FAF, that Audi space there in Vaughan? What do you plan to do there?

Milton Lamb: Uh-

Jimmy Shan: In terms of what you plan to do there?

Milton Lamb: It's early days. It's a bit of a balancing act. I mean, it's a great property. I keep on saying dirt, but it's also got a great building on it. The combination is the demand now for leasing income versus, you know, there is higher and better use, good density there, but in today's market, you're not getting paid for the density. It's a balancing act of how long do we want to commit on that property versus how long until we get access to potentially that underlying value. That's what we're going through right now and looking at different opportunities and different structures. It's early days, but it's a, it's a high quality property.

Speaker #1: It's early days. It's a bit of a balancing act. I mean, it's a great property—I keep on saying 'dirt'—but it's also got a great building on it.

Speaker #1: So the combination is the demand now for leasing income versus there is higher and better use good density there. But in today's market, you're not getting paid for the density.

Speaker #1: So it's a balancing act of how long do we want to commit on that property versus how long until we get access to potentially that underlying value.

Speaker #1: And that's what we're going through right now and looking at different opportunities and different structures. It's early days, but it's a high-quality property.

Giuliano Tolisano: Okay. Thank you.

Jimmy Shan: Okay. Thank you.

Speaker #5: Okay. Thank you.

Operator: Your next question comes from Giuliano Tolisano with National Bank. Your line is open.

Speaker #3: Your next question comes from Juliano Dornhill, with National Bank. Your line is open.

Giuliano Tolisano: Hey, guys. Good morning, everyone.

Speaker #4: Hey, guys. Good morning, everyone.

Milton Lamb: Good day.

Giuliano Tolisano: I just a question. How do the cap rates compare for the Rivian deals compared to just regular kind of dealerships in their areas? Are they, you know, on similar areas, like same ballpark or are they different?

Speaker #1: Good. Yeah.

Speaker #4: I just had a a question. How does the cap rates compare for the Rivian deals compared to just regular kind of dealerships in their areas?

Speaker #4: Are they on similar same ballpark, or are they different?

Milton Lamb: It really depends on the market, but I would think the Rivians, they haven't been around as long as some of the other dealerships or Tesla, so that's reflected a bit. Again, it's what I find interesting is that they're at market rates or at numbers that we are. I shouldn't say it overall. The ones that we've been doing are at market rates that we're very comfortable with. We've seen a number cross our desk at a high number per square foot that makes us extremely uncomfortable. It is a bit of a balancing act between the actual real estate and the tenant in place.

Speaker #1: It really depends on the market. But I would think the Rivian's it's they haven't been around as long as some of the other dealerships or Tesla.

Speaker #1: So that's reflected a bit. But again, what I find interesting is that they're at market rates or at numbers that we are— I shouldn't say at overall.

Speaker #1: The ones that we've been doing are at market rates that we're very comfortable with. We've seen a number cross our desk at a high number per square foot that makes us extremely uncomfortable.

Speaker #1: So it is a bit of a balancing act between the actual real estate and the tenant on in place. But I would say Rivian, with their upcoming R2, we could expect to see some cap rate compression going forward.

Milton Lamb: I would say Rivian, with their upcoming R2, we could expect to see some cap rate compression going forward, assuming that launch goes as well as people anticipate.

Speaker #1: Assuming that that launch goes as well as people anticipate.

Giuliano Tolisano: Do you think of the EV transition more of a, like, a risk or an opportunity for your tenant, for your existing tenant base?

Speaker #4: And do you think of the EV transition more as a risk or an opportunity for your existing tenant base?

Milton Lamb: I think it's opening up more demand for the real estate that is zoned for Automotive in Canada, you know, whether that's including potential new Chinese entrants or just overall. I think for the existing, call it traditional dealership base, a lot of them are gonna have to have the service capabilities and the delivery capabilities for both. Well, for three: for ICE, hybrid, and for EV. I think that broadens out their needs. But it's really going to be consumer preference, and there's gonna be some investment that has to occur. I don't see this being a hard pivot. I think it's gonna be gradual over the next 15 to 25 years. They're gonna have to continue to service ICE vehicles and at the same time move up the chain through hybrid and ICE.

Speaker #1: I think it's opening up more demand for the real estate that is zoned for automotive in Canada. Whether that's including potential new Chinese entrants or just overall, I think for the existing call it traditional dealership base, a lot of them are going to have to have these service capabilities and the delivery capabilities for both, well, for three.

Speaker #1: For ICE, hybrid, and for EV. So I think that broadens out their needs. But it's really going to be consumer preference, and there's going to be some investment that has to occur.

Speaker #1: But I don't see this being a hard pivot. I think it's going to be gradual over the next 15 to 25 years. And they're going to have to continue to service ICE vehicles.

Speaker #1: And at the same time, move up the chain through hybrid and ICE. Sorry, hybrid and EV.

Milton Lamb: Sorry, hybrid and EV.

Operator: This concludes the Q&A session. I would like to turn the call back over to management for any further remarks.

Speaker #3: This concludes the Q&A session. I would like to turn the call back over to management for any further remarks.

Milton Lamb: We appreciate everyone's time, and we look forward to talking to you shortly. Have a good day, everyone.

Speaker #1: Well, we appreciate everyone's time. And we look forward to talking to you shortly. Have a good day, everyone.

Operator: This concludes today's call. Thank you so much for attending. Have a wonderful rest of your day.

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