Q1 2026 PRO Real Estate Investment Trust Earnings Call

May 14, 2026

Speaker #1: Management will make a short presentation which will be followed by a question-and-answer period. Open exclusively to financial analysts. To ask a question, simply press the star key, then the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, please press the star key followed by the number 2. For your convenience, the results release along with first quarter financial statements and management's discussion and analysis are available at proread.com/investorssection and on FeederPlus.

Speaker #1: Before we start, I have been asked by PRO Read to read the following message regarding forward-looking statements, and non-IFRS measures. PRO Read's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements, or other future events or developments.

Rachel Smith: PROREIT's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements, or other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results, levels of activity, performance, achievements, future events, or developments to differ materially from those expressed or implied by the forward-looking statements. As a result, PROREIT cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements.

Operator: PROREIT's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements, or other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results, levels of activity, performance, achievements, future events, or developments to differ materially from those expressed or implied by the forward-looking statements. As a result, PROREIT cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements.

Speaker #1: Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances.

Speaker #1: However, there can be no assurance that such estimates and assumptions will prove to be correct. Manufacturers could cause actual results, levels of activity, performance, achievements, future events, or developments to differ materially from those expressed or implied by the forward-looking statements.

Speaker #1: As a result, PRO Read cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place under reliance on these forward-looking statements.

Rachel Smith: For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in PROREIT's MD&A dated 13 May 2026, available at www.sedarplus.ca. Forward-looking statements represent management's expectations as at 13 May 2026. Except as may be required by law, PROREIT has no intention and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. The discussion today will include non-IFRS financial measures. These non-IFRS financial measures should be considered in addition to and not as a substitute for or in isolation from the REIT's IFRS results. For a description of these non-IFRS financial measures, please see the Q1 earnings release for fiscal 2026 and non-IFRS measures section in the MD&A for the Q1 of fiscal 2026 for additional information.

Operator: For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in PROREIT's MD&A dated 13 May 2026, available at www.sedarplus.ca. Forward-looking statements represent management's expectations as at 13 May 2026. Except as may be required by law, PROREIT has no intention and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. The discussion today will include non-IFRS financial measures. These non-IFRS financial measures should be considered in addition to, and not as a substitute for or in isolation from the REIT's IFRS results. For a description of these non-IFRS financial measures, please see the Q1 earnings release for fiscal 2026 and non-IFRS measures section in the MD&A for the Q1 of fiscal 2026 for additional information.

Speaker #1: For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in PRO Read's MDNA dated May 13, 2026.

Speaker #1: Available at www.feederplus.ca. Forward-looking statements represent management's expectations as set May 13, 2026, and accept as may be required by law, PRO Read has no intention and undertakes no obligation to update or revise any forward-looking statement.

Speaker #1: Whether as a result of new information, future events, or otherwise. The discussion today will include non-IFRS financial measures, these non-IFRS financial measures should be considered in addition to, and not as a substitute for, or in isolation from the Read's IFRS results.

Speaker #1: For a description of these non-IFRS financial measures, please see the first quarter earnings release for fiscal 2026 and non-IFRS measures section in the MDNA for the first quarter of fiscal 2026 for additional information.

Rachel Smith: I will now turn the call over to Mr. Gordon G. Lawlor, President and Chief Executive Officer of PROREIT.

Operator: I will now turn the call over to Mr. Gordon G. Lawlor, President and Chief Executive Officer of PROREIT.

Speaker #1: I will now turn the call over to Mr. Gordon Lawler, President and Chief Executive Officer of PRO Read.

Gordon G. Lawlor: Thank you, Jenny. Good morning, everyone, and welcome. Joining me today is Alison Schafer, our CFO and corporate secretary. Also joining us for the Q&A session is Zachary Aaron, Vice President of Investments and Asset Management. We are pleased with our start of our 2026 as a pure play industrial REIT. We continued to execute on our strategic plan and delivered sound operating performance. Despite owning 8 fewer properties than at this time last year, we increased revenue, NOI, and AFFO while further reducing leverage. Building on several years of strong growth momentum, same property NOI increased 6.4% during the quarter, driven by 6.8% growth in our industrial segment. These results reflect the strength of our tenant base and the embedded lease growth within our portfolio.

Speaker #2: Thank you, Jenny. Good morning, everyone, and welcome. Joining me today is Allison Schaefer, our CFO and corporate secretary, also joining us for the Q&A session is Zach Aaron, Vice President of Investments and Asset Management.

Speaker #2: We are pleased with our start of our 2026 as a pure-play industrial REIT. We continue to execute on our strategic plan and delivered sound operating performance.

Speaker #2: Despite owning eight fewer properties than at this time last year, we increased revenue, NOI, and AFFO, while further reducing leverage. Building on several years of strong growth momentum, same property NOI increased 6.4% during the quarter, driven by 6.8% growth in our industrial segment.

Speaker #2: These results reflect the strength of our tenant base and the embedded lease growth within our portfolio. At quarter end, our portfolio comprised 104 investment properties, totaling 6.4 million square feet of GLA, with a weighted average lease term to maturity of 4.3 years.

Gordon G. Lawlor: At quarter end, our portfolio comprised 104 investment properties totaling 6.4 million square feet of GLA, with a weighted average lease term to maturity of 4.3 years, compared to 4.5 years at the same time last year. Industrial assets represent 90.7% of our base rent, compared to 81.8% a year ago as we continue to redeploy capital towards this segment. Geographically, we further diversified the portfolio across Canada. Manitoba and Western Canada increased to 19% of base rent, up from 9.6% a year ago, while Atlantic Canada declined to 44% from 52.4%. Our targeted markets continue to demonstrate strong industrial fundamentals. In Winnipeg, CBRE reported continued growth in industrial rental rates during the quarter.

Speaker #2: Compared to 4.5 years at the same time last year. Industrial assets represent 90.7% of our base rent, compared to 81.8% a year ago. As we continue to redeploy capital towards this segment.

Speaker #2: Geographically, we further diversified the portfolio across Canada. Manitoba and western Canada increased to 19% of base rent, up from 9.6 a year ago. While Atlantic Canada declined to 44% from 52.4.

Speaker #2: Our targeted markets continue to demonstrate strong industrial fundamentals. In Winnipeg, CBRE reported continued growth in industrial rental rates during the quarter. In Ottawa, increased federal defense spending is supporting near-term demand for both small and mid-bay industrial space.

Gordon G. Lawlor: In Ottawa, increased federal defense spending is supporting near-term demand for both small and mid-day industrial space. Meanwhile, Halifax industrial rents reached a record high of CAD 15.18 per square foot, reflecting a strong start to the year. Turning to the portfolio transactions during the quarter, we completed the previously announced sale of a 50% interest, co-ownership interest in an industrial property located in Dartmouth, Nova Scotia, totaling approximately 65,000 square feet for our share of gross proceeds of CAD 5.7 million. Subsequent to quarter-end, we engaged in two additional transactions.

Speaker #2: Meanwhile, Halifax Industrial Rents reached a record high of $15.18 per square foot, reflecting a strong start to the year. Turning to the portfolio transactions during the quarter, we completed the previously announced sale of a 50% interest co-ownership interest in an industrial property located in Dartmouth, Nova Scotia, totaling approximately $65,000 square feet.

Speaker #2: For our share of gross proceeds of $5.1 million—sorry, $5.7 million. Subsequent to quarter end, we engaged in two additional transactions. First, we completed the acquisition of 100% interest in a single-tenant, 2024-built, 10-year leased industrial building in Moncton, New Brunswick.

Gordon G. Lawlor: First, we completed the acquisition of 100% interest in a single tenant, 2024 built, 10-year leased industrial building in Moncton, New Brunswick, totaling approximately 60,000 sq ft of GLA for CAD 12.3 million and representing a going-in capitalization rate of 7%. This acquisition was financed through a combination of draws on the revolving credit facility and cash on hand from the Dartmouth property sale I just mentioned. Second, we entered into a binding agreement for the sale of 100% interest in a retail property located in Bathurst, New Brunswick, totaling approximately 15,000 sq ft of GLA for gross proceeds of CAD 1.4 million. Net proceeds from the sale are expected to be used for general business and working capital purposes. The transaction is scheduled to close in Q2, subject to customary closing conditions.

Speaker #2: Totaling approximately $60,000 square feet of GLA. For $12.3 million, and representing a going in capitalization rate of 7%. This acquisition was financed through a combination of draws on the revolving credit facility, and cash on hand from the Dartmouth property sale I just mentioned.

Speaker #2: Second, we entered into a binding agreement for the sale of 100% interest in a retail property located in Bathurst, New Brunswick. Totaling approximately $15,000 square feet of GLA.

Speaker #2: For gross proceeds of $1.4 million. Net proceeds from the sale are expected to be used for general business and working capital purposes. The transaction is scheduled to close in the second quarter subject to customary closing conditions.

Gordon G. Lawlor: Turning to leasing activity, momentum remained strong during the quarter. As of today, we've renewed approximately 76.9% of 2026 lease maturities at positive average spreads of 34.8%. Notably, 5 lease renewals commencing in 2026 include rental increases ranging from 40% to 45%. Lease renewals negotiated in 2024 and 2025 and kicking in in 2026 will provide for incremental cash flow as 418,000 square feet of space realizes new rental rates in September 2026 and fully in Q4. Overall, portfolio occupancy was 96% at quarter end compared to 97.7% a year earlier.

Speaker #2: Turning to leasing activity, momentum remained strong during the quarter. As of today, we have renewed approximately 76.9% of 2026 lease maturities, at positive average spreads of 34.8%.

Speaker #2: Notably, five lease renewals commencing in 2026 include rental increases ranging from 40 to 45 percent. Lease renewals negotiated in 2024 and 2025, and kicking in in 2026, will provide for incremental cash flow as $418,000 square feet of space realizes new rental rates in September '26.

Speaker #2: And fully in Q4. Overall portfolio occupancy was 96% at quarter end. Compared to 97.7 a year earlier. As noted on previous calls, this change was primarily driven by the temporary vacancy at 176,000 square foot single-tenant industrial property located in Fantiessant, Quebec.

Gordon G. Lawlor: As noted on previous calls, this change was primarily driven by the temporary vacancy at our 176,000 square foot single tenant industrial property located in Saint-Hyacinthe, Québec, following the tenant's decision not to renew its lease in July 2025. On 6 May 2026, the REIT entered into a binding lease for approximately 74,250 feet of the 176,000 square foot facility located at 63, 75 Picard Street, again, in Saint-Hyacinthe. The new tenant will have a 15-year term at lease term at market rent, commenced in mid-2026.

Speaker #2: Following the tenant's decision not to renew its lease in July of 2025. On May 6, 2026, the REIT entered into a binding lease for approximately $74,250 feet, of the 176,000 square foot facility.

Speaker #2: Located at 6375 Picard Street, again, in Fantiessant. The new tenant will have a 15-year term at lease term at market rent commencing mid-2026. The new base rent on the $74,000 square feet which is 42% of the total property GLA represents an increase of over 122% compared to the rent paid by the previous tenant.

Gordon G. Lawlor: The new base rent on the 74,000 sq ft, which is 42% of the total property GLA, represents an increase of over 122% compared to the rent paid by the previous tenant for the same GLA in the prior lease. The new lease will provide for incremental cash flows for Q3 and Q4 2026. We continue to actively market the remaining vacant space. Excluding this property vacancy, portfolio occupancy would have been approximately 97.6% at quarter end. With that, I'll now turn the call over to Alison. Alison, over to you.

Speaker #2: For the same GLA in the prior lease. The new lease will provide for incremental cash flows for Q3 and Q4 2026. We continue to actively market the remaining vacant space.

Speaker #2: Excluding this property vacancy, portfolio occupancy would have been approximately 97.6% at quarter end. With that, I'll now turn the call over to Allison. Allison, over to you.

Alison Schafer: Thank you, Gordy. Good morning, everyone. We are pleased with our Q1 performance. In the quarter, property revenue totaled CAD 26.9 million, up 4.5% year over year, despite owning 8 fewer properties. The increase is mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases. Net operating income, or NOI, was CAD 16.1 million, an increase of 8.1% compared to last year due to the same factors. Same property NOI represents 97 of our 104 properties. This reached CAD 14.1 million. That was up 6.4% year over year, including a 6.8% growth from our industrial segment. The increase was driven by contractual rent escalation, stronger renewal rates, and higher rents on new leases.

Alison Schafer: Thank you, Gordy. Good morning, everyone. We are pleased with our Q1 performance. In the quarter, property revenue totaled CAD 26.9 million, up 4.5% year over year, despite owning eight fewer properties. The increase is mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases. Net operating income, or NOI, was CAD 16.1 million, an increase of 8.1% compared to last year due to the same factors. Same property NOI represents 97 of our 104 properties. This reached CAD 14.1 million. That was up 6.4% year-over-year, including a 6.8% growth from our industrial segment. The increase was driven by contractual rent escalation, stronger renewal rates, and higher rents on new leases.

Speaker #1: Thank you, Gordy. And good morning, everyone. We are pleased with our first quarter performance. In the quarter, property revenue totaled $26.9 million. Up 4.5% year over year.

Speaker #1: Despite owning eight fewer properties. The increase is mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases.

Speaker #1: Net operating income, or NOI, was $16.1 million. An increase of 8.1% compared to last year due to the same factors. Same property NOI represents 97 of our 104 properties.

Speaker #1: This reached 14.1 million. That was up 6.4% year over year, including a 6.8% growth for from our industrial segment. The increase was driven by contractual rent escalation, stronger renewal rates, and higher rents on new leases.

Alison Schafer: This was achieved despite a decline in overall average occupancy related to the single tenant, Quebec vacancy Gordie mentioned earlier. Our funds from operations, or FFO, amounted to CAD 8.7 million for the quarter. This was up 10.6%. It was driven by increases in contractual base rent, higher re-rates on renewals, and higher rental rates on new leases. This was offset by higher general and administrative expenses due to timing, impact of certain professional fees, and an increase in interest expense. On a per unit basis, basic FFO was relatively stable year over year at approximately CAD 0.13. Basic AFFO payout ratio was 96.6% in Q1, compared to 93.8% for the same quarter last year.

Speaker #1: And this was achieved despite a decline in overall average occupancy related to the single-tenant Quebec vacancy Gordy mentioned earlier. Our funds from operations, or FFO, amounted to $8.7 million for the quarter.

Speaker #1: This was up 10.6%. And it was driven by increases in contractual base rent, higher rates on renewals, and higher rental rates on new leases.

Speaker #1: This was offset by higher general and administrative expenses, due to timing, impact of certain professional fees, and an increase in interest expense. On a per-unit basis sorry, on a per-unit basis, basic FFO was relatively stable year over year at approximately 13 cents.

Speaker #1: Basic AFFO, payout ratio, was 96.6% in Q1, compared to 93.8% for the same quarter last year. This higher ratio was due to the AFFO dilution related to the sale of 15 properties over the past 12 months, and the ongoing redeployment of capital towards higher quality industrial assets.

Alison Schafer: This higher ratio was due to the AFFO dilution related to the sale of 15 properties over the past 12 months and the ongoing redeployment of capital towards higher quality industrial assets. Based on leasing renewals already completed in 2026, we expect the AFFO payout ratio to improve as the year progresses. Net cash flows provided from operating activities were CAD 10.0 million in the quarter, up 34.1%, mainly impacted by the timing of cash receipts and the settlement of payables. The weighted average capitalization rate for our portfolio remained stable year over year at approximately 6.7% at 31 March 2026. Moving on to the balance sheet. We continue to focus on reducing leverage. Adjusted debt to gross book value improved to 47.8% compared to 49.5% a year earlier.

Speaker #1: Based on leasing renewals already completed in 2026, we expect the AFFO payout ratio to improve as the year progresses. Net cash flows provided from operating activities were $10.0 million in the quarter, up 34.1%, mainly impacted by the timing of cash receipts and the settlement of payables.

Speaker #1: The weighted average capitalization rate for our portfolio remained stable year over year, at approximately 6.7% at March 31, 2026. Moving on to the balance sheet, we continue to focus on reducing leverage.

Speaker #1: Adjusted debt-to-gross book value improved to $47.8% compared to $49.5% a year earlier. Adjusted debt-to-annualized adjusted EBITDA ratio came in at 8.8 times at March 31, 2026.

Alison Schafer: Adjusted debt to annualized adjusted EBITDA ratio came in at 8.8x at 31 March 2026. This was down from 9.9x at 31 December 2025 and in the same period last year. We continue to target further reductions in both adjusted debt to annualized adjusted EBITDA and adjusted debt to gross book value as we continue to scale the platform. At quarter end, our total debt, including current and non-current portions, totaled CAD 521.3 million, compared to CAD 525 million at 31 December 2025, and CAD 495 million at 31 March 2025. Looking at upcoming maturities, in 2026, we have CAD 157.1 million maturing.

Speaker #1: This was down from nine times at December 31, 2025, and in the same period last year. We continue to target further reductions in both adjusted debt-to-annualized adjusted EBITDA and adjusted debt-to-gross book value as we continue to scale the platform.

Speaker #1: At quarter end, our total debt, including current and non-current portions, totaled $521.3 million. Compared to $525 million at December 31, 2025. And $4095 million at March 31, 2025.

Speaker #1: Looking at upcoming maturities, in 2026, we have $157.1 million maturing. Subsequent to quarter end, we secured financing commitments and a term sheet totaling $146.2 million on competitive terms, addressing $108.3 million of our 2026 mortgage maturities.

Alison Schafer: Subsequent to quarter end, we secured financing commitments and term sheet totaling CAD 146.2 million on competitive terms, addressing CAD 108.3 million of our 2026 mortgage maturities and supporting the acquisition of the industrial property in Moncton that we just closed on. The financing is expected to be completed in Q2 2026 and will carry fixed term market interest rates with terms to maturity ranging from 3 to 7 years. In 2027, we have another CAD 46.1 million maturing, mainly tied to high-performing industrial assets in Burnside Industrial Park.

Speaker #1: And supporting the acquisition of the industrial property in Moncton. That we just closed on. The financing is expected to be completed in the second quarter of 2026, and will carry fixed-term market interest rates with terms to maturity ranging from 3 to 7 years.

Speaker #1: In 2027, we have another $46.1 million maturing. Mainly tied to high-performing industrial assets in Birdside Industrial Park. And for 2028, we have $59.8 million in maturities.

Alison Schafer: For 2028, we have CAD 59.8 million in maturities. The weighted average interest rate on these mortgages is 3.9% for 2026, 4.8% for 2027, and 3.5% for 2028. Finally, our distribution of CAD 0.0375 per unit was maintained for Q1 2026. That wraps up our financial review. Gordie, back to you for closing remarks.

Speaker #1: The weighted average interest rate on these mortgages is 3.9% for 2026. 4.8% for 2027. And 3.5% for 2028. Finally, our distribution of 3.75 cents per unit was maintained for the first quarter of 2026.

Speaker #1: That wraps up our financial review. Gordy, back to you for closing remarks.

Gordon G. Lawlor: Thank you, Alison. We remain well-positioned to continue executing on our strategy and to scale our industrial platform in high-performing secondary markets across the country. Mark-to-market rent increases are rolling through our quarters and provide incremental cash flows as we move through the year. Demand for well-located small and mid bay industrial properties remains healthy across several of our core markets, supported by limited supply and solid tenant demand. We continue to actively evaluate acquisition opportunities while maintaining a disciplined approach to capital allocation, always with the aim of creating long-term value for all stakeholders. Thank you. Jenny, back to you for the question and answer period.

Gordon G. Lawlor: Thank you, Alison. We remain well-positioned to continue executing on our strategy and to scale our industrial platform in high-performing secondary markets across the country. Mark-to-market rent increases are rolling through our quarters, and provide incremental cash flows as we move through the year. Demand for well-located small and mid bay industrial properties remains healthy across several of our core markets, supported by limited supply and solid tenant demand. We continue to actively evaluate acquisition opportunities while maintaining a disciplined approach to capital allocation, always with the aim of creating long-term value for all stakeholders. Thank you. Jenny, back to you for the question and answer period.

Speaker #2: Thank you, Allison. We remain well positioned to continue executing on our strategy and to scale our industrial platform in high-performing secondary markets across the country.

Speaker #2: Mark-to-market rent increases are rolling through our quarters, and will provide incremental cash flows as we move through the year. Demand for well-located, small and mid-bay industrial properties remains healthy across several of our core markets.

Speaker #2: Supported by limited supply and solid tenant demand. We continue to actively evaluate acquisition opportunities while maintaining a disciplined approach to capital allocation. Always with the aim of creating long-term value for all stakeholders.

Speaker #2: Thank you. Jenny, back to you for the question-and-answer period.

Rachel Smith: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on a touch-tone phone. Should you wish to cancel your request, you may press star 2. Once again, that is star 1 should you wish to ask a question. Your first question is from Sam Damiani from TD Cowen. Your line is now open.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on a touch-tone phone. Should you wish to cancel your request, you may press star two. Once again, that is star one should you wish to ask a question. Your first question is from Sam Damiani from TD Cowen. Your line is now open.

Speaker #3: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star, followed by the one on the touchdown phone.

Speaker #3: Should you wish to cancel your request, you may press star two. Once again, that is star one. Should you wish to ask a question?

Speaker #3: Your first question is from Sam Damiani from TD Karen. Your line is now open.

Sam Damiani: Thank you. Good morning, everyone. Congrats again on the good quarter. You've got a lot of leases, you know, either coming online or renewing at significant steps in around middle of the year into September. Are there any known pending move-outs over the course of 2026 that could offset that step-up in rent that the REIT's set to receive?

Speaker #4: Thank you. And good morning, everyone. Congrats again on the good quarter. So, you've got a lot of leases either coming online or renewing at significant steps in around the middle of the year, end of September.

Speaker #4: Are there any known pending move-outs over the course of 2026 that could offset that step-up in rent that the REIT is set to receive?

Gordon G. Lawlor: The only thing we have real knowledge of now is we have 80,950 square feet in Woodstock, Ontario. That tenant didn't renew, so they moved out March 31st. That's in, you know, two of our best buildings in the portfolio. 30-foot clear heights, eat off the floor type stuff. That's move-in ready. The Southwest Ontario market's a little bit, little slow right now.

Speaker #2: The only thing we have real knowledge of now is we have 80,000,915 square feet in Woodstock, Ontario. That tenant didn't renew, so they moved out March 31.

Speaker #2: That's in two of our best buildings in the portfolio. 30-foot clear heights eat off the floor type stuff. So that's moving ready. The Southwest Ontario market's a little slow right now.

Gordon G. Lawlor: That said, you know, that would negate some of the, you know, the new acquisition, if you will. You know, when you take the twos and the threes, you know, the new acquisition, the incremental upside in the Saint-Hyacinthe property, and then, you know, some significant leasing steps in end of Q3 and Q4, it shouldn't be that much noticeable, mostly compared to this quarter.

Speaker #2: But that said, that would negate some of the new acquisition, if you will. And a bit of the but when you take the twos and the pros, the new acquisition, the incremental upside in the Santee Ascent property and then some significant leasing steps in end of Q3 and Q4, it shouldn't be that much noticeable compared to this quarter.

Sam Damiani: Okay. That's great color. Just for clarity, is that 31 March vacancy, is that included as occupied at Q1 or did that

Speaker #4: Okay. And just—that's great, Caller. And just for clarity, is that March 31 vacancy—is that included as occupied at Q1, or is that...?

Gordon G. Lawlor: Yes.

Sam Damiani: It is.

Gordon G. Lawlor: It was occupied at Q1. They vacated 1 April.

Speaker #2: Yes, it was occupied in Q1. They vacated on April 1st.

Sam Damiani: Okay. Got it. Okay. Fair enough. Okay. There was a small drop in in-place occupancy in the quarter from Q4. Is there any notable or trend or color to share on that movement?

Speaker #4: Okay. Got it. Okay. Fair enough. Okay. And so there was a small drop in in-place occupancy in the quarter. From Q4, is there any notable or trend or color to share on that movement?

Gordon G. Lawlor: I'll turn it over to Zach, who manages the multitudes of leasing there, and he can probably provide a bit of color.

Speaker #2: I'll turn it over to Zach who manages the multiple multitudes of leasing there and he can probably provide a bit of color.

Zachary Aaron: Sure. Yeah. Thanks, Gordie, and thanks, Sam. Nothing noticeable or really pertinent in terms of larger spaces that came empty in Q1 from Q4. I would say just a few small base spaces, a mix of Halifax and Winnipeg. All of our typical kind of plus minus 5,000 square foot units that, you know, were 20%, 30% below today's market. Some of these units, we already have deals in the works on that, you know, we hope to sign up in Q2 and, you know, cash flow Q2, Q3, but nothing significant overall.

Speaker #4: Sure.

Speaker #5: Yeah. Thanks, Gordy, and thanks, Sam. Nothing noticeable or really pertinent in terms of larger spaces that came empty in Q1. From Q4, I would say just a few small bay spaces mix of Halifax and Winnipeg, but all of our typical kind of plus-minus 5,000 square foot units that were 20, 30 percent below today's market.

Speaker #5: So some of these units we already have deals in the works on that we hope to sign up in Q2 and cash flow Q2, Q3.

Speaker #5: But nothing significant overall.

Sam Damiani: Okay. I'll turn it back. Thanks very much, guys.

Speaker #4: Okay. I'll turn it back. Thanks very much, guys.

Speaker #2: Thanks, Sam.

Gordon G. Lawlor: Thanks, Sam.

Rachel Smith: Thank you. Your next question is from Kyle Stanley from B. Riley. Your line is now open.

Operator: Thank you. Your next question is from Kyle Stanley from Desjardin. Your line is now open.

Speaker #3: Thank you. Your next question is from Kyle Stanley from the Journal. Your line is now open.

Kyle Stanley: Thanks. Morning, everyone.

Speaker #6: Thanks, Sam. Morning, everyone. Just going back to the post-quarter financing activity, Allison, are you able to disclose the average interest rate that you've got there?

Gordon G. Lawlor: Morning.

Kyle Stanley: Just going back to the post-quarter financing activity, Alison. Are you able to disclose the average interest rate that you got there?

Zachary Aaron: The average interest rate in terms of the new financing?

Speaker #4: The average interest rate in terms of the new financing?

Kyle Stanley: Yes, in terms of the new financing, the CAD 146 million.

Speaker #6: Yes, in terms of the new financing, the 146 million.

Zachary Aaron: No, I would, it's a bit hard to give an actual all-in rate because some of these rates aren't fixed yet. We're getting financing terms. For one example, on seven-year money, we're getting 157 basis points over the seven-year bond. On another deal, priced over CORRA, we're getting 165. I think there's another one, which is the, you know, I think we have a term sheet for maybe 160 over seven-year money.

Speaker #4: Yeah. I would it's a bit hard to give an actual all-in rate because some of these rates aren't fixed yet. But we're getting financing terms for one example on seven-year money.

Speaker #4: We're getting 157 basis points over the seven-year bond. On another deal, priced over CORA, we're getting 165. And then I think there's another one out.

Speaker #5: Which is, I think we have a term sheet for maybe 160 over seven-year money.

Kyle Stanley: 160 over 7-year money.

Speaker #4: 160 over seven-year money. As well. So we're seeing really good spreads overall on our financing and healthy appetite to get 65, 70 percent LTV kind of with no problem.

Zachary Aaron: As well. We're seeing really good spreads overall on our financing and healthy appetite to, you know, get 65%, 70% LTV kind of with no problem. You know, just using kind of the 5-year bond as, you know, a standard point. We seem to be getting pricing in and around the kind of 160, 165 over, give or take.

Zachary Aaron: As well. We're seeing really good spreads overall on our financing and healthy appetite to, you know, get 65%, 70% LTV kind of with no problem. You know, just using kind of the five year bond as, you know, a standard point. We seem to be getting pricing in and around the kind of 160, 165 over, give or take.

Speaker #4: And just using kind of the five-year bond as a standard point, we seem to be getting pricing in and around the kind of 160, 165 over, give or take.

Kyle Stanley: Okay, perfect. That's good color. Thank you.

Speaker #2: Okay. Perfect. That's good, Caller. Thank you. We have some flexibility on when we fix that. These we've got commitment letters for two of these three financings.

Gordon G. Lawlor: We probably have some flexibility on when we fix that, you know, we've got to move the levers for 2 of these 3 financings. It's just kind of watching almost the week really and, you know, maybe we get a 10 basis point break from it's been a little rough the last week or so. Yeah, I'm, you know, we're in the four and three quarters to just below 5 range, so maybe we get a good week and save 10 basis points on that. You know, that's the kind of world we're in.

Gordon G. Lawlor: We probably have some flexibility on when we fix that, you know, we've got to move the levers for two of these three financings. It's just kind of watching almost the week really and, you know, maybe we get a 10 basis point break from it's been a little rough the last week or so. Yeah, I'm, you know, we're in the four and three quarters to just below five range, so maybe we get a good week and save 10 basis points on that. You know, that's the kind of world we're in.

Speaker #2: So it's just kind of watching almost the week, really, and maybe we get a 10 basis point break from it's been a little rough the last week or so.

Speaker #2: But yeah, we're in the four and three-quarters to just below five range. So maybe we get a good week and then save 10 beeps on that.

Speaker #2: But that's the kind of world we're in.

Kyle Stanley: Okay, fair enough. No, no shortage of volatility in the rate markets. I agree with you there. Just moving over to acquisitions. Last quarter, obviously, and maybe for a few quarters now, you've highlighted seeing some opportunities in Winnipeg, Quebec City. Obviously, your leverage did improve again this quarter. Just wondering, you know, where the acquisition opportunity set stands today. I think you've indicated in the past that you'd be willing to take leverage up for the right deal. In addition, you know, how much acquisition capacity do you see in your existing kind of equity base?

Speaker #6: Okay. Fair enough. No shortage of volatility in the rate markets. I agree with you there. Just moving over to acquisitions. So last quarter, obviously, and maybe for a few quarters now, you've highlighted seeing some opportunities in Winnipeg, Quebec City, obviously, your leverage did improve again this quarter.

Speaker #6: So just wondering where the acquisition opportunity set stands today. I think you've indicated in the past that you'd be willing to take leverage up for the right deal.

Speaker #6: So in addition, how much acquisition capacity do you see in your existing kind of equity base?

Gordon G. Lawlor: I mean, we'd like to stick around the 49% to 51% range. I mean, it took a while to get there, we're not going to, unless we have a plan to reduce it again or go significantly above that, obviously. We don't get the benefit of that anyway. Right now, you know, we have CAD 30 to 40 million of acquisitions, room, if you will, on our balance sheet. You know, we're actively looking at those. There's a lot of deals out there, you know, and we're working on some of them. So, you know, that room, CAD 30 to 40 million, it'd be hopeful that we could land that in the next little bit.

Speaker #4: Yeah. I mean, we'd like to stick around the 49 to 51 percent range. I mean, we took a lot to get there. So we're not going to unless we have a plan to reduce it again significantly above that, obviously.

Speaker #4: We don't get the benefit of that anyway. So right now, we have 30 to 40 million of acquisitions room if you will on our balance sheet.

Speaker #4: So we're actively looking at those there's a lot of deals out there. And we're working on some of them. And so that room, 30 to 40 million, would be hopeful that we could land that in the next little bit.

Kyle Stanley: Okay, thank you. Then just going back to one of Sam's questions. You know, you talked about all the puts and takes on, you know, the timing of leases starting and some vacancy in the acquisition. As we look at your same property NOI growth this quarter in the high 6% from the industrial portfolio, when we kind of look at all those puts and takes, is it fair to assume that we should expect that to start to ramp towards year-end as some of those bigger renewals come online?

Speaker #6: Okay. Thank you. And then just going back to one of Sam's questions, you talked about all the puts and takes on the timing of leases starting and some vacancy in the acquisition.

Speaker #6: As we look at your same-property in Hawaii, growth this quarter is in the high 6% range from the industrial portfolio. When we look at all those puts and takes, is it fair to assume that we should expect that to start to ramp towards year-end as some of those bigger renewals come online?

Gordon G. Lawlor: Yeah, I mean, again, there's lots goes on in a quarter with 104 tenants here. I mean, the 6.8 on the industrial basis, you know, you're comparing the Saint-Hyacinthe vacant building to when it was fully leased. It would been above 6.8%, you know, if that was excluded from the math or fully leased. Yeah, I think we're looking for some, you know, we've talked about mid to high single digits, hopefully we'll see a bit more of that. We do have the 80,000 square feet, which will be a negative, obviously on Q2, but and the acquisitions don't go into the same store, obviously.

Speaker #4: Yeah. I mean, again, there's lots going on in the quarter with the 104 tenants here. I mean, the 6.8 on the industrial basis you're comparing the St.

Speaker #4: Vincent vacant building to when it was fully leased. So we would have been above 6.8% if that was excluded from the math or fully leased.

Speaker #4: So yeah, I think we're looking first on—we've talked about mid- to high-single digits. So hopefully, we'll see a bit more of that.

Speaker #4: We do have the 80,000 square feet, which will be a negative obviously on Q2. But and the acquisitions don't go into the same store, obviously.

Gordon G. Lawlor: I can't see why we would be below, you know, the mid of the pack there. We'll hope for the seas and see. Yeah, 6.8 strong. You know, we'd like hope to see that shows a little bit higher. We just honestly haven't done the math like in Q4 yet or anything like that.

Speaker #4: So, I can't see why we would be below the mid of the pack there. So, we're hopeful to see some 6.8 strong. But we'd like to hope to see that show a little bit higher.

Speaker #4: But we just, honestly, haven't done the math in Q4 yet or anything like that.

Kyle Stanley: Okay, thank you for that. I will turn it back.

Speaker #6: Okay, thank you for that. I will turn it back.

Rachel Smith: Thank you. Once again, that is star one should you wish to ask a question. Your next question is from Brad Sturges from Raymond James. Your line is now open.

Operator: Thank you. Once again, that is star one should you wish to ask a question. Your next question is from Brad Sturges from Raymond James. Your line is now open.

Speaker #3: Thank you once again. That is Star and One. Should you wish to ask a question, end your next question is from Brad Sturgis from Raymond James.

Speaker #3: Your line is now open.

Brad Sturges: Hey, good morning.

Speaker #7: Hey, good morning.

Gordon G. Lawlor: Good morning.

Rachel Smith: Good morning.

Operator: Good morning.

Speaker #8: Good morning.

Brad Sturges: Just, you know, continuing on with the acquisition theme. I think you've talked about in recent quarters, there's been a bid-ask spread in the market, and that's kind of held back some of the opportunities that you could execute on. Now that you're, I guess talking about a little bit more opportunity, does that suggest the bid-ask spread has been narrowing and you're seeing vendor expectations change, you know, moving more towards where you guys might be underwriting assets?

Speaker #7: Just continuing on with the acquisition theme, I think you've talked about in recent quarters, there's been a bid-ask spread in the market, and that's kind of held back some of the opportunities that you could execute on.

Speaker #7: Now that you're I guess talking about a little bit more opportunity, does that suggest the bid aspirate has been narrowing and you're seeing vendor expectations change moving more towards where you guys might be underwriting assets?

Gordon G. Lawlor: Yeah, I think there's some public deals out there that, you know, that have been marketed. You know, whether we won the deal or a piece of the deal or not, you know, there's assets under contract. I think that would say, and Zach can comment about some deals that have gone on that we weren't involved in, but they would say that, you know, there's a meeting of the middle there to get some transactions done. I think that's pretty positive. Zach, do you have any comments on that?

Speaker #4: Yeah. I think there's some public deals out there that have been in marketing. And whether we won the deal or a piece of the deal or not, there's assets under contract.

Speaker #4: So I think that would say—and Zach can comment about some deals that have gone on that we weren't involved in—but it would say that there's a meeting of the middle there to get some transactions done.

Speaker #4: So, I think that's pretty positive. Zach, do you have any comments on that?

Zachary Aaron: Yeah. You know, at a high level, my answer is kind of yes and no. I think we've definitely seen some deals come to market, you know, in and around our core markets where the pricing seems to be at a level that we would expect and be interested in that. At the same time, we'll still get, you know, off-market opportunities, again, in our markets and not our markets, where the pricing still seems to be at a level that just doesn't match today's reality.

Speaker #8: Yeah. At a high level, my answer is kind of yes and no. I think we've definitely seen some deals come to market in and around our core markets, where the pricing seems to be at a level that we would expect and be interested in.

Speaker #8: But at the same time, we'll still get off-market opportunities again in our markets, and not in our markets, where the pricing still seems to be at a level that just doesn't match today's realities.

Zachary Aaron: The answer is a bit of both. From, you know, what we see in the market in terms of bid depth on some of the opportunities that have been brought to market on industrial, you know, call it in GTA or Winnipeg or Montreal, there still seems to be a very healthy amount of capital and institutional capital bidding and chasing these opportunities just with more discipline on pricing.

Speaker #8: So the answer is a bit of both. But from what we see in the market in terms of bid depth on some of the opportunities that have been brought to market on industrial, call it in GTA or Winnipeg or Montreal, there still seems to be a very healthy amount of capital and institutional capital bidding and chasing these opportunities just with more discipline on pricing.

Brad Sturges: At this point, are you mainly looking at existing markets or have you changed your strategy a bit and kind of looking at new markets, you know, Alberta being an example?

Speaker #7: And at this point, are you mainly looking at existing markets or have you changed your strategy a bit and kind of looking at new markets Alberta being an example?

Gordon G. Lawlor: No. I mean, we're still focused on the existing markets. We'd like to eventually move to Alberta. We kicked the tires on some stuff there. That would be an example where pricing expectations don't align, you know, at this point. Yeah, it's in around our current markets. I mean, if you haven't noticed in our MD&A this quarter, we isolated Manitoba instead of calling it Western Canada, just, you know, 'cause we have 1.3 million square feet there. You know, we have assets in Québec, Atlantic Canada, Ottawa. I mean, that's still our focus. Alberta's this just discussion of, you know, if we could get a significant portfolio of small mid-size assets there, we'd be interested in setting up a platform.

Speaker #4: No. I mean, we're still focused on the existing markets. We'd like to eventually move to Alberta. We kicked the tires on some stuff there.

Speaker #4: That would be an example where pricing expectations don't align. At this point, so yeah, it's in around our current markets. I mean, if you haven't noticed in our MD&A this quarter, we isolated Manitoba instead of calling it Western Canada just because we have 1.3 million square feet there.

Speaker #4: And then we have assets in Quebec, Atlantic Canada, Ottawa. So I mean, that's still our focus. Alberta is this just discussion of if we could get a port significant portfolio of small, mid-bay assets there, we'd be interested in setting up a platform.

Gordon G. Lawlor: It's just whenever we look, there's just always a disconnect on value. That's a frustration we have there.

Speaker #4: It's just whenever we look, there's just always a disconnect on value. So that's a frustration we have there.

Brad Sturges: Gotcha. Last question, just to go back to the financing activity. On the CAD 108 million that's being refinanced, what's the average expiring rate on that?

Speaker #7: Gotcha. Last question, just to go back to the financing activity. On the $108 million that's being refinanced, what's the expiring, the average expiring rate on that?

Gordon G. Lawlor: It's on also like 3.8 or something like that.

Speaker #4: It's at also like 3.8 or something like that.

Alison Schafer: Yeah, approximately 3.8%.

Speaker #8: Yeah. Approximately 3.8%.

Brad Sturges: Okay. Thank you. I'll turn it back.

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

Gordon G. Lawlor: Thanks.

Speaker #4: Thanks.

Rachel Smith: Thank you. The next question is from Sam Damiani from TD Cowen. Your line is now open.

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

Speaker #3: Thank you, the next question is from Sam Damiani from TD Cowan. Your line is now open.

Sam Damiani: Thanks. Thanks for the second chance here. I did notice that the WALT on the Government of Canada tenancy did increase by about 1 year from Q4, but it's still less than 3 years. Can you, is there any color to share there in terms of, you know, why didn't it go longer, or what sort of is going on there?

Sam Damiani: Thanks. Thanks for the second chance here. I did notice that the WALT on the Government of Canada tenancy did increase by about one year from Q4, but it's still less than three years. Can you, is there any color to share there in terms of, you know, why didn't it go longer, or what sort of is going on there?

Speaker #7: Thanks. Thanks for the second chance here. I did notice that the waltz on the government of Canada tendency did increase by about a year.

Speaker #7: From Q4, but it's still less than three years. Can you—is there any color to share there in terms of why didn't it go longer?

Speaker #7: Or what, sort of, is going on there?

Zachary Aaron: Sure. I'll just chime in.

Gordon G. Lawlor: Yeah, go ahead, Zach.

Zachary Aaron: We have several Government of Canada tenants in the portfolio, across Ottawa and Halifax. It's not tied to any 1 deal. There are some spaces larger that their expiries are just coming up soon in 2027, 2028, and you know, conversations haven't started yet. There are some spaces, particularly in Burnside, where we've just recently completed or yeah, completed some renewals, but on relatively smaller spaces. I think that's really the story there, not that there is a story, frankly. Just, yeah, we've completed some renewals and then on some larger spaces, just those discussions haven't started yet as they're still a year or 2 away.

Speaker #6: I'll chime in. I mean, so we have several government of Canada tenants in the portfolio. Across Ottawa and Halifax, so it's not tied to any one deal.

Zachary Aaron: We have several Government of Canada tenants in the portfolio, across Ottawa and Halifax. It's not tied to any ne deal. There are some spaces larger that their expiries are just coming up soon in 2027, 2028, and you know, conversations haven't started yet. There are some spaces, particularly in Burnside, where we've just recently completed or yeah, completed some renewals, but on relatively smaller spaces. I think that's really the story there, not that there is a story, frankly. Just, yeah, we've completed some renewals and then on some larger spaces, just those discussions haven't started yet as they're still a year or two away.

Speaker #6: There are some spaces, larger spaces, that their expiries are just coming up soon in '27, '28, and conversations haven't started yet. And there are some spaces, particularly in Burnside, where we've just recently completed—or yeah, completed—some renewals, but on relatively smaller spaces.

Speaker #6: So I think that's really the story there, not that there is a story, frankly. Just yeah, we've completed some renewals, and then on some larger spaces, just those discussions haven't started yet as there's still a year or two away.

Gordon G. Lawlor: I.e., we haven't done like less than 5-year deals or anything like that, right, Zach?

Gordon G. Lawlor: I.e., we haven't done like less than five year deals or anything like that, right, Zach?

Speaker #4: I.e., we haven't done less than five-year deals or anything like that, right, Zach? It's just math.

Zachary Aaron: Yeah. No. No

Gordon G. Lawlor: still off. Yeah.

Gordon G. Lawlor: Still off. Yeah.

Zachary Aaron: Like on Burnside, they're all standard term, if not longer term deals.

Speaker #6: Like on Burnside, they're all standard term, if not longer-term deals.

Sam Damiani: Okay. Well, that's helpful. Just finally, I guess, you know, the lease roll does tick higher in 2027. Is there anything in that year that is, I guess, more concerning than the rest?

Speaker #7: Okay. Well, that's helpful. And just one—I guess the least role does take higher in 2027. Is there anything in that year that is, I guess, more concerning than the rest?

Zachary Aaron: As of right now, I have nothing to speak to in terms of any known, coming vacancies. We're just starting to engage some of the larger 2027 expiries. From the few conversations I've had so far, all very preliminary, more positive than negative. Again, still very preliminary. No paper's been traded yet. I expect and hope that we'll start to get some action on some of these groups in the next quarter or two.

Speaker #6: As of right now, I have nothing to speak to in terms of any known coming vacancies. We're just starting to engage some of the larger 2027 expiries.

Speaker #6: From the few conversations I've had so far, all very preliminary. More positive than negative. But again, still very preliminary. No paper's been traded yet.

Speaker #6: But I expect and hope that we'll start to get some action on some of the groups in the next quarter or two.

Gordon G. Lawlor: Zach, a lot of that's Winnipeg, right?

Speaker #4: Zach, a lot of that's Winnipeg, right?

Zachary Aaron: Yes. There's a decent chunk coming due in Winnipeg, some of it from the latest acquisition we did last summer and then some just in our historic portfolio. Yeah. All those rents too are, as you know, still below market with healthy upsides.

Speaker #6: Yeah. There's a decent chunk coming due in Winnipeg. Some of it from the latest acquisition we did last summer and then some just in our historic portfolio.

Speaker #6: Yeah. All those rents to our as you kind of expect, still below market with healthy upsides.

Sam Damiani: Okay. That's all helpful. Thank you. Just last one, finally, interest expense. Was there anything unusual in there that might have offset the reported sort of net expense number? It just seemed to have dropped a bit versus the Q4 run rate.

Speaker #7: Okay, that's all helpful. Thank you. And just one last thing—finally, interest expense. Was there anything unusual in there that might have offset the reported sort of net expense number?

Speaker #7: It just seemed to have dropped a bit versus the Q4 run rate.

Alison Schafer: We did have a small correction in the quarter. It was about CAD 80,000. That reduced our interest expense. That was overstated in the last quarter.

Speaker #8: Well, we did have a small correction in the quarter. It was about $80,000. That reduced our interest expense. That was overstated in the last quarter.

Sam Damiani: Okay. That's good. Okay. Thank you very much. I'll turn it back.

Speaker #7: Okay. That's good. Okay. Thank you very much, and I'll turn it back.

Gordon G. Lawlor: Thanks.

Speaker #4: Thanks.

Rachel Smith: Thank you. There are no further questions at this time. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may now disconnect your lines.

Operator: Thank you. There are no further questions at this time. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may now disconnect your lines.

Speaker #3: Thank you. There are no further questions at this time. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining.

Speaker #3: You may now disconnect your lines.

Gordon G. Lawlor: Thanks very much.

Speaker #4: Thanks very much.

Alison Schafer: Thank you.