Q1 2026 Crombie Real Estate Investment Trust Earnings Call

May 7, 2026

Operator: Good morning, everyone, and welcome to Crombie REIT's Q1 2026 conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. Following the presentation, we will conduct a question and answer session. This call is being recorded today, 7 May 2026. I would now like to turn the conference over to Meghna Nair, Manager of Investor Relations at Crombie. Please go ahead.

Operator: Good morning, everyone, and welcome to Crombie REIT's Q1 2026 conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded today, 7 May 2026. I would now like to turn the conference over to Meghna Nair, Manager of Investor Relations at Crombie. Please go ahead.

Speaker #3: Good morning, everyone, and welcome to Crombie Q3's first quarter 2026 conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded.

Speaker #3: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press *0 for the operator.

Speaker #3: This call is being recorded today, May 7, 2026. I would now like to turn the conference over to Meg Naner, Manager of Investor Relations at Crombie.

Speaker #3: Please go ahead.

Meghna Nair: Good day, everyone, and welcome to Crombie REIT's Q1 2026 conference call and webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombie.ca. Slides to accompany today's call are available on the investor section of our website under presentations and events. Joining me on the call today are Mark Holly, President and Chief Executive Officer, Kara Cameron, Chief Financial Officer, and Arie Bitton, Executive Vice President, Leasing and Operations. Today's discussion includes forward-looking statements. As always, we wanna caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our management's discussion and analysis and annual information form for a discussion of these risk factors.

Speaker #4: Good day, everyone, and welcome to Crombie Q3's first quarter 2026 conference call and webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombie.ca.

Speaker #4: Slides to accompany today's call are available on the Investors section of our website under Presentations and Events. Joining me on the call today are Mark Holly, president and chief executive officer; Kara Cameron, chief financial officer; and Ari Bhattan, executive vice president, leasing and operations.

Meghna Nair: Today's discussion includes forward-looking statements. As always, we wanna caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our management's discussion and analysis and annual information form for a discussion of these risk factors.

Speaker #4: Today's discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements.

Speaker #4: Please see our public filings, including our management's discussion and analysis, and annual information form for a discussion of these risk factors. Our discussion will also include expected yield on cost for capital expenditures, please refer to the development section of our management's discussion and analysis for additional information on assumptions and risks.

Meghna Nair: Our discussion will also include expected yield on cost for capital expenditures. Please refer to the development section of our Management's Discussion and Analysis for additional information on assumptions and risks. I will now turn the call over to Mark, who will begin the discussion with comments on Crombie's strategy and outlook. Kara will review Crombie's operating and financial results. Mark will conclude with a few final remarks. Over to you, Mark.

Speaker #4: I will now turn the call over to Mark, who will begin the discussion with comments on Crombie's strategy and outlook. Kara will review Crombie's operating and financial results, and Mark will conclude with a few final remarks.

Speaker #4: Over to you, Mark.

Mark Holly: Thank you, Meghna, and good morning, everyone. Crombie's Q1 results demonstrate the continued disciplined execution of our Building Together strategy and the quality of our coast-to-coast necessity-based portfolio. Our centers are built around community essentials, proving its resiliency in all economic cycles. The portfolio has been built with purpose. Durable, predictable cash flows backed by necessity-based real estate provides both stability and growth. Today, I'll focus my comments on 2 of our value creation drivers within our strategy: own and operate and optimize. Starting with own and operate. Our coast-to-coast grocery-anchored portfolio sits at the heart of vibrant communities, both large and small, generating consistent traffic and strong tenant demand. Our leasing results Q1 once again reflect the success of our model and the execution of the team.

Speaker #5: Thank you, Meghna, and good morning, everyone. Crombie's first quarter results demonstrate the continued disciplined execution of our Building Together strategy and the quality of our coast-to-coast necessity-based portfolio.

Speaker #5: Our centers are built around community essentials, proving its resiliency in all economic cycles. The portfolio has been built with purpose, durable, predictable cash flows, backed by necessity-based real estate, provides both stability and growth.

Mark Holly: Today, I'll focus my comments on two of our value creation drivers within our strategy: own and operate and optimize. Starting with own and operate. Our coast-to-coast grocery-anchored portfolio sits at the heart of vibrant communities, both large and small, generating consistent traffic and strong tenant demand. Our leasing results Q1 once again reflect the success of our model and the execution of the team.

Speaker #5: Today, I'll focus my comments on two of our value creation drivers within our strategy: own and operate and optimize. Starting with own and operate, our coast-to-coast grocery-anchored portfolio sits at the heart of vibrant communities, both large and small, generating consistent traffic and strong tenant demand.

Speaker #5: Our leasing results this quarter once again reflect the success of our model and the execution of the team. We completed 232,000 square feet of renewals at a first-year growth rate of 12.1% over expiring rental rates.

Mark Holly: We completed 232,000 sq ft of renewals at a first-year growth rate of 12.1% over expiring rental rates. We also added 30,000 sq ft of new leases at rates 52% higher than our portfolio average and maintained occupancy near all-time highs, ending the quarter at 97.6%. This drove a 3.9% increase in our average minimum rent when compared to Q1 2025. Kara will walk through the leasing details in a moment, but the headline is another quarter of disciplined execution supporting our 3.7% commercial same asset property cash NOI growth. Turning to portfolio management, we continue to selectively deploy capital into assets that strengthen our grocery-linked platform and support long-term cash flow growth.

Speaker #5: We also added 30,000 square feet of new leases at rates 52% higher than our portfolio average and maintained occupancy near all-time highs, ending the quarter at 97.6%.

Speaker #5: This drove a 3.9% increase in our average minimum rent when compared to Q1 2025. Kara will walk through the leasing details in a moment, but the headline is another quarter of disciplined execution supporting our 3.7% commercial same asset property cash NOY growth.

Mark Holly: Kara will walk through the leasing details in a moment, but the headline is another quarter of disciplined execution supporting our 3.7% commercial same asset property cash NOI growth. Turning to portfolio management, we continue to selectively deploy capital into assets that strengthen our grocery-linked platform and support long-term cash flow growth.

Speaker #5: Turning to portfolio management, we continue to selectively deploy capital into assets that strengthen our grocery-linked platform and support long-term cash flow growth. We added to the portfolio this quarter closing the Whitby acquisition announced in Q4, which is a $484,000 square foot Sobey's occupied warehouse supporting retail store replenishment.

Mark Holly: We added to the portfolio this quarter closing the Whitby acquisition announced in Q4, which is a 484,000 sq ft Sobeys occupied warehouse supporting retail store replenishment. We acquired that asset for CAD 115.4 million before transaction and closing costs. In the quarter, we successfully acquired a newly constructed 55,000 sq ft warehouse property in Saint Hubert, Quebec, for CAD 14.4 million before transaction and closing costs. We ventured into a long-term lease with Sobeys and are currently working to outfit the space for their use. Crombie will act as development manager on the redevelopment, earning management and development fees through to completion. These two grocery-related industrial assets bring our retail-related industrial gross leasable area to 3 million sq ft and approximately 10% of our NOI. It's a meaningful platform alongside our grocery-anchored core.

Speaker #5: We acquired that asset for $115.4 million before transaction and closing costs. In the quarter, we successfully acquired a newly constructed 55,000 square foot warehouse property in St.

Speaker #5: Hubert, Quebec, for $14.4 million before transaction and closing costs. We've entered into a long-term lease with Sobey's and are currently working to outfit the space for their use.

Mark Holly: We ventured into a long-term lease with Sobeys and are currently working to outfit the space for their use. Crombie will act as development manager on the redevelopment, earning management and development fees through to completion. These two grocery-related industrial assets bring our retail-related industrial gross leasable area to 3 million sq ft and approximately 10% of our NOI. It's a meaningful platform alongside our grocery-anchored core.

Speaker #5: Crombie will act as development manager on the redevelopment, earning management and development fees through to completion. These two grocery-related industrial assets bring our retail-related industrial gross leasable area to 3 million square feet and approximately 10% of our NOI.

Speaker #5: It's a meaningful platform alongside our grocery-anchored core. And subsequent to the quarter, we acquired a 29,000 square foot grocery property in Surrey, British Columbia, for $12.7 million excluding transaction and closing costs from Empire.

Mark Holly: Subsequent to the quarter, we acquired a 29,000 sq ft grocery property in Surrey, British Columbia, for CAD 12.7 million, excluding transaction and closing costs from Empire. The property is a freestanding Safeway on roughly 2.25 acres in Ocean Park at the heart of the community's primary retail node. It's exactly the type of well-located necessity-based assets that reflect the ongoing value of our partnership with Empire. Turning to Optimize. Optimize is about unlocking embedded value in the existing portfolio, primarily through non-major investments such as modernizations and intensifications, and through major investments where we're advancing entitlements on the development ladder. In the quarter, we invested over CAD 6 million in our modernization program with Empire. This is a repeatable lever we've been capitalizing on for years.

Speaker #5: The property is a freestanding Safeway on roughly 2.25 acres in Ocean Park, at the heart of the community's primary retail node. It's exactly the type of well-located necessity-based assets that reflect the ongoing value of our partnership with Empire.

Mark Holly: Turning to Optimize. Optimize is about unlocking embedded value in the existing portfolio, primarily through non-major investments such as modernizations and intensifications, and through major investments where we're advancing entitlements on the development ladder. In the quarter, we invested over CAD 6 million in our modernization program with Empire. This is a repeatable lever we've been capitalizing on for years.

Speaker #5: Turning to optimize, optimize is about unlocking embedded value in the existing portfolio, primarily through non-major investments such as modernizations and intensifications, and through major investments where we're advancing entitlements on the development ladder.

Speaker #5: In the quarter, we invested over $6 million in our modernization program with Empire. This is a repeatable lever we've been capitalizing on for years, and enhances asset quality, supports leasing on both renewals and new deals, and delivers attractive yield on costs.

Mark Holly: It enhances asset quality, supports leasing on both renewals, and new deals, and delivers attractive yield on cost. With regards to our major investment program, we're focused on 2 items. First, the Marlstone in Halifax, where we have successfully secured partial occupancy and welcomed our first group of residents on 1 May. We're very proud of this accomplishment and the addition of this asset to the community, and to our portfolio. Second, entitlements, where our development team is focused on advancing select projects through the rezoning and development permit phase. We're focused on a set of assets within the major development ladder that will provide near to medium-term optionality and value creation. Before I hand the call over to Kara, I want to highlight the CAD 0.01 increase to our annual distribution announced last night, our second consecutive year of growth.

Speaker #5: With regards to our major investment program, we're focused on two items. First, the Marlstone and Halifax, where we have successfully secured partial occupancy and welcomed our first group of residents on May 1st.

Speaker #5: We're very proud of this accomplishment and the addition of this asset to the community and to our portfolio. And second, entitlements, where our development team is focused on advancing select projects through the rezoning and development permit phase.

Mark Holly: Second, entitlements, where our development team is focused on advancing select projects through the rezoning and development permit phase. We're focused on a set of assets within the major development ladder that will provide near to medium-term optionality and value creation. Before I hand the call over to Kara, I want to highlight the CAD 0.01 increase to our annual distribution announced last night, our second consecutive year of growth.

Speaker #5: We're focused on a set of assets within the major development ladder that will provide near to medium-term optionality and value creation. Before I hand the call over to Kara, I want to highlight the 1 cent increase to our annual distribution announced last night.

Speaker #5: Our second consecutive year of growth. This increase reflects the continued execution of our strategy, the stability of the platform, and the strength of our balance sheet.

Mark Holly: This increase reflects the continued execution of our strategy, the stability of the platform, and the strength of our balance sheet. Crombie has a long track record of delivering dependable distributions across economic cycles, and in recent years, we've grown both FFO and AFFO while further strengthening our payout ratios. This decision reinforces our focus on long-term value creation and disciplined, sustainable capital returns to our unit holders. I also want to recognize the team behind these results. Our performance is driven by the people at Crombie, and I'm exceptionally proud of their commitment to operational excellence and to the communities we serve together.

Speaker #5: Crombie has a long track record of delivering dependable distributions across economic cycles, and in recent years, we've grown both FFO and AFFO while further strengthening our payout ratios.

Mark Holly: This decision reinforces our focus on long-term value creation and disciplined, sustainable capital returns to our unit holders. I also want to recognize the team behind these results. Our performance is driven by the people at Crombie, and I'm exceptionally proud of their commitment to operational excellence and to the communities we serve together. That commitment continues to be recognized externally. In 2026, Crombie was once again named one of Canada's top employers across multiple categories. With that, I'll turn the call over to Kara.

Speaker #5: This decision reinforces our focus on long-term value creation and disciplined sustainable capital returns to our unit holders. I also want to recognize the team behind these results.

Speaker #5: Our performance is driven by the people at Crombie and I'm an exceptionally proud of their commitment to operational excellence and to the communities we serve together.

Mark Holly: That commitment continues to be recognized externally. In 2026, Crombie was once again named one of Canada's top employers across multiple categories. With that, I'll turn the call over to Kara.

Speaker #5: That commitment continues to be recognized externally. In 2026, Crombie was once again named one of Canada's top employers across multiple categories. With that, I'll turn the call over to Kara.

Kara Cameron: Thank you, Mark. Good afternoon, everyone. Our Q1 results demonstrate continued momentum across the business. Strong leasing fundamentals, growing per unit metrics, and a balance sheet that continues to support both stability and growth. The numbers tell a clear story. Our strategy is working. Let me start with leasing. During Q1, we completed 232,000 sq ft of renewals at a first-year increase of 12.1% over expiring rental rates. As we have consistently emphasized, we focus on achieving growth over the full duration of the lease. For Q1, we secured a 13.2% increase when comparing expiring rates to the weighted average rental rate over the renewal term. Within those totals, retail renewals were 117,000 sq ft at 10.4% over expiring rents.

Speaker #1: Thank you, Mark. And good afternoon, everyone. Our first quarter results demonstrate continued momentum across the business. Strong leasing fundamentals, growing per unit metrics, and a balance sheet that continues to support both stability and growth.

Speaker #1: The numbers tell a clear story. Our strategy is working. Let me start with leasing. During the quarter, we completed 232,000 square feet of renewals at a first-year increase of 12.1% over expiring rental rates.

Kara Cameron: As we have consistently emphasized, we focus on achieving growth over the full duration of the lease. For Q1, we secured a 13.2% increase when comparing expiring rates to the weighted average rental rate over the renewal term. Within those totals, retail renewals were 117,000 sq ft at 10.4% over expiring rents.

Speaker #1: As we have consistently emphasized, we focus on achieving growth over the full duration of the lease. And for the quarter, we secured a 13.2% increase when comparing expiring rates to the weighted average rental rate over the renewal term.

Speaker #1: Within those totals, retail renewals were $117,000 square feet at 10.4% over expiring rents. New commercial leases increased occupancy by 30,000 square feet at an average first-year rate of 29.20 per square foot.

Kara Cameron: New commercial leases increased occupancy by 30,000 sq ft at an average first-year rate of 29.20 per sq ft. At quarter-end, we had 166,000 sq ft of committed space at an average first-year rate of 28.92 per sq ft, with tenants expected to take possession throughout 2026 and 2027. That leasing activity, combined with embedded rent step-ups and contributions from our modernization investments, drove commercial same asset property cash NOI growth of 3.7% year over year. Turning to property revenue. Property revenue for the quarter was CAD 127.1 million, and net property income was CAD 79.7 million, up CAD 2.5 million year over year. Growth was driven primarily by renewals, new leasing, and the contribution of the Whitby acquisition, which closed during the quarter.

Speaker #1: At quarter end, we had 166,000 square feet of committed space at an average first-year rate of 28.92 per square foot, with tenants expected to take possession throughout 2026 and 2027.

Speaker #1: That leasing activity, combined with embedded rent step-ups and contributions from our modernization investments, drove commercial same asset property cash NOY growth of 3.7% year over year.

Kara Cameron: Turning to property revenue. Property revenue for the quarter was CAD 127.1 million, and net property income was CAD 79.7 million, up CAD 2.5 million year over year. Growth was driven primarily by renewals, new leasing, and the contribution of the Whitby acquisition, which closed during the quarter.

Speaker #1: Turning to property revenue, property revenue for the quarter was $127.1 million, and net property income was 79.7 million. Up 2.5 million year over year.

Speaker #1: Growth was driven primarily by renewals, new leasing, and the contribution of the Whitby acquisition, which closed during the quarter. These factors were partially offset by higher tenant incentive amortization from modernizations.

Kara Cameron: These factors were partially offset by higher tenant incentive amortization for modernizations. Revenue for management and development services was CAD 3.2 million in the quarter, driven primarily by ongoing fees from our programmatic partnerships. These contributions continue to represent a stable and recurring component of our cash flow profile. Finance costs were CAD 24.8 million in the quarter, up from the prior year, primarily reflecting higher interest expense on our revolving credit facility as a result of the Whitby and St-Hubert acquisitions, partly offset by lower mortgage interest. Now turning to earnings. FFO was CAD 61.6 million or CAD 0.33 per unit. AFFO was CAD 54.3 million or CAD 0.29 per unit, up 7.4% year over year.

Speaker #1: Revenue from management and development services was $3.2 million in the quarter, driven primarily by ongoing fees from our programmatic partnerships. These contributions continue to represent a stable and recurring component of our cash flow profile.

Kara Cameron: Finance costs were CAD 24.8 million in the quarter, up from the prior year, primarily reflecting higher interest expense on our revolving credit facility as a result of the Whitby and St-Hubert acquisitions, partly offset by lower mortgage interest. Now turning to earnings. FFO was CAD 61.6 million or CAD 0.33 per unit. AFFO was CAD 54.3 million or CAD 0.29 per unit, up 7.4% year over year.

Speaker #1: Finance costs were 24.8 million in the quarter, up from the prior year, primarily reflecting higher interest expense on our revolving credit facility as a result of the Whitby and Samu Bearer acquisitions partly offset by lower mortgage interest.

Speaker #1: Now, turning to earnings. FFO was $61.6 million, or $0.33 per unit. AFFO was $54.3 million, or $0.29 per unit, up 7.4% year over year.

Kara Cameron: As information, this quarter we updated the presentation of fair value movements related to unit-based compensation, moving them from G&A into change in fair value of financial instruments and aligning our FFO and AFFO to exclude the impact of that non-cash share price-driven item. Prior period results were updated for comparability. Our payout ratios were 68.4% of FFO and 77.6% of AFFO at the end of Q1. Turning to the balance sheet. Our balance sheet remains a core strategic strength and a source of resilience, particularly in the current environment. We ended the quarter with available liquidity of CAD 536.3 million between our undrawn credit facilities and cash. The CAD 115.4 million Whitby and CAD 14.4 million St-Hubert acquisitions were funded through the unsecured revolver.

Speaker #1: As information, this quarter we updated the presentation of fair value movements related to unit-based compensation moving them from G&A into change in fair value of financial instruments and aligning our FFO and AFFO to exclude the impact of that non-cash share price-driven item.

Speaker #1: Prior period results were updated for comparability. Our payout ratios were 68.4% of FFO and 77.6% of AFFO at the end of the first quarter.

Kara Cameron: Turning to the balance sheet. Our balance sheet remains a core strategic strength and a source of resilience, particularly in the current environment. We ended the quarter with available liquidity of CAD 536.3 million between our undrawn credit facilities and cash. The CAD 115.4 million Whitby and CAD 14.4 million St-Hubert acquisitions were funded through the unsecured revolver.

Speaker #1: Turning to the balance sheet. Our balance sheet remains a core strategic strength and a source of resilience, particularly in the current environment. We ended the quarter with available liquidity of $536.3 million between our undrawn credit facilities and cash.

Speaker #1: The $115.4 million Whitby and $14.4 million Samu Bearer acquisitions were funded through the unsecured revolver. We ended the quarter with an unencumbered asset pool with a fair value of $4.1 billion.

Kara Cameron: We ended the quarter with an unencumbered asset pool with a fair value of CAD 4.1 billion, debt to gross fair value of 43%, debt to trailing 12-month adjusted EBITDA of 7.89x, and interest coverage of 3.4x. Approximately 92% of our debt, excluding swaps, carries fixed rates, our weighted average term to maturity on senior unsecured notes is 3.5 years. We have CAD 200 million coming due this year, with maturity of our Series F senior unsecured notes, a manageable amount that is well within our framework. Our liquidity position, unencumbered asset pool, and access to multiple funding levers gives us the flexibility to address maturities and continue deploying capital as opportunities arise.

Speaker #1: Debt to gross fair value of $43%. Debt to trailing 12-month adjusted EBITDA of 7.89 times and interest coverage of 3.4 times. Approximately 92% of our debt excluding swaps carries fixed rates, and our weighted average term to maturity on senior unsecured notes is 3.5 years.

Kara Cameron: We have CAD 200 million coming due this year, with maturity of our Series F senior unsecured notes, a manageable amount that is well within our framework. Our liquidity position, unencumbered asset pool, and access to multiple funding levers gives us the flexibility to address maturities and continue deploying capital as opportunities arise.

Speaker #1: We have $200 million coming due this year, with maturity of our Series F senior unsecured notes. A manageable amount that is well within our framework.

Speaker #1: Our liquidity position, unencumbered asset pool, and access to multiple funding levers give us the flexibility to address maturities and continue deploying capital as opportunities arise.

Kara Cameron: Overall, Q1 was another quarter of steady, dependable execution, strong leasing, continued commercial same asset property cash NOI growth, and disciplined capital and financial management, supported by a balance sheet built for both stability and measured growth. Before I turn the call back to Mark, I will briefly highlight the distribution increase we announced last night, which marks our second consecutive year of growth. Our payout ratios reflect several years of FFO and AFFO per unit growth, supported by a disciplined approach to distributions, resulting in meaningful financial flexibility today. The CAD 0.01 increase is a measured step. It keeps us well within the conservative payout range we are comfortable operating in.

Speaker #1: Overall, the first quarter was another quarter of steady, dependable execution. Strong leasing continued commercial same asset property cash NOY growth and disciplined capital and financial management.

Speaker #1: Supported by a balance sheet built for both stability and measured growth. Before I turn the call back to Mark, I'll briefly highlight the distribution increase we announced last night.

Speaker #1: Which marks our second consecutive year of growth. Our payout ratios reflect several years of FFO and AFFO per unit growth, supported by a disciplined approach to distributions, resulting in meaningful financial flexibility today.

Kara Cameron: Our payout ratios reflect several years of FFO and AFFO per unit growth, supported by a disciplined approach to distributions, resulting in meaningful financial flexibility today. The CAD 0.01 increase is a measured step. It keeps us well within the conservative payout range we are comfortable operating in.

Speaker #1: The 1 cent increase is a measured step. It keeps us well within the conservative payout range we are comfortable operating in, preserves our capacity to fund acquisitions, modernizations, and our development pipeline, as well as enables us to return a portion of that growth to our unit holders.

Kara Cameron: Preserves our capacity to fund acquisitions, modernizations, and our development pipeline, as well as enables us to return a portion of that growth to our unitholders. This is consistent with our approach to capital allocation, disciplined, balanced, and focused on long-term value creation. With that, I'll turn it back to Mark.

Speaker #1: This is consistent with our approach to capital allocation, disciplined, balanced, and focused on long-term value creation. With that, I'll turn it back to Mark.

Mark Holly: Thanks, Kara. I noted at the outset that Crombie was built for this kind of environment, and the results show it. Strong leasing performance, grocery-linked acquisitions that strengthen the platform, and a team executing with discipline across the portfolio. Our focus is unchanged: owning and operating essential real estate at the heart of Canadian communities, deploying capital prudently, and compounding long-term value for our unit holders. While we're proud of what we've delivered, we believe we're still in the early innings of what this platform can deliver. With that, we'll open up the calls for questions.

Speaker #2: Thanks, Kara. I noted at the outset that Crombie was built for this kind of environment, and the results show it. Strong leasing performance, grocery-linked acquisitions that strengthen the platform, and a team executing with discipline across the portfolio.

Speaker #2: Our focus is unchanged, owning and operating essential real estate at the heart of Canadian communities, deploying capital prudently and compounding long-term value for our unit holders.

Speaker #2: And while we're proud of what we've delivered, we believe we're still in the early innings of what this platform can deliver. With that, we'll open up the calls for questions.

Operator: We will now begin the question and answer session. We will pause for a moment as callers join the queue. The first question comes from Lorne Kalmar with Desjardins. Please go ahead.

Speaker #3: We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request.

Speaker #3: If you are using a speakerphone, please pick up the handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue.

Speaker #3: The first question comes from Lauren Kallmar with Desjardins. Please go ahead.

Lorne Kalmar: Thanks, sorry, good afternoon. You guys had a pretty nice start to 2026 on the same property NOI perspective and came in ahead of the 2% to 3% target. I was just wondering, is there anything one-time in there, or is that, is that a good run rate for the balance of the year?

Speaker #4: Thanks. Sorry, good afternoon. You guys had a pretty nice start to 2026 on the same property NOY perspective. I think it came in ahead of the 2% to 3% target.

Speaker #4: I was just wondering, is there anything one-time in there, or is that a good run rate for the balance of the year?

Mark Holly: Hi, Lorne. There was nothing material as one-time in the quarter. You're right, we do have a long-term framework of same asset in that 2% to 3% range. You know, last year we delivered 3.7% as a total. The 2 years prior to that, it was at the high end of the range in around 3%. We hold our long-term target as a 2% to 3%. When you look at this quarter and you look at the rest of the year, you know, we look at a path that could potentially push through that top end.

Speaker #5: Hi, Lauren. There was nothing material as one time in the quarter. And you're right, we do have a long-term framework of same asset in that 2 to 3 percent range.

Speaker #5: Last year, we delivered 3.7 as a total. The two years prior to that, it was at the high end of the range in around 3.

Speaker #5: Our we hold our long-term target as a 2 to 3 percent. When you look at this quarter and you look at the rest of the year, we look at a path that could potentially push through that top end.

Lorne Kalmar: Okay. Maybe is there anything specific there or is it just the broader strength in the retail fundamentals? I mean, one of the things I was looking at is just the composition of lease maturities. I think the majority of them are non-Empire. Is that a factor?

Speaker #4: Okay. And maybe, is there anything specific there, or is it just the broader strength in the retail fundamentals? I mean, one of the things I was looking at is just the composition of lease maturities.

Speaker #4: I think the majority of them are non-empire. Is that a factor?

Arie Bitton: Hi, Lorne. Sorry. The renewals that are non-Empire are producing some very solid results and are a boost to our same asset NOI. We're seeing the benefit of that this year partially, but, of course, as those comp over an annual basis, we'll see them bear fruit a little bit more throughout 2027 and beyond. They are a component, but that's not the full story.

Speaker #5: Hi, Lauren. It's Ari. The renewals that are non-empire are producing some very solid results. And our boost to our same asset NOY, we're seeing the benefit of that this year partially, but of course, as those comp over an annual basis, we'll see them bear fruit a little bit more throughout 2027 and beyond.

Speaker #5: So they are a component, but that's not the full story.

Mark Holly: The other part to think about, Lorne, is modernizations. They contribute to same asset. We kind of look at those as a great investment on, you know, the retail component where we're investing in the anchor, which creates that halo that creates the benefit on the leasing spreads and shows up in same asset as well.

Speaker #6: The other part to think about, Lauren, is modernizations. They contribute to same asset. And we kind of look at those as a great investment on the retail component where we're investing in the anchor, which creates that halo that creates the benefit on the leasing spreads and shows up in same asset as well.

Lorne Kalmar: Okay. That's very helpful. Thank you. Maybe just one last one, going back to a question from last quarter. I was wondering if you could give us an update on where leased and in-place occupancy is at the Marlstone as of, I guess today.

Speaker #4: Okay. That's very helpful. Thank you. And then maybe just one last, I'm going back to a question from last quarter. I was wondering if you could give us an update on where leased and in-place occupancy is at the Marlstone as of, I guess, today.

Arie Bitton: Lorne, we welcomed our first tenants last week at the Marlstone, and the building looks amazing. What we've done purposely is we've opened up the building with all amenities in place, and that was a key learning from us from our previous experiences to make sure that the tenants experience the building fully. I would say that while we're not providing numbers today, with where we are as far as occupancy, we're pleased with the uptake so far. We're seeing our lease to, sorry, our tour-to-lease conversion rates go up significantly since we've had access to the building when we got partial occupancy towards the end of April. We'll provide some more color on upcoming quarters.

Speaker #5: Lauren, so we welcomed our first tenants last week at the Marlstone. And the building looks amazing. What we've done purposely is we've opened up the building with all amenities in place.

Speaker #5: And that was a key learning from us, from our previous experiences. To make sure that the tenants experience the building fully. So I would say that, well, we're not providing numbers today.

Arie Bitton: I would say that while we're not providing numbers today, with where we are as far as occupancy, we're pleased with the uptake so far. We're seeing our lease to, sorry, our tour-to-lease conversion rates go up significantly since we've had access to the building when we got partial occupancy towards the end of April. We'll provide some more color on upcoming quarters.

Speaker #5: With where we are as far as occupancy, we're pleased with the uptake so far. And we're seeing our lease to sorry, our tour to lease conversion rates go up significantly since we've had access to the building when we got partial occupancy towards the end of April.

Speaker #5: So, we'll provide some more color on upcoming quarters.

Lorne Kalmar: Okay. Thank you very much. I'll turn it back.

Speaker #4: Okay. Thank you very much. I'll turn it back.

Mark Holly: Thanks, Lorne.

Operator: The next question is from Brad Sturges with Raymond James. Please go ahead.

Speaker #5: Thanks, Lauren.

Speaker #3: The next question is from Brad Sturges with Raymond James. Please go ahead.

Brad Sturges: Hey, good afternoon. I guess on the leasing front, you've seen I guess a little bit of further uptick on the leasing spreads you're getting, and I guess it's certainly gonna depend on the composition of what the rollover is. Would you continue to expect kind of in that low double-digit kind of blended renewal spread right now?

Speaker #7: Hey, good afternoon. I guess on the leasing front, you've seen, I guess, a little bit further uptake on the leasing spreads you're getting. And I guess it's certainly going to depend on the composition of what the rollover is.

Speaker #7: But would you continue to expect kind of in that low double-digit kind of blended renewal spread right now?

Arie Bitton: We will. We're seeing that, and obviously with the leases being 6 to 12-month triggers on renewals, we're renewing right now into 2027. We are seeing a bit of a look-through, and we expect to maintain the double-digit spreads for the short to medium term.

Speaker #5: We will. We're seeing that. And obviously, with the leases being 6 to 12-month triggers on renewals, we're renewing right now into 2027. So we are seeing a bit of that look-through.

Speaker #5: And we expect to maintain the double-digit spreads for the short to medium term.

Brad Sturges: Okay. Sounds good. I guess my other question would be just, you know, seeing some further execution on the Empire-related acquisition pipeline. Is there anything else in the pipeline that you're looking at that you could pull the trigger on, whether it's Empire-related or just third party?

Speaker #7: Okay. Sounds good. I guess my other question would be just seeing some further execution on the empire-related acquisition pipeline. Is there anything else in the pipeline that you're looking at that you could pull the trigger on, whether it's empire-related or just third-party?

Mark Holly: Hey, Brad. Thanks for the question. Yeah, we were very happy that we've been able to execute on a few transactions year to date. That Whitby warehouse was, you know, a big one, half a million square feet. We were able to tuck in in Saint-Hubert, which is in Longueuil, just outside of Montreal, another warehouse. Both those facilities are, you know, replenishment locations for stores. Those are great opportunities for us. Buying the Surrey Safeway location in Ocean Park is another one that we really like. For us, it's about making sure that we are underwriting as much as possible, underwriting quality opportunities. We're not just chasing leasable area for the sake of it. The team is busy. There's lots of opportunities out there.

Speaker #6: Hey, Brad. Thanks for the question. Yeah, we were very happy that we've been able to execute on a few transactions year to date. That with the warehouse was a big one.

Speaker #6: Half a million square feet. We were able then to tuck in and thank Hubera, which is in Longay just outside of Montreal. Another warehouse.

Speaker #6: And both those facilities are replenishment locations for stores. So those are great opportunities for us. Buying the Surrey Safeway location in Ocean Park is another one that we really like.

Mark Holly: Those are great opportunities for us. Buying the Surrey Safeway location in Ocean Park is another one that we really like. For us, it's about making sure that we are underwriting as much as possible, underwriting quality opportunities. We're not just chasing leasable area for the sake of it. The team is busy. There's lots of opportunities out there.

Speaker #6: For us, it's about making sure that we are underwriting as much as possible, but underwriting quality opportunities. We're not just chasing leasable area for the sake of it.

Speaker #6: So the team is busy. There's lots of opportunities out there. We're underwriting quite a bit. From opportunities from our partnership with Empire, we've talked about in the past, there are a number of locations in their portfolio that we'd love on our balance sheet.

Mark Holly: We're underwriting quite a bit from opportunities from our partnership with Empire. We've talked about in the past, there are a number of locations in their portfolio that we'd love on our balance sheet. When they're ready to sell it and if it meets our criteria, we would be interested to take it on our side. Our balance sheet is in terrific shape, so we can opportunistically go after some of the stuff.

Speaker #6: When they're ready to sell it, and if it meets our criteria, we would be interested to take it on our side, our balance sheet is in terrific shape.

Speaker #6: So we can opportunistically go after some of the stuff.

Brad Sturges: Okay. I appreciate it. I'll turn it back.

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

Operator: The next question is from Sam Damiani with TD Cowen. Please go ahead.

Speaker #3: The next question is from Sam Damiani with TD Cowen. Please go ahead.

Sam Damiani: Thank you. Good afternoon, everyone. Maybe just to start off, just wondering, as you look out, you know, multiple years for Crombie, do you see sort of room in your capital allocation for, you know, a larger weighting to a grocery-anchored shopping centers like, you know, more than just the store, but, you know, acquiring those types of properties from third parties? I'm just wondering how you see that opportunity.

Speaker #4: Thank you. Good afternoon, everyone. Maybe just to start off, just wondering as you look at multiple years for Crombie, do you see sort of room in your capital allocation for a larger weeding to a gross rancored shopping centers?

Speaker #4: More than just the store, but acquiring those types of properties from third parties? I'm just wondering how you see that opportunity.

Mark Holly: Hey, Sam. Yes is the short answer. We are underwriting third-party opportunities, you know, each and every quarter. There are opportunities out there. We are also acquiring from Empire, which is a great strategic partner for us, which, you know, gives us first access rights to excellent real estate across the country. You know, St-Hubert is an example of the third-party opportunity that we were able to action. Found that location. It was a recently built, warehouse that had vacated. We bought it from a third party, approached Empire, who had a use for it, now we're gonna upfit it for their specific use, collect management fees during the duration of the outfit, then take what is sitting now in just committed occupancy and move it into economic.

Speaker #6: Hey, Sam. Yes. It's the short answer. We are underwriting third-party opportunities each and every quarter. There are opportunities out there. We are also acquiring from Empire, which is a great strategic partner for us, which gives us first access rights to excellent real estate across the country.

Mark Holly: You know, St-Hubert is an example of the third-party opportunity that we were able to action. Found that location. It was a recently built, warehouse that had vacated. We bought it from a third party, approached Empire, who had a use for it, now we're gonna upfit it for their specific use, collect management fees during the duration of the outfit, then take what is sitting now in just committed occupancy and move it into economic. We have You know, we're constantly underwriting opportunities, and we're gonna tuck in ones that meet the profile of what we're absolutely after, which is cash flow growth.

Speaker #6: Thank Hubera as an example of the third-party opportunity that we were able to action. So, found that location—it was a recently built warehouse that had vacated.

Speaker #6: We bought it from a third party. Approached Empire, who had a use for it. And now we're going to upfit it for their specific use, collect management fees during the duration of the outfit, and then take what is sitting now and just committed occupancy and move it into economic so we have we're constantly underwriting opportunities.

Mark Holly: We have You know, we're constantly underwriting opportunities, and we're gonna tuck in ones that meet the profile of what we're absolutely after, which is cash flow growth.

Speaker #6: And we're going to tuck in ones that meet the profile of what we're absolutely after, which is cash flow growth.

Sam Damiani: Thank you. The St-Hubert site there, how much extra CapEx beyond the initial acquisition are you anticipating there, and what sort of yield on costs should we think about?

Speaker #4: Thank you. And the same Hubera site there—how much extra CapEx beyond the initial acquisition are you anticipating there? And what sort of yield on cost should we think about?

Mark Holly: It's gonna be functioning as a TI, you won't see it show up in our non-major investments. It's a TI that we'll be providing to Empire, to which will be then built into the rent. We're not disclosing what that fit-up cost is at this point, because it's gonna ebb and flow as they sort of go through the detailed design. We expect that it'll take us at least 12 to, you know, 18 months to get it to a spot when it'll turn into economic occupancy. During that time, we're gonna collect management fees to build it out for them.

Speaker #6: So it's going to be functioning as a TI. So you won't see it show up in our non-major investments. So it's a TI that will be providing to Empire, to which we'll be then built into the rent.

Speaker #6: And so, we're not disclosing what that fit-up cost is at this point, because it's going to ebb and flow as they sort of go through the detailed design.

Speaker #6: But we expect that it's going to take it'll take us at least 12 to 18 months to get it to a spot when it'll turn into economic occupancy.

Speaker #6: But during that time, we're going to clip management fees to build it out for them.

Sam Damiani: Okay, great. Last one from me. I think you guys had just one Toys R Us. Is there an update on the progress of backfilling that one?

Speaker #4: Okay. Great. And the last one for me. I think you guys had just one toys or us. Is there an update on the progress of backfilling that one?

Arie Bitton: Hi, Sam. Toys R Us remained in occupancy throughout the quarter on a temporary deal. They expired in early April with the receiver. We have secured a tenancy, subject to finalizing a lease, for the entirety of the space that we hope to have wrapped up by the end of this quarter. Hopefully, we'll be able to announce some more details then.

Speaker #5: Hi, Sam. There is. So toys or us remained in occupancy throughout the quarter. On a temporary deal, they expired in early April with the receiver.

Speaker #5: And we have secured a tenancy subject to finalizing a lease. For the entirety of the space that we hope to have wrapped up by the end of this quarter.

Speaker #5: And hopefully we'll be able to announce some more details then.

Sam Damiani: Great. Thank you. I'll turn it back.

Speaker #4: Great, thank you. And I'll turn it back.

Operator: The next question is from Giuliano Thornhill with National Bank Capital Markets. Please go ahead.

Speaker #3: The next question is from Juliano Thornhill with National Bank Capital Markets. Please go ahead.

Giuliano Thornhill: Hey, guys. I was just wondering if you kind of could provide an update on the Calgary CFC or just maybe the Calgary industrial market in general. Do you think, obviously, there's been some space that might be given back, if there's anything you could provide there for the future of that asset?

Speaker #8: Hey, guys. I was just wondering if you kind of could provide an update on the Calgary CFC or just maybe the Calgary Industrial Market in general.

Speaker #8: Do you think obviously, there's been some space that might be given back if there's anything you could provide there for the future of that asset?

Mark Holly: Sure. As we called out, there's been no change from last quarter. It's a 300,000 sq ft industrial asset in Rocky View. Empire has ceased operating from the premise there. We are in a very, very, very long-term lease with rent commitment and the corporate covenant of Empire. What we're doing today is working with them on them securing a tenant that might be able to take over the space. If they're successful in that, we'll dialogue with them on what amendments we may want to consider with them. Until that time, very long-term lease in place, still collecting the rent, have the corporate covenant as the security. There's been no change since the last update.

Speaker #6: Sure. So, as we called out, there's been no change from last quarter. So, it's a 300,000 square foot industrial asset in Rocky View. Empire has ceased operating from the premise there.

Speaker #6: We are in a very, very, very long-term lease. With rent commitment and the corporate covenant of Empire. And what we're doing today is working with them on them securing a tenant that might be able to take over the space.

Mark Holly: If they're successful in that, we'll dialogue with them on what amendments we may want to consider with them. Until that time, very long-term lease in place, still collecting the rent, have the corporate covenant as the security. There's been no change since the last update.

Speaker #6: And if they're successful in that, then we'll dialogue with them on what amendments we may want to consider with them. But until that time, very long-term lease in place.

Speaker #6: Still collecting the rent. Have the corporate covenant as the security. So there's been no change since the last update.

Operator 2: Right. Then the second question I had was just on Empire entering the kind of discount/warehouse segment with their announced kind of agreement. Does that, like, does that change anything for yourselves from a real estate perspective? Like, would there be sites in Quebec that you think would benefit from that kind of retailer as opposed to your current one?

Giuliano Thornhill: Right. Then the second question I had was just on Empire entering the kind of discount/warehouse segment with their announced kind of agreement. Does that, like, does that change anything for yourselves from a real estate perspective? Like, would there be sites in Quebec that you think would benefit from that kind of retailer as opposed to your current one?

Speaker #4: Right. And then the second question I had was just on Empire entering the kind of discount/warehouse segment with their announced kind of agreement. Does that change anything for yourselves from a realistic perspective?

Speaker #4: Would there be sites in Quebec that you think would benefit from that kind of retailer as opposed to your current one?

Mark Holly: Strategically, it doesn't change anything. Our focus is still to own, operate, and where we can offer management services to Empire, we will. Where we can acquire real estate like St-Hubert, for their use, is great opportunities for us, and they have great yields and support all our metrics. The acquisition, I'm not gonna comment on that acquisition that Empire did in Quebec specifically. What I can say is they are looking to grow coast to coast, and that's the platform that we have, and we have a strategic partnership with them.

Speaker #6: So strategically, it doesn't change anything. So our focus is still to own/operate and where we can offer management services to Empire, we will. Where we can acquire real estate like St.

Speaker #6: Hubera. For their use, it is a great opportunity for us. And they have great yields and support all our metrics. The acquisition, I'm not going to comment on that acquisition that Empire did in Quebec specifically.

Speaker #6: But what I can say is they are looking to grow coast to coast. And that's the platform that we have. And we have a strategic partnership with them.

Mark Holly: Where they're looking to grow, we are interested in growing with them, and we'll do that in more grocery anchored. As you can see in our non-major development within the MD&A, we have 1 project on the go at this point that is a grocery anchored location that we're developing. From there, we'll continue to try and tuck in more projects.

Speaker #6: So where they're looking to grow, we are interested in growing with them. And we'll do that in more grocery anchored. As you can see in our non-major development within the end DNA, we have one project on the go at this point that is a grocery anchored location that we're developing.

Speaker #6: And then from there, we'll continue to try and tuck in more projects.

Giuliano Thornhill: Great. All right. Thanks, guys.

Speaker #4: Great. All right. Thanks, guys.

Operator: The next question is from Mario Saric with Deutsche Bank. Please go ahead.

Speaker #3: The next question is from Mario Sarek with Deutsche Bank. Please go ahead.

Mario Saric: Hi, good afternoon. Just on the milestone, without providing where kind of the occupancy metrics are now, are you able to give us a range of what the potential FFO impact from the property could be for 2026?

Speaker #9: Hi. Good afternoon. Just on the milestone, without providing where kind of the occupancy metrics are, now, are you able to give us a range of what the potential FFO impact from the property could be for '26?

Mark Holly: Hey, Mario. Is that with the Montez?

Speaker #6: Is that hey, Mario. Is that with the milestone?

Mario Saric: Yeah.

Mark Holly: Okay. For the Marlstone, as Ari called out, you know, we just welcomed our first resident, 1 May. We are going to give some updates as we progress to get to substantial completion, which for us is in around that 90% mark. Throughout 2026, it is going to be dilutive. We expect that in the H2 of 2027, it will move from dilution to accretion as we anticipate stability, you know, mid to back end of 2027.

Speaker #9: Yeah.

Speaker #6: Okay. So for the milestone, as Ari called out, the we just welcomed our first resident May 1st. And we're going to give some updates as we progress to get to substantial completion, which for us is in around that 90% mark.

Speaker #6: So throughout 2026, it's going to be dilutive. But we expect that in the back half of 2027, it will move from dilution to accretion as we anticipate stability mid to back end of 2027.

Mario Saric: Got it. Okay. That's helpful. Mark, it sounds like the acquisition pipeline, the potential is there, whether it's third party or through Empire. From a funding perspective, it sounds like you're pretty comfortable with the balance sheet that you have. It's probably the best that it's ever been. How do you think about the potential for dispositions, and then successful rezonings, in 2026 as a potential source of acquisition funding?

Speaker #9: Got it. Okay, that's helpful. So, Mark, it sounds like the acquisition pipeline—the potential is there, whether it's third party or through Empire.

Speaker #9: From a funding perspective, it sounds like you're pretty comfortable with balance sheet that you have. It's probably the best that it's ever been. How do you think about the potential for dispositions and then successful rezonings in 2026 as a potential source of acquisition funding?

Mark Holly: On the disposition side, we have been active in that area. Last year, we disposed of 2 properties. We disposed of the office in Moncton, and we disposed of a non-core, non-grocery location in Saint John. Most of the dispositions that we have been actioning against, have been sort of up, you know, scaling up the portfolio for some of those ones that were not delivering on some of the key metrics that, you know, we're pushing for. As we kind of continue to look, you know, the new crop of ones that are likely the drags and not contributing. We have some others in the portfolio that we're working against. In terms of the development ladder and assets in there that we could leverage, there are a couple.

Speaker #6: So, on the disposition side, we have been active in that area. Last year, we disposed of two properties. We disposed of the office in Moncton, and we disposed of a non-core, non-grocery location in St.

Speaker #6: John, most of the dispositions that we have been actioning against have been sort of scaling up the portfolio. So some of those ones that were not delivering on some of the key metrics that we're pushing for.

Mark Holly: As we kind of continue to look, you know, the new crop of ones that are likely the drags and not contributing. We have some others in the portfolio that we're working against. In terms of the development ladder and assets in there that we could leverage, there are a couple.

Speaker #6: As we kind of continue to look the new there's then the new crop of ones that are likely the drags and not contributing. So we have some others in the portfolio that we're working against.

Speaker #6: In terms of the development ladder and assets in there that we could leverage, there are a couple. The market today is if you think specifically Vancouver in that ladder that we have, we have one in Belmont.

Mark Holly: The market today, if you think specifically Vancouver and that ladder that we have, we have one in Belmont, we have one in Broadway and Commercial. We're still working through zoning and entitlement. We're still working with our partner, there's been no action called on either one of those in terms of when we plan to green light them. I would say for now, it's about just pruning and high-grading the portfolio.

Speaker #6: We have one in Broadway and Commercial. We're still working through zoning and entitlement. We're still working with our partner and so there's been no action called on either one of those in terms of when we plan to greenlight them.

Speaker #6: So I would say for now, it's about just pruning and high-grading the portfolio.

Mario Saric: In terms of the potential assets that are income producing right now, does the nature of the potential buyer, has that changed, or would it be similar to the types of buyers that you sold to last year?

Speaker #9: In terms of the potential assets, that are income-producing right now, does the nature of the potential buyover, has that changed? Or would it be similar to the types of buyers that you've sold to last year?

Mark Holly: Yeah. It's a very similar profile to the buyers that bought last year.

Speaker #6: Yeah. It's very similar profiles of the buyers that bought last year.

Mario Saric: Okay. More from an accounting perspective, IFRS perspective, the Choice, First Capital KingSett transaction, would that serve as a data point for you from a valuation standpoint, with your Q2 results, in terms of, you know, thinking about the cap rate on that transaction and what that may mean for your portfolio?

Speaker #9: Okay. More from an accounting perspective, IFRS perspective, the choice for capital Kingset transaction would that serve as a data point for you from a valuation standpoint with your Q2 results in terms of thinking about the cap rate on that transaction and what that may mean for your portfolio?

Kara Cameron: Hi, Mario. It's Kara. You know, I think that was a great transaction in the market and serves as a data point for all of us in the REIT space. I think we're very, you know, I think it solidifies very much the IFRS NAV value that I think us and others in this space have been highlighting over the past several years. Yes, we will definitely be taking that transaction into consideration as we look at cap rates and assessing our Q2 results.

Speaker #5: Hi, Mario. It's Kara. We were—I think that was a great transaction in the market and serves as a data point for all of us in the REIT space.

Speaker #5: And I think we're very—I think it solidifies very much the IFRS NAV value that I think us and others in this space have been highlighting over the past several years.

Speaker #5: And so yes, we will definitely be taking that transaction into consideration as we look at cap rates and assessing our Q2 results.

Mario Saric: Okay, my last one, just more of a modeling question. The G&A this quarter ticked up to close to CAD 7 million, which is up sequentially and also year over year. What's a good run rate for 2026 for that line item?

Speaker #9: Okay. My last one, just more of a modeling question. The G&A this quarter ticked up the close to 7 million, which is up sequentially and also year over year.

Speaker #9: What's a good run rate for '26 for that line item?

Kara Cameron: I'd say we're pretty comfortable with the run rate, as it is, as you're seeing it in the quarter. We did make a slight adjustment this quarter. I mentioned it in my prepared remarks. We had about CAD 432,000 to move of G&A and move into the fair value of the unit-based compensation. Those, that move was reallocated, and we actually chose to restate prior year. Prior was about CAD 786,000. That's a G&A move. You can think about this quarter as a better run rate for you.

Speaker #5: I’d say, if we’re pretty comfortable with the run rate as it is, as you’re seeing it in the quarter, we did make a slight adjustment this quarter.

Speaker #5: I mentioned it in my prepared remarks. We had about 432,000 commotive G&A and move into the fair value of the unit-based compensation. So those that move was reallocated.

Speaker #5: And we actually chose to restate prior year so prior year was about 786,000. So that's a G&A move. But and so you can think about this quarter as a better run rate for you.

Mario Saric: Okay. Would most of the variation or the variance be attributed to, or are there other items involved as well?

Speaker #9: Okay. So would most of the variation or the variance be attributable to? Or are there other items involved as well?

Kara Cameron: Sorry, Mario, you cut out there.

Speaker #5: Sorry, Mario. You cut out there.

Mario Saric: Oh, sorry. I'm just wondering whether most of the variance, either sequentially or year over year, can be attributable to the reclassification from an accounting standpoint, or is there just like a higher G&A load, in part because maybe the management revenue services line item is moving higher?

Speaker #9: Oh, sorry. I'm just wondering whether most of the variance, either sequentially or year over year, can be attributable to the reclassification from an accounting standpoint, or is there just a higher G&A load in part because maybe the management revenue services line item is moving higher?

Kara Cameron: Yeah. So it's a 1 for 1 on the stripping out the fair value adjustment. There's no variance that you would see as a result of that.

Speaker #5: Yeah. So it's a one-for-one on the stripping out the fair value adjustment. So there's no variance that you would see as a result of that.

Mario Saric: Okay. Thank you.

Speaker #9: Okay. Okay. Yeah. Thank you.

Operator: The next question is from Pammi Bir with RBC Capital Markets. Please go ahead.

Speaker #2: The next question is from Pammy Beer. With RBC Capital Markets, please go ahead.

Pammi Bir: Thanks. Hi, everyone. Just coming back to the Marlstone. You know, I realize it's still early, but, you know, how do the asking rents maybe compare to the initial underwriting? You know, do you see need at all to lean a little bit more on incentives at this stage?

Speaker #10: Thanks. Hi, everyone. Just coming back to the milestone—I realize it's still early, but how do the asking rents maybe compare to the initial underwriting? And do you see a need at all to lean a little bit more on incentives at this stage?

Arie Bitton: Pammi, it's Ari. The current asking rents are trending above our initial underwriting from project approval a few years ago. They're in line with what I'd say is more on the upper end of the market in the high CAD 3 range. As far as incentives are concerned, what we're seeing here is there's nothing advertised. We did have a grand opening or a soft opening promotion last week or 2 weeks ago, and we had our open house, which was extremely well attended. We had over 65 prospects tour, and many of those led to conversions of leases. For that particular open house, we did offer an incentive on a very short few. Beyond that, we're not advertising any.

Speaker #6: Pammy, it's Ari. The current asking rents are trending above our initial underwriting from project approval a few years ago. They're in line with what I'd say is more on the upper end of the market in the high $3 range.

Speaker #6: And as far as incentives are concerned, what we're seeing here is there's nothing advertised. We did have a grand opening or a soft opening promotion last week or two weeks ago, and we had our open house, which was extremely well attended.

Arie Bitton: We did have a grand opening or a soft opening promotion last week or 2 weeks ago, and we had our open house, which was extremely well attended. We had over 65 prospects tour, and many of those led to conversions of leases. For that particular open house, we did offer an incentive on a very short few. Beyond that, we're not advertising any.

Speaker #6: We had over 65 prospects tour, and many of those led to conversions of leases. And for that particular open house, we did offer an incentive on a very short fuse.

Speaker #6: But beyond that, we're not advertising any.

Pammi Bir: Okay. Then is this an asset where there's perhaps opportunities for bulk leasing arrangements, or is that not really contemplated at this stage?

Speaker #10: Okay. And then is this an asset where there's perhaps opportunities for bulk leasing arrangements, or is that not really contemplated at this stage?

Arie Bitton: We're not looking at that right now.

Speaker #6: We're not looking at that right now.

Pammi Bir: Okay. Just, Mark, I think you mentioned earlier in one of the responses, you know, the contribution for modernizations in your same property NOI. You know, look, it's certainly a positive, how much of that 3.7% in Q1 came from modernizations?

Speaker #10: Okay. And then just Mark, I think you mentioned earlier in one of the responses the contribution for modernizations in your same property and why look, it's certainly a positive, but how much of that 3.7% in Q1 came from modernizations?

Mark Holly: Good question, Pammi Bir. I don't have that at my fingertips. We can get Kara Cameron to circle back with you on that and give you some highlights on it.

Speaker #11: Good question, Pammy. I don't have that at my fingertips. I can certainly—we can get Kara to circle back with you on that and give you some highlights on it.

Pammi Bir: If I, you know, if I look back to last year, is it on a full year basis, are we looking at something as high as in the 20% to 25% range or not?

Speaker #10: If I look back to last year, is it on a full-year basis? Are we looking at something as high as in the 20, 25 percent range, or not?

Mark Holly: Of the 3.7, that would be too high. You know, in modernizations, we're investing about CAD 25 to 35 million annually. We can definitely give you a bit more color on that. Let us grab the materials, and we'll circle back with you.

Speaker #11: Of the 3.7, that would be too high. In modernizations, we're investing about 25 to 35 million dollars annually. But we can definitely give you a bit more color on that.

Speaker #11: We’ll just grab the materials, and we’ll circle back with you.

Pammi Bir: Okay. Thanks very much. I will alternate back.

Speaker #10: Okay. Thanks very much. I will turn it back.

Mark Holly: Pami.

Speaker #11: Pammy.

Operator: Our next question is from Tal Woolley with CIBC Capital Markets. Please go ahead.

Speaker #2: Again, if you have a question, please press star, then one. Our next question is from Tal Woolley with CIBC Capital Markets. Please go ahead.

Operator: Our next question is from Tal Woolley with CIBC Capital Markets. Please go ahead.

Tal Woolley: Hi, good morning. With the Marlstone moving from, or moving out of development, I guess, does that change the fee, the management and development fee earning potential from that asset going forward?

Speaker #12: Hi. Good morning. With the milestone moving from development to or moving out of development, I guess, does that change the management and development fee earning potential from that asset going forward?

Mark Holly: On that asset, yes, it'll turn into asset. Yes, because we were clipping some development fees, it'll turn into property management fees. As a reminder, with the Montez Partnership, we have two other projects that are still working through that entitlement program. If you think about it, the CAD 2.4 million that we have marked as sort of a quarterly run rate on the two partnerships, east and west, you can hold that one for the balance of 2026.

Speaker #11: On that asset, yes, it'll turn into asset yes, because we were clipping some development fees. It'll turn into property management fees. But as a reminder, with the Montes partnership, we have two other projects that are still working through that entitlement program.

Speaker #11: So for if you think about it, the 2.4 million dollars that we have marked as sort of a quarterly run rate on the two partnerships, East and West, you can hold that one for the balance of 2026.

Tal Woolley: Okay. That's. Okay. The sort of baseline fees you would expect on an annual basis is, you know, in and around that CAD 10 million mark, and then with some episodic development fees on top of that.

Speaker #12: Okay. That's and so okay. So the sort of baseline fees you would expect on an annual basis is in and around that $10 million mark.

Speaker #12: And then with some episodic development fees on top of that.

Mark Holly: You nailed it. Exactly.

Speaker #11: You nailed it. Exactly.

Tal Woolley: Perfect. Okay, that's great. Thanks very much, everyone.

Speaker #12: Perfect. Okay. That's great. Thanks very much, everyone.

Speaker #11: Thanks, Tal.

Mark Holly: Thanks, Tal.

Operator: This concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Speaker #2: This concludes the question and answer session. And today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.