Q2 2026 Killam Apartment REIT Earnings Call

August 6, 2026

Operator 2: Good morning, ladies and gentlemen. Welcome to the Killam Apartment Real Estate Investment Trust Q2 2026 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require assistance, please press star zero for the operator. This call is being recorded on 6 August 2026. I would now like to turn the conference over to Mr. Philip Fraser, President & Chief Executive Officer. Please go ahead.

Operator: Good morning, ladies and gentlemen. Welcome to the Killam Apartment Real Estate Investment Trust Q2 2026 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require assistance, please press star zero for the operator. This call is being recorded on 6 August 2026. I would now like to turn the conference over to Mr. Philip Fraser, President & Chief Executive Officer. Please go ahead.

Speaker #1: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require assistance, please press *0 for the operator.

Speaker #1: This call is being recorded on August 6, 2026. I would now like to turn the conference over to Mr. Philip Fraser, President and CEO.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Good morning, and thank you for joining KILLAM APARTMENT REAL ESTATE Q2 2026 conference call. I am here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and Erin Cleveland, Senior Vice President for Finance.

Phil Fraser: Thank you. Good morning, thank you for joining Killam Apartment REIT's Q2 2026 conference call. I am here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, and Erin Cleveland, Senior Vice President of Finance. Slides to accompany today's call are available on the investor relations section of our website under events and presentations. I will now ask Erin to read our cautionary statement.

Speaker #2: Slides to accompany today's call are available on the Investor Relations section of our website, under Events and Presentations. I will now ask Erin to read her cautionary statement.

Speaker #3: Thank you, Philip. This presentation may contain forward-looking statements with respect to KILLAM APARTMENT REIT and its operations, strategy, financial performance conditions, or otherwise. The actual results and performance of KILLAM, discussed here today, could differ materially from those expressed or implied by such statements.

Erin Cleveland: Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance conditions, or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed or implied by such statements. Such statements involve numerous inherent risks and uncertainties, and although Killam management believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance, or achievements will occur as anticipated. For further information about the inherent risks and uncertainties in respect to forward-looking statements, please refer to Killam's most recent annual information form and other securities regulatory filings found online on SEDAR+.

Speaker #3: Such statements involve numerous inherent risks and uncertainties, and although KILLAM management believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance, or achievements will occur as anticipated.

Speaker #3: For further information about the inherent risks and uncertainties in respect to forward-looking statements, please refer to KILLAM's most recent annual information form and other securities, regulatory filings found online on Cedar Plus.

Speaker #3: All forward-looking statements made today speak only as of the date which this presentation refers, and KILLAM does not intend to update or revise any such statements unless otherwise required by applicable securities laws.

Erin Cleveland: All forward-looking statements made today speak only as of the date which this presentation refers. Killam does not intend to update or revise any such statements unless otherwise required by applicable securities laws.

Speaker #2: Thank you, Erin. We are very pleased with our operating results for the second quarter of 2026. We achieved 3% same property NOI growth across the portfolio, which included 4.6% same property NOI growth in our apartment portfolio.

Phil Fraser: Thank you, Erin. We are very pleased with our operating results for Q2 2026. We achieved 3% same property NOI growth across the portfolio, which included a 4.6% same property NOI growth in our apartment portfolio. Our portfolio continues to demonstrate resilience, supported by strong demand for our apartments. Our Atlantic Canada markets continue to be our strongest markets and the driver of our outperformance this year. Same property apartment occupancy at the end of Q2 was 97.6%, up from 97% in Q1. The increased federal defense spending commitments are positive for a number of our markets. We are already seeing increased economic activity across our portfolio, reinforcing our confidence in the region's long-term growth outlook. Dale will now take us through our financial results, followed by Robert, who will discuss rental market fundamentals.

Speaker #2: Our portfolio continues to demonstrate resilience, supported by strong demand for our apartments. Our Atlantic Canada markets continue to be our strongest markets in the driver of our outperformance this year.

Speaker #2: Same property apartment occupancy at the end of the second quarter was 97.6%, up from 97% in Q1. The increased federal defense spending commitments are a positive for a number of our markets.

Speaker #2: We are already seeing increased economic activity across our portfolio, reinforcing our confidence in the region's long-term growth outlook. Dale will now take us through our financial results, followed by Robert, who will discuss rental market fundamentals.

Speaker #2: I will conclude with an update on our capital allocation strategy. I will now hand it over to Dale.

Phil Fraser: I will conclude with an update on our capital allocation strategy. I will now hand it over to Dale.

Speaker #3: Thanks, Phil. Key highlights of KILLAM's Q2 financial performance can be found on slide 2. KILLAM delivered strong operating performance in the quarter, including 3.8% same property apartment revenue growth.

Dale Noseworthy: Thank you, Phil. Key highlights of Killam's Q2 financial performance can be found on slide two. Killam delivered strong operating performance in the quarter, including 3.8% same-property apartment revenue growth. The weighted average rental increase on renewed and turned apartment units, shown on slide three, was 3.6%, consistent with Q1. Increases averaged 5% on unit turns and 3% on renewals. As shown on slide four, in-place rents remain approximately 10% below current market rents across the portfolio. This mark-to-market opportunity, together with sustained demand and high occupancy, provides a visible runway for continued revenue growth. These fundamentals reinforce our confidence in the portfolio's ability to perform and support our same-property apartment revenue growth target of at least 3.5% for the year. Turning to expenses, apartment same property expenses were up 2.1%, while operating expenses for the same property consolidated portfolio increased by 1.9%, as shown on slide five.

Speaker #3: The weighted average rental increase on renewed and turned apartment units, shown on slide 3, was 3.6%, consistent with the first quarter. Increases averaged 5% on unit turns and 3% on renewals.

Speaker #3: As shown on slide 4, in-place rents remain approximately 10% below current market rents across the portfolio. This mark-to-market opportunity together with sustained demand and high occupancy provides a visible runway for continued revenue growth.

Speaker #3: These fundamentals reinforce our confidence in the portfolio's ability to perform and support our same property apartment revenue growth target of at least 3.5% for the year.

Dale Noseworthy: These fundamentals reinforce our confidence in the portfolio's ability to perform and support our same-property apartment revenue growth target of at least 3.5% for the year. Turning to expenses, apartment same property expenses were up 2.1%, while operating expenses for the same property consolidated portfolio increased by 1.9%, as shown on slide five.

Speaker #3: Turning to expenses, apartment same property expenses were up 2.1%, while operating expenses for the same property consolidated portfolio increased by 1.9%. As shown on slide 5.

Speaker #3: We remain confident in our 2026 NOI growth targets, which were raised in Q1 of achieving at least 3.5% for the apartment portfolio and 2.5% for the consolidated portfolio.

Dale Noseworthy: We remain confident in our 2026 NOI growth targets, which were raised in Q1 of achieving at least 3.5% for the apartment portfolio and 2.5% for the consolidated portfolio. FFO was CAD 39.6 million in the quarter, a 0.5% increase from Q2 2025, while FFO per unit was unchanged at CAD 0.32. Same-property NOI growth, contributions from The Carrick, and lower administrative costs were offset by higher interest expense and the temporary earnings impact of the Westmount Place vacancy following the departure of a large office tenant on 1 April. The Westmount vacancy reduced Q2 FFO by approximately CAD 900,000. Excluding this impact, FFO per unit would have increased 2.3% quarter-over-quarter. While this near-term vacancy tempered per unit growth, it reflects a temporary transition period as we reposition Westmount Place. We expect the redevelopment and re-leasing program to begin contributing to FFO growth in 2028.

Speaker #3: FFO was 39.6 million in the quarter, a 0.5% increase from Q2 2025. While FFO per unit was unchanged at 32 cents. Same property NOI growth contributions from the Carrick and lower administrative costs were offset by higher interest expense and the temporary earnings impact of the Westmount Place vacancy following the departure of a large office tenant on April 1.

Speaker #3: The Westmount vacancy reduced Q2 FFO by approximately $900,000. Excluding this impact, FFO per unit would have increased 2.3% quarter over quarter. While this near-term vacancy tempered per unit growth, it reflects a temporary transition period, as we reposition Westmount Place.

Dale Noseworthy: The Westmount vacancy reduced Q2 FFO by approximately CAD 900,000. Excluding this impact, FFO per unit would have increased 2.3% quarter-over-quarter. While this near-term vacancy tempered per unit growth, it reflects a temporary transition period as we reposition Westmount Place. We expect the redevelopment and re-leasing program to begin contributing to FFO growth in 2028.

Speaker #3: We expect the redevelopment and releasing program to begin contributing to FFO growth in 2028. Our balance sheet remains well-positioned, with debt metrics highlighted on slide 6.

Dale Noseworthy: Our balance sheet remains well-positioned with debt metrics highlighted on slide six. Total debt as a percentage of total assets was 42.8% at 30 June. Subsequent to quarter end, Killam completed the disposition of a portion of our Ontario MHC portfolio, and net proceeds were applied against the credit facility. Following this transaction, debt as a percentage of total assets improved by 60 basis points to 42.2%. As at 30 June, our total weighted average mortgage interest rate was 3.62%. Approximately 95% of our apartment mortgages are CMHC insured, which remains an important competitive advantage providing access to lower cost, long-term financing relative to other asset classes. Looking at our debt maturity profile on slide seven, the path toward more stable interest expense growth is in sight.

Speaker #3: Total debt, as a percentage of total assets, was 42.8% at June 30. Subsequent to quarter-end, Killam completed the disposition of a portion of our Ontario MHC portfolio, and net proceeds were applied against the credit facility.

Speaker #3: Following this transaction, debt as a percentage of total assets improved by 60 basis points to 42.2%. As of June 30th, our total weighted average mortgage interest rate was 3.62%, approximately 95% of our apartment mortgages are CMHC insured, which remains an important competitive advantage providing access to lower-cost, long-term financing relative to other asset classes.

Speaker #3: Looking at our debt maturity profile on slide 7, the path toward more stable interest expense growth is in sight. Apartment mortgages maturing in 2028 and 2029 would be renewed at rates similar to or lower than the current rates of 4% and 3.7%, respectively.

Dale Noseworthy: Apartment mortgages maturing in 2028 and 2029 would be renewed at rates similar to or lower than the current rates of 4% and 3.7%, respectively. With less pressure on interest expense, we expect a greater portion of NOI growth to flow through to FFO. Combined with continued same-property NOI growth, the stabilization of recently completed developments, and the benefit of NCIB activity, we expect strong per unit earnings growth in the future. I will now turn it over to Robert.

Speaker #3: With less pressure on interest expense, we expect a greater portion of NOI growth to flow through to FFO. Combined with continued same property NOI growth, the stabilization of recently completed developments and the benefit of NCIB activity we expect strong per unit earnings growth in the future.

Speaker #3: I will now turn it over to Robert.

Speaker #2: Thank you, Dale. And good morning, everyone. Our Q2 results reinforced the strength of Killam's Atlantic Canadian platform. High occupancy, sustained rent growth, and limited incentive activity continue to support strong same property performance.

Robert Richardson: Thank you, Dale, and good morning, everyone. Our Q2 results reinforce the strength of Killam's Atlantic Canadian platform. High occupancy, sustained rent growth, and limited incentive activity continue to support strong same-property performance. While major defense-related investment in Halifax and across the region provides a durable long-term demand backdrop. Atlantic Canada continues to be Killam's strongest performing region, supported by high occupancy and above-average rental rate growth. As shown on slide eight, Q2 occupancy remained above 98% across our Atlantic portfolio. Halifax, our largest market, continues to deliver particularly strong results. In Q2, Halifax same-property apartment revenue increased 6.3%, while same-property apartment net operating income increased to 7%. We also believe the region's growing defense presence represents a significant long-term advantage for Killam. Please refer to the map on slide nine, which highlights the locations of these investments.

Speaker #2: While major defense-related investment in Halifax and across the region provides a durable long-term demand backdrop, Atlantic Canada continues to be KILLAM's strongest performing region, supported by high occupancy and above-average rental rate growth.

Speaker #2: As shown on slide 8, Q2 occupancy remained above 98% across our Atlantic portfolio, Halifax our largest market continues to deliver particularly strong results. In Q2, Halifax same property apartment revenue increased 6.3%, while same property apartment net operating income increased 7%, we also believe the region's growing defense presence represents a significant long-term advantage for KILLAM.

Speaker #2: Please refer to the map on slide 9. Which highlights the locations of these investments. Halifax is home to Canadian forces base Halifax, Canada's largest military base by personnel.

Robert Richardson: Halifax is home to Canadian Forces Base Halifax, Canada's largest military base by personnel, with a combined 10,000 military and civilian employees on-site. Nova Scotia is expected to receive approximately CAD 2 billion in defense-related investment, with CFB Halifax and CFB Greenwood receiving most of that capital. An additional CAD 1 billion is expected to be invested across Atlantic Canada, with CFB Gagetown, located near Fredericton, receiving the vast majority of those funds. Slide 10 provides additional detail on the National Shipbuilding Strategy, a cornerstone of Canada's defense program. Halifax remains the primary beneficiary of this initiative. Established in 2013, the program awarded Irving Shipbuilding the contract to modernize Canada's combat fleet at the Halifax shipyard, where more than 3,000 people are employed today. Most recently, Canada awarded the largest defense procurement contract in its history to ThyssenKrupp Marine Systems for the construction and long-term maintenance of up to 12 submarines.

Speaker #2: With a combined 10,000 military and civilian employees on site. Nova Scotia is expected to receive approximately $2 billion in defense-related investment, with CFD Halifax and CFD Greenwood receiving most of that capital.

Speaker #2: An additional $1 billion is expected to be invested across Atlantic Canada, with CFB Gagetown, located near Fredericton, receiving the vast majority of those funds.

Speaker #2: Slide 10 provides additional detail on the National Shipbuilding Strategy, a cornerstone of Canada's defense program. Halifax remains the primary beneficiary of this initiative, established in 2013, the program awarded Irving Shipbuilding the contract to modernize Canada's combat fleet at the Halifax shipyard, where more than 3,000 people are employed today.

Robert Richardson: Established in 2013, the program awarded Irving Shipbuilding the contract to modernize Canada's combat fleet at the Halifax shipyard, where more than 3,000 people are employed today. Most recently, Canada awarded the largest defense procurement contract in its history to ThyssenKrupp Marine Systems for the construction and long-term maintenance of up to 12 submarines.

Speaker #2: Most recently, Canada awarded the largest defense procurement contract in its history to ThyssenKrupp Marine Systems, with a construction and long-term maintenance of up to 12 submarines.

Speaker #2: Six of these vessels are expected to be permanently stationed and serviced at CFD Halifax. This represents a $24 billion procurement, with an estimated national economic impact of up to $86 billion over the next 30 to 50 years.

Robert Richardson: Six of these vessels are expected to be permanently stationed and serviced at CFB Halifax. This represents a CAD 24 billion procurement with an estimated national economic impact of up to CAD 86 billion over the next 30 to 50 years. The first submarines are expected to arrive in Halifax beginning in 2034. In summary, with more than 5,700 apartment units in Halifax alone, we view Atlantic Canada as a differentiated competitive advantage within Killam's portfolio. I'd also like to provide additional commentary on 50 Westmount Place as Sun Life's decision to vacate approximately 200,000 square feet at the start of Q2 weighed on same property NOI growth this quarter. Fortunately, due to its exceptional location, we believe 50 Westmount represents a compelling repositioning opportunity. Our plan is to transform the property into a mixed-use destination combining retail, office, and dining uses.

Speaker #2: The first submarines are expected to arrive in Halifax beginning in 2034. In summary, with more than 5,700 apartment units in Halifax alone, we view Atlantic Canada as a differentiated competitive advantage within KILLAM's portfolio.

Speaker #2: I'd also like to provide additional commentary on 50 Westmount Place, as Sunlight's decision to vacate approximately 200,000 square feet at the start of Q2 weighed on same property NOI growth this quarter.

Robert Richardson: I'd also like to provide additional commentary on 50 Westmount Place as Sun Life's decision to vacate approximately 200,000 square feet at the start of Q2 weighed on same property NOI growth this quarter. Fortunately, due to its exceptional location, we believe 50 Westmount represents a compelling repositioning opportunity. Our plan is to transform the property into a mixed-use destination combining retail, office, and dining uses.

Speaker #2: Fortunately, due to its exceptional location, we believe 50 Westmount represents a compelling repositioning opportunity. Our plan is to transform the property into a mixed-use destination combining retail office and dining uses.

Speaker #2: The redevelopment will be completed in three phases, with full completion expected in late 2028. This phased approach allows us to reposition the asset, over time, while continuing to advance leasing, design, and tenant mix decisions in a disciplined manner.

Robert Richardson: The redevelopment will be completed in three phases with full completion expected in late 2028. This phased approach allows us to reposition the asset over time while continuing to advance leasing, design, and tenant mix decisions in a disciplined manner. While the reposition will take some time, we expect the property to begin contributing meaningfully to earnings in 2028. With that, I'll hand you back to Philip to discuss Killam's capital recycling and capital allocation strategy.

Speaker #2: While the repositioning will take some time, we expect the property to begin contributing meaningfully to earnings in 2028. With that, I'll hand you back to Philip to discuss KILLAM's capital recycling and capital allocation strategy.

Speaker #1: Thank you, Robert. Capital recycling remains a key focus during the second quarter and is a very important source of funding. On August 4, we completed the disposition of a portfolio of Ontario manufactured home communities, containing approximately 746 sites, for gross proceeds of $50.9 million.

Phil Fraser: Thank you, Robert. Capital recycling remains a key focus during Q2 and is a very important source of funding. On 04 August, we completed the disposition of a portfolio of Ontario manufactured home communities containing approximately 746 sites for gross proceeds of CAD 50.9 million. The portfolio consists of eight year-round communities and one seasonal park with an average rent of CAD 507 per month and an exit cap rate of approximately 5.9%. Net proceeds after debt were approximately CAD 40 million. In addition, we have a Nova Scotia portfolio of nine MHC communities containing roughly 1,300 sites under agreement of purchase and sale, and is expected to close in Q3. A large 3,000-site portfolio of seasonal and year-round MHCs under contract with an expectation of closing in Q4 2026.

Speaker #1: The portfolio consists of eight year-round communities in one seasonal park with an average rent of $507 per month and an exit cap rate of approximately 5.9%.

Speaker #1: Net proceeds after debt were approximately $40 million. In addition, we have a Nova Scotia portfolio of nine MAC communities containing roughly 1,300 sites under agreement of purchase and sale, and is expected to close in Q3.

Speaker #1: In a large 3,000-site portfolio, of seasonal and year-round MACs under contract with an expectation of closing in Q4, 2026. Proceeds from dispositions and refinancing maturing first mortgage debt allows flexibility to allocate capital between NCIB repurchases, debt reductions, acquisitions, and development opportunities.

Phil Fraser: Proceeds from dispositions and refinancing maturing first mortgage debt allows flexibility to allocate capital between NCIB repurchases, debt reductions, acquisitions, and development opportunities. During the quarter, Killam allocated CAD 31.3 million towards its NCIB activity, repurchasing 1.7 million trust units for cancellation. Year to date, through the end of July, Killam has repurchased a total of 2.7 million trust units, representing more than CAD 49.2 million of capital to unit repurchase, shown on slide three. We intend to continue unit repurchases as a key component of our capital allocation strategy during H2 2026. In Waterloo, Ontario, Brightwood, our newest development, reached substantial completion on 01 June 2026, ahead of schedule and below budget at a total development cost of CAD 55.1 million. The 128-unit property is currently 45% leased and is expected to reach stabilization occupancy in early 2027.

Speaker #1: During the quarter, KILLAM allocated $31.3 million towards its NCIB activity, repurchasing $1.7 million trust units for cancellation. Year to date, through the end of July, KILLAM has repurchased a total of $2.7 million trust units representing more than 49.2 million of capital to unit repurchase, shown on slide 3.

Speaker #1: We intend to continue unit repurchases as a key component of our capital allocation strategy during the second half of 2026. In Waterloo, Ontario, Brightwood, our newest development reached essential completion on June the 1st, 2026, ahead of schedule in below budget at a total development cost of $55.1 million, the $128-unit property is currently 45% leased, and is expected to reach stabilization occupancy in early 2027.

Speaker #1: Photos of the completed property can be seen on slide 14. Eventide are 55-unit development in Halifax on slide 15 remains on track for completion in Q4, 2026, and is currently 22% pre-leased.

Phil Fraser: Photos of the completed property can be seen on slide 14. Eventide, our 55-unit development in Halifax on slide 15, remains on track for completion in Q4 2026 and is currently 22% pre-leased. We also maintain a 10% interest in Nolan Hill Phase Three in Calgary, which is expected to be completed in H2 2027. In the current environment, we continue to prioritize flexibility and balance sheet strength, and the highest return capital allocation opportunities. To conclude, we are very pleased with our Q2 operating performance and the progress made across our strategic priorities listed on slide 17. We delivered strong apartment NOI growth, completed Brightwood ahead of schedule, advanced our Westmount Place repositioning plans, and remain active under our NCIB and continue to execute on capital recycling. I would like to thank our employees for their continued hard work and dedication. Thank you.

Speaker #1: We also maintain a 10% interest in Noland Hill Phase 3 in Calgary, which is expected to be completed in the second half of 2027.

Speaker #1: In the current environment, we continue to prioritize flexibility, balance sheet strength, and the highest return capital allocation opportunities. To conclude, we are very pleased with our second quarter operating performance and the progress made across our strategic priorities listed on slide 17.

Speaker #1: We delivered strong apartment NOI growth, completed Brightwood ahead of schedule, advanced our Westmount Place repositioning plans, and remained active under our NCIB. And continue to execute on capital recycling.

Phil Fraser: We delivered strong apartment NOI growth, completed Brightwood ahead of schedule, advanced our Westmount Place repositioning plans, and remain active under our NCIB and continue to execute on capital recycling. I would like to thank our employees for their continued hard work and dedication. Thank you.

Speaker #1: I would like to thank our employees for their continued hard work and dedication. Thank you. We will now open the call for questions.

Phil Fraser: We will now open up the call for questions.

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 1 on your touch tone phone.

Operator 2: 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 your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Jonathan Kelcher with TD Cowen. Please go ahead.

Operator: 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 your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Jonathan Kelcher with TD Cowen. Please go ahead.

Speaker #3: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2.

Speaker #3: If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jonathan Kelcher with TD Cohen.

Speaker #3: Please go ahead.

Speaker #4: Thanks. Good morning.

Jonathan Kelcher: Thanks. Good morning.

Speaker #1: Good morning.

Phil Fraser: Good morning, Jonathan.

Jonathan Kelcher: First question just on the same property NOI on the apartment side. I know you didn't officially raise your target for the year, but is there any reason to think that it won't stay above 4% in the back half of the year? Are you just sort of concerned about weather in Q4? Would that be the bogey?

Speaker #4: First question just on the same property NOI. On the apartment side, I know you didn't officially raise your target for the year, but is there any reason to think that it won't stay above 4% in the back half of the year, or are you just sort of concerned about weather in Q4?

Speaker #4: Would that be the bogey?

Speaker #5: Utilities would be the bogey, just a reminder. We had a hefty increase in water rates in Nova Scotia that was approved earlier this year, so in the third quarter, those are up about 18%.

Dale Noseworthy: Utilities would be the bogey. Just a reminder, we had a hefty increase in water rates in Nova Scotia that was approved earlier this year. In Q3, those are up about 18%, the rates alone. That's something we are modeling in, as well as Q4 on the Enbridge gas side.

Speaker #5: The rates alone. So that's something we are modeling in, as well as Q4 on the NACAS side.

Speaker #4: Okay. Fair enough. And then for 2027, I don't recall if you get, like, you put in the MD&A that you expect similar apartment, same property NOI growth.

Jonathan Kelcher: Okay. Fair enough. For 2027, I don't recall if you put it in the MD&A that you expect similar apartment, same property NOI growth. That seems kind of early to be putting something like that out. What's kind of driving that?

Speaker #4: What's that seems kind of early to be putting something like that out. What's kind of driving that?

Speaker #5: Certainly, the mark-to-market that we have. When we look at our ability to increase rents, the strength in the occupancy. So when we look at the top line and we have insight generally into renewals, we're still seeing strength in terms of our ability to get rental growth on turns.

Dale Noseworthy: Certainly, the mark-to-market that we have when we look at our ability to increase rents, the strength in the occupancy. When we look at top line and we have insight generally into renewal, we're still seeing strength in terms of our ability to get rental growth on turns. We're seeing a reduced pressure on lower rates in some markets, including Alberta and Ontario in the last quarter. When we look out, we do expect that that should be more moderated. On the expense side, that does factor in a reasonable amount of expense growth. The outlook could change, but as of now, we are expecting similar growth next year.

Speaker #5: We're seeing a reduced pressure on lower rates in some markets, including Alberta and Ontario in the last quarter. So when we look out, we do expect that that should be more moderated.

Speaker #5: And on the expense side, you know, that does factor in a reasonable amount of expense growth. So the outlook could change, but as of now, we are expecting similar growth next year.

Speaker #4: Perfect. And then just lastly on Westmount, it looks like you're a little bit further along in your planning. Is there do you have a budgeted cost for the transformation there?

Jonathan Kelcher: Perfect. Just lastly on Westmount. Looks like you're a little bit further along in your planning. Do you have a budgeted cost for the transformation there? Are you still targeting, I think at one point you were targeting CAD 1 million in NOI when all is said and done.

Speaker #4: And are you still targeting I think at one point you were targeting a million dollars in NOI when all is said and done.

Speaker #2: Hi, Jonathan. So the million dollars of NOI?

Robert Richardson: Jonathan. The CAD 1 million of NOI?

Speaker #4: Yeah, I may have that wrong. I can go back and look.

Jonathan Kelcher: Yeah, I may have that wrong. I can go back and look.

Speaker #2: Okay. And the first part of the question?

Robert Richardson: Okay. The first part of the question?

Speaker #1: The cost for this year and next year.

Phil Fraser: The cost for this year and next year.

Robert Richardson: Yeah, the cost. We are between CAD 15 million and CAD 20 million, is where we are looking at this point. So far, the demolition quotes have come in actually favorably, so that is good to see. We are well on our way.

Speaker #2: Yeah, the cost. So we're between 15 and 20 million dollars is where we're looking at this point. And so far, the demolition quotes have come in, actually favorably, so that's good to see.

Speaker #2: And we're well on our way.

Speaker #4: Okay, thanks. I'll turn it back.

Jonathan Kelcher: Okay, thanks. I will turn it back.

Speaker #3: Your next question comes from Sayram Srinivas with ATB Cormack Capital Markets. Please go ahead.

Operator 2: Your next question comes from Sairam Srinivas with ATB Capital Markets. Please go ahead.

Operator: Your next question comes from Sairam Srinivas with ATB Capital Markets. Please go ahead.

Speaker #2: Thank you, Alberta. So going back to your comment on the MHC disposition post-quarter, would you say the value of these dispositions is pretty much in line with the IFRS value, and even for the dispositions going ahead, would they be in line with what you expect there?

Sairam Srinivas: Thank you, operator. Phil, going back to your comment on the MHC disposition post-quarter, would you say the value of the dispositions is pretty much in line with the IFRS value? Even for the dispositions going ahead, would they be in line with what you expect there?

Phil Fraser: Sorry, could you just repeat that first part of the question about the sales of the MHC?

Speaker #1: Sorry, could you just repeat that first part of the question about the sales of the MHCs?

Speaker #2: Yeah. So looking at the MHC dispositions announced post-quarter, would you say they're fairly in line with where you carry them at books at Q2?

Sairam Srinivas: Yeah. Looking at the MHC dispositions announced post-quarter, would you say they're fairly in line with where you carry them at books at Q2? Going ahead to the comments you made about potential dispositions coming in, would they be somewhere in line there as well?

Speaker #2: And going ahead to the comments you made about potential dispositions coming in, would they be somewhere in line there as well?

Speaker #1: Yes.

Phil Fraser: Yes.

Speaker #2: Okay. And maybe looking at the more near-term leases that have been a drag overall, how should we be thinking about the cadence of this drag coming in?

Sairam Srinivas: Okay.

Phil Fraser: Okay.

Sairam Srinivas: Maybe looking at the more near-term leases that have been a drag overall, how should we be thinking about the cadence of this drag coming in? Do you see that heading down into the H2 of next year?

Speaker #2: And do you see that heading down into the second half of next year?

Speaker #5: The drag on the turn on newer leases, just to clarify your question?

Dale Noseworthy: The drag on the turn on new leases, just to clarify your question?

Speaker #2: Yes.

Sairam Srinivas: Yes.

Speaker #5: We do see it lessening. And looking forward, expect it to moderate. Likely flat in the second half of next year, maybe earlier. In terms of the turns.

Dale Noseworthy: We do see it lessening and looking forward to expect it to moderate. Likely flat in H2 of next year, maybe earlier in terms of the turns. Closer to flat rents, I would say, rather than negative for those shorter nearer-term leases.

Speaker #5: Closer to flat rents. I would say rather than negative for those shorter, like, nearer-term leases.

Speaker #6: But we expect, like, the overall increase on turn to be generally in line with what we have seen.

Erin Cleveland: We expect the overall increase on turn to be.

Dale Noseworthy: Yes

Erin Cleveland: in line with what we have seen.

Speaker #5: Absolutely.

Dale Noseworthy: Absolutely. Yeah.

Speaker #6: Yeah.

Speaker #2: Okay. Thanks, guys. I'll turn it back.

Sairam Srinivas: Okay. Thanks, guys. I'll drop back.

Speaker #1: Thank you.

Phil Fraser: Thank you.

Speaker #3: Your next question comes from Jimmy Shan with RBC Capital Markets. Please go ahead.

Operator 2: Your next question comes from Jimmy Shan with RBC Capital Markets. Please go ahead.

Operator: Your next question comes from Jimmy Shan with RBC Capital Markets. Please go ahead.

Speaker #7: Thanks. Good morning. So the positive leasing momentum did that continue into July and early August?

Jimmy Shan: Thanks. Good morning. The positive leasing momentum, did that continue into July and early August?

Phil Fraser: Sorry, can you repeat that question, Jimmy?

Speaker #1: Sorry, we can't can you repeat that question, Jimmy?

Speaker #7: I was just curious, is the occupancy is further improved since end of the quarter?

Jimmy Shan: I'm just curious if the occupancy has further improved since the end of the quarter.

Speaker #6: So since July, we saw a little bit of the dip in occupancy, but we're expecting to see that come back. Maybe not to the exact level we saw in May and June.

Erin Cleveland: July, we saw a little bit of a dip in occupancy, but we're expecting to see that come back, maybe not to the exact level we saw in May and June. It was very strong in Q2. Overall, probably a little bit down from what we saw in Q2, but still strong.

Speaker #6: It was very strong in the second quarter. So overall, probably a little bit down from what we saw in the second quarter, but still strong.

Jimmy Shan: Okay.

Speaker #6: And it's really just localized in a certain you know, student-based assets and predominantly in the London area.

Erin Cleveland: It's really just localized in a certain student-based assets and predominantly in the London area.

Speaker #7: Right. Okay. And likewise, on the rental incentives, do you see that now that occupancy is at that sort of 97 over 97 percent, do you see that plateauing or even trending down a little

Jimmy Shan: Likewise, on the rental incentives, now that occupancy is at that sort of over 97%, do you see that plateauing or even trending down a little bit?

Speaker #6: Yeah, we actually in July have seen it trend down slightly month over month. So we're hoping to see that continue.

Erin Cleveland: Yeah, we actually in July had seen it trend down slightly month over month. We're hoping to see that continue.

Speaker #7: Okay. To follow up on the Westmount question, you're spending $15 to $20 million in rental costs. What's your expectation again in terms of projected NOI once everything is done?

Jimmy Shan: Okay. To follow up on the Westmount question, you're spending CAD 15 to 20 million in reno costs. What's your expectation, again, in terms of projected NOI once everything is done?

Speaker #1: Yeah, the basically, before when sunlight was there, we were hitting about 5.2 million. In NOI. And with the subtractions of space to create more sort of parking in front of the building, and then the addition that we're putting on of retail and changing the mix from 100 percent office to a big chunk of it being retail, with a higher sort of net rent, we think that basically it might be about 200,000 dollars to 300,000 less over that period of time once it's fully leased out.

Robert Richardson: You can have it.

Phil Fraser: You can have it.

Robert Richardson: Sure. Basically, before when Sun Life was there, we were hitting about CAD 5.2 million in NOI. With the subtractions of space to create more sort of parking in front of the building, and then the addition that we are putting on of retail and changing the mix from 100% office to a big chunk of it be in retail with a higher sort of net rent, we think that basically it might be about CAD 200,000 to 300,000 less over that period of time once it is fully leased up. The flip side of that is that it creates another 80,000 square feet of space that is not going to be on a building footprint, and the thoughts are, in phases two and three, that there is going to be more retail built on at the other side of the parking lot.

Speaker #1: But it also creates the flip side of that is that it creates another 80,000 square feet of space that's not going to be on like a building footprint.

Speaker #1: And the thoughts are in phases two and three, that there's going to be more retail built on the other side of the parking lot.

Speaker #7: Okay. Okay. And then just lastly, on the NCIB, I know you mentioned that continues to be a priority for you. You expect the same pace of NCIB activity in Q2, go for I'm going to go forward basis?

Jimmy Shan: Okay. Just lastly on the NCIB, I know, Phil, you mentioned that continues to be a priority for you. Do you expect the same pace of NCIB activity in Q2 on a go-forward basis?

Speaker #5: Really depends on pricing. The last month, you know, continuing to trade below 19, we remained active. So in these levels, we would expect to continue to be very active.

Dale Noseworthy: Really depends on pricing.

Dale Noseworthy: The last month continuing to trade below CAD 19, we remained active. In these levels, we would expect to continue to be very active.

Speaker #7: Okay. Thank you.

Jimmy Shan: Okay. Thank you.

Speaker #1: Thank you.

Phil Fraser: Thank you.

Speaker #3: Your next question comes from Mario Saric with Scotiabank. Please go ahead.

Operator 2: Your next question comes from Mario Saric with Scotiabank. Please go ahead.

Operator: Your next question comes from Mario Saric with Scotiabank. Please go ahead.

Speaker #8: Hi. Good morning. Just maybe coming back to the occupancy and just looking at slide three. The call deck, which is great disclosure. I think you mentioned that July occupancy may dip a little bit versus June.

Mario Saric: Hi. Good morning. Just maybe coming back to the occupancy and just looking at slide three of the call deck, which is great disclosure. I think you mentioned that July occupancy may dip a little bit versus June. If we go back historically, if you go back 20 years, typically Q3 occupancy is greater than Q2 occupancy. I guess that kind of adjusts for some of the seasonality associated with the student building that you mentioned. Is that the expectation for this year for Q3 September end occupancy to be higher than Q2?

Speaker #8: But if we go back historically, if you go back 20 years, typically Q3 occupancy is greater than Q2 occupancy. And I guess that kind of adjusts for some of the seasonality associated with the student buildings that you mentioned.

Speaker #8: Is that the expectation for this year, for Q3, September end occupancy to be higher than Q2?

Speaker #6: I expect probably September, end of September occupancy probably to be generally in line with Q2. Not necessarily higher. It really did peak. It abnormally peaked kind of in that second quarter.

Erin Cleveland: I expect September, end of September occupancy probably to be generally in line with Q2. Not necessarily higher. It abnormally peaked in that Q2 compared to historical trends.

Speaker #6: Compared to historical trends.

Speaker #8: Okay. And what would you what do you think drove the abnormal peak earlier in the quarter?

Mario Saric: Okay. What do you think drove the abnormal peak earlier in the quarter?

Speaker #5: You know, if we took out those few properties Erin mentioned, we would still be pretty high. It is still pretty high. I don't mean to say—our occupancy is still very strong.

Dale Noseworthy: If we took out those few properties Aaron mentioned, we would still be pretty high. It is still pretty high. I don't mean to say our occupancy is still very strong, but London is a market that is our most challenging at the moment. Some of those student-focused ones. There is some new supply in that market. That's part of that. If you took out those few properties, we'd likely be looking quite stable.

Speaker #5: But those London is a market that is our most challenging at the moment. Some of those student-focused ones and is about there is some new supply in that market.

Speaker #5: So that's part of that. So, if you took out those few properties, we'd likely be looking quite stable.

Speaker #1: Yeah. I mean, we're talking about 180 mill. And we've owned that building for 10 to 15 years, multiple times as the trend of every four years, or if there's new supply around there that it kind of dips out over the summer, but it comes back throughout the year.

Phil Fraser: Yeah. We're talking about CAD 180 million. We've owned that building for 10 to 15 years or more. We've seen this trend multiple times as the trend of every four years. If there's new supply around there that it dips in over the summer, it comes back throughout the year. It's just a seasonality and a function of that market.

Speaker #1: So it's just a seasonality and a function of that market.

Speaker #8: Okay. And then when I look at that slide, if you look at the top chart, the line on the top chart, it generally kind of correlates with the bars on the bottom chart, meaning kind of the higher the occupancy goes, the better your lease spreads are, which is relatively intuitive.

Mario Saric: Okay. When I look at that slide, if you look at the top chart, the line on the top chart, it generally kind of correlates with the bars on the bottom chart, meaning kind of the higher the occupancy goes, the better your lease spreads are, which is relatively intuitive. With the occupancy level kind of having come up and expected to kind of stay at the level that it is by the end of September, would you say that your renewal and new lease spreads have troughed at this point?

Speaker #8: So with the occupancy level kind of having come up and expected to kind of stay at the level that it is by the end of September, would you say that your renewal and new lease spreads have troughed at this point?

Speaker #5: I think new lease spreads we're going to see similar spreads going forward. It's a bit of a different market that when a few years ago when occupancy was super high, and there was a balance between how do we you know, pushing rents versus occupancy, now we are favoring occupancy.

Dale Noseworthy: I think new lease spreads, we're going to see similar spreads going forward. It's a bit of a different market that when a few years ago, when occupancy was super high and there was a balance between pushing rents versus occupancy. Now we are favoring occupancy. We do want to get the most rent we can get, but because of new supply in certain markets, we can't just sit there and wait for the higher rent. We'll end up with vacant units for longer in many markets. It's a balancing act, but overall, what we've seen this year, we feel can continue for the next 12 to 18 months that we have in sight.

Speaker #5: We do want to get the most rent we can get. But because of new supply in certain markets, we can't just sit there and wait for the higher rent.

Speaker #5: We'll end up with vacant for longer in many markets. So it's a balancing act, but overall, what we've seen this year we feel can continue for the next 12 to 18 months that we have in sight.

Speaker #8: Okay. And that would be the case for renewal spreads as well?

Mario Saric: Okay. That would be the case for renewal spreads as well?

Speaker #5: For lease, yes. They're bumping around a little bit, but no sizable moves are expected.

Dale Noseworthy: For lease, yes.

Mario Saric: Okay.

Dale Noseworthy: They're bumping around a little bit, no sizable moves are expected.

Speaker #8: Okay. And then just maybe the last one, a general question on kind of the defense spending in Atlanta, Canada. I don't know if you've come across it in terms of we see all the projects that you highlight in some of them are quite substantial.

Mario Saric: Okay. Just maybe the last one, a general question on kind of the defense spending in Atlantic Canada. I don't know if you've come across it in terms of, we see all the projects that you highlight, some of them are quite substantial, in terms of the cadence of expected employment growth coming from those projects, have you seen anything that kind of gives the expected job growth, over the next 10 years, coming from these initiatives?

Speaker #8: But in terms of the cadence of expected employment growth coming from those projects, have you seen anything that gives the expected job growth over the next 10 years coming from these initiatives?

Speaker #2: Mariel, we don't have that information. We do have the list of what's going to be invested here, and it's going to be over 110 billion dollars.

Robert Richardson: Mario, we don't have that information. We do have the list of what's going to be invested here, it's going to be over CAD 110 billion. The numbers are so large, it's almost like it's fanciful. The reality is this work has started on every one of these. There's 10 projects I have in front of me, every one of them is underway. It's going to happen. I don't know the whole multiplier. I was thinking about it when I was in school. They talked about government spending and how it flows through the marketplace. We're seeing it, our occupancy shows it. I think that that's pretty important.

Speaker #2: And the numbers are so large, it's almost like it's fanciful. But the reality is, this work is started on every one of these there's 10 projects I have in front of me.

Speaker #2: And every one of them is underway. So it's going to happen. I don't know the whole multiplier. I was thinking about it when I was in school.

Speaker #2: They talked about government spending on how it flows through the marketplace. And we're seeing it. And our occupancy shows it. And so I think that that's pretty important.

Speaker #2: And then I was curious. I did a little looping myself. I asked ChatGPT to go and do a little work and find all the projects in Atlantic Canada, $50 million or more, that are not related to defense.

Robert Richardson: I was curious, I did a little snooping myself, I asked ChatGPT to go out and do a little work and find all the projects in Atlantic Canada, CAD 50 million or more, that are not related to the defense. It came back with CAD 30 billion. For example, in Halifax right now, we have a CAD 7 billion build with our new hospital. There's more work to be done on Churchill, that's a couple of billion in Newfoundland. Every province has additional things on the go. It really is an incredible tailwind that we find ourselves in right now.

Speaker #2: And it came back with 30 billion dollars. So for example, in Halifax right now, we have a 7 million dollar 7 billion dollar, pardon me, build with our new hospital.

Speaker #2: There's more work to be done on Churchill. And so that's a couple of billion in Newfoundland. And there's every province has additional things on the go.

Speaker #2: So it really is an incredible tailwind that we find ourselves in right now.

Speaker #1: Yeah, I mean, Mariel, as an example, to get a little bit of real data to your question, the Irving Shipyard now has been going on for 15-plus years.

Phil Fraser: Yeah. I mean, Mario, as an example, to get a little bit of real data to your question. The Irving Shipyard now has been going on for 15-plus years, thousands of people working there. Lockheed Martin, one of the larger subcontractors for that sort of program of the frigates being built, they basically came out and said they expect to hire another 300 people just to sort of match and keep up with the contracts they have for the river-class battleships that are starting to be built in that shipyard. There's a lot of these defense contractors that are here or will be coming here, and they have huge demand for the employment base that they're going to need to help service all the real dollars being spent by the federal government.

Speaker #1: Thousands of people working there. And lucky American, one of the larger subcontractors for that sort of program of the frigates in being built, they basically came out and said they expect to hire another 300 people just to sort of match and keep up with the contract they have for the river class.

Speaker #1: Battleships that are starting to be built in that shipyard. So there's a lot of these defense contractors that are here or will be coming here and they have huge sort of demand for the employment base that they're going to need to help service all the real dollars being spent by the federal government.

Speaker #8: Yeah. Okay. All right. Thanks for the color.

Mario Saric: Yeah. Okay. All right. Thanks for the color.

Speaker #1: Thank you.

Phil Fraser: Thank you.

Speaker #3: Okay. Next question comes from Kyle Stanley, Desjardins Securities. Please go ahead.

Operator 2: Your next question comes from Kyle Stanley, Desjardins Securities. Please go ahead.

Operator: Your next question comes from Kyle Stanley, Desjardins Securities. Please go ahead.

Speaker #8: Thanks. Morning, everyone. You did some pretty attractively priced mortgage refinancing and then up financing so far in the first half. Is the expectation that the proceeds from the up financing you know, again, you know, I think roughly a 3.7 percent rate, which is pretty attractive, I guess, versus maybe where rates are headed you know, in the last couple of weeks.

Kyle Stanley: Thanks. Morning, everyone. You did some pretty attractively priced mortgage refinancing and then up financing so far in H1. Is the expectation that the proceeds from the up financing, again, at, I think roughly a 3.7% rate, which is pretty attractive, I guess, versus maybe where rates are headed in the last couple of weeks? Will those proceeds be used to repay the maturities in H2, kind of locking in that better rate than you can kind of get in today's environment?

Speaker #8: Will those proceeds be used to repay the maturities in the back half, kind of locking in that better rate than you can kind of get in today's environment?

Speaker #3: I guess to date, most of those refis have been used for the NCIB program and just kind of our ongoing operations. In terms of repayments, I don't think we'd be looking specifically to any apartment mortgage.

Erin Cleveland: I guess to date, most of those refis have been used for the NCIB program and just kind of our ongoing operations. In terms of repayments, I don't think we'd be looking specifically to any apartment mortgage repayments in H2 of the year. Obviously, depending on what happens with rates, we'll keep an eye on it.

Speaker #3: Repayments in the back half of the year. But obviously, depending on what happens with rates, we'll keep an eye on it.

Speaker #8: Okay. Fair enough. And then just over to Ethan Tide, you know, how is the lease up progressing there? Obviously, I understand it's still very early.

Kyle Stanley: Okay. Fair enough. Just over to Eventide. How is the lease-up progressing there? Obviously, I understand it's still very early. Just given the kind of supply environment in Halifax, and the competitive pressures at the upper end of the market, I'm just curious how delivering a new project is going today and maybe where incentives might be and just want a general view of how that's progressing.

Speaker #8: But just given the kind of supply environment in Halifax, and you know, the competitive pressures at the upper end of the market, I'm just curious how delivering a new project is going today and maybe where incentives might be and just want to, you know, a general view of how that's progressing.

Speaker #1: Well, I think I can honestly say that we're a little disappointed in the speed of it being finishing up over the last few months.

Phil Fraser: Well, I think I can honestly say that we're a little disappointed in the speed of it being finishing up over the last few months, and we still have our fingers crossed that we'll be able to have it complete, and people will be able to move in the first of October or the first of November. That said, the good news is it's only 55 units. The location is absolutely great, and the pre-leasing has been very strong. I think if it was open now, we'd have it basically well over half, if not three-quarters full. Today, we're sitting at in the mid-twenties, and there's leasing activity that's coming in on a weekly basis. We're just about ready to be able to have a show suite available to take people through. That's one building I'm pretty sure is going to have a fairly fast lease-up.

Speaker #1: And we're still having our fingers crossed that we'll be able to have a complete and people will be able to move in the first of October, or the first of November.

Speaker #1: That said, the good news is it's only 55 units. The location is absolutely great. And the pre-leasing has been very strong. I think if it was open now, we'd have it basically well over half, if not three-quarters full.

Speaker #1: Today, we're sitting at in the mid-20s. And there's leasing activity that's coming in on a weekly basis. We're just about ready to be able to have a show suite available to take people through.

Speaker #1: But that's one building. I'm pretty sure it's going to have a fairly fast lease-up, and the rates are holding from a pro forma.

Phil Fraser: The rates are holding from a pro forma calculation.

Speaker #1: Calculation.

Speaker #8: Okay. Thank you. So I guess in that scenario, maybe not fully reflective of the market, if you were delivering a new build elsewhere, this one, you think location and is one of the biggest drivers?

Kyle Stanley: Okay. Thank you. I guess in that scenario, maybe not fully reflective of the market if you were delivering a new build elsewhere. This one, do you think location is one of the biggest drivers?

Speaker #1: It's the location. It's like if you're again, I'm sure you've seen it or know where the location is. It's just off Spring Garden. And it's sort of a quiet cul-de-sac.

Phil Fraser: It's the location. Again, I'm sure you've seen it or know where the location is. It's just off Spring Garden. It's in sort of a quiet cul-de-sac, and across the street is our building. Literally what Robert said, this expansion of the hospitals, this CAD 8.8 billion is about a seven-minute walk to it through a graveyard. On the other side, you basically have the medical school and all the sort of university-related employment facilities, plus Dalhousie. It's in a really good location.

Speaker #1: And beside across the street is our building. And literally, what Robert said, this expansion of the hospitals, this 8.8 billion is about a seven-minute walk to it through a graveyard.

Speaker #1: And on the other side, you basically have the medical school and all the sort of university-related employment facilities, plus style housing. So it's in a really good location.

Speaker #8: Okay. No, that makes sense. And I do remember seeing it before. So I believe it. That's it for me. I'll turn it back. Thanks.

Kyle Stanley: Okay. No, that makes sense. I do remember seeing it before, I believe it. That's it for me. I'll turn it back. Thanks.

Speaker #1: Thank you.

Phil Fraser: Thank you.

Speaker #3: Okay. Next question comes from Matt Cornack with National Bank of Canada, Capital Markets. Please go ahead.

Operator 2: Your next question comes from Matt Kornack with National Bank of Canada Capital Markets. Please go ahead.

Operator: Your next question comes from Matt Kornack with National Bank of Canada Capital Markets. Please go ahead.

Speaker #8: Morning, guys. Maybe first, Dale, for the MHC and commercial mortgages, that you have, I think it's 110 million at almost a 5 percent interest rate.

Matt Kornack: Morning, guys. Maybe first, Dale, for the MHC and commercial mortgages that you have, I think it's CAD 110 million at almost a 5% interest rate. Would the bulk of that be on the MHC portfolio, or is there a component or a meaningful component on the commercial space as well?

Speaker #8: Would the bulk of that be on the MHC portfolio? Is there a component, or a meaningful component, on the commercial space as well?

Speaker #5: It would be a little more on the commercial.

Dale Noseworthy: It would be a little more on the commercial.

Speaker #1: Well, you said what's the total? The 100?

Phil Fraser: Well, you said, what's the total?

Dale Noseworthy: 100.

Speaker #5: Yeah. 110.

Matt Kornack: 110.

Phil Fraser: 100?

Matt Kornack: 110.

Phil Fraser: 100?

Dale Noseworthy: Yeah, 110.

Speaker #1: We have 30 on the mall over in PEI and maybe.

Phil Fraser: We have 30 on the mall over in PEI.

Speaker #5: And the brewery.

Dale Noseworthy: In the brewery. Yeah.

Speaker #3: And on the brewery.

Erin Cleveland: On the brewery.

Speaker #1: And on the brewery.

Phil Fraser: On the brewery.

Dale Noseworthy: Top, maybe it's a little more.

Speaker #5: Top. Maybe it's a little more.

Speaker #1: Yeah. Vote half. At most, maybe 40 million. Commercial.

Phil Fraser: Yeah. About half. At most, maybe CAD 40 million commercial.

Speaker #8: Okay. And is it fair to say, though, that with the sale of the MHC portfolio, the debt associated with it—is it at a bit higher interest rate?

Matt Kornack: Is it fair to say, though, that with the sale of the MHC portfolio, that the debt associated with it is at a bit higher interest rate, so it tempers kind of some of the dilution, maybe of selling higher cap rate to MHC?

Speaker #8: So it tempers kind of some of the dilution maybe of selling higher cap rate MHC?

Speaker #5: Yes.

Dale Noseworthy: Yes.

Speaker #1: Yes.

Phil Fraser: Yes.

Speaker #5: The debt levels are lower on it as a percentage of the value compared to our whole portfolio. But yes, that would be higher.

Dale Noseworthy: The debt levels are lower on it as a percentage of the value compared to our whole portfolio, yes, debt would be higher.

Speaker #8: And I understand buying back stock at a discount to book when you're selling book. But I guess it's price dependent, but it sounds like the sales are fairly certain.

Matt Kornack: I understand buying back stock at a discount to book when you're selling book, I guess it's price dependent, it sounds like the sales are fairly certain. Let's say the stock trades higher, you don't buy back stock. Would the near term view be to deleverage or would you get back to being more active on the development side or maybe even acquire assets on the apartment side?

Speaker #8: So let's say the stock trades higher. You don't buy back stock. Would the near-term view be to deleverage or would you get back to being more active on the development side or maybe even acquire assets on the apartment side?

Speaker #1: I think the important thing you're asking is, if the price does go up and it becomes less accretive from a buyback, do we go back to looking at the other three alternatives?

Phil Fraser: I think the important thing you're asking is, if the price does go up and it becomes less accretive from a buyback, do we go back looking at the other three alternatives? The answer would be yes, to whatever extent. It depends on the pricing. Obviously all those other avenues of growth or allocation of capital will be looked at.

Speaker #1: And the answer would be yes to whatever extent it depends on the pricing. But obviously, all those other avenues of growth or allocation of capital will be looked at.

Speaker #8: Okay. And then if we look at the markets, I mean, it's pretty stark. And Atlantic Canada versus the rest of your portfolio outside of Atlantic Canada in terms of performance today.

Matt Kornack: Okay. If we look at the markets, it's pretty stark in Atlantic Canada versus the rest of your portfolio outside of Atlantic Canada in terms of performance today. Obviously, hopefully the West and Ontario will normalize. Is it attractive to look at opportunities? I look at Newfoundland, it also is doing quite well in those type of markets. Is there the ability to buy at reasonable or higher cap rates in a market like Newfoundland or to build there? I'm just interested in kind of how you're thinking about Atlantic versus the rest of the country.

Speaker #8: Obviously, hopefully, the West and Ontario will normalize. But is it attractive to look at opportunities? I mean, I look at Newfoundland. It also is doing quite well.

Speaker #8: In those type

Speaker #1: Type markets and is there the ability to buy it reasonable or higher cap rates in a market like Newfoundland , or to build their , , just interested in kind of how you're thinking about Atlantic versus the rest of the country

Speaker #2: So , , Matt , you're asking what are the current opportunities for acquisitions in Atlantic Canada

Phil Fraser: Matt, you're asking what are the current opportunities for acquisitions in Atlantic Canada?

Speaker #1: Yeah . And if that would be of interest and again , there's this kind of new versus old build versus buy existing . I mean , jury's out as to what's better , but interested in what your thoughts are from a capital allocation .

Matt Kornack: Yeah. If that would be of interest. Again, there's this kind of new versus old, build versus buy existing. Jury's out as to what's better, interested in what your thoughts are from a capital allocation perspective.

Speaker #1: Well , I .

Phil Fraser: Well, I think I'll answer that by saying, we continue to look at all our markets across Canada, what kind of level of activity from an acquisition or disposition of other sort of owners of either apartments or. That's all really what we're looking at. We are keeping a pretty good close eye on transaction and what's available in Atlantic Canada for sure. Right now we're just lookers as opposed to saying that we want to buy something.

Speaker #2: I think I can , we can I'll answer that by saying , , we continue to look at all our markets across Canada .

Speaker #2: What kind of level of activity from an acquisition or disposition of other sort of owners of either apartments or that's all really what we're looking at .

Speaker #2: So the , we are keeping a pretty good close eye on transaction . And what's available , , in Atlantic Canada for sure .

Speaker #2: But right now we're just lookers as opposed to saying that we want to buy something

Speaker #1: Okay . Makes sense . , and then maybe lastly , just turning back to the operations side of things . , good to see new leasing spreads stabilize .

Matt Kornack: Okay. Fair. Makes sense. Maybe lastly, just turning back to the operations side of things. Good to see new leasing spreads stabilize. Is that figure net of incentive? I know incentives ticked up a little bit, but just trying to understand if that's a net number or if it's a gross number.

Speaker #1: Is that figure net of incentives ? And incentives ticked up a little bit , but just trying to understand if , , if that's a net number or if it's a gross number .

Speaker #3: That is growth , that is not net , but incentives year over year for many of those units that turned have been pretty consistent .

Dale Noseworthy: That is gross. That is not net. Incentives year over year for many of those units that turned have been pretty consistent.

Speaker #3: So if we looked at incentives , it would not look very different

Matt Kornack: Okay.

Dale Noseworthy: If we looked at incentives, it would not look very different.

Speaker #1: Okay . And , , mark to markets stable . So presumably even though you're pushing through rents , it seems like you're getting some market rent growth .

Matt Kornack: Okay. Mark-to-market's stable, so presumably, even though you're pushing through rents, it seems like you're getting some market rent growth in different segments of the market. Do you have, with your crystal ball, and I understand we're not going to hold you to this, but have a sense as to what the cadence is going to be in terms of trajectory of market rents in Atlantic Canada versus maybe what you'd expect over the next couple of years in Ontario and Alberta?

Speaker #1: , in , in different segments of the market . , do you have with your crystal ball ? And I , we're not going to hold you to this , but have a sense as to what the cadence is going to be .

Speaker #1: , in terms of trajectory of market rents in Atlantic Canada versus maybe what you would expect over the next couple of years in Ontario and Alberta

Speaker #2: And kind of we're all kind of shaking our heads thinking we didn't I can't really come up with an answer for that one .

Phil Fraser: We're all kind of shaking heads thinking we didn't I can't really come up with an answer for that one, Matt.

Speaker #2: Matt .

Speaker #1: I mean , I bass is the hope that , , while Atlantic Canada maybe is normalizing and mark to markets are being achieved , that that Ontario and Alberta will be turning in the opposite direction and you'll be pretty stable from here on out at these pretty good .

Matt Kornack: Is the hope that while Atlantic Canada maybe is normalizing and mark-to-markets are being achieved that Ontario and Alberta will be turning in the opposite direction and you'll be pretty stable from here on out at these pretty good-

Speaker #2: I agree with that .

Dale Noseworthy: Yes.

Phil Fraser: I agree with that.

Speaker #1: Yes . Okay . Low , low to mid single digits . , NOI growth . , yes . I won't I won't ask you to , , to delve any further into the future .

Dale Noseworthy: Yes.

Matt Kornack: Okay. Low to mid-single digits NOI growth.

Dale Noseworthy: Yes.

Matt Kornack: Okay. I won't ask you to delve any further into the future.

Speaker #2: I mean , in fairness , some of those , some weeks we actually see that in Alberta or Ontario that they turn positive .

Phil Fraser: In fairness, we actually see that in Alberta or Ontario, that they turn positive. Consistently month-over-month, not there yet. Some weeks they do, depending on what is actually being released.

Speaker #2: , but consistently month over month , not there yet , but some weeks they do , depending on what is actually , , being released

Speaker #1: Okay . Fair enough . Thanks

Matt Kornack: Okay. Fair enough. Thanks.

Speaker #4: As a reminder , if you wish to ask a question , please press star one . You now have a question from Jean Wilkinson with CIBC .

Operator 2: As a reminder, if you wish to ask a question, please press star one. You now have a question from Dean Wilkinson with CIBC. Please go ahead.

Operator: As a reminder, if you wish to ask a question, please press star one. You now have a question from Dean Wilkinson with CIBC. Please go ahead.

Speaker #4: Please go ahead

Speaker #5: Thank you . , morning , everybody . , Phil , maybe just a question . More on the supply or potential supply response to all that activity that is going to happen .

Dean Wilkinson: Thank you. Morning, everybody. Phil, maybe just a question more on the supply or potential supply response to all that activity that is going to happen in Atlantic Canada. If you consider the market balanced, maybe. Is there enough juice for developers or yourself to put new shovels in the ground and build something? I look at Eventide, maybe it's a little on the higher end, but how do you think that dynamic looks going forward? Are cost pressures coming down, or would a spate of construction actually start to push things up and you see an inflationary spiral there and that ultimately flows through to rents as well?

Speaker #5: , in Atlantic Canada , if you consider the market balanced , maybe , , how is all this like , is there enough juice for developers or yourself to , to put new shovels in the ground and build something ?

Speaker #5: I mean , I look at Eventide , maybe it's a little on the higher end , but how do you think that dynamic looks going forward or cost pressures coming down ?

Speaker #5: Or would a spate of construction actually start to push things up ? And , you know , you see an inflationary spiral there .

Speaker #5: And ultimately flows through to rents as well

Speaker #2: , I think the supply and this is only really my opinion is that it's going to get tighter over the next couple of years .

Phil Fraser: I think the supply, and this is only really my opinion, is that it's going to get tighter over the next couple of years until we get adjustments and more sort of contractors come into this market if the demand is truly there on the sort of the building out of housing. A lot of the labor is going to be concentrated on the defense, sort of the non-residential side of it. That basically even the hospital, for the last 2 years, they've been just pouring the concrete basement, the underground, and it's really just starting to come out, and then that's when you get all the trades moving in that have to get work in there. I just see that the labor side of it is still very tight in Halifax in particular. The other markets, not so much.

Speaker #2: , until we get a and more sort of contractors come into this market . If the demand is truly there for on the sort of the building out of , of housing , you know , a lot of the labor is going to be concentrated on the defense , sort of the non-residential side of it .

Speaker #2: , you know , that basically even the hospital , I mean , for the last two years they've been just pouring the sort of the concrete basement , the underground .

Speaker #2: And it's really just starting to come out. And then that's when you get all the trades moving in that have to get work in there.

Speaker #2: So , , I just see that the labor side of it is still very tight . , in Halifax in particular . The other markets , not so much .

Speaker #2: And it depends . And there's going to be real opportunities . Maybe , maybe in a sort of like a Fredericton or , or a Saint John and , and then the one market that is undersupplied is Saint John's , Newfoundland .

Phil Fraser: It depends, and there's going to be real opportunities maybe in a sort of like a Fredericton or a Saint John, and then the one market that is undersupplied is Saint John's, Newfoundland. That's really what I see. Eventually, once everything starts basically coming together, we're going to need more housing across metro here in Halifax. If you look at, and you read the papers, there's already slowdowns in Toronto, Kitchener, Waterloo, maybe not so much in Alberta, but we're going to need some housing in Ontario as well.

Speaker #2: , so that's really what I , I see , but eventually , , once this , everything starts , , basically coming together , we're going to need more housing across , , metro here in Halifax .

Speaker #2: And if you look at and you read the papers , there's already slowdowns in Toronto , Kitchener-Waterloo , maybe not so much in Alberta , but we're going to need some housing .

Speaker #2: , in Ontario as well

Speaker #6: So they'll , they'll , in all likelihood , as

Dean Wilkinson: They'll, in all likelihood, as history has been kind of chasing that after the demand comes in and that's probably going to put some pressures there. Okay. That's good. Thanks.

Speaker #5: History has been kind of chasing that , , after the demand comes in and that's probably going to put some pressures there . , okay .

Speaker #5: That's good . Thanks .

Speaker #2: Thank you

Phil Fraser: Thank you.

Speaker #4: There are no further questions at this time . So I will now turn the call over to Philip Fraser for closing remarks . Please continue .

Operator 2: There are no further questions at this time. I will now turn the call over to Philip Fraser for closing remarks. Please continue.

Operator: There are no further questions at this time. I will now turn the call over to Philip Fraser for closing remarks. Please continue.

Speaker #2: Once again, thank you for participating and listening to our Q2 conference call today. We look forward to reporting Q3 financial results on November 4th.

Phil Fraser: Once again, thank you for participating and listening to our Q2 conference call today. We look forward to reporting Q3 financial results on 4 November 2026.

Speaker #2: 2026 .

Operator 2: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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