Q2 2026 CT Real Estate Investment Trust Earnings Call

August 11, 2026

Operator: Thank you for standing by. My name is Jonathan, and I will be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q2 2026 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star one one on your telephone keypad. To withdraw your question, simply press star one one again. The speakers on today's call are Kevin Salsberg, President and Chief Executive Officer of CT REIT, Jodi Shpigel, Senior Vice President, Real Estate, and Lesley Gibson, Chief Financial Officer. Today's discussion contains information that may constitute forward-looking information within the meaning of applicable securities laws.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star 1-1 on your telephone keypad.

Speaker #1: To withdraw your question, simply press star 11 again. The speaker's on today's call are Kevin Salzberg, president, and chief executive officer of CT REIT; Jody Spiegel, senior vice president, real estate and Leslie Gibson, chief financial officer.

Speaker #1: Today's discussion contains information that may constitute forward-looking information within the meaning of applicable securities laws. Although CT REIT believes that the forward-looking information in today's discussion is based on information estimates and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information.

Operator: Although CT REIT believes that the forward-looking information in today's discussion is based on information, estimates, and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information. For information on these material risks, uncertainties, factors, and assumptions, please see the REIT's Q2 2026 and full year 2025 MD&A, as well as the 2025 AIF, which are available on the website and filed on SEDAR+. The REIT does not undertake to update any forward-looking information, whether written or oral, except as is required by applicable laws. Now I'd like to turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin?

Speaker #1: For information on these material risks, uncertainties, factors, and assumptions please see the REIT's second quarter 2026 and full year 2025 MDNA as well as the 2025 AIF, which are available on the website and filed on CDAR+.

Speaker #1: The REIT does not undertake to update any forward-looking information, whether written or oral, except as is required by applicable laws. And now I'd like to turn the call over to Kevin Salzberg, president and chief executive officer of CT REIT.

Speaker #1: Kevin?

Speaker #2: Thank you, Jonathan. Good morning, everyone, and thank you for joining us on our call today. CT REIT delivered another solid quarter in Q2, reflecting the strength and resilience of our portfolio and the disciplined execution of our strategy.

Kevin Salsberg: Thank you, Jonathan. Good morning, everyone, and thank you for joining us on our call today. CT REIT delivered another solid quarter in Q2, reflecting the strength and resilience of our portfolio and the disciplined execution of our strategy. Our objective remains unchanged: to be Canada's premier net lease REIT by delivering strong risk-adjusted returns, portfolio stability, and reliable, durable, and growing distributions for our unitholders. During the second quarter, we continued to advance that objective through a combination of strong operating performance, strategic investments, advancing our development activity, and prudent capital management. From an operating perspective, our results once again demonstrated the durability of our business model. Our portfolio remains substantially fully occupied, and we continue to successfully address upcoming lease maturities. Same-property NOI, including the benefits of our intensification program, grew 2.5%.

Speaker #2: Our objective remains unchanged: to be Canada's premier net lease REIT by delivering strong, risk-adjusted returns, portfolio stability, and reliable, durable, and growing distributions for our uniholders.

Speaker #2: During the second quarter, we continued to advance that objective through a combination of strong operating performance, strategic investments, advancing our development activity, and prudent capital management.

Speaker #2: From an operating perspective, our results once again demonstrated the durability of our business model. Our portfolio remains substantially fully occupied, and we continue to successfully address upcoming lease maturities.

Speaker #2: Same property NOI, including the benefits of our intensification program, grew 2.5%. AFFO per unit on a diluted basis also increased 2.5% year over year, while overall NOI increased 4.8%.

Kevin Salsberg: AFFO per unit on a diluted basis also increased 2.5% year-over-year, while overall NOI increased 4.8%. We were also active on the growth front during the quarter. In addition to completing a CAD 13 million vend-in in St. Catharines, Ontario, we closed approximately CAD 76 million of previously announced investments and developments that added more than 230,000 square feet of incremental GLA to the portfolio. Jodi will discuss these investments in greater detail in a moment, but these activities demonstrate our ability to continue growing through a mix of acquisitions, developments, and intensifications while remaining focused on opportunities that complement our existing portfolio and generate attractive long-term returns. Another highlight during the quarter was the successful issuance of CAD 300 million of Series K unsecured debentures. This transaction allowed us to refinance maturing debt, extend our debt maturity profile, and further strengthen our financial flexibility.

Speaker #2: We were also active on the growth front during the quarter. In addition to completing a $13 million vend-in in St. Catharines, Ontario, we closed approximately $76 million of previously announced investments and developments that added more than 230,000 square feet of incremental GLA to the portfolio.

Speaker #2: Jody will discuss these investments in greater detail in a moment, but these activities demonstrate our ability to continue growing through a mix of acquisitions, developments, and intensifications, while remaining focused on opportunities that complement our existing portfolio and generate attractive long-term returns.

Speaker #2: Another highlight during the quarter was the successful issuance of $300 million of Series K unsecured debentures. This transaction allowed us to refinance maturing debt, extend our debt maturity profile, and further strengthen our financial flexibility.

Speaker #2: As Leslie will describe, we remain well-positioned to fund our development pipeline and pursue future investment opportunities as they arise. Finally, as we previously disclosed, our board recently approved a $3.5% increase in our monthly distributions which took effect in the quarter.

Kevin Salsberg: As Leslie will describe, we remain well-positioned to fund our development pipeline and pursue future investment opportunities as they arise. Finally, as we previously disclosed, our board recently approved a 3.5% increase in our monthly distributions, which took effect in the quarter. The increase is supported by our conservative AFFO payout ratio and marks another step in CT REIT's long-term track record of distribution growth and value creation for our unitholders. Overall, we were pleased with our performance in the quarter and remain confident in the outlook for the business. Our high-quality portfolio, strong relationship with Canadian Tire, ability to source strategic investments, and conservative balance sheet continues to position CT REIT well for the future growth. With that, I will turn the call over to Jodi to discuss our investment, development, and leasing activities in more detail. Jodi?

Speaker #2: The increase is supported by our conservative AFFO payout ratio and marks another step in CT REIT's long-term track record of distribution growth and value creation for our unitholders.

Speaker #2: Overall, we were pleased with our performance in the quarter, and remain confident in the outlook for the business. Our high-quality portfolio, strong relationship with Canadian Tire, ability to source strategic investments, and conservative balance sheet continue to position CT REIT well for the future growth.

Speaker #2: With that, I will turn the call over to Jody to discuss our investment, development, and leasing activities in more detail. Jody?

Speaker #3: Thanks, Kevin, and good morning, everyone. As Kevin noted, and as highlighted in our press release yesterday, we were active on the investment front again this quarter, sourcing a new investment while closing on previously announced transactions.

Jodi Shpigel: Thanks, Kevin, and good morning, everyone. As Kevin noted, and as highlighted in our press release yesterday, we were active on the investment front again this quarter, sourcing a new investment while closing on previously announced transactions. During the quarter, we completed a CAD 13 million vend-in of a Canadian Tire store and Canadian Tire Gas+ gas bar in St. Catharines, Ontario. The property is well located in a strong retail node, represents approximately 52,400 square feet of incremental GLA and is expected to earn a going-in yield of 6.9%. We also closed on approximately CAD 76 million of previously announced investments during the quarter, which together added over 232,000 square feet of incremental GLA to the portfolio.

Speaker #3: During the quarter, we completed a $13 million divestment of a Canadian Tire store and Canadian Tire Gas+ part in St. Catharines, Ontario.

Speaker #3: The property is well-located in a strong retail node, represents approximately 52,400 square feet of incremental GLA, and is expected to earn a going-in yield of 6.9%.

Speaker #3: We also closed on approximately $76 million of previously announced investments during the quarter, which together added over $232,000 square feet of incremental GLA to the portfolio.

Speaker #3: These included the third-party acquisition of Centre 50, a Canadian Tire anchored multi-tenant property in Edmonton, Alberta, the acquisition of Marché Rosemer, a multi-tenant retail property adjacent to our existing Canadian Tire store in Rosemer, Quebec, and the acquisition of land adjacent to an existing CT REIT-owned property in Oliver, British Columbia.

Jodi Shpigel: These included the third-party acquisition of Centre 50, a Canadian Tire-anchored multi-tenant property in Edmonton, Alberta, the acquisition of Marché Rosemère, a multi-tenant retail property adjacent to our existing Canadian Tire store in Rosemère, Quebec, and the acquisition of land adjacent to an existing CT REIT-owned property in Oliver, British Columbia. In addition, we completed intensifications of three existing Canadian Tire stores in Penticton, British Columbia, Burlington, Ontario, and Valleyfield, Quebec. During the quarter, we also continued to advance the Canada Square Toronto office retrofit project. As we have previously discussed, this project is a complete modernization of two buildings at our Canada Square complex, 2180 and 2200 Yonge Street, and includes refurbishing 680,000 square feet of GLA, over 90% of which has been leased. The project started in Q4 2025 and is running on schedule.

Speaker #3: In addition, we completed intensifications of three existing Canadian Tire stores in Penticton, British Columbia, Burlington, Ontario, and Valley Field, Quebec. During the quarter, we also continue to advance the Canada Square Toronto office retrofit project.

Speaker #3: As we have previously discussed, this project is a complete modernization of two buildings at our Canada Square complex, 2180 and 2200 Young Street, and includes refurbishing 680,000 square feet of GLA, over 90% of which has been leased.

Speaker #3: The project started in Q4 2025 and is running on schedule. The upgrades to the curtain wall systems in both 2180 and 2200 Yonge Street are underway, and the upgrades and refresh of internal facilities at 2180 Yonge are almost completed.

Jodi Shpigel: The upgrades to the curtain wall systems in both 2180 and 2200 Yonge Street are underway, and the upgrades and refresh of internal facilities at 2180 Yonge are almost completed. As well, the work on the new elevator systems has commenced. To date, approximately 17% of the project's budget has been spent. Looking ahead, our development pipeline remains healthy. Including Canada Square, we currently have nine projects at various stages of progress. These developments represent total development costs of approximately CAD 354 million, of which approximately CAD 191 million has been spent to date. We expect to invest roughly CAD 66 million over the next 12 months to advance these projects. As at quarter end, we had committed lease agreements for 488,000 square feet, representing 94.2% of total GLA under development, of which 91.6% has been leased to Canadian Tire.

Speaker #3: As well, the work on the new elevator systems has commenced. To date, approximately 17% of the project’s budget has been spent. Looking ahead, our development pipeline remains healthy.

Speaker #3: Including Canada Square, we currently have nine projects at various stages of progress. These developments represent total development costs of approximately $354 million, of which approximately $191 million has been spent to date.

Speaker #3: We expect to invest roughly $66 million over the next 12 months to advance these projects. As at quarter end, we had committed lease agreements for 488,000 square feet representing 94.2% of total GLA underdevelopment, of which 91.6% has been leased to Canadian Tire.

Speaker #3: Turning to leasing, during the second quarter, CT REIT completed nine Canadian Tire store lease renewals. On a blended basis, renewal leasing activity for the portfolio totaled over $618,000 square feet, at a 10.4% increase.

Jodi Shpigel: Turning to leasing, during Q2, CT REIT completed nine Canadian Tire store lease renewals. On a blended basis, renewal leasing activity for the portfolio totaled over 618,000 square feet at a 10.4% increase.

Speaker #3: Canadian Tire store renewals accounted for approximately $515,000 square feet at a 10.9% increase, while other tenancies represented roughly $103,000 square feet at an 8.3% increase.

Jodi Shpigel: Canadian Tire store renewals accounted for approximately 515,000 square feet at a 10.9% increase, while other tenancies represented roughly 103,000 square feet at an 8.3% increase. As of quarter end, we maintained a long weighted average lease term for the portfolio with our leases with Canadian Tire averaging 7.1 years and our occupancy rate remained robust at 99.5%. I will now turn it over to Leslie to discuss our financial results. Leslie?

Speaker #3: As of quarter end, we maintained a long-waited average lease term for the portfolio, with our leases with Canadian Tire averaging 7.1 years, and our occupancy rate remained robust at 99.5%.

Speaker #3: I will now turn it over to Leslie to discuss our financial results. Leslie?

Speaker #4: Thanks, Jody, and good morning, everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in the second quarter. Once again, our results demonstrate the steady growth and resilience of our portfolio.

Lesley Gibson: Thanks, Jody, and good morning, everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in Q2. Once again, our results demonstrated the steady growth and resilience of our portfolio. Same property net operating income, which includes the impact of intensifications, grew by 2.5% in the quarter compared to Q2 2025. These increases reflect the contractual rent escalations in many of our Canadian Tire leases, as well as the contributions from the intensification projects completed in 2025 and 2026. Overall, NOI grew by 4.8% quarter-over-quarter, representing an increase of approximately CAD 5.8 million. This strong performance was supported by the same property NOI that I just referenced and the impacts of the properties acquired and developed in 2025 and 2026. In Q2, general administrative expenses as a percentage of property revenue were 4.4% compared to 4% in the same period last year.

Speaker #4: Same property, net operating income, which includes the impact of intensifications, grew by 2.5% in the quarter compared to Q2, 2025. These increases reflect the contractual rent escalations in many of our Canadian Tire leases, as well as the contributions from the intensification projects completed in 2025 and 2026.

Speaker #4: Overall, NOI grew by 4.8% quarter over quarter, representing an increase of approximately 5.8 million. This strong performance was supported by the same property NOI that I just referenced, and the impacts of the property's acquired and developed in 2025 and 2026.

Speaker #4: In the second quarter, general administrative expenses as a percentage of property revenue were 4.4% compared to 4% in the same period last year. The increase was mainly due to fair value adjustments on the unit-based awards and the timing of the divert income tax provision.

Lesley Gibson: The increase was mainly due to fair value adjustments on the unit-based awards and the timing of the deferred income tax provision. Excluding the fair value adjustment, G&A as a percentage of property revenue was 3.6% compared to 3.4% in the prior year. The fair value adjustment on investment properties was CAD 44.3 million in Q2, compared to CAD 23.6 million in the prior year. This gain was driven primarily by contractual rent increases, renewal activity completed in the quarter, and changes to investment metrics for certain retail industrial properties based on market activity and recently completed external appraisals. In Q2, AFFO per unit on a diluted basis was 32.6 cents, up 2.5% compared to Q2 of last year. AFFO on a diluted basis was 35.3 cents per unit, up 3.2% compared to Q2 2025.

Speaker #4: Excluding the fair value adjustment, G&A is a percentage of property revenue was 3.6% compared to 3.4% in the prior year. The fair value adjustment on investment properties was 44.3 million in the second quarter, compared to 23.6 million in the prior year.

Speaker #4: This gain was driven primarily by contractual rent increases, renewal activity completed in the quarter, and changes to investment metrics for certain retail industrial properties based on market activity and recently completed external appraisals.

Speaker #4: In the second quarter, AFFO per unit on a diluted basis was 32.6 cents, up 2.5% compared to the second quarter of last year. FFO on a diluted basis was 35.3 cents per unit, up 3.2% compared to Q2 2025.

Speaker #4: Growth in FFO and AFFO primarily reflects the increase in NOI, partially offset by increases in interest expense. Cash distributions paid in the quarter increased 2.5% compared to Q2, 2025 to 23.7 cents per unit, reflecting the higher monthly distribution rate that became effective in July '25.

Lesley Gibson: Growth in FFO and AFFO primarily reflects the increase in NOI, partially offset by increases in interest expense. Cash distributions paid in the quarter increased 2.5% compared to Q2 2025 to 23.7 cents per unit, reflecting the higher monthly distribution rate that became effective in July 2025. The AFFO payout ratio for Q2 was 72.7%, stable from the 72.6% in the same period last year. Turning to the balance sheet, our interest coverage ratio for Q2 was 3.49 times compared to 3.55 times in Q2 of 2025. During the quarter, we completed the issuance of CAD 300 million of Series K unsecured debentures, which carry a five-and-a-half year term at a coupon of 3.57%. The net proceeds were used to repay the CAD 200 million of Series D unsecured debentures that matured on 1 June 2026, and to pay down amounts owing under our credit facilities.

Speaker #4: The AFFO payout ratio for Q2 was 72.7%, stable from the 72.6% in the same period last year. Turning to the balance sheet, our interest coverage ratio for the second quarter was 3.49 times, compared to 3.55 times in Q2 of 2025.

Speaker #4: During the quarter, we completed the issuance of $300 million of Series K unsecured debentures, which carry a 5.5-year term at a coupon of 3.57%.

Speaker #4: The net proceeds were used to repay the $200 million of Series D unsecured debentures that matured on June 1, 2026, and to pay down amounts owing under our credit facilities.

Speaker #4: Even with these refinancing activities, our total indebtedness to EBITDA fair value improved to 6.56 times at June 2026, compared to 6.77 times at the end of 2025.

Lesley Gibson: Even with these refinancing activities, our total indebtedness to EBITDA fair value improved to 6.56 times at 26 June, compared to 6.77 times at the end of 2025, as earning growth outpaced the increase in debt. With respect to liquidity, we ended Q2 with approximately CAD 12 million of cash on hand for a total of approximately CAD 312 million available to us as our committed CAD 300 million bank credit facility was undrawn at quarter end. In addition, we had roughly CAD 187 million available on our CAD 300 million uncommitted facility with Canadian Tire. Our strong balance sheet, conservative credit metrics, and ample liquidity provide us with both a strong foundation as well as substantial financial flexibility to fund future growth initiatives. With that, I will turn back the call to the operator for any questions.

Speaker #4: As earnings growth outpaced the increase in debt. With respect to liquidity, we ended Q2 with approximately $12 million of cash on hand, for a total of approximately $312 million available to us, as our committed $300 million bank credit facility was undrawn at quarter end.

Speaker #4: In addition, we had roughly $187 million available on our $300 million uncommitted facility with Canadian Tire. Our strong balance sheet, conservative credit metrics, and ample liquidity provide us with both a strong foundation, as well as substantial financial flexibility to fund future growth initiatives.

Speaker #4: And with that, I will turn back the call to the operator for any questions.

Operator: Certainly. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. Our first question comes from the line of Tal Woolley from CIBC Capital Markets. Your question please.

Speaker #1: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again.

Speaker #1: Our first question comes in the line of Tyle Willie from CIBC Capital Markets. Your question, please.

Speaker #5: Hey, good morning. Just wondering if you can speak at all to sort of any deal flow that you've seen outside of Canadian Tire. Has there been a lot to look at, or just a little bit?

Tal Woolley: Hey, good morning. Just wondering if you can speak at all to any deal flow that you have seen outside of Canadian Tire. Has there been a lot to look at, a little bit, and what has been available to put in front of you of late?

Speaker #5: And what's sort of been available to like, put in front of you of like?

Speaker #2: Hey, Tyle. Good morning. I'd say on a marketed basis, there's not much out there right now that for us would be on strategy or of interest.

Kevin Salsberg: Hey, Tal, good morning. I would say on a marketed basis, there is not much out there right now that for us would be on strategy or of interest. Obviously, we have had discussions ongoing with market participants about the type of assets we acquire, which from a strategic perspective would be Canadian Tire stores, single-tenant properties, strategic assets or assets that are adjacent to existing sites we own, and that kind of fits the description of a number of the acquisitions we made in the quarter. Nothing specific for us to speak to on today's call, but obviously there is a lot of activity broadly in the market right now and certainly there could be some subset of assets that would be of interest to us from some of those opportunities. I think we will just keep at it and we will see where the year takes us.

Speaker #2: Obviously, we've had ongoing discussions with market participants about the type of assets we acquire, which, from a strategic perspective, would be Canadian Tire stores, single-tenant properties, strategic assets, or assets that are adjacent to existing sites we own. That kind of fits the description of a number of the acquisitions we made in the quarter.

Speaker #2: Nothing specific for us to speak to on today's call, but obviously, there's a lot of activity broadly in the market right now, and certainly, there could be some subset of assets that would be of interest to us from some of those opportunities.

Speaker #2: So I think we'll just keep at it, and we'll see where the year takes us.

Speaker #5: And maybe you can just refresh us on like, what sort of size or what sort of quantity of maybe of REIT-suitable properties Canadian Tire still holds?

Tal Woolley: Maybe you can just refresh us on what sort of size or what sort of quantity of maybe REIT suitable properties Canadian Tire still holds?

Speaker #2: I'd say there's probably between 10 to 15 assets on the Canadian Tire balance sheet that would meet the REITs investment criteria. So over time, certainly, those could be possible candidates for what we call vendants, so we keep our mind turned to that.

Kevin Salsberg: I would say there are probably between 10 to 15 assets on the Canadian Tire balance sheet that would meet the REIT's investment criteria. So over time, certainly those could be possible candidates for what we call vend-ins. So we keep our mind turned to that. We obviously have a number of different growth levers between our development pipeline, those vend-ins, and third-party opportunities, and pull on the appropriate lever, as desirable or needed, when the time comes. So, we are also in discussion with Canadian Tire about some of those.

Speaker #2: We obviously have a number of different growth levers between our development pipeline, those vendants, and third-party opportunities, and pull on the appropriate lever as desirable or needed.

Speaker #2: When the time comes. So we are also in discussion with Canadian Tire about some of those.

Speaker #5: Okay. And then can you just talk a little bit about your, sort of, more into the teeth of doing a lot of Canadian Tire renewals or lease renewals at this point in time?

Tal Woolley: Okay. Can you just talk a little bit about, you are more into the teeth of doing a lot of Canadian Tire renewals or lease renewals at this point in time. Is that something you guys sit down to tackle two times a year, four times a year? Can you just talk a little bit about the process of that, given that there are normally so many to do?

Speaker #5: Is that something like you guys sit down to tackle like two times a year, four times a year, like how can you just talk a little bit about the process of that, given that they're normally so many to do?

Speaker #2: Sure. I mean, under the lease, there's a period at which they will have to notify us of their intention to renew or not.

Kevin Salsberg: Sure. Under the lease, there is a period at which they will have to notify us of their intention to renew or not. That is the governor in terms of the timing of the process or where it starts, and typically that is around 18 months prior to lease expiry. We have a pretty good line of sight to where things are going from that perspective. The renewals that we announced this quarter pretty much deal with those up to the end of the first half of 2027. Obviously, once we receive their notification or intention with respect to those renewal options, we then sit down, do a little work on market context, market rents, renewal terms, and anything else that needs to be discussed, to lead to ultimately the appropriate lease documentation to then codify the renewal.

Speaker #2: So that is the sort of governor in terms of the timing of the process or where it starts. And typically, that's around 18 months prior to lease expiry.

Speaker #2: So, we have a pretty good line of sight to where things are going from that perspective. The renewals that we announced this quarter pretty much deal with those up to the end of the first half of 2027.

Speaker #2: Obviously, once we receive their notification or intention with respect to those renewal options, we then sit down, do a little work on market context, market rents, renewal terms, and anything else that needs to be discussed.

Speaker #2: ...to lead to, ultimately, the appropriate lease documentation to then codify the renewal.

Speaker #5: Okay. And then lastly, like the leverage metrics really remain low relative to most of the Canadian real estate universe. We've been seeing some other issuers manage to see credit rating upgrades.

Tal Woolley: Okay. Lastly, the leverage metrics really remain low relative to most of the Canadian real estate universe. We have been seeing some other issuers manage to see credit rating upgrades. I am just wondering, is that something you have been in discussion with the credit rating agencies at any point?

Speaker #5: I'm just wondering, like, is that something you've been in discussion with, with the credit rating agencies at any point?

Speaker #4: I mean, we're really happy we're at the sort of the metric is overall. I think maybe one of the different parts is that our credit rating is linked to Canadian Tires, as noted in the DBRS report.

Lesley Gibson: We are really happy where the metric is overall. I think maybe one of the different parts is that our credit rating is linked to Canadian Tire’s, as noted in the DBRS report. We are happy with the credit metrics. They are very positive. I think really our ratings are linked to that of Canadian Tire, so there would have to be a broader discussion. That is something that we discuss with the rating agencies on a regular basis when we meet with them. We sort of are where we are, and if things change for Canadian Tire, then there is a possibility right now that things could change for us.

Speaker #4: So we're happy with the credit metrics. They're very positive. But I think really our rates are linked to that of Canadian Tire. So there'd have to be a broader discussion.

Speaker #4: But yeah, that is something that we discussed with the rating agencies on a regular basis. When we meet with them. But we sort of are where we are.

Speaker #4: And if things change for Canadian Tire, then there's a possibility, right now, that things could change for us.

Speaker #5: Got it. Okay. Thanks very much, everybody.

Tal Woolley: Got it. Okay. Thanks very much, everybody.

Speaker #2: Thank you.

Kevin Salsberg: Thank you.

Speaker #1: Thank you. And our next question comes in the line of Sam Damiani from TD Callan. Your question, please.

Operator: Thank you. Our next question comes from the line of Sam Damiani from TD Cowen. Your question please.

Speaker #6: Thanks. And good morning, everyone. Apologize if this was asked already. I was distracted by some other activity in the REIT sector this morning. But just on the, I guess, the new investments and now it's just one is there any change in your outlook for the year or let's say the next year or so in terms of the velocity of new investments that could be sourced and secured for the REIT?

Sam Damiani: Thanks, and good morning, everyone. Apologize if this was asked already. I was distracted by some other activity in the REIT sector this morning. Just on the, I guess the new investments announcement, just one. Is there any change in your outlook for the year, or let's say the next year or so, in terms of the velocity of new investments that could be sourced and secured for the REIT?

Speaker #2: Good morning, Sam. We don't typically speak to forward expectations on the investment pipeline. I would say in this market, we're being selective. Retail fundamentals are great, but what that's caused in the investment market is a lot of competition.

Kevin Salsberg: Good morning, Sam. We don't typically speak to forward expectations on the investment pipeline. I would say in this market, we're being selective. Retail fundamentals are great. What that's caused in the investment market is a lot of competition and elevated pricing. For us, certainly we have been pretty good at sticking to our knitting with respect to the type of assets we're interested in acquiring. We're going to continue focusing on that type of asset. I mentioned in the previous answer certainly some of the broader market activity and the M&A we're seeing could bring about some opportunities for us, but it's nothing that we have anything to say about at this point in time.

Speaker #2: And an elevated pricing. And so for us, certainly, we have been pretty good at sticking to our knitting with respect to the type of assets we're interested in acquiring.

Speaker #2: We're going to continue focusing on that type of asset. And I mentioned in the previous answer certainly some of the broader market activity and the M&A we're seeing could bring about some opportunities for us, but it's nothing that we have anything to say about at this point in time.

Speaker #6: Okay. Understood. And on the Saint Catherine's acquisition, is there anything more about that asset you could share in terms of when it was last expanded or renovated?

Sam Damiani: Okay, understood. On the St. Catharines acquisition, is there anything more about that asset you could share in terms of when it was last expanded or renovated? Anything unique about the lease there? I mean, the 6.9% cap rate seems to indicate a yield that hasn't moved with the market over the last year, let's say.

Speaker #6: Anything unique about the lease there, I mean, the 6.9% cap rate? Seems to indicate a yield that hasn't moved with the market over the last year, let's say.

Speaker #2: Yeah, I think the first thing I'll say is we've been talking to Canadian Tire about this asset for some time and kind of locked in on the pricing a little while back.

Kevin Salsberg: Yeah, I think the first thing I'll say is we've been talking to Canadian Tire about this asset for some time and kind of locked in on the pricing a little while back. The asset has not been expanded anytime recently, although it is on format. So, great site, just a kitty corner from Pen Centre. St. Catharines is a strong market for Canadian Tire, so for us, it totally fit with our portfolio and was a desirable asset.

Speaker #2: The asset has not been expanded any time recently, although it is on format. So great site just Kitty Corner from Penn Center. Saint Catherine's is a strong market for Canadian Tire.

Speaker #2: So for us, it totally fit with our portfolio and was a desirable asset.

Speaker #6: Yeah, great location for sure. And just last one for me: noting the IFRS NAV is up about 7.5% year over year, I'm just trying to think about how that— I mean, I guess the inputs are obviously same property NOI growth.

Sam Damiani: Yeah, great location for sure. Just last one for me. Noting the IFRS NAV is up about 7.5% year over year. Just trying to think about how that, I guess the inputs, obviously same property NOI growth. You've got about probably a 1% tailwind from the discount rate being reduced, maybe 2%. Obviously, balance sheet leverage. Are there other factors that are contributing to the NAV growth besides those obvious ones from the MD&A?

Speaker #6: You've got about probably a 1% tailwind from the discount rate being reduced, maybe 2%. Obviously, you've balance sheet leverage. But are there other factors that are contributing to the nav growth besides those obvious ones from the MDNA?

Kevin Salsberg: Well, the lease renewals that we have affected over the last call 2 years would be part of the update to the discounted cash flow. We would have development completions tying into it, and then probably some broader future updates to cash flow assumptions would also play into it, Tim.

Speaker #2: Well, the lease renewals that we've affected over the last call to two years would be part of the upbeat to the discounted cash flow.

Speaker #2: We would have development completions tying into it. And then probably some broader future updates to cash flow assumptions would also play into it, Sam.

Speaker #6: Okay. And, Kevin, you mentioned lease renewals. Does that mean that your IFRS implicitly assumes some percentage of renewal or non-renewal, and then when the lease is actually renewed, that goes to 100% from 90%, or whatever it was assumed?

Sam Damiani: Okay. Kevin, you mentioned lease renewals. Does that mean that your IFRS implicitly assumes some percentage of renewal or non-renewal, and then, when the lease is obviously renewed, that goes to 100% from 90% or whatever it was assumed. Is that a value-adding event for your IFRS process?

Speaker #6: Is that a value adding event for your IFRS process?

Speaker #2: Yeah, we would always have a run-rate assumption on a percentage likelihood of lease renewal. I don't think we've changed that particular assumption. I think it's more around the rent uplifts and the rental rates that we hope to achieve when it comes time for renewal.

Kevin Salsberg: Yeah, we would always have a run rate assumption on a percentage likelihood of lease renewal. I do not think we have changed that particular assumption. I think it is more around the rent uplifts and the rental rates that we hope to achieve when it comes time for renewal.

Speaker #6: Okay. Very helpful. I'll turn it back and congrats on the great results.

Sam Damiani: Okay. Very helpful. I will turn it back, and congrats on the great results.

Speaker #2: Thank you.

Kevin Salsberg: Thank you.

Speaker #1: Thank you. And our next question comes in the line of Guliano Thornhill from National Bank. Your question, please.

Operator: Thank you. Our next question comes from the line of Giuliano Thornhill from National Bank. Your question please.

Speaker #5: Thanks, good morning, everyone. Just kind of wanted to ask about the pipeline earlier. Is that kind of represented or potential pipeline from CT? Is that representative of your existing portfolio right now, or is there anything like chunkier or like higher quality that's available there?

Giuliano Thornhill: Thanks. Good morning, everyone. Just kind of wanted to ask about the pipeline earlier. Is that kind of represented or potential pipeline from CT, is that representative of your existing portfolio right now, or is there anything like chunkier or higher quality that is available there? Could be available, I guess.

Speaker #5: Could be available, I guess.

Speaker #2: Yeah. I mean, we like to think of our existing portfolio as high quality. So I would say it's certainly fits with our existing asset base, primarily retail properties.

Kevin Salsberg: Well, we like to think of our existing portfolio as high quality. I would say it certainly fits with our existing asset base, primarily retail properties. One or two smaller non-retail, but I would say it looks pretty comparable to our existing assets.

Speaker #2: One or two smaller non-retail, but I would say it looks pretty comparable to our existing assets.

Speaker #5: Okay. And then, just following on that, with your leverage at pretty low levels, would you ever consider broadening out the investment opportunity set?

Giuliano Thornhill: Okay. Just following on that is, with your kind of leverage at pretty low levels, would you ever consider broadening out the investment opportunity set, like maybe initiating more development or just uptaking the investment capacity potentially?

Speaker #5: Like maybe initiating more development or, yeah, just uptaking the investments capacity potentially?

Speaker #2: Certainly. We like our balance sheet position, as it gives us a lot of financial flexibility and dry powder if we do find something that we like.

Kevin Salsberg: Certainly. We like our balance sheet position in that it gives us a lot of financial flexibility and dry powder if we do find something that we like. Development side, we are open to. The number of projects we have in our development pipeline has certainly shrunk over the last year or so, but the actual CAD dollar quantum is kind of similar with Canada Square. That is a big single investment that we are making in one of our assets. We are kind of still early days on that project, so we are trying to manage development exposure overall in the context of the total spend. Hope that answers your question, but we are open to doing more, but I think it has got to be on strategy and obviously financially attractive to us.

Speaker #2: On the development side, we're open to it. I mean, the number of projects we have in our development pipeline has certainly shrunk over the last year or so, but the actual dollar quantum is kind of similar.

Speaker #2: With Canada Square, that's a big single investment that we're making in one of our assets. And we're kind of still early days on that project.

Speaker #2: So we're trying to manage development exposure overall in the context of the total spend. I hope that answers your question, but we're open to doing more.

Speaker #2: But I think it's got to be on strategy and obviously financially attractive to us.

Speaker #5: Yeah, and then just lastly, on Canada Square, I think it was mentioned in the prepared remarks that around 75% of the project budget has been spent.

Giuliano Thornhill: Yeah. Just lastly on Canada Square, I think it was mentioned in the prepared remarks, around 75% of the project budget has been spent. I am assuming that is for phase 1. Is that a good kind of approximation for what phase 2 could look like, just in terms of modeling out future capital intensity for the business?

Speaker #5: I'm assuming that's for phase one. Is that a good kind of approximation for what phase two could look like, just in terms of modeling out future capital intensity for the business?

Jodi Shpigel: Good morning. Just to clarify, 17% of our-

Speaker #4: Good morning. Just to clarify, 17% of our budget, 17, yes. Because we're still we started in Q4, so we're still sort of in early days.

Giuliano Thornhill: Seventeen

Jodi Shpigel: budget. 17%, yes. We started in Q4, so we are still sort of in early days. The project itself, the retrofit will take till the end of 2028. So we are 17% spent as of now. No, it would not be reflective of any future phases. Those would be modeled separately and analyzed separately when the time comes.

Speaker #4: The project itself, they retrofit will take till the end of '28. So we're 17% spent as of now. And no, it would not be reflective of any future phases.

Speaker #4: Those would be modeled separately and analyzed separately when the time comes.

Speaker #5: So that's just phase one, correct?

Giuliano Thornhill: So that is just phase 1, correct?

Speaker #4: That's right. Yeah.

Jodi Shpigel: That is right. Yeah.

Speaker #5: Okay. And is there anything different about phase two, in terms of why it would be different, potentially?

Giuliano Thornhill: Okay. Is there anything different about phase 2 in terms of why would it be different potentially?

Jodi Shpigel: Yeah. Phase 2, when it comes along down the road, is the residential component of the future land area of Canada Square. Phase 1 is the office retrofit of the two existing office buildings. Phase 2 is everything else. They are completely different projects, different scope, budgets, timelines.

Speaker #4: Yeah. So phase two, when it comes along down the road, is the residential component of the future land area of Canada Square. So phase one is the office retrofit of the two existing office buildings.

Speaker #4: Phase two is everything else. So they're completely different projects, different scope budgets, timelines.

Speaker #5: And phase one, sorry.

Kevin Salsberg: Phase 1, we are, sorry.

Speaker #6: Yep.

Giuliano Thornhill: Yep.

Speaker #2: I was just going to say phase one, we're working with the existing buildings. Phase two would be ground up construction.

Kevin Salsberg: I was going to say, phase 1, we are working with the existing buildings. Phase 2 would be ground-up construction.

Giuliano Thornhill: Right. Yeah, a little different. The 17%, is there like a CAD dollar figure that you could disclose or approximation in your PUD value that has been outlaid there?

Speaker #5: Yeah. Little different. And then the 17%, is there like a dollar figure that you could disclose? Or approximation in your PED value that has been outlaid there?

Kevin Salsberg: We haven't given a specific number for the project, although we have said that at 100%, it's a little over CAD 200 million.

Speaker #2: We haven't given a specific number for the projects, although we have said that at 100%, it's a little over $200 million.

Speaker #5: Okay. All right. Thank you.

Giuliano Thornhill: Okay. All right. Thank you.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 1 1 on your telephone. Our next question comes from the line of Brad Sturges from Raymond James. Your question please.

Speaker #1: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our next question comes in the line of Brad Stearns from Raymond James.

Speaker #1: Your question, please.

Speaker #5: Hey, good morning. Just, I guess, on the new investment side, and you talked about the development pipeline ticking up a bit, how do you think that could evolve in terms of the retail intensification opportunities going forward?

Brad Sturges: Hey, good morning. Just, I guess, on the new investment side, you talked about the development pipeline shrinking a bit. How do you think that could evolve in terms of the retail intensification opportunities going forward? Do you think that there's some opportunities in the pipeline that could allow for new projects to start, or how should we think about that over the next few quarters?

Speaker #5: Do you think that there's some opportunities in the pipeline that could allow for a new project to start, or how should we think about that over the next few quarters?

Speaker #2: Yeah. So, we've talked about it a little bit over the past couple of calls, where the pace at which we're adding to the development pipeline has certainly slowed.

Kevin Salsberg: Yeah. We've talked about it a little bit over the past couple of calls where the pace at which we're adding to the development pipeline has certainly slowed, mostly related to the Canadian Tire related projects. We mentioned that one of the acquisitions in the quarter was a piece of land in the Okanagan Valley in British Columbia. For us, that is a future retail development opportunity unconnected to Canadian Tire. I would say we have a couple of those in the works. Canadian Tire certainly continues to invest in their store network. We're the beneficiary of that when it's on a REIT site or it's an opportunity to participate alongside of them.

Speaker #2: Mostly related to the Canadian Tire-related projects. We mentioned that one of the acquisitions in the quarter was a piece of land in the Okanagan Valley in British Columbia.

Speaker #2: So for us, that is a future retail development opportunity unconnected to Canadian tire. I would say we have a couple of those in the works.

Speaker #2: Canadian tire certainly continues to invest in their store network. We're the beneficiary of that when it's on a REIT site or it's an opportunity to participate alongside of them.

Speaker #2: But I think in the context of their True North strategy, certainly there's less focus on store development than in the last iteration of their formal strategy, which was called Better Connected, which really launched our outsized Canadian tire-related retail development spend for the last couple of years.

Kevin Salsberg: But I think in the context of their True North strategy, certainly there's less focus on store development than in the last iteration of their formal strategy, which was called Better Connected, which really launched our outsized Canadian Tire related retail development spend for the last couple of years. There'll still be opportunities, but probably to a lesser extent as we've had for the next few years, I anticipate.

Speaker #2: So they'll still be opportunities, but probably to a lesser extent as we've had. For the next few years, I anticipate.

Speaker #5: Okay. My other question would be, obviously, you were able to get the bond offering completed in the quarter and bond yields have kind of moved up since then.

Brad Sturges: Okay. My other question would be, obviously, you were able to get the bond offering completed in the quarter and bond yields have kind of moved up since then. I guess if you had to reprice that today, how much have the all-in costs moved since June?

Speaker #5: I guess if you had to reprice that today, how much have the all-in costs moved since June?

Lesley Gibson: The all-in cost probably about 35 basis points since June. So a little bit more, but definitely things have been more volatile and moving around. I think we're just happy to have that taken care of early on in the year.

Speaker #4: The all-in costs probably about 35 basis points sort of since June. So a little bit more, but definitely things have been more volatile and sort of moving around.

Speaker #4: So, I think we're just happy to have that one taken care of early on in the year.

Speaker #5: Perfect. Thank you.

Brad Sturges: Perfect. Thank you.

Speaker #2: Thank you.

Kevin Salsberg: Thank you.

Speaker #1: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press *11 on your telephone. Our next question comes from the line of Lon Kelmer from Desjardins.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 1 1 on your telephone. Our next question comes from the line of Lorne Kalmar from Desjardins. Your question, please.

Speaker #1: Your question, please.

Speaker #5: Thanks. Good morning. Just a quick one from me on the leasing side—and sorry if I missed it—but it looked like you guys did a pretty decent job in terms of getting the spreads on Canadian Tire stores, as I think we should anticipate by this point.

Lorne Kalmar: Thanks. Good morning. Just a quick one from me on the leasing side, and sorry if I missed it, but looked like you guys did a pretty decent job in terms of getting the spreads on Canadian Tire stores, as I think we should anticipate by this point. Just on the other leasing you guys did, I know last quarter, I think there was some flat rate renewals that happened that pulled the number down. But at 8%, it is still obviously pretty healthy, but a little bit below where we have seen some of your peers doing lease renewals. I was just wondering if you can give us a little bit of color around that and where you sort of think these will trend over the next 12 to 18 months.

Speaker #5: But just on the other leasing you guys did—I know last quarter, I think there were some flat-rate renewals that happened that pulled the number down.

Speaker #5: But at 8%, it’s still obviously pretty healthy, but a little bit below where we’ve seen some of your peers doing lease renewals. I was just wondering if you can give us a little bit of color around that, and where you sort of think these will trend over the next 12 to 18 months.

Speaker #2: Good morning, Lauren. So I guess the problem with our third-party renewal activity is in most quarters, it's pretty small. I mean, this was about $100,000 square feet.

Kevin Salsberg: Good morning, Lorne. I guess the problem with our third-party renewal activity is in most quarters, it's pretty small. This was about 100,000 square feet. Last quarter you mentioned that was skewed by some flat options that were exercised. I think this quarter there were some fixed rate options in there. There were also some shorter term lease renewals. It kind of just depends on what's in the mix of that smaller quantum of space being extended. I wouldn't read too much into it other than to say it fluctuates quarter to quarter.

Speaker #2: So last quarter, you mentioned that was skewed by some flat options that were exercised. I think this quarter, there were some fixed-rate options in there.

Speaker #2: There were also some shorter-term lease renewals, so it kind of just depends on what's in the mix of that—smaller quantum of space being extended.

Speaker #2: So I wouldn't read too much into it other than to say it fluctuates quarter to quarter.

Speaker #5: Fair enough. That's all I had. Thank you very much.

Lorne Kalmar: Fair enough. That's all I had. Thank you very much.

Speaker #2: Thank you.

Kevin Salsberg: Thank you.

Speaker #1: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Kevin Salzberg, president and CEO, for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Kevin Salsberg, President and CEO, for any further remarks.

Speaker #2: Thank you, Jonathan. And thank you all for joining us today. We look forward to speaking with you again in November after we release our Q3 results.

Kevin Salsberg: Thank you, Jonathan. Thank you all for joining us today. We look forward to speaking with you again in November after we release our Q3 results. Thank you.

Speaker #2: Thank you.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Q2 2026 CT Real Estate Investment Trust Earnings Call

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