Q2 2026 RFA Financial Inc Earnings Call

August 14, 2026

Speaker #1: Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to RFA Financial's second quarter 2026 results conference call.

Operator: Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to RFA Financial's Q2 2026 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 session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad.

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

Speaker #1: If you would like to withdraw your question, please press star, then the number 2 on your telephone keypad. Thank you. Ms. Heather Nickel, you may begin your conference.

Operator: If you would like to withdraw your question, please press star then the number 2 on your telephone keypad. Thank you. Ms. Heather Nikkel, you may begin your conference.

Operator: If you would like to withdraw your question, please press star then the number two on your telephone keypad. Thank you. Ms. Heather Nikkel, you may begin your conference.

Speaker #2: Thank you, operator, and good afternoon, everyone. Thank you for taking the time to join us today. For this call, we will walk you through an executive summary to discuss our Q2 financial results and provide an update on our operations.

Heather Nikkel: Thank you, operator, and good afternoon, everyone. Thank you for taking the time to join us today. For this call, we will walk you through an executive summary, discuss our Q2 financial results, and provide an update on our operations. Our Q2 results, including our financial statements, management's discussion and analysis, and earnings press release are available on SEDAR+ and on our website at rfafinancial.ca. The Q2 presentation can be seen in real-time on the webcast version of this conference call and is also available on RFA Financial website in the investor relations section. The transcript, along with a recording of the webcast, will also be made available on RFA website after this call. Please note that today's call will include forward-looking statements and information.

Speaker #2: Our Q2 results, including our financial statements, Management's Discussion and Analysis, and earnings press release, are available on SEDAR+ and on our website at rfafinancial.ca.

Speaker #2: The Q2 presentation can be seen in real time on the webcast version of this conference call and is also available on RFA Financial's website in the Investor Relations section.

Speaker #2: The transcript, along with a recording of the webcast, will also be made available on RFA's website after this call. Please note that today's call will include forward-looking statements and information.

Speaker #2: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated, including those described under the headings "Risk Factors" in Artists' Annual Information Form for the year ended December 31, 2024; "Risk Factors Relating to the Resulting Issuer" in the management information circular of Artists dated November 10, 2025; and "Risks and Uncertainties" in RFA's Q2 2026 MD&A, all of which can be accessed on SEDAR+ and RFA's website.

Heather Nikkel: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated, including those described under the headings "Risk factors" in Artis' annual information form for the year ended 31 December 2024, "Risk factors relating to the resulting issuer" in the management information circular of Artis dated 10 November 2025, and "Risks and uncertainties" in RFA's Q2 2026 MD&A, all of which can be accessed on SEDAR+ and RFA's website. Forward-looking statements reflect management's views only as of today's date. We do not undertake to revise them or reflect subsequent events or circumstances, and participants should not place undue reliance on these statements. In addition, we will reference certain non-GAAP financial measures and ratios during this call, including originations, average mortgage and loan assets, weighted average lease term, net interest margin, write-offs, mortgage arrears rate, and payout ratio.

Speaker #2: Forward-looking statements reflect management's views only as of today's date. We do not undertake to revise them or to reflect subsequent events or circumstances, and participants should not place undue reliance on these statements.

Speaker #2: In addition, we will reference certain non-GAAP financial measures and ratios during this call, including originations, average mortgage and loan assets, weighted average lease term, net interest margin, write-offs, mortgage arrears rate, and payout ratio.

Speaker #2: These do not have standardized meanings under GAAP, may differ from those used by other issuers, and should not be considered in isolation or as a substitute for measures and ratios prepared in accordance with GAAP.

Heather Nikkel: These do not have standardized meanings under GAAP, may differ from those used by other issuers, and should not be considered in isolation or as a substitute for the measures and ratios prepared in accordance with GAAP. They are intended to provide supplemental information regarding the performance of RFA. For further details on these, please see our Q2 2026 MD&A press release and investor presentation deck for today's session. You should also be aware that certain statements presented today, including those relating to credit scores and mortgage arrears rates, are based on information obtained from reputable third-party sources. While RFA has not independently verified such information, we have no reason to believe it is inaccurate in any material respect. Unless otherwise noted, all dollar amounts referenced on this call are in Canadian currency. Before we get into the results, I would like to introduce the leadership team joining me today.

Speaker #2: They are intended to provide supplemental information regarding the performance of RFA. For further details on these, please see our Q2 2026 MD&A press release and investor presentation deck for today's session.

Speaker #2: You should also be aware that certain statements presented today, including those relating to credit scores and mortgage arrears rates, are based on information obtained from reputable third-party sources.

Speaker #2: While RFA has not independently verified such information, we have no reason to believe it is inaccurate in any material respect. Unless otherwise noted, all dollar amounts referenced on this call are in Canadian currency.

Speaker #2: Before we get into the results, I'd like to introduce the leadership team joining me today. With me on the call are Ben Rodney, our President and Chief Executive Officer; Jacqueline Koenig, our Chief Financial Officer; and Melody Lo, our Chief Operating Officer.

Heather Nikkel: With me on the call are Ben Rodney, our President and Chief Executive Officer, Jaclyn Koenig, our Chief Financial Officer, and Melody Lo, our Chief Operating Officer. With that, I will turn things over to Ben.

Speaker #2: With that, I will turn things over to Ben.

Speaker #3: Thanks, Heather. And thank you, everyone, for joining us today. I am looking forward to walking you through our medium-term targets and how our platform is positioned to achieve those objectives while creating long-term value for shareholders.

Ben Rodney: Thanks, Heather, and thank you, everyone, for joining us today. I am looking forward to walking you through our medium-term targets and how our platform is positioned to achieve those objectives while creating long-term value for shareholders. Q2 was another quarter of sound execution against our long-term strategy. The building blocks are in place, our targets remain unchanged, and we continue to see a clear path to scaling the platform and enhancing shareholder returns. Looking ahead, over the next three to five years, we plan to execute between CAD 1.3 billion and CAD 1.5 billion of asset sales, grow our lending portfolio towards CAD 8 billion to CAD 12 billion, and redeploy capital into higher return opportunities across the platform.

Speaker #3: Q2 was another quarter of sound execution against our long-term strategy. The building blocks are in place, our targets remain unchanged, and we continue to see a clear path to scaling the platform and enhancing shareholder returns.

Speaker #3: Looking ahead, over the next 3 to 5 years, we plan to execute between $1.3 billion and $1.5 billion of asset sales, grow our lending portfolio towards $8 billion to $12 billion, and redeploy capital into higher-return opportunities across the platform.

Speaker #3: As we execute on these priorities, we expect to generate a return on equity in the low to mid-teens and deliver 40% to 50% compound annual growth in net income, both specific to RFA Bank, and achieve and maintain a payout ratio below 65%.

Ben Rodney: As we execute on these priorities, we expect to generate a return on equity in the low to mid teens and deliver 40% to 50% compound annual growth in net income, both specific to RFA Bank, and achieve and maintain a payout ratio below 65%. These targets are supported by a capital allocation model that is already in motion and designed to compound value over time. At the core of that model is disciplined capital recycling. We have a scalable financial services platform and a high-quality real estate portfolio. Our strategy is to monetize real estate assets and redeploy that capital into higher return opportunities, including lending growth, strategic acquisitions, and share repurchases. As those investments generate earnings and liquidity, we reinvest the proceeds back into the business. The result is a capital allocation model that drives earnings growth, improves capital efficiency, and supports our long-term financial objectives.

Speaker #3: These targets are supported by a capital allocation model that is already in motion and designed to compound value over time. At the core of that model is disciplined capital recycling.

Speaker #3: We have a scalable financial services platform and a high-quality real estate portfolio. Our strategy is to monetize real estate assets and redeploy that capital into higher-return opportunities, including lending growth, strategic acquisitions, and share repurchases.

Speaker #3: As those investments generate earnings and liquidity, we reinvest the proceeds back into the business. The result is a capital allocation model that drives earnings growth, improves capital efficiency, and supports our long-term financial objectives.

Speaker #3: Importantly, that growth is supported by disciplined underwriting practices, which have contributed to consistently low realized write-offs across market cycles and will protect our lending portfolio quality as we scale.

Ben Rodney: Importantly, that growth is supported by disciplined underwriting practices, which have contributed to consistently low realized write-offs across market cycles and will protect our lending portfolio quality as we scale. Before moving on to our financial results, I would like to highlight a significant development achieved by our leasing team at RFA Asset Management. This accomplishment reflects both the strength of our team and our continued focus on delivering sustainable growth. We recently secured a 20-year lease agreement with IG Wealth Management, totaling over 120,000 square feet at our 360 Main Street and 300 Main Street properties in downtown Winnipeg. IG is a member of IGM Financial Inc., a subsidiary of the Power Corporation of Canada, and provides an institutional quality tenancy that enhances the long-term strength and stability of our office portfolio.

Speaker #3: Before moving on to our financial results, I'd like to highlight a significant development achieved by our leasing team at RFA Asset Management. This accomplishment reflects both the strength of our team and our continued focus on delivering sustainable growth.

Speaker #3: We recently secured a 20-year lease agreement with IG Wealth Management, totaling over 120,000 square feet at our 360 Main Street and 300 Main Street properties in downtown Winnipeg.

Speaker #3: IG is a member of IGM Financial Inc., a subsidiary of Power Corporation of Canada, and provides an institutional-quality tenancy that enhances the long-term strength and stability of our office portfolio.

Speaker #3: The new lease represents the largest private sector relocation to an existing Class A downtown Winnipeg office in recent history. Importantly, this transaction increases committed occupancy from 79.6% to approximately 95.1% and is expected to increase net rental income by approximately 59.7% for RFA's core Winnipeg office portfolio.

Ben Rodney: The new lease represents the largest private sector relocation to an existing Class A downtown Winnipeg office in recent history. Importantly, this transaction increases committed occupancy from 79.6% to approximately 95.1% and is expected to increase net rental income by approximately 59.7% for RFA's core Winnipeg office portfolio. These figures have been adjusted to reflect the expiration of an existing lease within the premises to be occupied by IG. Beyond the direct leasing benefits, this transaction also delivers meaningful strategic value across the broader portfolio. The addition of more than 1,000 employees to the property is expected to increase activity in the surrounding area and support performance across nearby RFA assets. It is also expected to drive an increase in the property's value, reflecting both the quality of the asset and the strength of its location.

Speaker #3: These figures have been adjusted to reflect the expiration of an existing lease within the premises, to be occupied by IG. Beyond the direct leasing benefits, this transaction also delivers meaningful strategic value across the broader portfolio.

Speaker #3: The addition of more than 1,000 employees to the property is expected to increase activity in the surrounding area and support performance across nearby RFA assets.

Speaker #3: It is also expected to drive an increase in the property's value, reflecting both the quality of the asset and the strength of its location.

Speaker #3: We view this transaction as a clear validation of our leasing strategy, asset management team, and the underlying quality of the portfolio. With that, I will pass the call over to Jacqueline to review our second quarter financial performance.

Ben Rodney: We view this transaction as a clear validation of our leasing strategy, asset management team, and the underlying quality of the portfolio. With that, I will pass the call over to Jaclyn to review our Q2 financial performance.

Speaker #2: Thank you, Ben. And hello, everyone. This is our first full quarter as RFA Financial, and an important milestone in the evolution of our business.

Jaclyn Koenig: Thank you, Ben, and hello, everyone. This is our first full quarter as RFA Financial and an important milestone in the evolution of our business. Highlights for the quarter include closing on the sale of 13 properties for an aggregate sale price of CAD 94 million. As of 30 June, we had approximately CAD 442 million of investment properties held for sale. Occupancy, including committed leases, was 84.4% at quarter end, and we saw a healthy 3% increase in weighted average renewal rates during the quarter. Financial services metrics reported included net interest margin of 2.1%, excluding the impact of non-cash purchase price adjustments and a CET1 ratio of 17.5% specific to RFA Bank. Actual credit losses represented just 0.08% or eight basis points of average mortgage and loan assets on an annualized basis, also specific to RFA Bank. That wraps up our Q2 financial results.

Speaker #2: Highlights for the quarter include closing on the sale of 13 properties for an aggregate sale price of $94 million. As of June 30, we had approximately $442 million of investment properties held for sale.

Speaker #2: Occupancy—including committed leases—was 84.4% at quarter end, and we saw a healthy 3% increase in weighted average renewal rates during the quarter. Financial services metrics reported included a net interest margin of 2.1%, excluding the impact of non-cash purchase price adjustments, and a CET1 ratio of 17.5%, specific to RFA Bank.

Speaker #2: Actual credit losses represented just 0.08%, or 8 basis points, of average mortgage and loan assets on an annualized basis, also specific to RFA Bank.

Speaker #2: That wraps up our second quarter financial results. With that, I will turn the call over to Melody to provide an operational update.

Jaclyn Koenig: With that, I will turn the call over to Melody to provide an operational update.

Speaker #4: Thanks, Jacqueline. And good afternoon, everyone. I'm happy to provide an update on our operations and walk you through the highlights of the second quarter.

Melody Lo: Thanks, Jacqueline, and good afternoon, everyone. I am happy to provide an update on our operations and walk you through the highlights of the Q2. Before turning to the results, I would like to spend a moment on integration. We continued to make strong progress during the quarter, advancing our disposition strategy, aligning key governance and operating processes, and maintaining a disciplined approach to capital allocation. What we are most encouraged by is how the combined platform is performing. We focused on building a foundation that will be sustainable for scale. Increased capital flexibility is allowing us to strategize capital into attractive opportunities that we believe will generate stronger long-term returns. While there are continued initiatives and priorities, we are pleased with our progress to date and remain confident in the opportunities in front of us.

Melody Lo: Thanks, Jaclyn, and good afternoon, everyone. I am happy to provide an update on our operations and walk you through the highlights of the Q2. Before turning to the results, I would like to spend a moment on integration. We continued to make strong progress during the quarter, advancing our disposition strategy, aligning key governance and operating processes, and maintaining a disciplined approach to capital allocation. What we are most encouraged by is how the combined platform is performing. We focused on building a foundation that will be sustainable for scale. Increased capital flexibility is allowing us to strategize capital into attractive opportunities that we believe will generate stronger long-term returns. While there are continued initiatives and priorities, we are pleased with our progress to date and remain confident in the opportunities in front of us.

Speaker #4: Before turning to the results, I would like to spend a moment on integration. We continued to make strong progress during the quarter, advancing our disposition strategy, aligning key governance and operating processes, and maintaining a disciplined approach to capital allocation.

Speaker #4: What we are most encouraged by is how the combined platform is performing. We focused on building a foundation that will be sustainable for scale, increase capital flexibility, and allow us to strategize capital into attractive opportunities that we believe will generate stronger long-term returns.

Speaker #4: While there are continued initiatives and priorities, we are pleased with our progress to date and remain confident in the opportunities in front of us.

Speaker #2: Our real estate portfolio continues to play an important role in supporting growth, providing both stable cash flow and a source of capital for reinvestment.

Melody Lo: Our real estate portfolio continues to play an important role in supporting growth, providing both stable cash flow and a source of capital for reinvestment. Following recent dispositions, as of 30 June, the portfolio consisted of 76 diversified properties in Canada and the US, totaling approximately 8.7 million square feet, along with 395 multi-residential suites. The portfolio continues to generate stable cash flow and demonstrates strong operating performance, including a weighted average rental rate increase of 3% on lease renewals during the quarter. Disposition activity remained strong quarter-over-quarter, with CAD 60 million closed in Q1, CAD 94 million closed in Q2, and CAD 77 million closed subsequent to the end of the quarter, totaling CAD 231 million across 25 properties to date. Total disposition activity reached CAD 541 million year to date, including closed, unconditional, and conditional transactions.

Speaker #4: Following recent dispositions, as of June 30, the portfolio consisted of 76 diversified properties in Canada and the US, totaling approximately 8.7 million square feet, along with 395 multi-residential suites.

Speaker #4: The portfolio continues to generate stable cash flow and demonstrates strong operating performance, including a weighted average rental rate increase of 3% on lease renewals during the quarter.

Speaker #2: Disposition activity remains strong quarter over quarter, with $60 million closed in Q1, $94 million closed in Q2, and $77 million closed subsequent to the end of the quarter, totaling $231 million across 25 properties to date.

Speaker #4: Total disposition activity reached $541 million year to date, including closed unconditional and conditional transactions.

Speaker #2: Importantly, these sales have continued to be executed at prices that meet or exceed IFRS values, reinforcing the strength of the portfolio and validating our asset valuations.

Melody Lo: Importantly, these sales have continued to be executed at prices that meet or exceed IFRS values, reinforcing the strength of the portfolio and validating our asset valuations. Year to date, closed sales and unconditional contracts have been completed at an average of 4.6% above IFRS values, including 2.4% above IFRS values on closed sales and 9% above IFRS values on unconditional contracts. These results demonstrate the effectiveness of our asset management team in maximizing value. With a healthy pipeline of CAD 310 million in conditional and unconditional transactions and continued demand for our assets, we remain well-positioned to advance our capital recycling strategy and create additional value through the balance of the year. Turning to mortgage originations, the platform continued to demonstrate strong momentum in the Q2, with year-to-date total originations for RFA Bank and RFA Mortgage Corporation increasing 35% compared to prior year.

Speaker #4: Year to date, closed sales and unconditional contracts have been completed at an average of 4.6% above IFRS values, including 2.4% above IFRS values on closed sales and 9% above IFRS values on unconditional contracts.

Speaker #2: These results demonstrate the effectiveness of our asset management team in maximizing value.

Speaker #4: With a healthy pipeline of $310 million in conditional and unconditional transactions, and continued demand for our assets, we remain well-positioned to advance our capital recycling strategy and create additional value through the balance of the year.

Speaker #2: Turning to mortgage originations, the platform continued to demonstrate strong momentum in the second quarter, with year-to-date total originations for RFA Bank and RFA Mortgage Corporation increasing 35% compared to the prior year.

Speaker #4: RFA Bank delivered strong growth, with origination volume increasing 50% compared to Q2 of 2025, demonstrating strength in both alternative and off-balance sheet multifamily originations.

Melody Lo: RFA Bank delivered strong growth, with origination volume increasing 50% compared to Q2 of 2025, demonstrating strength in both alternative and off-balance sheet multifamily originations. RFA Mortgage Corporation experienced a healthy 27% increase this quarter compared to the second quarter of last year. I am also pleased to highlight that June was a record-breaking month for RFA Mortgage Corporation. During the month, we funded CAD 573 million in prime originations, the largest monthly volume in the company's history and a 43% increase over June of last year. This milestone reflects the strong demand for our mortgage solutions, the scalability of our origination platform, and the exceptional efforts of our teams and broker partners across the country while ensuring discipline and risk-aware controls and measures. The continued growth in originations positions us well for the next three to five years as we target lending assets of CAD 8 billion to CAD 12 billion.

Speaker #2: RFA Mortgage Corporation experienced a healthy 27% increase this quarter compared to the second quarter of last year.

Speaker #4: I am also pleased to highlight that June was a record-breaking month for RFA Mortgage Corporation. During the month, we funded $573 million in prime originations, the largest monthly volume in the company's history, and a 43% increase over June of last year.

Speaker #2: This milestone reflects the strong demand for our mortgage solutions, the scalability of our origination platform, and the exceptional efforts of our teams and broker partners across the country, while ensuring discipline and risk-aware controls and measures.

Speaker #4: The continued growth in originations positions us well for the next 3 to 5 years, as we target lending assets of $8 to $12 billion.

Speaker #2: Origination growth continues to be supported by a disciplined underwriting approach and a focus on credit quality.

Melody Lo: Origination growth continues to be supported by a disciplined underwriting approach and a focus on credit quality. In the second quarter, our mortgage arrears rate remained low at just 0.032%, approximately 89% below the national average. This performance reflects our strategy of originating and retaining high-quality borrowers, demonstrated by average borrower credit scores that consistently exceed 790 for our prime portfolio. Strong credit performance continues to underscore the resilience of the portfolio and deepen relationships with insurers and institutional aggregators while supporting access to a high-quality pipeline through the broker channel. Turning to RFA Bank, the performance of our alternative mortgage portfolio remains strong.

Speaker #4: In the second quarter, our mortgage arrears rate remained low at just 0.032%, approximately 89% below the national average.

Speaker #2: This performance reflects our strategy of originating and retaining high-quality borrowers, demonstrated by average borrower credit scores that consistently exceed 790 for our prime portfolio.

Speaker #4: Strong credit performance continues to underscore the resilience of the portfolio and deepen relationships with insurers and institutional aggregators, while supporting access to a high-quality pipeline through the broker channel.

Speaker #2: Turning to RFA Bank, the performance of our alternative mortgage...

Speaker #4: Realized credit losses were exceptionally low, representing just 0.08% of average mortgage and loan assets on an annualized basis.

Melody Lo: Realized credit losses were exceptionally low, representing just 0.08% of average mortgage and loan assets on an annualized basis. This reflects prudent risk management, disciplined underwriting, and the overall quality of our borrower base. We are pleased with the consistency of our credit results quarter over quarter across all of our business lines, which continues to support sustainable growth. I will now hand the call back to Ben for closing comments.

Speaker #2: This reflects prudent risk management, disciplined underwriting, and the overall quality of our borrower base.

Speaker #4: We are pleased with the consistency of our credit results quarter over quarter across all of our business lines, which continues to support sustainable growth.

Speaker #2: I will now hand the call back to Ben for closing comments.

Speaker #5: Thank you, Melody. The story today is ultimately one of strong execution. We continue to build value through leasing momentum, strategic asset sales, disciplined lending growth, and prudent capital allocation.

Ben Rodney: Thank you, Melody. The story today is ultimately one of strong execution. We continue to build value through leasing momentum, strategic asset sales, disciplined lending growth, and prudent capital allocation. While we remain in the early stages of realizing the full potential of our combined platform, our results to date reinforce the strength of our strategy, the complementary nature of our businesses, and our ability to generate long-term value through disciplined capital allocation and active asset management. Thank you all for your time today. I will now pass it back to the operator for our Q&A session. Operator, we are now ready to take questions.

Speaker #5: While we remain in the early stages of realizing the full potential of our combined platform, our results to date reinforce the strength of our strategy, the complementary nature of our businesses, and our ability to generate long-term value through disciplined capital allocation and active asset management.

Speaker #5: Thank you all for your time today. I will now pass it back to the operator for our Q&A session. Operator, we are now ready to take questions.

Speaker #6: Thank you. We will now begin the question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star, then the number 2 on your telephone keypad. Once again, it is star 1 if you wish to ask a question. Once again, as a reminder, if you have any questions or follow-up, please press star 1. There are no further questions at this time. I will pass it back to Heather Nikkel for final remarks.

Speaker #6: If you would like to withdraw your question, please press star, then the number 2 on your telephone keypad. Once again, it is star 1 if you wish to ask a question.

Speaker #6: Once again, as a reminder, if you have any questions or follow-up, please press star 1. There are no further questions at this time. I will pass it back to Heather Nicole for final remarks.

Speaker #2: Thank you, operator. On behalf of the RFA team, I want to thank you again for joining us today. We appreciate your support and interest in RFA.

Heather Nikkel: Thank you, operator. On behalf of the RFA team, I want to thank you again for joining us today. We appreciate your support and interest in RFA. If you have any questions, please feel free to contact me at our investor relations email address that can be found on our website and in the press release announcing our Q2 results. We look forward to sharing further updates with you in the coming months and quarters ahead. With that, I'll turn the call back to the operator.

Speaker #2: If you have any questions, please feel free to contact me at our investor relations email address, which can be found on our website and in the press release announcing our Q2 results.

Speaker #2: We look forward to sharing further updates with you in the coming months and quarters ahead. With that, I'll turn the call back to the operator.

Operator: Ladies and gentlemen, this concludes today's call. Have a great day.