Q2 2026 BTB REIT Earnings Call

August 12, 2026

Speaker #1: All lines have been placed on mute to prevent any background noise. Should you wish to follow the presentation in greater detail, management has made a presentation available on BTB's website at www.btbret.com/investors/presentations/quarterlymeetingpresentations.

Speaker #1: After the speaker's remarks, there will be a question-and-answer period reserved exclusively for analysts. If you would like to ask a question during this time, please press star, followed by the number 1 on your keypad.

Operator: After the speaker's remarks, there will be a question and answer period reserved exclusively for analysts. If you would like to ask a question during this time, please press star followed by the number one on your keypad. Before turning the meeting over to management, please be advised that some of the statements that may be made during this call may be forward-looking in nature.

Speaker #1: Before turning the meeting over to management, please be advised that some of the statements that may be made during this call may be forward-looking in nature.

Speaker #1: Such statements involve numerous factors and assumptions, and are subject to inherent risks and uncertainties, both general and specific, which gives rise to the possibility that predictions forecast projections and other forward-looking statements will not be achieved.

Operator: Such statements involve numerous factors and assumptions and are subject to inherent risks and uncertainties, both general and specific, which gives rise to the possibility that predictions, forecast projections, and other forward-looking statements will not be achieved. Several important factors could cause BTB Real Estate Investment Trust actual results to differ materially from the expectations expressed or implied by such forward-looking statements. These risks and uncertainties and other factors that could influence actual results are described in BTB Real Estate Investment Trust management's discussion and analysis, and in its annual information form, which was filed on SEDAR+ and on BTB's website at www.btbreit.com/investors/reports. I would like to remind everyone that this conference is being recorded. Thank you.

Speaker #1: Several important factors could cause BTB Real Estate Investment Trust's actual results to differ materially from the expectations expressed or implied by such forward-looking statements.

Speaker #1: These risks, uncertainties, and other factors that could influence actual results are described in BTB Real Estate Investment Trust Management's discussion and analysis, and in its annual information form, which were filed on SEDAR+ and on BTB's website at www.btbret.com/investors/reports.

Speaker #1: I would like to remind everyone that this conference is being recorded. Thank you. I will now turn the conference over to Mr. Michel Leonard, President and Chief Executive Officer, accompanied today by Mr. Marc-André Lefebvre, Vice President and Chief Financial Officer, Mr. Charles-Jaurès Bédard, Vice President of Finance, and Ms. Stéphanie Léonard, Principal Director of Leasing.

Operator: I will now turn the conference over to Michel Léonard, President and Chief Executive Officer, accompanied today by Marc-André Lefebvre, Vice President and Chief Financial Officer, Charles Dorais-Bédard, Vice President of Finance, and Stéphanie Léonard, Principal Director of Leasing. Mr. Léonard, you may begin the conference.

Speaker #1: Mr. Leonard, you may begin the conference.

Speaker #2: Thank you, Joelle. Good morning, everybody. We're with pleasure reporting our Q2 numbers and we are continuing on our investment activity as purchasing industrial assets and selling office properties.

Michel Léonard: Thank you, Joelle. Good morning, everybody. With pleasure, we are reporting our Q2 numbers, and we are continuing on our investment activity as purchasing industrial assets and selling office properties. You have witnessed that activity throughout the first two quarters. We are still actively involved in densifying some of our properties in Montréal and Ottawa, having made representations to both cities as far as a redevelopment for each property is concerned. We did, on 14 May 2026, establish an ATM program following the filing of a prospectus supplement that was filed back on 19 December 2025, and the ATM program was approved by the Toronto Stock Exchange on 14 May 2026, and to date, it has not been used. On our ESG front, we are pleased to report that on 10 June, we did publish our third ESG report. In 2025, we strengthened our environmental data collection.

Speaker #2: We have you will you have witnessed that activity throughout the first two quarters. We're still actively involved in densifying some of our properties in Montreal and Ottawa, having made representations to both cities as far as a redevelopment for each property is concerned.

Speaker #2: We did on May 14, 2026, establish an ATM program following the filing of a prospectus supplement that was filed back in December 19, 2025.

Michel Léonard: We did, on 14 May 2026, establish an ATM program following the filing of a prospectus supplement that was filed back on 19 December 2025, and the ATM program was approved by the Toronto Stock Exchange on 14 May 2026, and to date, it has not been used. On our ESG front, we are pleased to report that on 10 June, we did publish our third ESG report. In 2025, we strengthened our environmental data collection.

Speaker #2: And the ATM program was approved by the Toronto Stock Exchange on May 14, 2026. And to date, it hasn't been used. On our ESG front, we're pleased to report that on June 10, we did publish our third ESG report, and in 2025, we strengthened our environmental data collection.

Speaker #2: We expanded sustainability certifications across our portfolio with 13 new BOMA-based certifications. And we are continuing to foster an engaging and inclusive workplace for our employees and the community.

Michel Léonard: We expanded sustainability certifications across our portfolio with 13 new BOMA BEST certification, and we are continuing to foster an engaging and inclusive workplace for our employees and the community. As far as acquisition is concerned, for our property located at 7 and 9 Montclair Boulevard in Gatineau, we owned only 50% of that property, obviously, through a sort of a joint interest with another real estate developer. We decided to terminate this agreement by purchasing the 50% interest that we did not own from that co-owner for CAD 7 million. This acquisition is expected to contribute approximately CAD 500,000 on an annualized basis for NOI. Subsequent event to the quarter, we did dispose of our property located in Trois-Rivières, and that it closed on 4 August of this year, for a total proceed of CAD 20 million, obviously excluding transaction fees and adjustment.

Speaker #2: As far as acquisition is concerned, for our property located at 7 and 9 Montclair Boulevard in Gatineau, we owned only 50% of that property, obviously through a sort of joint interest with another real estate developer.

Speaker #2: And we decided to terminate this agreement by purchasing the 50% interest that we didn't own from that co-owner for $7 million and this acquisition is expected to contribute approximately $500,000 on an annualized basis for NOI.

Michel Léonard: This acquisition is expected to contribute approximately CAD 500,000 on an annualized basis for NOI. Subsequent event to the quarter, we did dispose of our property located in Trois-Rivières, and that it closed on 4 August of this year, for a total proceed of CAD 20 million, obviously excluding transaction fees and adjustment.

Speaker #2: Subsequent event to the quarter, we did dispose of our property located in Three Rivers and that a closed on August 4th of this year.

Speaker #2: For a total proceed of $20 million, obviously excluding transaction fees and adjustment. And I'd like to note that this property was leased on it at the occupancy rate was 80%.

Michel Léonard: I would like to note that this property was leased on a The occupancy rate was 80%. For the six-month period, the trust concluded CAD 38.5 million of acquisitions, and it is anticipated that these acquisitions will contribute, on an annualized basis, CAD 3 million to the NOI. If we look at the distribution of our portfolio, back in 2021, we used to be at 23% industrial. Now we are jumping to 38% industrial. Our suburban office ownership was at 47%, we are down to 41%. Necessity-based retail used to be at 30%, and we are at 21%. As far as our geographical diversification, except for the sale of the property that represented 3% of the total ownership on the segment, basically, there has been no change. The key metrics on page 6 for those that are following me with the presentation.

Speaker #2: So for the six-month period, the trust concluded $38.5 million of acquisitions and its anticipated that these acquisitions will contribute on an annualized basis $3 million to the NOI.

Speaker #2: So if we look at the distribution of our portfolio, back in '21, we used to be 23% industrial, now we're jumping to 38% industrial.

Speaker #2: Our suburban office ownership was at 48 47%. We're down to 41%. And necessity-based retail used to be at 30% and we're at 21%. And as far as our geographical diversification, except for the sale of the property that represented 3% of our owners of the total ownership on the segment, basically there's been no change.

Michel Léonard: Necessity-based retail used to be at 30%, and we are at 21%. As far as our geographical diversification, except for the sale of the property that represented 3% of the total ownership on the segment, basically, there has been no change. The key metrics on page 6 for those that are following me with the presentation.

Speaker #2: And the key metrics I'm on page 6 for those that are following me on with the presentation. So as far as the fair value of investment properties, we see a slight increase of 1.7%.

Michel Léonard: As far as the fair value of investment properties, we see a slight increase of 1.7%. Our occupancy rate went slightly up, 10 basis points, to 91.3%. The total renewals concluded in Q2 2026 and new leases were 378,000 square feet. We have witnessed positive leasing spreads. Our payout ratio has come down on an AFFO basis, and we have strong leasing activity. With this, I will turn the presentation to Stéphanie on this leasing aspect.

Speaker #2: Our occupancy rate went slightly up, 10 basis points, to 91.3%. And the total renewals concluded in Q2 2026 were 3 and new leases were 378,000 square feet.

Speaker #2: So, we have—we've witnessed positive leasing spreads. Our payout ratio has come down on an AFFO basis, and we have strong leasing activity. With this, I'll turn the presentation to Stephanie on this leasing aspect.

Speaker #3: Good morning, everyone. So if you're following us on our online presentation, we're currently at page 8 of Fed presentation. So during the quarter, we leased a total of roughly 79,000 square feet to new tenants.

Stéphanie Léonard: Good morning, everyone. If you are following us on our online presentation, we are currently at page 8 of said presentation. During the quarter, we leased a total of roughly 79,000 square feet to new tenants. In addition to renewing leases of existing tenants for roughly 299,000 square feet, representing a total leasing activity of roughly 378,000 square feet for the quarter. Our most noteworthy transaction on a square foot basis was concluded with ProGym in Saint-Bruno-de-Montarville in our necessity-based retail segment, located in Montreal, representing 19,000 square feet. It is important to note that this transaction was directly in line with our leasing strategy for our necessity-based retail property, which is to increase the notoriety of tenants by replacing previous tenants who either paid under market rent or percentage rent, and with tenants that are more prestigious or have better financial capabilities.

Speaker #3: In addition to renewing leases of existing tenants for roughly 299,000 square feet, representing a total leasing activity of roughly 378,000 square feet for the quarter.

Speaker #3: Our most noteworthy transaction on a square foot basis was concluded with ProGym in Saint-Bruno, in our necessity-based retail segment located in Montreal, representing 19,000 square feet.

Speaker #3: It's important to note that this transaction was directly in line with our leasing strategy for our necessity-based retail property, which is to increase the notoriety of tenants by replacing previous tenants who either paid under market rent or percentage rents and with tenants that are more prestigious or have better financial capabilities.

Stéphanie Léonard: It is important to note that this transaction was directly in line with our leasing strategy for our necessity-based retail property, which is to increase the notoriety of tenants by replacing previous tenants who either paid under market rent or percentage rent, and with tenants that are more prestigious or have better financial capabilities.

Speaker #3: Our second most noteworthy transaction was also concluded with Noybu Technologies in our suburban office segment located in Ottawa, representing 14,444 square feet. The essence of this transaction was similar to ProGym's that we had an opportunity to terminate the lease as an occupying tenant whose lease was coming to maturity in 2027 and we knew that they would not renew their lease.

Stéphanie Léonard: Our second most noteworthy transaction was also concluded with Noibu Technologies in our suburban office segment located in Ottawa, representing 14,444 square feet. The essence of this transaction was similar to ProGym, that we had an opportunity to terminate the lease of an occupying tenant whose lease was coming to maturity in 2027, and we knew that they would not renew their lease. So we are capitalizing on market momentum in order to replace them with Noibu for a longer term and higher rent. It is important to note that both ProGym and Noibu's cases, both transactions affected our renewal rate, as we needed to force tenant departures in order to account for these transactions. Therefore, there is no direct positive absorption to our occupancy rate as a result of these transactions.

Speaker #3: So we're capitalizing on market momentum in order to replace them with Noybu for a longer term and higher rents. It's important to note that both ProGym and Noybu's cases both transactions affected our renewal rate as we needed to force tenant departures in order to account for these transactions.

Speaker #3: Therefore, there's no direct positive absorption to our occupancy rate as a result of these transactions. Out of the other transactions completed throughout the quarter, I wanted to note the following two tenants with whom we signed expansions during the quarter.

Stéphanie Léonard: Out of the other transactions completed throughout the quarter, I wanted to note two following tenants with whom we signed expansions with during the quarter. Notably, we signed a 3,380 square foot expansion with SFL Wealth Management, bringing their total footprint with us to 37,000 square feet in Quebec City, and again, in our suburban office segment. In addition to an expansion of 2,422 square feet with M&P, again, in our suburban office segment in Laval, bringing their total footprint with us to 16,000 square feet. In terms of our lease renewals for the quarter, we had quite a busy quarter with just over 299,000 square feet of lease negotiations with our current tenants. As I mentioned, some of our new transactions impacted our lease renewal rates, but excluding these tenant replacements, our renewal rate for the quarter would have been 76%.

Speaker #3: Notably, we signed a 3,380-square-foot expansion with SFL Wealth Management, bringing their total footprint with us to 37,000 square feet in Quebec City.

Speaker #3: And again, in our suburban office segment, in addition to an expansion of 2,422 square feet with M&P—again, in our suburban office segment in Laval—bringing their total footprint with us to 16,000 square feet.

Speaker #3: In terms of our lease renewals for the quarter, we had quite a busy quarter with just over 299,000 square feet of lease negotiations with our current tenants.

Stéphanie Léonard: In terms of our lease renewals for the quarter, we had quite a busy quarter with just over 299,000 square feet of lease negotiations with our current tenants. As I mentioned, some of our new transactions impacted our lease renewal rates, but excluding these tenant replacements, our renewal rate for the quarter would have been 76%.

Speaker #3: As I mentioned, some of our new transactions impacted our lease renewal rate, but excluding these tenant replacements, our renewal rate for the quarter would have been 76%.

Speaker #3: Out of our Diffuse Inc. in our suburban office segment located in Montreal, for a 10-year term, for roughly 50,000 square feet. In addition to a 5-year renewal with Bimo Nesbitt Burns in our suburban office segment in Ottawa for 20 for roughly 20,000 square feet.

Stéphanie Léonard: Out of our noteworthy transactions, we renewed leases with Difuze Inc. in our suburban office segment located in Montréal for a 10-year term for roughly 50,000 square feet. In addition to a five-year renewal with BMO Nesbitt Burns in our suburban office segment in Ottawa for roughly 20,000 square feet. As we always look to renew leases in anticipation of their maturity, we renewed a total of 157,000 square feet of leases whose maturity dates fell in 2027 and subsequent years after. In terms of noteworthy transactions, we are looking at BBA Group in Saint-Hilaire, that is in our Montréal portfolio in our suburban office segment, for 69,000 square feet for a 10-year term. With Royal Drugs in Ottawa, also known as the Ottawa Medical Group, in our industrial segment for 46,000 square feet, also for a 10-year term.

Speaker #3: In addition, as we always look to renew leases in anticipation of their maturity, we renewed a total of 150 leases, representing 157,000 square feet, whose maturity dates fell in 2027 and subsequent years after.

Speaker #3: So in terms of noteworthy transactions, we're looking at BBA Group in Saint-Silas, that's in our Montreal portfolio in our suburban office segment for 69,000 square feet for a 10-year term.

Speaker #3: With Royal Drugs in Ottawa, also known as the Ottawa Medical Group, in in our industrial segment for 46,000 square feet, also for a 10-year term.

Speaker #3: And with SFL Wealth Management, as I mentioned, that they did take an expansion, but we also renewed their lease for 30 roughly 33,000 square feet in our suburban office segment in Quebec City, also for a 10-year term.

Stéphanie Léonard: With SFL Wealth Management, as I mentioned, they did take an expansion, but we also renewed their lease for roughly 33,000 square feet in our suburban office segment in Quebec City, also for a 10-year term. In terms of rental spreads for the quarter, we achieved a 4.6% average increase in our lease renewal rates across all segments. So consistent with our strategy to always find an increase when possible. We increased our industrial segment by 10.5%, our necessity-based retail segment by 7%, and our suburban office segment by 2.9%. In terms of our active large vacancies, I wanted to provide an update for a property located at 3695 de la Côte-de-Liesse in our Montréal portfolio, more specifically in Laval. As a reminder, this property spans 132,000 square feet and represents a 2.2% impact on our occupancy rate.

Speaker #3: In terms of rental spreads for the quarter, we achieved a 4.6% average increase in our lease renewal rate across all segments. So consistent with our with our strategy to always find an increase when possible.

Speaker #3: So we increased our industrial segment by 10.5%, our necessity-based retail segment by 7%, and our suburban office segment by 2.9%. In terms of our active large vacancies, I wanted to provide an update for our property located at 3695 De La Hofstede in our Montreal portfolio more specifically in Laval.

Speaker #3: As a reminder, this property spans 132,000 square feet and represents a 2.2% impact on our occupancy rate. I've mentioned in past quarters that we were negotiating with an international client for different size requirements of theirs.

Stéphanie Léonard: I have mentioned in past quarters that we were negotiating with an international client for different size requirements of theirs, and I am not necessarily proud to say that we are still negotiating with them, as I do understand that there have been prolonged negotiations, and it is taking time. The client, however, has re-toured the property last week for a different requirement, and we are still in their plans at this time. It is just dealing with an international company takes more time and takes a little bit more, not necessarily effort, but takes more effort to get it to the finish line. However, we also have drummed up leasing interest with three other parties for various size requirements, including a full building requirement. Based on our discussions and certain terms that have been provided to our prospects, we would be expecting revenue in 2027.

Speaker #3: And I'm not necessarily proud to say that we're still negotiating with them as I do understand that there have been prolonged negotiations and it is taking time.

Speaker #3: The client, however, has reached toward the property last week for a different requirement and we're still in their plans at this time. It's just dealing with an international company takes more time and takes a little bit more.

Speaker #3: I'm not necessarily effort, but takes more effort to get it to the finish line. The however, we also have strummed up leasing interest with three other parties for various size requirements including a full building requirement.

Stéphanie Léonard: However, we also have drummed up leasing interest with three other parties for various size requirements, including a full building requirement. Based on our discussions and certain terms that have been provided to our prospects, we would be expecting revenue in 2027.

Speaker #3: Based on our discussions and certain terms that have been provided to our prospects, we'd be expecting revenue in 2027. Over the past summer months, we've noticed increased momentum in the market mainly in terms of our industrial availabilities which is a positive sign.

Stéphanie Léonard: Over the past summer months, we have noticed increased momentum in the market, mainly in terms of our industrial availability, which is a positive sign. Office requirements have remained very active, as we do have a healthy pipeline, and retail, as per usual, continues to be our most stable operating segment, showing a 98.9% occupancy rate for which demand is constant. On this note, I will turn over the call to Martin.

Speaker #3: Office requirements have remained very active as we do have a healthy pipeline and retail as per usual continues to be our most stable operating segment showing a 98.9% occupancy rate for which demand is constant.

Speaker #3: And on this note, I'll turn over the call to Macampi.

Speaker #2: Thank you, Stephanie. Good morning, everyone. For the the second quarter, rental revenues stood at 31.9 million dollars. That's an increase of 4.5% compared to the same quarter last year.

Marc-André Lefebvre: Thank you, Stéphanie. Good morning, everyone. For Q2, rental revenues stood at CAD 31.9 million. That is an increase of 4.5% compared to the same quarter last year. The increase is caused by a non-cash straight-line lease adjustment, which negatively affected the rental revenue by CAD 1.8 million in Q2 of last year. Dispositions completed throughout 2025 and 2026 were partially offset by acquisitions concluded this year, and the net increase is CAD 0.2 million. New leases concluded, higher lease renewal rental rates, and increases in rental spreads for in-place leases contributed to an increase of CAD 0.2 million, which was partially offset by a decrease of CAD 0.8 million resulting from planned tenant departures that are not yet replaced, also from free rent granted to new tenants, and the rent reduction granted to The Lion Electric Company.

Speaker #2: The increase is caused by a non-cash straight-line lease adjustment, which negatively affected the rental revenue by $1.8 million in the second quarter of last year.

Speaker #2: This position is completed throughout 2025 and 2026 were partially offset by acquisitions concluded this year and it the the net increase is 0.2 million dollars.

Speaker #2: New leases concluded higher lease renewal rental rates and increases in rental spreads for in place leases contributed to an increase of 0.2 million dollars which was partially offset by a decrease of 0.8 million dollars resulting from planned tenant departures that are not yet replaced.

Speaker #2: Also from free rent granted to new tenants and the rent reduction granted to Lion Electric. NOI increased by 10.5% compared to the same quarter last year.

David Brown: NOI increased by 10.5% compared to the same quarter last year, and the increase was driven by the previously mentioned straight-line lease adjustment. Cash same-property NOI remains stable for the quarter compared to the same period last year. For the six-month period, cash same-property NOI decreased by 4.8%. The year-to-date decrease is driven by both industrial and office segments. First, the office segment was impacted by a partial lease cancellation payment received, and that payment is CAD 1 million. It positively affected NOI during Q1 2025. A decrease in NOI due to free rent granted to new tenants in Q1 2026, with whom leases were concluded in Q4 2025, and planned departure that has not been replaced.

Marc-André Lefebvre: NOI increased by 10.5% compared to the same quarter last year, and the increase was driven by the previously mentioned straight-line lease adjustment. Cash same-property NOI remains stable for the quarter compared to the same period last year. For the six-month period, cash same-property NOI decreased by 4.8%. The year-to-date decrease is driven by both industrial and office segments. First, the office segment was impacted by a partial lease cancellation payment received, and that payment is CAD 1 million. It positively affected NOI during Q1 2025. A decrease in NOI due to free rent granted to new tenants in Q1 2026, with whom leases were concluded in Q4 2025, and planned departure that has not been replaced.

Speaker #2: And the increase was driven by the previously mentioned straight-line lease adjustment. Cash same property NOI remains stable for the quarter compared to the same period last year.

Speaker #2: For the six-month period, cash same property NOI decreased by 4.8%. The year-to-date decrease is driven by both industrial and office segments. First, the office segment was impacted by a partial lease cancellation payment received, and that payment is $1 million.

Speaker #2: And it positively affected NOI during the first quarter of 2025. A decrease in NOI due to free rent granted to new tenants in the first quarter of 2026 which whom leases were concluded in the fourth quarter of 2025.

Speaker #2: And planned departure that that that has not been replaced. Second, the decrease in the industrial segment is due to the planned departure of a tenant not yet fully replaced and a rent reduction of 0.4 million dollars granted to Lion Electric.

David Brown: Second, the decrease in the industrial segment is due to the planned departure of a tenant not yet fully replaced and the rent reduction of CAD 0.4 million granted to The Lion Electric Company. FFO adjusted per unit was CAD 0.097 for the quarter. That is an increase of CAD 0.014 or almost 17% compared to the same quarter last year. This increase was mainly driven by the previously mentioned increase in NOI. Adjusted AFFO per unit was CAD 0.098 for the quarter, an increase of CAD 0.003 or 3% compared to the same quarter last year. The increase is explained by an increase in cash NOI of CAD 0.3 million. We maintain our distribution to unitholders at CAD 0.075 per unit for Q2, and that represents CAD 0.30 per unit on an annualized basis.

Marc-André Lefebvre: Second, the decrease in the industrial segment is due to the planned departure of a tenant not yet fully replaced and the rent reduction of CAD 0.4 million granted to The Lion Electric Company. FFO adjusted per unit was CAD 0.097 for the quarter. That is an increase of CAD 0.014 or almost 17% compared to the same quarter last year. This increase was mainly driven by the previously mentioned increase in NOI. Adjusted AFFO per unit was CAD 0.098 for the quarter, an increase of CAD 0.003 or 3% compared to the same quarter last year. The increase is explained by an increase in cash NOI of CAD 0.3 million. We maintain our distribution to unitholders at CAD 0.075 per unit for Q2, and that represents CAD 0.30 per unit on an annualized basis.

Speaker #2: FFO adjusted per unit was 9.7 cents for the quarter. That's an increase of 1.4 cents or almost 17% compared to the same quarter last year.

Speaker #2: This increase was mainly driven by the previously mentioned increase in NOI. Adjusted AFFO per unit was 9.8 cents for the quarter and increase of 0.3 cents or 3% compared to the same quarter last year.

Speaker #2: The increase is explained is explained by an increase in cash NOI of 0.3 million dollars. We maintain our distribution to unit holders at 7.5 cents per unit for the second quarter.

Speaker #2: And that represents $0.30 per unit on an annualized basis. The AFFO adjusted payout ratio was 76.5% for the quarter, and that's an improvement of 2.7% from the same quarter last year.

David Brown: The AFFO adjusted payout ratio was 76.5% for the quarter, and that is an improvement of 2.7% from the same quarter last year. The value of our investment properties portfolio remains virtually unchanged at CAD 1.2 billion compared to the prior quarter. We did not make any portfolio-wide changes to our cap rate this quarter, and the weighted average cap rate for the entire portfolio stood at 6.7%, the same as the previous quarter. We concluded the quarter with a total debt ratio of 58.1%. The weighted average term and average interest rates on our mortgage portfolio were 2.2 years and 4.4%, respectively. Finally, at the end of the quarter, we held CAD 0.6 million in cash and CAD 14.8 million was available under our credit facilities, and that is a total equity of CAD 15.4 million. This completes our presentation. We will now open the call to questions.

Marc-André Lefebvre: The AFFO adjusted payout ratio was 76.5% for the quarter, and that is an improvement of 2.7% from the same quarter last year. The value of our investment properties portfolio remains virtually unchanged at CAD 1.2 billion compared to the prior quarter. We did not make any portfolio-wide changes to our cap rate this quarter, and the weighted average cap rate for the entire portfolio stood at 6.7%, the same as the previous quarter. We concluded the quarter with a total debt ratio of 58.1%.

Speaker #2: The value of our investment properties portfolio remains virtually unchanged at 1.2 billion dollars compared to the prior quarter. We did not make any portfolio-wide changes to our cap rate this quarter and the weighted average cap rate for the entire portfolio stood at 6.7%.

Speaker #2: The same as the previous quarter. We concluded the quarter with a total debt ratio of 58.1%. The weighted average term and average interest rate on our mortgage portfolio were 2.2 years and 4.4%, respectively.

Marc-André Lefebvre: The weighted average term and average interest rates on our mortgage portfolio were 2.2 years and 4.4%, respectively. Finally, at the end of the quarter, we held CAD 0.6 million in cash and CAD 14.8 million was available under our credit facilities, and that is a total equity of CAD 15.4 million. This completes our presentation. We will now open the call to questions.

Speaker #2: Finally, at the end of the quarter, we held $0.6 million in cash and $14.8 million was available under our credit facilities. That brings our total liquidity to $15.4 million.

Speaker #2: So this completes our presentation. We will now open the call to questions. Operator, can we please have the first question on the line?

Michel Léonard: Operator, can we please have the first question on line 1?

Marc-André Lefebvre: Operator, can we please have the first question on line 1?

Speaker #1: At this time, I would like to remind everyone that the analysts may now ask their questions by pressing star followed by the number one on your telephone keypad.

Operator: At this time, I would like to remind everyone that the analysts may now ask their questions by pressing star followed by the number 1 on your telephone keypad. Again, if you would like to ask a question, please press star 1. We will now pause for just a moment to compile the Q&A roster. Your first question comes from Mark Rothschild with Canaccord Genuity. Your line is now open.

Speaker #1: Again, if you would like to ask a question, please press star one. We'll now pause for just a moment to compile the Q&A roster.

Speaker #1: Your first question comes from Mark Rothschild with Canaccord Genuity. Your line is now open.

Speaker #4: Thanks. Thanks. Good morning. Maybe—hey, just starting with, you know, obviously it's not a major deal with the office partner that you bought out.

Stéphanie Léonard: Good morning, Mark.

Michel Léonard: Good morning, Mark.

Mark Rothschild: Hey, just starting with, obviously it is not a major deal with the office partner that you bought out. Just talk a little bit about what went into the thought of buying out the stake and the long-term plan. Is this a property that you are going to maybe look to sell at some point soon?

Speaker #4: Just talk about a little bit about what went into the thought of buying out stake and with a long-term plan. Is this a property that you're going to really look to sell at some point soon?

Michel Léonard: The dynamic of purchasing this property was basically a consequence of the poor management of our partner. We felt that it was time for us to separate as a result of the poor management. Two years ago,

Speaker #5: The the the dynamic of selling of purchasing this property was basically a consequence of the poor management of our partner. And we felt that it was time for us to separate as a result of the poor management.

Speaker #5: So, two years ago, and driven by the same kind of impetus, we put the property on the market. Most of the people that were looking at purchasing the property were looking at it on a development basis.

Michel Léonard: Driven by the same kind of impetus, we put the property on the market. Most of the people that were looking at purchasing the property were looking at it on a development basis. Obviously, on a pure development basis, it is worth a lot more than the total consideration, call it CAD 14 million. Our partner at that time was looking at it with a lot of stars in his eyes, basically thinking that this was a property that was worth CAD 20 million, CAD 22 million, but never basically made an offer to us to exit. That is what we wanted. We wanted to exit from this property. The frustrations just mounted, and as a result, we decided that it was time for us to step in and purchase the 50% interest. The property is going to be eventually on the market.

Speaker #5: And obviously on a on a pure development basis, it's worth a lot more than the total consideration that we call it 14 million dollars.

Speaker #5: So our partner at that time was looking at it with a lot of stars in his eyes, basically thinking that this was a property that was worth $20 million, $22 million.

Speaker #5: But never basically made an offer to us to exit and that's what we wanted we wanted to exit from this property. But the frustrations just mounted.

Michel Léonard: We wanted to exit from this property. The frustrations just mounted, and as a result, we decided that it was time for us to step in and purchase the 50% interest. The property is going to be eventually on the market.

Speaker #5: And as a result, we decided that it was time for us to step in and purchase the 50% interest. The the property is going to be eventually on the market.

Speaker #5: So it's not a property that we're going to hold. And it's just we're waiting for the right the right moment in order to put it back on the market.

Michel Léonard: It is not a property that we are going to hold. It is just we are waiting for the right moment in order to put it back on the market. We did attract some purchasers, and our goal is to reach back to these eventual purchasers. For us, it was a question of managing, it was a question of responding properly to our tenancy. They had the management interest, and I will give you a few examples. When it was time to finance the property, we had to take the responsibility of financing or refinancing the property and negotiating with the lender because they seemed to be unable to do so.

Speaker #5: We did attract some purchasers and our goal is to reach back to these eventual purchasers. But for us, it was a question of managing it was a question of responding properly to our tenancy and, you know, they had the management interest and I'll give you a few examples.

Speaker #5: When it was time to finance the property, we had to take the responsibility of financing or refinancing the property and negotiating with the lender, because they seemed to be unable to do so.

Speaker #5: When it was time to negotiate the lease with with Giant Tiger, that we basically identified, you know, during when we go to ICSC and so on and we identified Giant Tiger as a potential tenant, we had to carry all the negotiations and at the end of the day, we had to pay them a fee for the negotiations that we did carry.

Michel Léonard: When it was time to negotiate the lease with Giant Tiger that we basically identified, during when we go to ICSC and so on, and we identified Giant Tiger as a potential tenant, we had to carry all the negotiations. At the end of the day, we had to pay them a fee for the negotiations that we did carry. The frustrations were there, and we had to find a way out. Obviously, for us, the best way out would have been to have been purchased, but unfortunately, I don't think that the partner that we had the money in order to purchase us. That is the scenario. For us, it is a relief and it is basically going back to the market, eventually.

Speaker #5: So the the the the frustrations were there. And we had to find a way out. Obviously for us, the best way out would have been to be to be to have been purchased.

Speaker #5: But unfortunately, I don't think that the partner that we had had had the the money in order to purchase us. So that's the scenario.

Speaker #5: It's for us, it's a relief. And it's basically going back to the market eventually.

Speaker #4: Okay, great. Thanks. And maybe just one more. A lot of leasing information that was given pretty quickly. But looking at the leasing spreads, you know, for industrial retail, they they've generally been pretty good.

Mark Rothschild: Okay, great. Thanks. Maybe just one more, a lot of leasing information that was given pretty quickly. But looking at the leasing spreads for industrial retail, they've generally been pretty good. Are these numbers that we should look at as good expectations for what can be achieved over the next year or so, or were there any specific items that maybe pushed these numbers higher?

Speaker #4: Are are these numbers that we should look at as good expectations for what can be achieved over the next year or so? Or were there any specific items that maybe pushed these numbers higher?

Speaker #5: No, I think that the the numbers are a good indication. I think if you look at the past and you look at our trend, I think it is a good the numbers are are strong and are a good indication.

Michel Léonard: No, I think the numbers are a good indication. I think if you look at the past and you look at our trend, I think the numbers are strong and are a good indication.

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

Mark Rothschild: Okay, great. Thanks. I'll turn it back.

Speaker #1: Again, if you would like to ask a question, please press star one. Your next question comes from Matt Kornak with National Bank of Canada.

Operator: Again, if you would like to ask a question, please press star one. Your next question comes from Matt Kornack with National Bank of Canada. Your line is now open.

Speaker #1: Your line is now open.

Speaker #4: Good morning, guys. Maybe just to follow up on Mark's questioning with regards to the leasing spreads, but on the occupancy front, can you give us a sense as to—obviously, retail has fallen, industrial it seems like took a little bit of a step back in the quarter—but how should we think about the trajectory in terms of your leasing prospects on vacant space versus any known kind of non-renewals in the next 12 months, call it?

Matt Kornack: Good morning, guys. Maybe just to follow up on Mark Rothschild's questioning with regards to the leasing spreads, but on the occupancy front. Can you give us a sense as to, obviously, retail is full. Industrial, it seems like took a little bit of a step back in the quarter, but how should we think about the trajectory in terms of your leasing prospects on vacant space, versus, any known non-renewals in the next 12 months, call it?

Speaker #5: Well, on the on let's start with non-renewals. We haven't received any notices from our tenancy that they're that they're not renewing leases for next year.

Michel Léonard: Well, let's start with non-renewals. We haven't received any notices from our tenancy that they're not renewing leases for next year. That's a positive aspect. We're now in August. Usually notices come, let's say, 6 months prior to the end of the term of the lease, and we haven't received notices on that front. As far as our leasing aspect and the occupancy rate, we're very hopeful that, first of all, as Stéphanie Léonard mentioned earlier, that the de la Côte-de-Liesse property is going to be partially or totally leased on a committed basis by the end of the year. That's 2.2%. We're, I wouldn't say far advanced in negotiations, but I would say we are in negotiations, and two of these tenants that Stéphanie Léonard spoke about have to commit to something by either the end of September or the end of October.

Speaker #5: So that's a positive aspect. We're now in August. You know, usually notices come let's say six months prior to the end of the term of the lease and we haven't received notices on that front.

Speaker #5: As far as our leasing aspect and the occupancy rate, we're very hopeful that, first of all, as Stephanie mentioned earlier, the property is going to be partially or totally leased on a committed basis by the end of the year.

Speaker #5: So that's 2.2%. So and we we're I wouldn't say far advanced in negotiations, but I would say we are in negotiations and one of the two of these tenants that Stephanie spoke about have to commit to something by the end of either the end of September or the end of October.

Michel Léonard: We're, I wouldn't say far advanced in negotiations, but I would say we are in negotiations, and two of these tenants that Stéphanie Léonard spoke about have to commit to something by either the end of September or the end of October.

Speaker #5: So on a committed basis, we're hopeful that it's going to pan out. One of these tenants, the one that is looking at at the whole building, is a tenant that would need needs needs a fit-up period of almost a year.

Michel Léonard: On a committed basis, we're hopeful that it's going to pan out. One of these tenants, the one that is looking at the whole building, is a tenant that would need a fit-up period of almost 1 year. It would mean that the property would be committed, and I'm just on an assumption basis, let's say that they would have occupancy on 1 January. The retrofit that they have to build in the property would take roughly 9 to 12 months. As a result of it, as far as cash flow is concerned, it would not hit our cash flow next year, but as far as the streamlining of rent, then it would be recognized. Again, we're hopeful. We're talking about a minimum of 2% as far as the occupancy is concerned.

Speaker #5: So it would mean that the property would be committed and that's let's say it's and I'm just on an assumption basis. Let's say that the the they would have occupancy on January 1st.

Speaker #5: The retrofit that they have to build in the property would take roughly 9 to 12 months. So, as a result of it, as far as cash flow is concerned, it would not hit our cash flow next year.

Speaker #5: But on as far as far as, you know, the the the streamlining of rent, then it would be recognized. But again, we're hopeful. We're talking about a minimum of 2% as far as the occupancy is concerned.

Speaker #5: The other one that Stephanie mentioned in her presentation is a 24,000 square foot property located in Alberta. So, that property—the reason that we lost our tenant is not because they didn't enjoy it.

Michel Léonard: The other one that Stéphanie Léonard mentioned in her presentation is a 24,000 square foot property located in Alberta. That property, the reason that we lost our tenant is not because they didn't enjoy it, was basically because the building was too small for them, and they needed to double their size. There are two prospects that are looking at the property right now, both of them to lease up the whole building. We're hopeful on that front again. That's 24,000 square feet. I don't think that's going to move the needle. What will move the needle is more than 132,000 square feet of availability in Laval.

Speaker #5: It was basically because the the the building was too small for them and they needed to double their size. We have we're we there are two prospects that are looking at at the property right now.

Speaker #5: Both of them to lease up the whole building. So we're hopeful on that front again. But that's 24,000 square feet. I don't think that that's going to move the needle.

Speaker #5: What will move the needle is more than 132,000 square feet of availability in Laval.

Speaker #4: And and just Michelle, in terms of the the terms of I understand that it hasn't been signed and it's prospect, but where where would the rents be relative to the prior tenant and it sounds like the the capex fit-out is going to be done on the part of the tenant.

Matt Kornack: Michel, in terms of the terms of, I understand that it hasn't been signed and it's prospect, but where would the rents be relative to the prior tenant? It sounds like the CapEx fit-out is going to be done on the part of the tenant. Would you have to give any sort of TIs or leasing costs related to that?

Speaker #4: Would you have to give any sort of TIs or leasing costs related to that?

Speaker #5: We're we're not quite there yet. As far as, you know, how you know, are we going to contribute or not, we're not quite there yet.

Michel Léonard: We're not quite there yet. As far as are we going to contribute or not, we are not quite there yet. The past tenant was paying a little bit less than CAD 8 net, and the discussions are north of CAD 11. So at a minimum, there's a premium on rent of CAD 3 a square foot.

Speaker #5: The past tenant was paying a little bit less than $8 net. And we're the discussions are north of $11. So at a minimum, there's a premium on rent of $3 a square foot.

Speaker #4: Okay. And then this quarter, I I mean, last quarter, capex was down. This quarter, it was up a bit. Like as you're going through some of the leasing or or just in the normal course, do you expect capex to kind of remain in in term in long-term average ranges or or should we expect a little bit of a pickup in the near term?

Matt Kornack: Okay. This quarter, I mean, last quarter, CapEx was down. This quarter, it was up a bit. As you're going through some of the leasing, or just in the normal course, do you expect CapEx to kind of remain in long-term average ranges, or should we expect a little bit of a pickup in the near term?

Speaker #5: No. I'm I'm I'm we're not expecting it to pick up. I think it's always a bit slightly down slightly up, but on a yearly basis, it's going to normalize to historical numbers.

Marc-André Lefebvre: No, we're not expecting it to pick up. I think it's always a bit slightly down, slightly up, but on a yearly basis, it's going to normalize to historical numbers.

Speaker #4: Okay. And then lastly, just on the capital allocation side, you've done some dispositions in Touaregar, which I think would are welcome. And what are you thinking over the next, call it, 12 months in terms of potential to sell more assets, the the refocusing on industrial and the regions that you're potentially looking at for that expansion?

Matt Kornack: Okay. Lastly, just on the capital allocation side, you have done some dispositions in Trois-Rivières, which I think are welcome. What are you thinking over the next, call it, 12 months in terms of potential to sell more assets, the refocusing on industrial and the regions that you are potentially looking at for that expansion, and just the general tone in the disposition or acquisition market?

Speaker #4: And and just the general tone and the the disposition or acquisition market.

Michel Léonard: We see, as far as disposing of office properties, just to be specific to your question and redeploying office into industrial, we are seeing a higher demand at this point. We obviously have demand for certain retail properties. I mentioned during the last quarter that we had put a retail property, or call it two retail properties on the market with an office property as a package. We were not successful in selling it as a package, so we are looking at possibly selling. It is located in a tertiary market, the Saint-Jean-sur-Richelieu, as we have discussed before. So we are looking at putting the retail property on the market and one of the office properties on the market. Last year, we were not successful in selling the property located in Saint-Hilaire as a result of the fact that the lease term for the major tenant was expiring in 2027.

Speaker #5: We, we... I, we see, as far as disposing of office properties—just to be specific to your question—and redeploying office into industrial, we're seeing a higher demand at this point.

Speaker #5: We obviously have demand for certain retail properties. I mentioned during the last quarter that we had put a retail property, or call it two retail properties, on the market with an office property as a package.

Speaker #5: We were not successful in selling it as a package. And so we're looking at possibly selling you know, it's located in a tertiary market, the Saint-Jean-sur-Richelieu, as we've discussed before.

Speaker #5: So we're looking at putting the retail property on the market, and one of the office properties on the market. Last year, we weren't successful in selling the property located in Saint-Hilaire.

Speaker #5: As a result of the fact that the lease term for the the major tenant was expired in 2027. As Stephanie mentioned, we were successful in renewing the term of that lease for 10 years.

Michel Léonard: As Stéphanie mentioned, we were successful in renewing the term of that lease for 10 years. So now we are getting ready to put it back on the market or going back to the potential acquirers that were identified and were steadfast on a condition of a lease renewal. So overall, I think that if you start adding from this point on this year to the end of next year, we may have, and what we want, our objective is to sell roughly CAD 100 million, if not more, of office assets. With this, maybe a little bit of retail to complement the package, and redeploying the totality of the proceeds of the sale into industrial.

Speaker #5: So now we're getting ready to put it back on the market or going back to the potential acquirers that were identified and were steadfast on a condition of a lease renewal.

Speaker #5: So overall, I I think that if you start adding during from this point on this year to the end of next year, we may have and we're what we want our objective is to sell roughly 100 million, if not more, of office assets and with this maybe a a little bit of retail to to complement the package.

Speaker #5: And redeploying the totality of the proceeds of the sale into industrial.

Speaker #4: And just relative cap rates between those two, are you finding that they're more similar today for the types of assets—suburban office outside of Montreal and then industrial—where you're buying it?

Matt Kornack: Just relative cap rates between those two, are you finding that they are more similar today for the types of assets, suburban office outside of Montréal and then industrial where you are buying it? Have those compressed or are they still a little bit wide of one another?

Speaker #4: Have those compressed or are they still a little bit wide of one another?

Speaker #5: There I mean, that's that's your tricky question of the day. The the cap rates of I think that if you're looking at Ottawa, Ottawa is experiencing a a very high cap rate.

Michel Léonard: That is your tricky question of the day. The cap rates, I think that if you are looking at Ottawa is experiencing a very high cap rate for office properties. If we are looking at, I am not mentioning that we are going to sell our Ottawa assets because the cap rates are just, for now, too high, although the properties are stellar in my mind. Unfortunately, we are not going to hit the bid on those properties. On the island, Montréal, or around the island, Montréal, we are seeing that if you compare this year to last year, there has been compression, but not enough to get to the same cap rates as the industrial properties that we are purchasing. There is going to be some slippage there. However, if you look at a property, for instance, the one that we sold in Trois-Rivières, it was 80% leased.

Speaker #5: For office properties. So if we're looking at, you know, I'm I'm not mentioning that we're going to sell our Ottawa assets because the cap rates are just for now too high.

Speaker #5: Although the properties are stellar, in my mind, unfortunately, we're not going to hit the bid on those properties. On the Island of Montreal or around the Island of Montreal, we're seeing that if you compare this year to last year, there has been compression.

Speaker #5: But not enough to get to the same cap rates as the industrial properties that we are purchasing, so there's going to be some slippage there.

Michel Léonard: There is going to be some slippage there. However, if you look at a property, for instance, the one that we sold in Trois-Rivières, it was 80% leased.

Speaker #5: However, if you look at a property, for instance, the one that we sold in Three Rivers, it was 80 percent leased. So 80 percent leased on a on a in-place cap rate basis was 8.5, I think, a cap rate of 8.5.

Michel Léonard: 80% leased on an in-place cap rate basis was a cap rate of 8.5. To redeploy this, it means that if we take the same amount of cash and we redeploy it into an industrial property that is 100% leased, we are going to get more NOI out of our money. If you, on a redeployment basis, I think that it becomes more affordable for us and obviously accretive to us to look at the NOI that is being produced by a property versus only looking at a cap rate.

Speaker #5: But to redeploy this, it meant it means that if we take the same amount of cash and we redeploy it into an industrial property, that is 100 percent leased, we're going to get more NOI out of our money.

Speaker #5: And if you, on a redeployment basis, I think that it becomes more affordable for us, and obviously accretive to us to look at the NOI that is being produced by a property, versus only looking at a cap rate.

Speaker #4: Okay. No, that makes sense. Thanks, Michelle.

Matt Kornack: Okay. No, that makes sense. Thanks, Michel.

Speaker #2: At this time, no, no further questions. Please go ahead, Mr. Léonard.

Operator: At this time, there are no further questions. Please go ahead, Mr. Leonoff.

Speaker #5: Thank you for participating in our meeting. I think that a lot of what Matt touched on were points that I was going to hit on in my conclusion.

Michel Léonard: Thank you for participating in our meeting. I think that Matt touched on the points that I was going to hit on in my conclusion. Unfortunately, I don't want to repeat myself and waste your time. But overall, I think that we're confident that we're going to be able to sell our properties contrary to what happened during COVID and so on, and we're confident that we don't have to necessarily give them away in order to redeploy in industrial. We do have a pipeline to redeploy our capital into industrial assets, and hence, we are going to be very active in our selling of some properties within our portfolio. With this, I thank you very much for participating in this call today, and we'll see you for our results of Q3 2026. Thank you.

Speaker #5: So, unfortunately, I don't want to repeat myself and waste your time. But overall, I think that, you know, we are—we're confident that we're going to be able to sell our properties, contrary to, you know, what happened during COVID and so on.

Speaker #5: And we're confident that we don't have to necessarily give them away in order to redeploy in industrial. We do have a pipeline to redeploy our capital into industrial assets.

Speaker #5: And hence, we are going to be very active in our selling of some properties within our portfolio. So with this, I thank you very much for participating in this call today.

Speaker #5: And we'll see you for our results of Q3 2026. Thank you.

Operator: This concludes today's conference call. You may now disconnect.