CT REIT Stock

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 second quarter 2026 earnings results conference call. [Operator Instructions]

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, 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 second quarter 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. And now I'd like to turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin?

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%. 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 $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. 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 $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. As Lesley 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 continue 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?

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 $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 $76 million of previously announced investments during the quarter, which together added over 232,000 square feet of incremental GLA to the portfolio. 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. 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 $354 million, of which approximately $191 million has been spent to date. 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 under development of which 91.6% has been leased to Canadian Tire.

Returning to leasing, during the second quarter, CT REIT completed nine Canadian Tire store lease renewals. On blended basis, renewal leasing activity for the portfolio totaled over 618,000 square feet at a 10.4% increase. 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 Lesley to discuss our financial results. Lesley.

Thanks, Jodi, 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 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. The 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 $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 the second quarter, general and 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 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 $44.3 million in the second quarter, compared to $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 and industrial properties based on market activity and recently completed external appraisals. In the second quarter, AFFO per unit on a diluted basis was $0.326, up 2.5% compared to the second quarter of last year. FFO on a diluted basis was $0.353 per unit, up 3.2% compared to Q2 2025. 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 $0.237 per unit, reflecting the higher monthly distribution rate that became effective in July '25. 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 3.49x compared to 3.55x in Q2 of 2025. 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%. The net proceeds were used to repay the $200 million of Series D unsecured debentures that matured on June 1, '26, and to pay down amounts owing under our credit facilities.

Even with these refinancing activities, our total indebtedness to EBITFV improved to 6.56x at June '26 compared to 6.77x at the end of 2025. 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. 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 both with a strong foundation as well as substantial financial flexibility to fund future growth initiatives. And with that, I will turn back the call to the operator for any questions.

Certainly. [Operator Instructions] Our first question comes from the line of Tal Woolley from CIBC Capital Markets. Your question, please.

Just wondering if you can speak at all to sort of any deal flow that you've seen outside of Canadian Tire? Have you, has there been a lot to look at a little bit? And what's sort of been available to -- is like, put in front of you of late?

Hey, Tal, 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. Obviously we have had discussions ongoing, you know, with market participants about the type of assets we acquire, which, you know, 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'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. So I think we'll just keep at it and we'll see where the year takes us.

And maybe you can just refresh us on, like, what sort of size or what's our quantity of maybe of REIT suitable properties Canadian Tire still hold.

I'd say there's 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 you know 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.

Okay. And then can you just talk a little bit about, you know, you're sort of more into the teeth of doing a lot of Canadian Tire renewals, or at least renewals at this point in time. Is that something like you guys sit down to tackle like, you know, 2 times a year, 4 times a year? Like how, can you just talk a little bit about that with the process of that, given that there are normally so many to do?

Sure. Under the lease, there's a period at which they will have to notify us of their intention to renew or not. 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. Um, so we have a pretty good line of sight to, um, you know, 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, you know, renewal terms, anything else that needs to be discussed to lead to ultimately, you know, the appropriate lease documentation to then codify the renewal.

Okay. And then, Lesley, you know, like the leverage metrics, you know, 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. I'm just wondering, like, is that something you've been in discussion with the credit rating agencies at any point?

I mean, we're really happy where the sort of 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. So, you know, we're happy with the credit metrics, you know, they're very positive, but I think really the ratings are linked to that of Canadian Tire, so there'd have to be a broader discussion, but yes, that is something that we discuss with the rating agencies on a regular basis when we meet with them, but we sort of are where we are, and if things change for Canadian Tire, then there's a possibility right now that things could change for us.

Thank you. And our next question comes from the line of Sam Damiani from TD Cowen. Your question, please.

I 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 announced, 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?

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 and elevated pricing. And so for us, you know, 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. And, you know, I mentioned in the previous answer, you know, 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.

Okay, understood. And 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, you know, seems to indicate, you know, a yield that hasn't moved with the market over the last year, let's say.

Yes, 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, great site, just a kitty-corner from Pen Centre. St. Catharines is a strong market for Canadian Tire. For us, it totally fit with our portfolio and was a desirable asset.

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

Well, the lease renewals that we've effected over the last two years would be part of the uptick 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, Sam.

Okay, and Kevin, you mentioned lease renewals. Does that mean that your IFRS -- you know, implicitly assumes some percentage of renewal or non-renewal, and then, you know, 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?

Yes, 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.

Congrats on the great results.

Thank you. And our next question comes from the line of Giuliano Thornhill from National Bank.

Just kind of wanted to ask about the pipeline earlier, is that kind of represented or potential pipeline from CT? Is that a representative of your existing portfolio right now or is there anything like chunkier or like higher quality that that's available there could be available?

Yes, I mean, we like to think of our existing portfolio as high quality, so 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.

Okay, and then 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 upticking the investments capacity potentially?

Certainly. You know, 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're open to. 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 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, so we're trying to manage development exposure overall in the context of the total spend. So... I hope that answers your question, but we're open to doing more, but I think it's got to be on strategy and obviously financially attractive to us.

Yes, and then just lastly on Canada Square, I think you, it was mentioned in the prepared remarks around 75% of the project budget has been spent. I'm assuming that's 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?

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. The project itself, a 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, those would be modeled separately and analyzed separately when the time comes.

So that's just phase 1, correct?

That's right, yes.

Okay. And is there anything different about phase 2 in terms of, like, why would it be different potentially?

Yes, so phase 2, when it comes along down the road, is the residential component of the future land area of Canada Square. So phase 1 is the office retrofit of the two existing office buildings. Phase 2 is everything else. So they're completely different projects, different scope, budgets, timelines.

And then phase 1, we're working with the existing buildings. Phase 2 would be ground-up construction.

Yes, a little different. And then the 17%, is there like a dollar figure that you could disclose or approximation in your PUD value that has been outlaid there?

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

[Operator Instructions] Our next question comes from the line of Brad Sturges from Raymond James.

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?

Yes, so we've talked about it a little bit over the past couple calls where the pace at which we're adding to the development pipeline has certainly slowed, mostly related to the Canadian Tire-related projects. You know, we mentioned that one of the acquisitions in the quarter was a piece of land in the Okanagan Valley in British Columbia. 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. You know, 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. 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.

So there'll still be opportunities, but probably to a lesser extent as we've had for the next few years, I anticipate.

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 would that be, much of the all-in cost moved since June?

The all-in cost 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. So I think we're just happy to have that sort of one taken care of early on in the year.

[Operator Instructions] Our next question comes from the line of Lorne Kalmar from Desjardins. Your question, please.

Just a quick one from me on the leasing side, and sorry if I missed it, but it looks like you guys did a pretty decent job in terms of getting spreads on Canadian Tire stores, as I think we should anticipate by this point. 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. 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 you can -- these will trend over the next 12 to 18 months.

So, you know, I guess the problem with our third-party renewal activity is in most quarters, it's pretty small. I mean, this is about 100,000 square feet. So, you know, last quarter you mentioned that was skewed by some flat options that were exercised. I think this quarter there was some fixed rate options in there. There was 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. So I wouldn't read too much into it other than to say it fluctuates quarter to quarter.

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.

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. Thank you.

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

Good morning, everyone. Thank you for standing by, and welcome to CT REIT's Annual Meeting of Unitholders. Please be advised that today's meeting is being recorded. I would now like to hand the meeting over to Kimberley Graham, Senior Vice President, General Counsel and Corporate Secretary of CT REIT. Please go ahead.

Thank you, and good morning. Before we hear from the Chair of this meeting, followed by our CEO, it is important to note that today's meeting includes forward-looking statements and non-GAAP measures. Forward-looking statements are based on management's assumptions and beliefs and are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Non-GAAP measures such as adjusted funds from operations and net operating income do not have standardized meaning under IFRS and should not be considered a substitute for IFRS financial measures. Please refer to CT REIT's Q1 2026 and Annual 2025 Management's Discussion and Analysis as well as our 2025 annual information form for important information about forward-looking information and non-GAAP measures.

These can be found on the REIT's website or on SEDAR+. Our cautionary statements are up on the webcast screen at the moment. We have now posted the agenda for this meeting on the webcast screen, which you can follow as we progress. Unfortunately, CT REIT's Chair of the Board of Trustees, John O'Bryan, is not able to attend today's meeting, and he sends his deepest regrets. The Board has appointed Heather Briant, Chair of the REIT's Governance, Compensation and Nominating Committee, to act in John's stead as Chair of this meeting. I would therefore now like to introduce Heather Briant. Heather?

Good morning. It is my pleasure to welcome you to CT REIT's 13th Annual Meeting of Unitholders. We are sincerely appreciative that you have joined us here today. I will now proceed to read John O'Bryan's prepared comments on his behalf. 2025 was an excellent year for CT REIT despite the backdrop of difficult macroeconomic and geopolitical conditions. I am once again proud of the REIT's accomplishments as it announced its 13th distribution increase, further expansion of its portfolio through strategic investments, development and intensifications generated through its strong relationship with Canadian Tire and continued prioritization of financial flexibility. This distribution growth, portfolio expansion and financial prudence has contributed to long-term value creation and demonstrates our steadfast commitment to delivering reliable, durable and growing results for you, our unitholders.

While we take great pride in CT REIT's track record, we remain focused on the future. Your Board continues to meaningfully engage with prudent oversight that balances the long-term interest of the REIT with disciplined, sustainable growth. We are committed to ensuring that as a Board, we maintain the right mix of skills to provide good governance and objective advice in support of this strategy. We will continue to work with management as the REIT executes its strategy to drive performance and deliver strong financial results over the long term. In closing, I wish to express my appreciation to my fellow trustees and to management for their tireless dedication and efforts. To our valued unitholders, I would also like to thank you for your continued support of CT REIT. It is now my pleasure to invite the President and Chief Executive Officer of CT REIT, Kevin Salsberg, to say a few words. Kevin, over to you.

Thank you, Heather. I join you in welcoming our unitholders, team members and business partners to CT REIT's Virtual Annual Meeting of Unitholders. Reflecting on 2025, I am extremely proud of our achievements. Despite the challenging environment that Heather noted in John's remarks, CT REIT continued to deliver on its value proposition to you, our unitholders, namely a growing asset base, solid returns and financial stability. This past year, disciplined investment and strong execution drove our results. We deployed approximately $235 million through acquisition, development and intensification activities, adding approximately 900,000 square feet of incremental gross leasable area to our portfolio. Across 13 discrete investments, our team found new opportunities to acquire assets from third parties to redevelop and improve existing REIT properties and to build new locations, both for Canadian Tire and for other third-party tenants.

In addition, we announced a new 20-year lease with Canadian Tire Corporation at our Canada Square property, committing with our co-owner, Oxford Properties, to invest and improve the buildings in order to deliver what will become a AAA complex. Whether from organic growth, new development opportunities or strategic acquisitions, by executing against our growth levers and leaning into our core competencies, we continued to drive results in 2025 and to set the stage for sustainable long-term growth. Turning to operations. We ended the year with an occupancy rate of 99.5% and a weighted average lease term of 7.2 years. We delivered consistent growth across our key metrics on a year-over-year basis with same-property NOI growing by 2.2%, NOI overall growing by 4.6%, AFFO per unit growing by 2.8% on a diluted basis and net asset value per unit increasing to $18.53 at year-end, a 7% year-over-year increase.

We achieved this growth while maintaining a payout ratio in the low 70% range and further reducing our indebtedness ratio to 39.8%. And the strength of our balance sheet and debt metrics, coupled with our liquidity, puts us into an enviable position to continue to capitalize on opportunities going forward. Overall, we are very pleased with the results delivered in 2025. We continue to manage our business, focusing on opportunities that leverage our strategic relationship with Canadian Tire, optimize our existing asset base and allow us to maintain a strong balance sheet. This continued focus on our hallmarks and our people remain foundational to our success and positions us well as we continue to build value for you, our unitholders. We released our results for the first quarter of 2026 yesterday evening and held our quarterly analyst call earlier this morning.

To avoid repetition, I'll just highlight that we delivered increases in net operating income of 4.7% and adjusted funds from operations per unit of 2.8% on a diluted basis, a testament to the success of our strategy and execution in the face of a continued macroeconomic uncertainties. We also announced that the REIT's Board of Trustees approved a 3.5% increase to our distributions payable to unitholders. This increase represents the 13th time that CT REIT has raised its distributions since our IPO in 2013 and a 3.31% compound annual growth rate, a track record we are extremely proud of. If you were a unitholder with us since the time of our IPO, the monthly distributions that you will receive once this latest increase goes into effect will be over 50% greater than those provided to unitholders at the time we went public. We also continue to do important ESG work, focusing on creating sustainable outcomes for our stakeholders by striving toward a more climate-resilient, socially responsible and well-governed business.

In 2025, we advanced our ESG priorities while navigating our path for the future. We continue to support Canadian Tire with sustainable initiatives, including a dual fuel air source heat pump pilot project and the development of its first net zero ready store in Kelowna, British Columbia that opened in October 2025. Strong governance and inclusive leadership have always been a priority for the REIT. And so I am proud of the fact that, again, this year, we were included in The Globe and Mail's RoB Magazine's Women Lead Here list. I look forward to the release of our 2025 ESG report later this month, which will further highlight the progress that we have made over the course of this past year. CT REIT remains steadfast in seeking out ways to deliver value for our unitholders. Our core tenants remain strong, long weighted average lease terms, a portfolio that is virtually fully occupied, contractual rent growth and our unique relationship with Canadian Tire.

These enablers allow us to balance growth along with prudent fiscal management. It is with great optimism that I look to the future and CT REIT's prospects. We are proud of what we have accomplished to date, and we will continue to build upon this strong foundation. I would like to conclude my remarks today by thanking our Board of Trustees for their ongoing leadership, guidance and commitment to CT REIT. I would also like to thank the entire CT REIT team for their ongoing hard work. We are fortunate to have a talented team of leaders and employees who are extremely engaged and contribute every day to the REIT's success. Before I hand it back to Heather, I want to extend one last thank you to you, our unitholders, for your continued support of CT REIT. Heather, back over to you.

Thank you, Kevin. And now we will move to the formal business of the meeting. I will act as Chair of this meeting, and Kimberley Graham will act as Secretary. I appoint Anup Das of Computershare Trust Company of Canada, who is joining us remotely to act as the scrutineer of the meeting. Notice calling this meeting, together with the management information circular or the notice and access notification as applicable were mailed to unitholders of record as of the close of business on March 19, 2026. Copies of the management information circular and other meeting materials are available on the REIT's website and on SEDAR+.

I direct the Secretary to keep a copy of such proxy-related materials and the proof of mailing with the minutes of this meeting. The scrutineer has confirmed that a quorum of unitholders is present and represented by proxy. I therefore declare this meeting duly constituted for the transaction of business. I will ask the Secretary to prepare a final report on attendance as soon as practicable following the meeting and keep a copy of the preliminary and final scrutineers' reports on attendance with the minutes of this meeting and to provide any unitholder and proxyholder with the details on attendance at this meeting upon request. We have a few guidelines on how the formal business of this meeting will proceed, which the Secretary will now speak to. Kim?

Thank you, Madam Chair. To facilitate the introduction of motions and the conduct of the meeting, the Chair has arranged in advance for certain employee unitholders to move and second motions. Unitholders and proxyholders accessing the meeting online with a control number may submit comments or ask questions related to any motions through the online platform prior to the motions being voted upon. Also, there will be an opportunity to ask general questions following the formal business of the meeting. The items to be voted on today are the election of trustees and the appointment of the REIT's auditor. These items are each ordinary resolutions requiring a simple majority of the votes cast to be approved. For unitholders that have voted in advance of the meeting, your voting instructions have been recorded, and you do not need to take any further steps.

In order to vote at the meeting, registered unitholders should have logged into the webcast by entering the 15-digit control number on the proxy form as their control number. Duly appointed proxyholders, including beneficial unitholders who appointed themselves as proxyholders should have logged into the webcast by entering the 4-digit alpha code sent to them by Computershare as their control number. If you have logged in as a guest, you will not be able to vote at the meeting. Each item of business to be voted on at today's meeting will be conducted by way of a separate resolution. Once the Chair declares that voting for a specific motion has been opened, the ballot for such resolution will appear on your screen. You can also view the resolution by clicking on the voting icon on the navigation bar at the top left-hand side of your screen.

Ballots will remain open during the entire voting period. After voting on all items has been completed, the preliminary voting results will be read. The final voting results will be available after the meeting. Unitholders and proxyholders who are accessing the meeting online with a control number may submit questions. To submit a question, click on the messaging icon on the navigation bar at the top left-hand side of your screen, type your question in the messaging text box and then click the send button. When submitting your question, please identify whether it relates to a motion being considered as part of the formal business of the meeting or whether it is general in nature. Questions relating to any of the formal items of the business that are being voted on today will be answered once that motion has been introduced and will be read aloud at the appropriate time.

If time permits, we will attend to general questions received after the formal business has been completed. If you have a question, you may submit it at any point during the meeting. However, if possible, please submit your questions as early as possible during the meeting and prior to the commencement of the question period. We will do our best to respond to all questions during the meeting. However, in the interest of time, we will limit the Q&A period to 20 minutes, and any pertinent questions that cannot be answered today due to time constraints will be answered and posted online at www.ctreitagm.com as soon as practicable following the meeting and will remain online for a week after posting. I will now pass it back to the Chair of our meeting. Heather?

Thank you, Kim. The first item of business is for the unitholders to receive the REIT's audited consolidated financial statements for the year ended December 31, 2025, and the auditor's report thereon, which can be found in our 2025 annual report. The report was sent to all registered unitholders, except those who requested that these materials not be sent to them and to all beneficial unitholders who requested that these materials be sent to them. A copy of the materials was also filed on SEDAR+ and posted on our website.

Unless there is an objection, I will dispense with the reading of the auditor's report. We will now move to the next point on today's agenda. The next item of business is the nomination and election of trustees of the REIT. The size of our Board has been set at 8, and our management information circular contains detailed biographies and sets out the qualifications and backgrounds of the 8 nominees standing for election. I invite Kim to nominate the 3 Canadian Tire Corporation nominees named in the circular.

Madam Chair, I nominate TJ Flood, Dean McCann, and Kevin Salsberg for election as trustees of the REIT to serve until the next Annual Meeting of Unitholders or until their earlier resignation or retirement.

Thank you. I will now ask Kim to nominate the remaining 5 trustees named in the circular.

Madam Chair, I nominate Pauline Alimchandani, Heather Briant, Anna Martini, John O'Bryan and Kelly Smith for election as trustees of the REIT to serve until the next Annual Meeting of Unitholders or until their earlier resignation or retirement.

Thank you. Kim, have we received any questions on the nominations?

We have not received any questions on this matter.

Thank you. I will ask Bruce Detlor, Vice President, Finance, to make a motion to elect the persons nominated.

Madam Chair, I move that the persons nominated for election as trustees be elected as trustees of the REIT to serve until the next annual election of trustees or until their earlier resignation or retirement.

Thank you. May I have a seconder?

Madam Chair, my name is Brad Chapman, and I second the motion.

Thank you, Bruce and Brad. I declare that nominations are closed. Voting will now be opened on this matter, and the ballot will appear momentarily on your screen. Unitholders have been provided with the opportunity to vote for or withhold their vote in respect of each individual trustee nominee. Please vote now by selecting for or withhold. I remind you that the Board of Trustees and management recommend voting for all of the trustees set out in the circular. Also, may I remind you that if you have already voted or sent in your proxy, there is no need to do anything unless you wish to change your vote. We will pause for a moment to allow for voting to be completed.

[Voting]

The next item of business is the appointment of the REIT's auditor for the ensuing year and to authorize the trustees to set the auditor's compensation. The trustees of the REIT recommends the reappointment of Deloitte LLP, chartered professional accountants as the REIT's auditor for the ensuing year. Have we received any questions on this motion?

Madam Chair, we have not received any questions on this motion.

Thank you, Kim. I will now ask Brad Chapman, Vice President, Legal, to make the motion appointing Deloitte LLP as the auditor of the REIT and authorizing the Board of Trustees to set the auditor's compensation.

Madam Chair, I move that Deloitte LLP, Chartered Professional Accountants, be appointed as the auditor of the REIT to hold office until the next Annual Meeting of Unitholders and to authorize the Board of Trustees to set the auditor's compensation.

Thank you. May I have a seconder?

I second the motion.

Unitholders have been provided with the opportunity to vote for this motion or to withhold their vote. Please vote now by selecting for or withhold. I remind you that the Board of Trustees and management recommend voting for the reappointment of the REIT's auditor. Also, may I remind you that if you have already voted or sent in your proxy, there is no need to do anything unless you wish to change your vote. We will pause for a moment to allow for voting to be completed.

[Voting]

As this concludes the formal items of business to be considered at today's meeting, voting will now be closed. We will proceed to answer general questions from our unitholders momentarily. If you have not yet submitted a question and wish to do so, please submit your question now. Before we proceed to questions, I will ask Kim to report on the preliminary voting results.

Based on the preliminary scrutineers' report, approximately 80.56% of the REIT's outstanding units were voted by proxy in advance of the meeting. As such, sufficient votes were cast prior to the meeting in favor of the election of each trustee nominee and the motion approving the appointment of the auditor to carry both motions.

Thank you, Kim. I therefore declare each of the nominated trustees has been elected, and the auditors have been reappointed. The final voting results will be included in the records of this meeting and available after the meeting, which we will announce by way of press release. We will also file the final voting results on SEDAR+. Before proceeding with the question period, as there is no further business, I hereby declare the formal part of this meeting terminated. I will now ask Kim if there are any questions from unitholders.

Thank you, Madam Chair. As a reminder, unitholders and proxyholders who are accessing the meeting online with a control number or alpha code may submit questions. To submit a question, click on the messaging icon on the navigation bar at the top left of your screen, type your question within the messaging text box and then click the send button. We will pause for a few minutes to allow for questions to be submitted. Mr. Chair, we have not received any questions. Madam Chair, we have not received any questions.

Thank you, Kim. Thank you, everybody, for joining us today, and we look forward to the upcoming financial year. Have a wonderful day.

This concludes CT REIT's Annual Meeting of Unitholders. The lines are now closed.

Thank you for standing by. My name is Shannon, and I'll be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q1 2026 Earnings Results Conference Call. [Operator Instructions] The speakers on the call today 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. 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 Q1 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 required by applicable laws.

I will now turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin?

Thank you, Shannon, and good morning, everyone. Thank you for joining us today on our Q1 2026 earnings call. We are pleased with our start to the year and our first quarter results once again demonstrate the strength and stability of our portfolio, the benefits of our disciplined operating approach and the resilience of our business model. CT REIT's objective has always been straightforward to deliver dependable and growing results, supported by a high-quality portfolio and a conservatively managed balance sheet.

Our Q1 results reflect our continued execution against this objective. From an operating perspective, our portfolio continued to perform very well. Occupancy remained high at 99.4% consistent with prior periods, and we continue to benefit from the contractual rent escalations embedded in our long-term leases. Same-property NOI grew by 2.3% and net operating income increased by 4.7% year-over-year, respectively. This steady growth at the property level translated into continued improvement in our earnings metrics.

AFFO per unit increased by 2.8% compared to the first quarter of last year, and FFO per unit increased by 3.5%. It is important to note that this growth was achieved while maintaining a disciplined approach to costs and capital allocation and while keeping our payout ratio stable in the low to mid-70% range. Against this backdrop, we are pleased to announce that our Board of Trustees has approved a further increase in our monthly distributions. Effective with the July 2026 payment, distributions will increase by 3.5%, which marks our 13th increase since our IPO and brings our cumulative distribution growth to more than 50% over that period.

Turning to capital deployment. We were pleased to announce 3 new third-party investment opportunities with a total expected capital commitment of approximately $43 million. These investments include the acquisition of a Canadian Tire anchored retail property in Edmonton as well as the acquisition of 2 separate properties that are located adjacent to existing CT REIT-owned assets. One, a land parcel in Oliver, British Columbia and the other, an existing retail property in the Greater Montreal area. Collectively, these transactions are expected to deliver an attractive going-in yield and will add nearly 130,000 square feet of incremental GLA to the portfolio.

While individually modest in size, these investments are good examples of how we continue to source capital-efficient growth opportunities that align with our strategy. In each case, we are leveraging our portfolio, existing relationships and market knowledge to deploy capital in a prudent manner. This approach has been a consistent hallmark of CT REIT's growth over time and works particularly well in a transaction environment where discipline and selectivity remain critical.

At the same time, our development pipeline remains well positioned. We continue to advance a number of projects with 4 expected to be completed through the course of this year and others extending into 2027 and beyond, including our Canada Square retrofit project. These developments are all substantially pre-leased. And as Jodi will outline in more detail, they are designed to deliver incremental growth while maintaining the overall quality and balance of our portfolio.

From a balance sheet perspective, it remains in a very strong position. We ended the quarter with our indebtedness ratio sitting at 39% and our interest coverage ratio at 3.52x. The potential liquidity that this provides, coupled with our conservative approach, differentiates us from our peers and will position us well to continue to execute on our strategy going forward.

Looking ahead, we remain confident in CT REIT's ability to deliver reliable performance and long-term value creation with a stable, predominantly net lease portfolio, visible organic growth, a well-positioned development pipeline and a strong balance sheet, CT REIT will continue to navigate current environment and capitalize on opportunities as they arise.

With that, I'll now turn the call over to Jodi to discuss our investment development and leasing activities in more detail. Jodi?

Thanks, Kevin, and good morning, everyone. As Kevin noted, as highlighted in our press release yesterday, we were pleased to announce 3 new investments this quarter. The first acquisition relates to a property in the eastern part of Edmonton, roughly 76,000 square foot property is anchored by a Canadian Tire store and has 2 additional freestanding pads, 1 leased to the Bank of Montreal and 1 leased to McDonald's. The second acquisition is a 54,000 square foot CRU building anchored by Value Village that is directly adjacent to the CT-owned Canadian Tire store in Rosemere, Quebec, which is a suburb located just north of Montreal.

Lastly, we will be acquiring roughly 3.4 acres of land adjacent to a CT REIT-owned Canadian Tire and grocery store anchored open-air shopping center in Oliver, BC. These new investments are subject to closing conditions and are expected to close in Q2 and will require a total of $43 million to complete and are projected to earn a going-in yield of 6.28%. Combined, they will add approximately 130,000 square feet of high-quality GLA to our portfolio.

Looking ahead, our development pipeline remains healthy. We currently have 11 projects at various stages of progress. These developments, including the Canada Square office retrofit project in Toronto, represent a committed investment of approximately $380 million of which $177 million has been spent to date. We expect to invest roughly $78 million over the next 12 months to advance these projects. Once completed, they will add 629,000 square feet of new GLA to the portfolio approximately 95% of which has already been pre-leased.

Turning to leasing. During the first quarter, CT REIT completed 2 Canadian Tire store lease extensions. In the quarter, we also renewed nearly 200,000 square feet of third-party tenancies. On a blended basis, total renewal spreads came in at 5.9% on approximately 340,000 square feet of GLA. It should be noted that approximately 226,000 square feet of this GLA related to extensions that were exercised with fixed options to renew at flat rents. Excluding this GLA, blended renewal spreads came in at 11%. As of quarter end, we maintained a long weighted average lease term for the portfolio at 7.0 years and our occupancy rate remained robust at 99.4%.

I will now turn the call over to Lesley to discuss our financial results. Lesley?

Thanks, Jodi, and good morning, everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in the first quarter. Once again, our results demonstrated the steady growth and resilience of our portfolio. Same-property NOI, which includes the impact of intensifications, grew by 2.3% in the quarter compared to Q1 of 2025. These increases reflect the contractual rent escalations of approximately 1.5% per year in many of our Canadian Tire leases as well as the contributions from intensification projects completed in 2025 of $1.2 million for the quarter. Overall, NOI grew by 4.7% year-over-year, representing an increase of approximately $5.6 million. This strong performance was supported by the same property NOI growth I just spoke to and the impacts of 7 acquisitions completed in 2025 as well as development activity over the relevant period.

In the first quarter, general administrative expenses as a percentage of property revenue were 2.6% compared to 2.9% in the same period last year. The decrease was mainly due to the timing of the deferred income tax provision. Excluding the fair value adjustments, G&A as a percentage of property revenue decreased 20 basis points to 2.5%. The fair value adjustment on investment properties was $31.2 million in the quarter, compared to $24.8 million in the prior year. The gain was primarily driven by contractual rent increases and leasing activity within the property portfolio as well as adjustments to certain assumptions in our discounted cash flow models.

In the first quarter, AFFO per unit on a diluted basis was $0.327, up 2.8% compared to the first quarter of last year. FFO on a diluted basis was $0.354 per unit, up 3.5% compared to Q1 of 2025. Growth in FFO and AFFO primarily reflects the increase in NOI, partially offset by higher property expenses, interest costs and $1 million of development fee revenue earned in Q1 2025. Cash distributions paid in the quarter increased 2.5% compared to Q1 2025 to $0.237 per unit, reflecting the higher monthly distribution rate that became effective in July of 2025.

As Kevin mentioned earlier, we are pleased to announce our 13th distribution increase since our IPO, reflecting our financial strength and consistent delivery of strong results. The new rate will become effective with the July 2026 distribution. The AFFO payout ratio for Q1 was 72.5%, stable from 72.6% in the same period last year.

Turning to the balance sheet. Our interest coverage ratio for the first quarter was 3.52x, which is stable compared to 3.55x in Q1 of 2025. This small change reflects our higher interest costs arising from the reset of interest rates on several series of our Class C LP units effective June 1, 2025, increased utilization of our credit facilities to fund acquisitions, intensification and development, and the issuance of $200 million of the Series J unsecured debentures in June of last year, partially offset by higher capitalized interest on properties under development. Even with these financing activities, our total indebtedness to EBIT fair value improved to 6.46x in 2026 from 6.77x a year ago as earnings growth outpaced the increase in debt. Our strong balance sheet provides ample financial flexibility to fund future growth initiatives.

With respect to liquidity, we ended Q1 with approximately $6 million of cash on hand. Our committed $300 million bank credit facility and our $300 million uncommitted credit facility with CTC, with roughly $132 billion (sic) [ $ 132 million ] available on the line at quarter end, which provides adequate liquidity and balance sheet capacity to fund ongoing investments and to pursue new opportunities.

And with that, I'll turn the call back over to the operator for any questions.

[Operator Instructions] Our first question is from the line of Lorne Kalmar with Desjardins.

I was just saying congrats on a good start to the year. On the acquisition front, clearly, a little bit of a flurry here in, I guess, what will be 2Q. I was just wondering if you could provide us a little bit of an outlook in terms of the acquisition outlook for the balance of the year.

Sure, Lorne. So obviously, we're very pleased with the acquisitions that we've announced. They all fit very well into the portfolio and align with our strategy. I think the way we're thinking about 2026 is hitting singles and doubles. We're going to be out there trying to find these opportunities, working obviously with our existing relationships to try to source them. We're pretty confident in our ability to continue finding these types of deals.

We've talked about our development pipeline. It's still obviously quite robust. We're happy with the pipeline, but we'll be delivering a bunch of that through the course of the year. So we're trying to find the backfills to keep our investment activity up towards our typical run rate in a given year. So no specific deals to announce at this time or specific guidance on quantum or type. But I would say we're hopeful the balance of the year shapes up similar to the way it started off.

Okay. That's pretty helpful. And then maybe a quick one here just for Lesley. On the capped interest side of things, it bumped up, I think, a little bit quarter-over-quarter. What -- how should we be thinking about that over the balance of the year and into 2027?

Lorne, the increase in the capped interest relates to us having moved the Canada Square property into properties under development on December 31. So sort of the higher run rate that you're seeing in Q1 that will sort of continue as that development continues over the course of the next 2, 2.5 years.

Okay. So kind of use this as a good jumping off point.

[Operator Instructions] Our next question comes from the line of Tal Woolley with CIBC.

The Oliver BC land purchase, is that just to -- are you banking some land there? Or are there some plans for building on that site?

I wouldn't call it a land bank. I think we have active intention to develop the parcel. It's about 3.4 acres. So it can probably build somewhere around 40,000 to 50,000 square feet of GLA there. It's a really good market, South Okanagan. We got a lot of productive stores in and around the neighborhood. So when the opportunity came up, we wanted to obviously protect our existing assets and add to it because it's quite productive. So we do have some tenant interest. We're working through that right now. And as long as that goes as we hope it will, it will hopefully join our development pipeline soon.

Okay. And then I guess I was just curious, Choices -- Choice Properties has moved forward with the proposal to acquire at least part of First Capital's portfolio. I'm wondering, given that both you and Choice started at roughly the same time with similar structures, like did this sort of open your eyes maybe to larger type transactions that might be possible for CT REIT? Or are you and Canadian Tire more interested in just kind of sticking to your knitting rather than branching out in that fashion?

I'd say it's probably more likely to be the latter than the former, Tal. I mean we always scan the market for opportunities. Obviously, we're aware of the notion around something larger, transformational on the M&A side, but that hasn't been the way that we've grown to date, and our growth to date has obviously been secret to our success in terms of our outperformance, in terms of earnings and NAV growth, and our ability to continue to pushing our distribution increases on an annual basis. So obviously, we think about these things, we contemplate them. We talk with our Board and obviously, Canadian Tire about the merits. But to date, we have not found anything that we believe is in our best interest, but that doesn't mean that can't change over time.

And are you seeing any larger retail portfolios in the market right now that you would be interested in? Or has it been relatively quiet on that front?

In terms of marketed opportunities, definitely quiet. The marketed opportunities that we're seeing are more single-tenant assets in the retail space, a lot of grocery anchored. But I would say even the quantity of marketed offerings has slowed down a little relative to where the last year ended off. There's 1 or 2 bigger single property acquisitions that we're aware of that are coming to market, but no specific portfolios that I'm aware of at this time.

Our next question comes from the line of Pammi Bir with RBC Capital Markets.

Just on the development cost for the pipeline that's active. It looks like the cost per square foot went up rather materially. Can you maybe just expand on that and what drove that? Or was it really just a function of maybe the transfer of Canada Square into PUD?

I think a couple things, Pammi, I definitely think Canada Square is a contributing factor to that. Obviously, an office retrofit is a unique type of development investment for us. So the profile would look different than, say, building new retail GLA. The other thing that's happened is we've completed a lot of new larger store projects and now we're left with on the retail side are store expansions. And typically, when you're expanding a store 20,000, 30,000 square feet at a time, it's slightly less efficient. You lose some of the economies of scale. So on a per square foot basis, it can be a little bit more expensive. So I think it's the combination of those 2 things that's driving that increased cost on a per square foot basis.

With the bulk of it, what you just described in terms of the expansions or really the bulk of it because some of these other ones do seem to be sort of rather smaller projects, but -- or with the bulk of it...

Yes, we'd have to get back to you on the breakdown. I don't know that off the top of my head, but just those 2 things at a high level would be the contributing factors. But if you'd like to break down, we can circle back with you.

Sure. Okay. And then just last one for me. Just in terms of the -- I think it was Jodi's comments and Lesley's comments on the leasing spreads. Are there a lot of leases in the portfolio where you do have flat rents. I think you mentioned 200,000 or over 200,000 square feet had options on flat rents. And just curious if that was also -- if those were Canadian Tire related.

So 226,000 of those were the fixed flat renewals. We do not have -- that's really in the minority of the portfolio. And it's a combination of the tenancies, it's not just exclusively CTR. It was a combination. So -- but it is an anomaly, it is not the norm.

Yes. Pammi, just for a little extra color. They were, I'd say, 2 anchor leases that were acquired subsequent to our IPO and our typical vend-in or development-related transactions with Canadian Tire. So these would be the 2 that would be most prominent in the portfolio, and they just happened to come up at the same quarter.

Our next question comes from the line of Giuliano Thornhill with National Bank.

So obviously, your leverage is running pretty low. I think you're at 6.5% this quarter. I'm just wondering, is that anticipation of really ramping up Canada Square? Or should we kind of expect that to be trending higher? And if so, where would you be investing that capital or directing that capital to be M&A or just incremental developments?

Giuliano, it's Lesley. The leverage is down at 39%. It's not sort of anticipation of leveraging that up. As we spend through our development portfolio, the -- because this development portfolio is being spent over the couple of years and largely we can fund the vast majority of that through retained cash, not expecting that to sort of increase significantly over the next little while. It's really more a factor just of the increases in the property portfolio as we continue to sort of increase value of those assets relative to development spend, it's crept down, but it's not a strategic objective to be lower, and we're not expecting it also to be sort of significantly higher in the coming quarters.

I think we view it as a conservative way to manage the balance sheet, while leaving dry powder on the side, should we find opportunities that we want to capitalize on. So really trying to be opportunistic in this marketplace and be in a good position to obviously run the portfolio and complete our developments, but also leave ourselves open to new acquisitions should they present.

And so the new acquisitions, would you say that's kind of more focused on like CT-related banners? Or is it going to be kind of more adjacent properties to your existing portfolio going forward?

A bit of a mixed bag. I mean, yes, buying the Canadian Tire anchored property in Edmonton, obviously, that's core to our strategy and repatriating Canadian Tire assets is what we do. The other ones are just taking advantage of our existing market knowledge and our existing portfolio to sort of find new opportunities. So I think it will be a mix of both going forward, where you'll see us doing our typical stuff, but also trying to expand a little further afield while we try to find deals that's still aligned with our strategic objectives.

As there are no further questions at this time, I will now turn the call over to Kevin Salsberg, our President and CEO, for closing remarks.

Thank you, Shannon, and thank you all for joining us today. We look forward to welcoming you to our Annual Meeting of Unitholders, which we will conduct virtually later this morning at 10:00 a.m. We hope that you'll be able to listen in. We also look forward to speaking with you again in August after we release our Q2 results. Thank you.

This concludes today's call. You may now disconnect.

Good morning. My name is Gigi, and I'll be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q4 2025 Earnings Conference Call. [Operator Instructions] The speakers on the call today 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 discussions may include forward-looking statements. Such statements are based on management's assumptions and beliefs.

These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see CT REIT's public filings for a discussion of these risk factors, which are included in their Q4 2025 management's discussion and analysis and 2025 Annual Information Form, which can be found on CT REIT's website and on SEDAR+. I will now turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin?

Thank you, Gigi, and good morning, everyone. We were very pleased to report that 2025 shaped up to be a great year for CT REIT. In the face of continued geopolitical uncertainty and macroeconomic disruption, CT REIT once again delivered on its value proposition to unitholders. CT REIT's goal is to provide its investors with strong returns, growing distributions and stability.

We manage our business with these hallmarks in mind, focusing on growth opportunities that leverage our strategic relationship with Canadian Tire, optimizing our existing asset base and maintaining a balance sheet that provides us with a resilient foundation. In 2025, we successfully deployed approximately $235 million and added nearly 900,000 square feet of new retail to our portfolio, with approximately 400,000 square feet of that being added in the fourth quarter alone.

Although we were very pleased with the quantum and quality of the new space that we brought on this past year, as I discussed on our conference call last quarter, we were even happier with how we delivered these results. Across 13 discrete investments, our team found new opportunities to acquire assets from third parties to redevelop and improve existing CT REIT properties and to build new locations, both for Canadian Tire and for other third-party tenants.

As we look to the future, we will lean into these growth levers and the core competencies that we have built in order to continue to create value for our unitholders and to improve our portfolio. This portfolio growth, coupled with our foundation of contractual rent escalations and our successful lease renewals, contributed to our strong financial performance in 2025.

As we have seen across our peer group, demand for retail space continues to outpace supply and the fundamentals for retail real estate are currently very strong. Jodi will provide a little more color on this momentarily, but we continue to leverage this dynamic to drive organic growth and seek out new opportunities. Our successes over the course of the last year led to solid growth in our bottom line.

In the fourth quarter, net operating income grew by 4.9% and adjusted funds from operations per unit grew by 2.9%. For the full year, growth in net operating income came in at 4.6% and adjusted funds from operations per unit grew by 2.8% and we achieved this growth while maintaining our payout ratio in the low 70% range and further reducing our indebtedness ratio by approximately 130 basis points relative to the end of 2024.

We are also pleased that construction began at the Canada Square property related to Canadian Tire's new long-term head office lease in Q4. This project will substantially refurbish the existing 640,000-square-foot office complex with completion anticipated towards the end of 2028. With the improvements that we will be making to the property and the new Eglinton LRT line now operational, the future for this asset looks bright.

I want to take a moment to recognize the CT REIT team for their hard work and dedication over the past year. In addition to our financial and operational achievements, we made a difference in our communities in 2025 through our fundraising efforts, the way we managed our assets and through our various sustainability-related initiatives.

I'm very proud of the efforts of our entire team, and I'm optimistic about what 2026 will bring for CT REIT as we continue to advance our business. And with that, I will pass it over to Jodi for her comments on our investment, development and leasing activity. Jodi?

Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we were pleased to have completed several previously announced projects in the fourth quarter. These included 6 intensification projects, 5 of which represented expansions of existing Canadian Tire stores that are located in Victoria, British Columbia; Winnipeg, Manitoba; Fergus and Brampton, Ontario; and Donnacona, Quebec.

The last intensification project related to the development of a third-party pad at an existing Canadian Tire-anchored property in Fort Frances, Ontario. In Q4, we also completed the development of a new 172,000-square-foot Canadian Tire store in Kelowna, British Columbia and the redevelopment of a former -- of a vacant former Canadian Tire store in Lloydminster, Alberta. This building was successfully backfilled with a national grocer, furniture store and a footwear retailer.

Finally, as previously announced, we also acquired the freehold interest underlying an existing Canadian Tire ground lease as well as a multi-tenant commercial retail building in Fort Saskatchewan, Alberta. As Kevin noted, this is a very productive quarter for growth. In total, projects completed in the fourth quarter represented $116 million of investment and added more than 400,000 square feet of incremental GLA to the portfolio.

They are also strong examples of how we collaborate with our principal tenant, Canadian Tire, to unlock additional value for our unitholders. Looking ahead, our development pipeline remains healthy. We currently have 11 projects at various stages of progress with 4 expected to be completed in 2026 and the remainder in 2027 and beyond.

These developments, including the Canada Square office retrofit project in Toronto, represent a committed investment of approximately $329 million, of which $102 million (sic) [ $112 million ] has been spent to date. We expect to invest roughly $78 million over the next 12 months to advance these projects. Once completed, they will add just over 600,000 square feet of new GLA to the portfolio, approximately 95% of which is already pre-leased.

Turning to leasing. During the fourth quarter, CT REIT completed a little over 1 million square feet of lease extensions, primarily comprised of 14 Canadian Tire store lease renewals. For the full year, we completed 30 Canadian Tire store lease extensions and overall, renewed retail leases representing over 2 million square feet of GLA.

For the full year, these renewals were completed at a weighted average first year rental uplift of approximately 10.4%. As of year-end, we maintained a long weighted average lease term for the portfolio at 7.2 years, and our occupancy rate remained robust at 99.5%, up 10 basis points from a year ago. I will now turn it over to Lesley to discuss our financial results. Lesley?

Thanks, Jodi, and good morning, everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in the fourth quarter and full-year 2025. Once again, our results demonstrated the steady growth and resilience of our portfolio. Same-property NOI, which includes the impact of intensifications, grew 2% in the quarter compared to Q4 2024. For the full year, same-property NOI increased 2.2%.

These increases reflect the contractual rent escalations of approximately 1.5% per year in many of our Canadian Tire leases as well as the contributions from intensification projects completed in 2024 and '25 of $1.2 million and $3.3 million for the quarter and year, respectively. Overall, net operating income for the quarter grew 4.9% year-over-year, representing an increase of about $5.7 million. For the full-year of 2025, NOI grew 4.6% or over $21 million.

This strong performance was supported by the same-property NOI growth that I just spoke to and the impacts of acquisition and development activity over the relevant period. In the fourth quarter, general administrative expenses as a percentage of property revenue were 2.8% compared to 2% in the same period last year. The increase was mainly due to the timing of noncash fair value adjustments on unit-based compensation in Q4 2025.

Excluding these fair value adjustments, G&A as a percentage of property revenue decreased 20 basis points to 2.7%. On a full-year basis, G&A expense represented approximately 3.1% of revenue or roughly 2.8% after normalizing for unit-based compensation fair value changes, slightly better than the 2.9% in 2024. The fair value adjustment of our investment properties was $110.4 million in the fourth quarter compared to $54.8 million in the prior year.

This sizable gain was driven primarily by increases to underlying cash flows due to updates made to market leasing assumptions, strong leasing and renewal activity completed during the period, the impact of numerous development project completions mentioned by Jodi earlier and the compression of terminal capitalization and discount rates for certain retail properties within the portfolio.

These factors more than offset the expansion of terminal capitalization discount rates applied to the valuation of our industrial properties, a change that was made to reflect current market conditions. For the full year, fair value adjustments totaled $195.4 million, up from $119.1 million in 2024. In the fourth quarter, AFFO per diluted unit was $0.317, up 2.9% compared to the fourth quarter last year and the full year. AFFO per unit diluted was up 2.8% year-over-year.

FFO on a diluted basis was $0.339 per unit, up 1.5% compared to Q4 2024 and up 2% on a full-year basis. Growth in FFO and AFFO primarily reflects increases in NOI, partially offset by higher interest expense. Cash distributions paid in the quarter increased 2.5% compared to Q4 2024 to $0.237 per unit, reflecting the higher monthly distribution rate that became effective in July '25.

This continued growth is further evidence of our strong track record of increasing distributions every year since our IPO in 2013, reflecting the cumulative growth of 45.9% that unitholders have enjoyed since that time. With AFFO per unit growing faster than distributions, our payout ratio improved slightly. The AFFO payout ratio for Q4 was 74.8% compared to 75% a year ago. On a full year basis, the AFFO payout ratio remained stable at 73.5%.

Turning to the balance sheet. Our interest coverage ratio for the fourth quarter was 3.34x compared to 3.52x in Q4 2024. This decrease reflects the higher interest costs arising from the reset of interest rates on several series of our Class C LP units effective June 1, 2025, and increased utilization of our credit facilities to fund acquisitions and developments and the issuance of $200 million of Series J unsecured debentures in June '25.

Even with these financing activities, our total indebtedness to EBIT fair value improved to 6.77x in 2025 from 6.81x a year ago as earning growth outpaced the increase in debt. Our indebtedness ratio at the year-end also improved relative to the end of 2024 at 39.8%, down from 41.1%.

This improvement reflects the continued increase in the fair value of our investment properties and the growth in total assets from acquisitions and developments, partially offset by draws on our credit facilities. The strength in our balance sheet and these industry-leading debt metrics provide us with ample financial flexibility to fund our future growth initiatives. With respect to liquidity, we ended Q4 with approximately $4 million of cash on hand.

Our committed $300 million bank credit facility was essentially undrawn at year-end, and we also maintained our $300 million uncommitted credit facility with CTC with roughly $104 million available on this line at year-end. Altogether, we continue to have adequate liquidity and balance sheet capacity to fund ongoing investments and to pursue new opportunities. And with that, I'll turn the call back to the operator for any questions.

[Operator Instructions] Our first question comes from the line of Brad Sturges from Raymond James.

Congrats on the good quarter and obviously, a lot of success on a number of fronts on the growth side. Just curious on the -- I guess, as you think about the expansion intensification opportunity, you completed a number of projects in the quarter. Like how do you think about new opportunities to be added to the pipeline this year? Kind of what do you see in terms of new opportunities right now?

Thanks, Brad. Yes, super happy about the completions in Q4. I think that was a big quarter for us. Obviously, looking to reload the pipeline just in terms of new opportunities and continue to work with Canadian Tire. I think the cost environment is still somewhat challenging on the new development side.

As you know, we have several growth levers that we can pull, whether it be store intensifications, new store development, acquiring assets from other third-party landlords or even vend-ins, which we haven't done in some time. So we're obviously looking to the opportunities and availability of each of those types of transactions. And I'm pretty optimistic that we'll be able to find some that fit our strategy and our financial parameters and 2026 will shape up similarly to the way we were able to deliver in 2025.

Okay. So you think pipeline across all those buckets could be pretty similar year-over-year?

Yes. I mean it's always opportunity based. So it's hard to say exactly. But certainly, we're out there. We're looking at some things that are on market, some things that are off market. We're having discussions with Canadian Tire. So I guess the best I would say is I'm optimistic, but time will tell.

Okay. And just what got completed or delivered in the quarter? Can you just comment, generally speaking, ongoing in yield on cost?

Probably a mixed bag. I mean, obviously, we had some different project types, one ground-up development for a third party, some of the store intensifications, an acquisition. So on a blended basis, I would probably say mid- to high 6s, but that's without really spending a lot of time thinking about the math in my head. So I think that's probably a good rough guide.

Our next question comes from the line of Giuliano Thornhill from National Bank.

Just had one question on the kind of vend-in opportunity. How large is that? And do you think kind of CT is mostly fleshed out on the industrial distribution side?

On the supply chain side, yes, I think they're pretty set. They had a major swell in COVID when their inventory positions increased, and we helped them with that as we built a new DC for them in Calgary, I would say, looking back at the last couple of quarters, I think they've normalized that to a certain extent.

So I don't see any huge opportunities with CTC necessarily on the supply chain side, although we do always look at synergies with respect to our existing holdings and if there's anything in terms of adjacent sites or opportunities in the nodes that we operate in to consolidate space. So that continues to be a strategy for us. In terms of your first question, in terms of the vend-in opportunities, there's roughly 10 to 15 Canadian Tire stores that we believe meet our investment criteria.

The last couple of years, our unit price hasn't been exactly where we want to be in terms of issuing equity in exchange for assets, which is part of the formula we've used in the past when acquiring assets from Canadian Tire. I think today, we feel a little better about that. And certainly, with the development pipeline a little bit smaller than it was at this time last year, that is something we will be looking at.

And just with leverage kind of declining at all-time lows really, is there maybe the possibility to pursue larger distribution increases or possibly buying back stock at these levels? I'm just wondering kind of how you would utilize like that low leverage level for unitholders.

Yes. I mean we've said before, while being below 40% is not necessarily a target for us, we certainly feel comfortable where we are. We also believe it provides some dry powder as you're sort of intimating. We prefer to use that dry powder to acquire or develop sites at the unit price levels that we're currently experiencing.

I'm not sure we'd be users of our NCIB. That was something we were a little bit more active on when we were trading kind of in the low to mid- $13 range. Today, we're in the high 16s. So I think primarily, we would like to use it for growth initiatives at the portfolio level.

Our next question comes from the line of Tal Woolley from CIBC Capital Markets.

Apologies if I missed some earlier commentary, I had to jump on late. Just with Canada Square, now that the Eglinton LRT is done, can you just talk a little bit about -- I know this was one of the hitches sort of in getting things moving on that site. Can you talk a little bit more about just progress there?

Sure. So very happy that the Crosstown LRT is finally open. In terms of hitches, there's kind of 2 components of that. One was the actual usability of the new line. The other is the 2 acres at the, I guess, northwest corner of our site are being controlled by Crosslinx, the consortium that built the LRT. And the first phase of development cannot begin on those lands until such time as they relinquish control. We don't have a specific time line as to when that will happen.

I would imagine it would be sooner than later, but we have no notice yet at this point. Having said that, although the benefits of the LRT still accrue to the existing commercial complex and its users, the connectivity that it brings and access to the employee base here, we're really focused on the commercial refurbishment, the retrofit of the office space that we'll be undertaking with Oxford between now and the end of 2028.

So I think while we will continue to advance the master plan and the zoning efforts, we're not really turning our minds quite yet to incremental density on the site in terms of the desire to proceed with that part of the project.

And does that sort of -- does the ongoing like question about when you will sort of maybe start that piece, is that sort of factoring into why the pipeline is sort of where it's at right now that you wanted when you're thinking about this a few years ago, you want to have capital available to pursue that and so took on less? Or is it a function of just there are fewer projects to do at Canadian Tire?

I think it's mostly the latter where there's fewer projects. Certainly having that dry powder to allocate as we feel is appropriate is a nice-to-have. So if in a couple of years, the market has improved, the density is realized and it's something we want to pursue, having the balance sheet capacity to do that is obviously great. But in the current circumstances, I think it's more of the cost environment that's impeding our ability to continue to add to the store intensification and new store development pipeline.

Okay. And then just lastly, I guess this would be for Lesley. You have the, I believe, a $200 million debenture maturing in June. Would we expect you to move earlier on that. And I'm assuming you'd be looking to refinance the -- whatever you have left on your credit facilities too, in addition to the $200 million?

Tal, definitely, we're watching markets. And I think the public debt market, which is sort of our continued preferred avenue for sort of financing, is very constructive right now and it has been -- and it's quite active. So definitely looking to refinance the existing maturities, that $200 million and likely some upside to that.

We'll just see where you are drawn on the line and where our use for the rest of the year is in terms of how much new offering could be. But yes, definitely in the next sort of 3 months, we'll be watching the markets to find an opportune time.

Our next question comes from the line of Sam Damiani from TD Cowen.

I just jumped on a little late. So -- but I think the question was asked about the former Canadian Tire store in Kelowna that has been backfilled. Has it been like 100% backfilled? And I wonder if you could comment on the rents versus the pre-existing rents on that space.

Sam, it's Jodi. Just to clarify, it was a former Canadian Tire store in Lloydminster, Alberta that we backfilled. We completed a new store in Kelowna as well in this quarter, but the backfill was in Lloydminster. And so that's the tenants that were the grocer, the footwear retailer and furniture store.

Okay. Okay. But there is an empty former Canadian Tire store in Kelowna, too. Is that not, right?

That is correct. Canadian Tire still occupies it and has lease terms. So we're determining what comes next for that asset.

I see. Okay. Thank you for the clarification. And I appreciate the new disclosure on rent increases, on renewal rent increases. That's very helpful. You showed both an uptick in the fourth quarter versus sort of first 9 months, both on the Canadian Tire and third-party tenants. Was there anything unusual in the Q4 stats there? Or would you say that's indicative of kind of just a market trend?

I don't think there's anything unusual. I think certainly we're seeing an improved leasing and renewal market as we kind of commented on earlier. We've substantially dealt now with our 2026 maturities. So in the next couple of months, we'll be turning our eyes to the first few that come up in 2027. But yes, I think there's certainly an opportunity to replicate these kinds of results across the portfolio.

I mean every batch of renewals that we deal with is slightly different in terms of where they're located, the size of the market, where the rents are relative to market rents. So there certainly could be some fluctuation up and down amongst the output, but we do think there is upside for us as we continue to get at these renewals, and that will start kicking in more and more as time goes on as we get further into our lease expiries.

I think in 2027, I think there's about 6%, 7% -- 6% of CTR leases come up for renewal, 2028, almost 9%. So that number will continue to grow in prominence, and we'll continue to hopefully follow the trends that we're seeing more broadly in the retail leasing market.

I appreciate that, Kevin. And the sort of 10.5%, 11% on the Canadian Tire store lease renewals, just to clarify, those are 5-year fixed renewals. Is that correct?

Yes, that's correct, Sam.

Yes. And so the average sort of annual increase is a snick above 2%. So if I'm not mistaken, that is higher than previous years, which I seem to recall was more in the 1.5% annual -- sort of average annual increase. Is that right?

That's correct, Sam.

Okay. And is that any reason, anything different with the 2025 renewals that would sort of justify that? Or is it purely just a reflection of overall markets, the mix geographically isn't meaningfully different year-to-year?

I think it's a combination of the improved retail leasing market as well as the mix of those leases that we were dealing with.

[Operator Instructions] As there are no further questions at this time, I will now turn the call over to Kevin Salsberg, President and CEO, for closing remarks.

Thank you, Gigi, and thank you all for joining us today. We look forward to speaking with you again in May after we release our Q1 results. Thank you.

This concludes today's call. You may now disconnect.

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" Desjardins Securities Inc.

" TD Cowen

" BMO Capital Markets

" RBC Capital Markets

Thank you for standing by. My name is Lauren Cannon, and I will be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q3 2025 Earnings Results Conference Call. [Operator Instructions] The speakers on the call today 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. Although the 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 Q3 2025 and annual 2024 MD&A as well as the 2024 AIF, which are available on our 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. I will now turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin?

Thank you, Lauren. Good morning, everyone, and thank you for joining us today on CT REIT's quarterly investor conference call. I am happy to report that Q3 2025 was another strong quarter for CT REIT as we delivered growth in net operating income of 5.5%, growth in AFFO per unit of 2.9% and continue to maintain our portfolio occupancy above 99%. CT REIT's stable portfolio and reliable growth have for more than a decade now, provided our investors with an opportunity to participate in a real estate strategy that leverages our privileged relationship with Canadian Tire in order to deliver value for all of our unitholders. In the quarter, we acquired a strong performing Canadian Tire-anchored shopping center in Calgary from a third party, completed the redevelopment of an enclosed mall that we own in Winkler, Manitoba and began construction on the Canadian Tire head office retrofit at Canada Square.

And subsequent to the quarter end, we bought out the underlying freehold interest in a property that we had previously land leased in Fort Saskatchewan, Alberta. While each of these projects is different and unique in terms of geography, asset type and real estate intervention, they collectively tell a story about CT REIT's ability to find new ways of deploying capital and source different avenues of growth. We continue to work closely with Canadian Tire on their development requirements and the real estate components of their True North strategy as we continue to build our own pipeline of deals with over 1 million square feet of development projects currently expected to be delivered between now and the end of 2028, including the newly announced expansion of a Canadian Tire store in Collingwood at a property that we acquired from a third party several years ago.

Whether from organic growth derived from our existing portfolio of properties, new CTC-related development opportunities or strategically consolidating the ownership of third party-owned CTC-related assets, CT REIT's growth prospects continue to look bright. And with a conservative and prudently managed balance sheet, we have the financial flexibility to lean into these opportunities so that CT REIT can continue to deliver strong, reliable and durable results and create value for our stakeholders as we look to the road ahead.

I will now turn it over to Jodi and Lesley to provide some additional details on the quarter, our results and our leasing investment and development activities. Jodi?

Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we are pleased to announce 2 new investments this quarter. Our first new investment involves the acquisition of the freehold interest underlying an existing ground lease along with an adjacent multi-tenant commercial retail building in Fort Saskatchewan, Alberta. Additionally, we are expanding the Canadian Tire store located in Collingwood, Ontario that Kevin mentioned earlier. These new investments require a total of $90 million to complete and are projected to earn a going-in yield of 6.45%. Combined, they will add approximately 50,000 square feet of high-quality GLA to our portfolio.

In the third quarter, we completed 2 previously announced projects, the acquisition of a Canadian Tire anchored property in Calgary, Alberta that we discussed last quarter and the redevelopment of our existing enclosed mall in Winkler, Manitoba. Since acquiring Southland Mall in Winkler, Manitoba in 2016, the REIT has made substantial improvements to the property, including the expansion of the Canadian Tire store in 2018 as well as a significant demalling and renovation that has allowed us to introduce new retailers to the mall, including Winners, Anytime Fitness, Stacked Pancake House and a relocated and expanded Mark. Part of the rationale for acquiring this property originally was based on the strength of the Canadian Tire store and the steps that we have taken since that time illustrate how the REIT has been able to create value in an asset that we decided to invest in based on the insights that we gleaned through our relationship with Canadian Tire.

The Calgary acquisition and the Winkler redevelopment totaled $72 million and have added over 350,000 square feet of additional GLA to our portfolio. Our development pipeline overall remains strong with 20 projects at various stages, 7 of which are expected to be completed by the end of this year and the remainder expected to be completed in 2026 and beyond. These developments, including Canada Square office retrofit projects represent a total committed investment of approximately $427 million upon finalization, $113 million of which has already been spent and $148 million of which we anticipate will be spent in the next 12 months. Once built, these projects will add a total incremental GLA of just over 1 million square feet to the portfolio, approximately 90% of which has been leased.

With respect to our leasing activities, during the third quarter, CT REIT completed 4 Canadian Tire store lease extensions. And as of the end of Q3, the weighted average lease term for our portfolio was 7.3 years, which remains one of the longest in the sector. At the end of the quarter, CT REIT's occupancy rate remained strong at 99.4%. I will now turn it over to Lesley to discuss our financial results. Lesley?

Thanks, Jodi, and good morning, everyone. We were pleased with the results delivered by the REIT again this quarter. This quarter, same-store NOI increased 2.0% or $2.3 million, mainly driven by contractual rent escalations averaging 1.5% per year as contained in the Canadian Tire leases. Same-property NOI saw a rise of 2.6% or $3 million compared to the previous year. This increase was largely due to the same-store NOI growth mentioned earlier, along with approximately $700,000 of additional contribution from intensifications completed in 2024 and 2025. Overall, in the third quarter, NOI experienced robust growth of 5.5% or $6.2 million. This was fueled by the $3.2 million contribution from the 4 acquisitions completed in '24 and '25 as well as the development completions over that time.

In the third quarter, excluding fair value adjustments, G&A expense as a percentage of property revenue was 2.5%, which was higher than the same period in the prior year of 2.2%. This increase was due to the timing of a deferred income tax provision in 2024 that reversed by the end of the year. On a year-to-date basis, G&A expenses as a percentage of revenue are running at a consistent 2.9%. The fair value adjustment of $36.7 million in the quarter was primarily driven by contractual rent increases, leasing renewals and changes to certain valuation metrics and assumptions as well as the development completions within the property portfolio. In the quarter, diluted FFO per unit was up 2.1% to $0.338 compared to $0.331 in the third quarter of 2024. AFFO per unit on a diluted basis was $0.317, up 2.9% compared to Q3 of 2024.

Cash distributions paid in the quarter increased 2.5% compared to the same period in the previous year due to the increase in distributions, which became effective with the monthly distributions paid in July 2025. With the increase in AFFO per unit outpacing the rate of the monthly distributions, the AFFO payout ratio for Q3 was 74.8%, a slight improvement from 75.0% in the period last year.

Turning to the balance sheet. Our interest coverage ratio for the current quarter was 3.37x compared to 3.52x in the same quarter of 2024. This decrease is due to a combination of increased interest costs resulting from the resetting of the interest rate on the Series 3 and 16 to 19 Class C LP units effective June 1, 2025, higher utilization of the credit facilities to fund acquisitions, intensifications and developments in '24 and '25 as well as the issuance of the $200 million Series J unsecured debentures in June of this year. The indebtedness to EBIT fair value ratio was 6.61x during the quarter, improved from last year's ratio of 6.81x. Our indebtedness ratio this quarter was 39.8%, down from 40.7% at the end of last year. This improvement is mainly attributable to the continued increases in the fair value of investment properties and higher total assets from acquisitions and developments, partially offset by the increased use of the credit facilities. The ratio has consistently trended lower over recent years, giving us ample financial flexibility for future growth.

Lastly, with respect to liquidity, we ended Q3 with $5 million of cash on hand, $298 million of that remains available through our committed credit facility and a further $186 million is also available on our uncommitted facility with Canadian Tire Corporation. And with that, I will turn the call back to the operator for any questions.

[Operator Instructions] Our first question comes from the line of Lorne Kalmar with Desjardins.

Just on the Canada Square retrofit, I was wondering what is the progress on tendering costs? I mean, obviously, you guys have started work there. And have you guys seen any reprieve on the cost side with sort of the slowdown in development activity more broadly?

Lorne, it's Jodi. Thanks for the question. So, the retrofit just started this quarter effectively. So, it really starts to pick up the pace in 2026 and beyond. So, it's in the initial stages so far. Oxford, of course, is managing this on behalf of the co-owners. They are in the process of tendering and securing the various contracts and trades. They have their CM in place. I don't think there's been any noticeable difference in terms of tendering versus budget at this stage. However, I would say it's early on in the retrofit. So that could be a case as we move forward.

Lovely. And then just on the intensification development side. Obviously, Canadian Tire is a large chunk of that. But one thing we've been hearing is there's a lot of opportunity out there to intensify for other retailers. I was just wondering if you guys are seeing any demand and if that's something you look to focus the pipeline a little bit more on as dynamics call for it.

Lorne, it's Kevin. We definitely have inbound interest from retailers. We don't have a lot of large pad opportunities that can accommodate the users who are expressing interest, grocery, pharmacy, liquor. Most of our pad opportunities are smaller, and we've actually affected quite a few of them to date. But that doesn't mean we're not out selectively looking for alternative sites or opportunities to work with the retailers who are looking to expand. Our Lloydminster redevelopment is a good example of where we can take advantage of opportunities like that. So yes, we're trying to find the balance between the demand side, finding opportunities that we can make financial sense of and obviously, where it complements existing assets.

Our next question comes from the line of Sam Damiani with TD Securities.

Maybe just to get into the leasing side of the business, maybe Jodi, if you could just comment on leasing spreads in the quarter, both to Canadian Tire and third-party tenants.

Sam, it's Jodi. On third-party renewals, it's typically our volumes are on the lower side just because of our -- the high occupancy rate and that the bulk of our activities with Canadian Tire. So, it is at the lower end. I'd say the spreads though are consistent with what we see in every other quarter. So, we're pleased with that. In terms of the related party, we had quite a number this quarter, as noted. Obviously, we don't comment on the specifics, but the escalations that we achieved have been continuing on these fronts.

And Sam, as we've talked about before, as we look at the escalations, we are looking at market-specific dynamics. And whereas on average, certainly 1.5% is the number for the entire portfolio. There are selective opportunities within each set of renewals to address that and possibly get that number a little higher. And we also continue to have discussions with Canadian Tire about as we, I guess, enter into some of the metier years in terms of the number of renewals that we'll be dealing with what the best collective situation is for both the REIT and for CTC in terms of continuing on with the annual rent escalations or looking at more conventional fixed 5-year rent numbers. So as of right now, we're still playing with the same rhyme scheme, but that could be subject to change in the future as we've discussed before.

And Kevin, your comment on looking at other alternatives versus the annual escalations. I mean, what would be the, I guess, the benefit for the REIT in looking at a different structure?

Well, like you guys, we can forecast out the next 5 to 10 years based on our portfolio and obviously looking to if there's any spread between one versus the other. The fixed contracts to recall, have a floor and a ceiling in terms of the renewal rate. They can't be less than the amount they were paying in the preceding term, and it's capped out at 112%. So just based on where we forecast the market to be and where it might be going, if there is a difference financially for us, that's a benefit to look at one version versus the other. To date, there hasn't been a big difference, but that might not always be the case.

Appreciate that. And then just on the macro, it's a little more challenging. Are you seeing any retailers start to feel some pain, given any known move-outs in the portfolio, any problem tenants, bad debt expense, any of that sort of getting a little bit coming into focus these days?

That hasn't been our experience. We don't have any real bad debt that's any different than in any preceding periods. I don't think there's -- the major retailers are -- seem to be showing any signs of weakness at this point. Certainly, with the base stores coming back to some of the major landlords out there, there could be a little bit of distraction in terms of other opportunities. There's a lot of square footage to be addressed in the market. Not all of it obviously reusable or appropriate to the tenants that we deal with. But I don't -- I think the only indication of potentially them slowing down with respect to our discussions would be based on other alternatives in the market that they're considering.

And last one for me. Just in Kelowna with the new store, I guess, ready to be opened soon. And I believe the REIT owns the other store that's going to be vacated in that market. Is there plans to backfill that? What's the sort of plan there?

We're working on that right now, Sam. We do have a couple of different alternatives for the site. So, we're thinking our way through options. So, stay tuned.

[Operator Instructions] Our next question comes from the line of Mike Markidis with BMO Capital Markets.

Two quick ones for me. I guess just first on Winkler, just a modeling question here. I guess it's a redevelopment that came on stream in the third quarter. Presumably, there was -- it's now substantially complete, but presumably there is some income tied to it before. So, what -- how should we be thinking of the increment from that delivery that came on stream going forward?

With that particular one, Mike, we had -- at one point, the Canadian Tire store in HUD because we're expanding it and the mall wasn't. And then the store went back in and the mall went into PUD. I would say maybe 60% is attributable to the mall versus 40% to the CT store, if that helps.

So, the total amount delivered is just with respect to what was completed, not the entire project?

That's right. The mall redevelopment component of it.

And then just with respect to the $148 million of capital that you guys have to spend or are committed to spend over the next 12 months. Obviously, opportunity dependent. But given where your balance sheet is, where your cost of capital is, what's your appetite if the opportunities present themselves to ramp that up materially further? How much capacity do you see yourselves as having?

I think we have a strong appetite to ramp it up. I don't know if I would describe that appetite as material. We see some opportunities in the market. And I think we're in a good spot. We've talked about our dry powder in past quarters. And certainly, we have the financial capability and flexibility to go hunting a little bit. But retail is still among the most sought-after asset classes. The type of assets we're looking at are well leased with good tenants. So, there's competition for that. But we try to pick our spots. And I think we've got a nice pipeline on the development side. We're showing all the different ways we can affect our growth through our investment program. And I think we'd like to do a little bit more as we look to 2026, if possible.

And actually, just one more for me before I turn it back. So, with respect to hunting out there for retail, is the acquisition criteria such that if it doesn't -- from third parties, if it doesn't have a CT Canadian Tire store in it, that it would potentially -- that would be the goal is to have something like that? Or would you ever purchase something that would just be a third-party retail property and so be it?

We would definitely purchase third-party retail property unaffiliated with Canadian Tire. Now there's 2 versions of what that could look like, something that's a little bit more strategic. So adjacent lands, adjacent assets, something that we think long-term, we can bring Canadian Tire into. So, I'll say, unaffiliated with Canadian Tire in its current form, but potential strategic rationale for why we'd be acquiring it. The other ones that we would look at is things like what we've done in the past with our bank branch portfolio, just third-party single-tenant net lease, long-term leases, good credit type assets portfolios preferably. But it's been a long time since we've seen something like that, that we're interested in, that the pricing works for us. I mean it's gotten quite expensive in that space, especially when you're talking about tenants like banks or certain QSR restaurants or pharmacies. So again, we've always looked at that opportunistically. We like it. We'd like to own more of it, but we're only going to do that if it makes sense for us.

Our next question comes from the line of Pammi Bir with RBC Capital Markets.

Maybe just one for me. Along the lines of acquisitions, can you maybe just comment on perhaps the timing of when we may see additional bend-ins from CTC. If I recall, I think there's maybe 15, 20 properties left in that -- left at that level. And then secondly, if you have any comments on the potential value of those remaining assets?

Pammi, yes, there's probably closer to 15 now. We've always looked at the bend-ins as a lever we can pull when maybe there isn't as much development or as much third party that's ongoing to continue our steady pace of investment activity generally. So, I think you'll see us continue to do a couple a year. I think the total size of the Canadian Tire portfolio that we would be interested in buying is probably somewhere between $150 million and $200 million today.

As there are no further questions at this time, I will turn the call over to Kevin Salsberg, President and CEO, for closing remarks.

Thank you, Lauren, and thank you all for joining us today. We look forward to speaking with you again in February after we release our Q4 results. Have a good day.

This concludes today's call. You may now disconnect.