Automotive Properties Real Estate Investment Trust

Good morning, ladies and gentlemen, and welcome to Automotive Property REITs 2025 Fourth Quarter and Year-End Results Conference Call and Webcast. At this time, all lines are in a listen-only mode. Following management's remarks, we will conduct a question-and-answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and annual information form, which are available on CDAR+. Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. please refer to the REIT's latest MDNA for additional information regarding non-IFRS financial measures. This call is being recorded on March 5th, 2026. I would now like to turn the conference over to Milton Lamb. Please go ahead, Mr. Lamb.

Milton Lamb Thank you, Morgan, and good morning, everyone. Thank you for joining us. With me today on the call is Andrew Kalra, our Chief Financial Officer. 2025 was an instrumental year for Automotive Properties REIT. We acquired 13 automotive properties, including our first three properties in the United States, for an aggregate purchase price of approximately $200 million. These acquisitions contributed to our significant growth in rental revenue, cash NOI, AFFO per unit in 2025, which supported our distribution increase effective August of 2025. Compared to 2024, our property rental revenue increased by 8.5%, cash NOI was up 8.4%, and AFFO per unit diluted increased to 99.8 cents from 93.2 cents. As the majority of acquisitions were completed in the second half of the year, our Q4 results show even greater growth with property rental revenue up 19.3% compared to Q4 a year ago. Cash NOI grew 18.6% and AFFO per unit diluted increased to 25.1 cents from 23.2 cents. Our $57.1 million equity offering in the quarter, which helped finance our acquisitions, impacted our Q4 AFFO per unit, but we still generated nearly $0.02 increase to AFFO per unit. Supported by our contractual fixed or CPI adjusted annual rent increases, our same property cash NOI increased by 1.9% and 2.1% for Q4 2025 and the full year respectively. During Q4, we deployed approximately $57.3 million for the acquisition of four dealership properties in Greater Montreal, including a portfolio of three properties located in Dorval consisting of a full-service Subaru, Honda, and VW dealership properties tenanted by affiliates of Dilawri, and a full-service Honda dealership in Ile Perrault tenanted by an affiliate of Group Autoforce. which adds to the sixth property portfolio we previously acquired in Q3, which is also tenanted by affiliates of Group Autoports. We expect to benefit from the full impact of our 2025 acquisitions in 2026. Subsequent to year end, on January 1st, we completed the acquisition of a full-service 40,000-foot Hyundai dealership situated on six acres of land in Quebec City for a purchase price of $13.25 million. And yesterday, we announced that we've waived conditions for the purchase of the real estate underlying automotive and service property located at 3280 Corporate View in Vista, California from a third party for a purchase price of $16 million. This is located in northern San Diego County. The VISTA property is tenanted by Rivian under a midterm net lease that includes contractual fixed annual rent increases with renewal options. The VISTA property consists of a 60,000-foot Rivian delivery and service facility that is situated on approximately 3.7 acres of land. The acquisition is expected to close during the first half of 2026, and we expect to fund the purchase price by drawing on our revolving credit facilities. We expect these property acquisitions to drive continued growth in our AFFO per unit, and we are entering 2026 with solid growth momentum. I'd now like to turn it over to Andrew Calra to review our Q4 financial results and position in more detail. Andrew? Thanks, Milton, and good morning, everyone.

Our property rental revenue for the quarter increased to $27.9 million from $23.4 million in Q4 a year ago. reflecting growth from the properties we acquired during and subsequent to Q4 last year and contractual annual rent increases, partially offset by the reduction of rent from the sale of our Kennedy Lands property in October 2024. Total cash NOI, same property cash NOI for the quarter total $23.2 million, $19.6 million, respectively, representing increases of 18.6% and 1.9% compared to Q4 a year ago. Interest expense and other financing charges for the quarter were $7.5 million, a $1.9 million increase from Q4 last year, reflecting additional debt incurred to acquire properties during and subsequent to Q4 2024 and increased interest rates. Our G&A expenses were $1.8 million for the quarter, a decrease of $0.4 million from Q4 last year in line with our expectations. Net income and other comprehensive income was $13.9 million compared to $12 million in Q4 last year. The increase is primarily due to higher NOI and a change in non-cash fair value adjustments for interest rate swaps partially offset by higher interest costs and changes in non-cash fair value adjustments for investment properties and for Class B LP units and unit-based compensation, partially offset by foreign exchange loss of $1 million. FFO and AFFO increased by 20.4% and 18.4%, respectively, compared to Q4 last year, reflecting higher rental revenue from acquisitions, contractual rent increases, partially offset from the reduction of rent from the sale of the Kennedy lands. On a per-unit basis, FFO increased to 25.9 cents diluted in the quarter, up from 23.6 cents in Q4 last year, and AFFO per unit increased to 25.1 cents, up from 23.2 cents. We paid unit holders distributions of $11.32 million, or 20.6 cents per unit, representing an AFFO payout ratio of 82.1% compared with 86.6% in Q4 last year, reflecting the positive impact of the properties acquired during and subsequent to Q4 last year and contractual rent increases partially offset by the reduction of rent from the sale of the Kennedy lands and the increase in our monthly cash distributions effective August 2025. The cap rate applicable to our portfolio was 6.75% at year end, which is essentially flat quarter over quarter. The $6.8 million fair value adjustment for the year was primarily related to write-off of closing costs, including land transfer taxes associated with the new acquisitions. We continue to be proactive with our debt strategy to limit our exposure to interest rate fluctuations, enhance our financial flexibility. During the quarter, we renewed or entered into $25 million of floating to fixed interest rate swaps for a term of five to six years at a rate or under 4.5%. We increased the amount of the non-revolving portion of Facility 3 by $40 million and extended the maturity to March 2028 at the same credit spread. At year end, we had a debt to GBV ratio of 49.9%, providing further acquisition capacity. Subsequent to year end, we entered into floating to fixed interest rate swaps within Facility 3 in the amount of $45 million for terms ranging from five to seven years with interest rates between 4.45 and 4.59%. And we increased the amount of the revolving portion of Facility 1 by $25 million and extended the maturity from June 2027 to June 2029. As at the date of this MD&A, on a trailing 12-month basis, the borrowing capacity under our three credit facilities increased by an aggregate $140 million, and we extended maturities. We have a well-balanced level of annual maturities with less than $40 million of swaps maturing over the next 12 months. We have a weighted average interest rate term and mortgage mortgages remaining of 4.1 years at year end. As at March 4th, 87% of our debt was fixed through interest rate swaps and mortgages, and we had approximately $102.3 million of undrawn capacity under our revolving credit facilities and 10 unencumbered properties with an aggregate value of approximately $130.2 million. I'd like to turn the call back to Milton for closing remarks. Thank you very much.