Automotive Properties Real Estate Investment Trust

Good morning, ladies and gentlemen, and welcome to Automotive Properties REIT's 2026 Second Quarter 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 MDNA 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 MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on August 14th, 2026. I would now like to turn the conference over to Milton Lamb, President and CEO. Please go ahead, Mr. Lamb.

Milton Lamb Thank you, Morgan, and good morning, everyone. With me on our call is Andrew Kalra, our Chief Financial Officer. Our strong second quarter performance reflects the positive impact of the property acquisitions we completed during 2025 and Q1 of this year, plus partial contribution of the three properties we acquired in Greater San Diego and Santa Ana, California in early Q2. Compared to Q2 of last year, our property rental revenues increased by 22.8% Cash NOI is up 20%, AFFO has increased by 18%, and AFFO per unit diluted increased to 26.3 cents from 24.9 cents. This represents a record quarterly AFFO per unit amount for APR, up from our prior record of Q1 this year, demonstrating the positive impact of our acquisitions and embedded growth for contractual fixed or CPI-adjusted rent increases in our net lease structure. This is further reflected in our reduced AFFO payout ratio of 78.3% in the quarter compared to 80.7% in Q2 of last year, despite our distribution increase last year in issuance of REIT units through the completion of our $57 million equity offering last October. With our strong financial performance, the REITs trustees have approved an increase of approximately 2% to our annual cash distribution, from 82.2 cents to 83.9 cents per unit. Our new monthly distribution will be 6.99 cents per unit, up from 6.85 cents. This increase will be effective for this month's distribution to be paid on or about September 15th to unit holders of record on August 31, 2026. This marks the second consecutive year we have implemented a distribution increase, which highlights our confidence in the stability of our cash flow. Further, the underlying stability of our cash flow, we were active in Q2 renewing several of our leases including one of our dealership properties in Vancouver, one of our dealership properties in Regina, which were extended by an average of seven and a half years with base rent increases of approximately 4.8% with subsequent annual fixed rent increases. Our VW DaySource dealership property in Montreal was extended beyond its current lease maturity of 2027 for a further six years Subject to a CPI adjustment in 2027. One of our dealership properties in Calgary was also extended by five years at rents to be agreed upon as that renewal commences. We also announced yesterday that subsequent to quarter end, we entered into a new lease in joint arrangement with a member of the Dilawri Group. pursuant to which we've agreed to lease our 69,000-square-foot automotive dealership property located at 9088 Jane Street in Vaughan under a 16-year triple net lease whereby the landlord has a redevelopment option. We expect rent payments to commence on December 1, 2026. Concurrently, we've agreed to sell 50% in trust in the property for a cash purchase price of $16 million, reflecting a premium to IFRS value, with the expected closing in September of 2026. We expect to retain the remaining 50% interest of the property and all parties have waived conditions. It should be noted that the demand for automotive facilities has allowed us to maintain a 100% leased portfolio, even though some of the properties have experienced changes in the OEM franchises. With the new lease at 9088 Jane Street combined with the recent lease renewal activity, we'll have no material lease expirations until 2028. I'd now like to turn it over to Andrew Calra to review our financial results in more detail.

Andrew? Thanks, Milton, and good morning, everyone. Our property rental revenue for the quarter increased to $30.2 million. dollars from $24.6 million Q2 a year ago, reflecting growth from properties we acquired during and subsequent to Q2 last year, and contractual annual rent increases. Total cash NOI, same property cash NOI for the quarter, total $24.8 million and $21.1 million respectively, representing increases of 20% and 2.2% compared to Q2 last year. Interest expense and other financing charges for the quarter were $8.1 million, an increase of $1.7 million from Q2 last year, reflecting additional debt incurred to fund the acquisitions. Our G&A expenses were $1.6 million for the quarter, an increase of about $80,000 from Q2 last year, and in line with the REITs expectations. Net income and other comprehensive income was $18.1 million compared to $11.2 million in Q2 last year. The increase was primarily due to higher NOI changes in non-cash fair value adjustments for investment properties and foreign exchange gain, partially offset by higher interest costs and a change in non-cash fair value adjustments for interest rate swaps. FFO and AFFO increased by 19.4 and 18.6% respectively compared to Q2 last year, reflecting higher rental revenue from the acquisitions and contractual rent increases. On a per unit basis, FFO increased to 27 cents diluted, up from 24.4 cents in Q2 last year, and AFFO per unit increased to 26.3 diluted cents up from 24.9 cents. We paid unit holder distribution totaling 20.6 cents per unit in the quarter representing an AFFO payout ratio of 78.3%. This compares with the total distribution of 20.1 cents per unit in Q2 last year for a payout ratio of 80.7%. The cap rate applicable to our portfolio was 6.7% at quarter end which is flat compared to 2025 year end. We continue to be proactive with our debt strategy to enhance our financial flexibility. During the quarter, we increased the amount of the non-revolving portion of Facility 2 by $35 million and extended the maturity date to June 2030 with the same credit spread. At quarter end, 74% of our debt was fixed with a weighted average interest rate of 4.49%. a weighted average interest rate, swap term and mortgages remaining of 3.9 years, and a weighted average term of maturity of debt of 2.9 years as we continue to increase and extend our credit facilities. As at August 13th, we had a debt-to-GBV ratio of 47.5% with approximately $64 million of undrawn capacity under our credit facilities and 11 unencumbered properties valued at $166.7 million. I'd like to turn the call back to Milton for closing remarks. Thank you very much.