CT Real Estate Investment Trust

Good morning. My name is Lauren Cannon, and I will be your conference operator today. At this time, I would like to welcome everyone to CTREIT's Q2 2025 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star 1 1 on your telephone keypad. To withdraw your question, please press star 1 1. The speakers on today's call are Kevin Salzberg, President and Chief Executive Officer of VT REIT, Jody Spiegel, Senior Vice President, Real Estate, and Leslie Gibson, Chief Financial Officer. Today's discussion 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 CTREIT's public filings for a discussion of these risk factors, which are included in their Q2 2025 management's discussion and analysis, which can be found on CTREIT's website and on CDER+. I will now turn the call over to Kevin Salzberg, President and Chief Executive Officer of CTREIT. Kevin?

Thank you, Lauren. Good morning, everyone, and thank you for joining us today on CTREIT's quarterly investor conference call. We had a busy second quarter here at CT REIT, and I am pleased to highlight some of our notable accomplishments since we last spoke. First, we were thrilled to recently share news of the progress that we have been making at our Canada Square property. Located at the southwest corner of Yonge Street and Eglinton Avenue West in Midtown Toronto, and home to Canadian Tire Corporation's head office for nearly five decades, this trophy asset that we co-own with Oxford Properties Group has always been a unique property within our portfolios. Acquired in 2014, we have long considered there to be tremendous upside in this asset based on its strategic location at what will soon be the intersection of two transit lines and also related to the site's future mixed-use redevelopment potential. For the co-owners, stabilizing the commercial component of the complex has been our priority, and we have been working with CTC for some time on their evolving workplace strategy to determine their needs and to find solutions that met all of our collective objectives. The result of these efforts is a new 20-year lease with CTC to take approximately 550,000 square feet of significantly refurbished space that will anchor the complex and occupy substantial portions of the two buildings located at 2180 and 2200 Yonge Street. The co-owners have committed to improving the buildings at a cost of over $200 million or greater than $100 million at our 50% share, including upgrading the electrical and mechanical systems, washrooms, elevators, and even replacing the curtain wall. There will also be enhanced transit connections in the form of a new subway entrance from the lobby of 2200 Yonge Street, as well as 15,000 square feet of new retail space along Yonge. The project will also seek to minimize embodied carbon while introducing significant energy efficiency upgrades in support of LEED certification. Needless to say, we will be investing in this asset to deliver what will soon become a AAA complex at what has always been a AAA location. Construction and occupancy will begin this fall and will be phased over the next three years with full occupancy expected in late 2028. Second, with respect to our funding and financing activities, in Q2, we refinanced our Series B unsecured debentures that matured in June with a new issuance of $200 million in Series J unsecured debentures with a five-year term at a rate of 4.29%. The spread we realized on this new financing of 135 basis points over the reference rate was CT REIT's tightest ever, and at the time, the tightest REIT five-year spread in the last four or so years, obviously a result that we were very pleased with. Additionally, the REIT reset the interest rate effective June 1, 2025, on its Series 3, 16, 17, 18, and 19 Class C LP units with CTC to 4.38%, for a five-year term ending on May 31, 2030. In the quarter, we also renewed our base shelf perspectives as well as our ATM program. Next, we were happy to release our fourth annual ESG report, which highlights our strategy, priorities, and accomplishments in 2024. As we continue to evolve our thinking, practices, and disclosure, our ESG report is a great reference to understand where we are at on our ESG journey. Highlights from the past year include improving our data-related systems, and the ability to measure our footprint, philanthropically supporting the communities in which we operate, and being recognized for both our diversity and the way we manage our assets. I encourage you to give it a read to learn more. Beyond these achievements, I am also pleased with our financial performance, and CT REIT delivered strong results in Q2. Occupancy was steady again this quarter, up slightly to 99.5%. Growth in same-store NOI was 1.6% for the quarter, which when coupled with our intensification activity over the past year, led to growth in same property NLI of 2.2%. Net operating income overall grew at 3.4% on the back of the same property NLI growth, coupled with growth driven by recently completed acquisitions and developments. And this growth in net operating income drove AFFO per unit growth of 1.6% in Q2. As a reminder, in Q2 of 2024, we received a lease surrender payment, And excluding this item, NOI growth would have been 4.4%, and AFFO per unit growth would have been 3.2% for the quarter, both very strong showing. With respect to our balance sheet, with our indebtedness ratio dropping below 40% at the end of Q2, we are in the enviable position to be able to leverage our financial flexibility when we find new investment opportunities that fit our strategy and meet our financial targets. Although we are quite comfortable with this current level, it is below our typically targeted range in the low to mid 40%, and we therefore have significant dry powder to deploy for the right deals. While the market has slowed in terms of transaction volumes, the new investments that we announced this quarter and that Jody will describe in more detail are great examples of our ability to source strategic third-party acquisitions and to also leverage our relationship with Canadian Tire to both find new avenues for growth and continue to improve our asset base. With a substantially fully occupied portfolio, a solid balance sheet, and the financial flexibility to continue to invest in our growth, CTREIT continues to provide investors with a stable and reliable investment option that is built to withstand the ups and downs of the volatile markets that we have seen for some time now. I will now turn it over to Jody and Leslie to provide some additional details on the quarter, our results, and our leasing, investment, and development activities. Jody?

Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we are pleased to announce two new investments this quarter. The first new investment relates to our acquisition of a well-located 200,000-square-foot open-air shopping center anchored by Canadian Tire and other strong tenants in the north part of Calgary, Alberta, which closed subsequent to quarter end. Additionally, we have finalized arrangements to expand a Canadian Tire store in the eastern part of Saskatoon, Saskatchewan. This development project is anticipated to be completed by the end of 2026. These new investments will require a total of $66 million to complete and, in aggregate, are expected to earn a going-in yield of 7.55%. Together, they will add approximately 252,000 square feet of incremental GLA to our high-quality portfolio. In the second quarter, we completed two previously disclosed projects, including the expansion of a Canadian tire store in Peterborough, Ontario, as well as the development of a new Canadian tire store in Kingston, Ontario. These investments totaled $45 million and added 142,000 square feet of incremental GLA to the portfolio. Our development pipeline overall remains strong with 20 projects at various stages, eight of which are expected to be completed by the end of this year, and the remainder expected to be completed in 2026 and beyond. Included in these development projects is the newly announced retrofit at Canada Square that Kevin touched on and that we announced in June. This initiative will modernize the commercial complex, delivering a total of 680,000 square feet of renovated space, of which over 90% is pre-leased and over 80% of which will be occupied by Canadian Tire. The redevelopment is our first step in transforming the 9.2-acre site into a vibrant, mixed-use community hub complete with public open spaces and transit-connected infrastructure. The office retrofit for 2180 Yonge Street will begin later in 2025 with work on 2200 Yonge Street beginning at the start of 2026, and the project overall will be substantially completed in 2028. The majority of the required investment will be spent relatively evenly between 2026, 2027, and 2028. The office retrofit will include upgrades to the curtain walls, new quick dispatch elevator systems, improved lobbies and entrances, refreshed washroom facilities, new HVAC systems and roof replacements in both buildings, as well as new ended trip facilities in 2180 Young that will serve both buildings. The goal of the co-owners is to deliver a world-class office complex that will meet the needs and exceed the expectations of both Canadian Tire and our other tenants within the property. These developments, including the Canada Square retrofit project, represent a total committed investment of approximately $433 million upon finalization, $119 million of which has already been spent, and $153 million of which we anticipate will be spent in the next 12 months. Once built, these projects represent a total GLA of approximately $1 million 137,000 square feet, approximately 95% of which has been pre-leased. With respect to our leasing activities, during the second quarter, CT REIT completed 10 Canadian tire and two marked lease extensions, which total approximately 554,000 square feet of GLA, and as at the end of Q2, the weighted average lease term for a portfolio was 7.5 years, which remains one of the longest in the sector. At the end of the quarter, CG REIT's occupancy rate ticked marginally higher to 99.5%. I will now turn it over to Leslie to discuss our financial results.