PRO Real Estate Investment Trust

Good morning and welcome to ProREIT's fourth quarter and annual results conference call for fiscal 2025. At this time, all lines have been placed on mute to prevent background noise. Management will make a short presentation, which will be followed by a question and answer period, open exclusively to financial analysts. To ask questions, simply press the star key then number one on your telephone keypad. If you would like to withdraw your question, Please press the star key followed by number two. For your convenience, the results released along with fourth quarter and fiscal 2025 financial statements and management discussion and analysis are available at ProReit.com in the investor section and on CDAR+. Before we start, I have been asked by ProReit to read the following message regarding forward-looking statements and non-IFIS measures. ProReit's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements, or other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors may cause actual results, level of activity, performance, achievements, future events, or development to differ materially from those expressed or implied by the forward-looking statements. As a result, ProREIT cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in ProREIT's MD&E dated March 4, 2026, available at www.cedarplus.ca. Forward-looking statements represent management's expectations as at March 4, 2026, And, except as may be required by law, ProREIT has no intention and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. The discussion today will include non-IFRS financial measures, these non-IFRS measures, should be considered in addition to and not as a substitute for or in isolation from the REIT's IFRS results. For a description of these non-IFRS financial measures, please see the Fourth Quarter and Fiscal 2025 Earnings Release and Non-IFRS Measures section of the MD&A for Fiscal 2025 for additional information. I will now turn the call over to Mr. Gordon Lawler, President and Chief Executive Officer of ProReit. Please go ahead.

Thank you, Sylvie. Good morning, everyone, and welcome. Joining me today is Alison Schaefer, our CFO and Corporate Secretary. Zach Aaron, Vice President of Investments and Asset Management, is not joining us today as he has a new bouncing baby girl as of last week. Congrats, Zach and Julia, on his proud new parents. I'll begin with an overview of our fiscal 2025 and fourth quarter performance before turning the call over to Alison for a more detailed review of our financial results. We're very proud of our performance in 2025, which marked a major milestone for ProREIT as we completed our transition to a pure-play industrial REIT focused on small and mid-bay properties. I want to commend our entire team Achieving this strategic objective established three years ago reflects the discipline, execution, and commitment of our employees. Over the course of the year, we repositioned our portfolio, strengthened our balance sheet, and enhanced the overall quality of our platform to support sustainable long-term growth. At year end, our portfolio comprised 105 investment properties, totaling 6.4 million square feet of gross leaseable area. Weighted average lease term to maturity was 4.3 years compared to 3.8 years at the same time last year. In line with our capital recycling strategy, we sold a total of 17 non-core properties during the year with gross proceeds of $71.2 million. We also acquired a portfolio of seven high-quality industrial properties in Winnipeg, Manitoba from Parkett Enterprise, Inc., for $101.9 million. By the same token, we struck a strategic partnership with Parkit to pursue future growth opportunities. As part of the transaction, we also successfully raised $42.1 million of equity, further enhancing our financial flexibility and positioning the REIT for future growth. As of year-end, industrial assets represented 90.5% of our base rent compared to 80.8% a year ago. The enhanced earnings profile of our industrial-focused portfolio is reflected in our financial performance. NOI rose by 9.6% in the fourth quarter and 8.4% for the year, despite owning 10 fewer properties. Turning to the portfolio transactions during the year, we completed the sale of a non-core office property located in St. John, New Brunswick, totaling approximately 51,000 square feet for gross proceeds of $7.2 million. We continue to manage that property on behalf of the purchaser. And the sale of our non-core retail property in Rocky Mountain House, Alberta, totaling approximately 5,000 square feet for gross proceeds of $400,000. Net proceeds for these sales were used to repay related mortgages, credit facilities, and for general corporate purposes. Leveraging our partnership with Parkit, we purchased an industrial property in Winnipeg from them for $5.4 million as we continue to increase our presence in this market. Purchase price was financed through $3.2 million of the non-revolving credit facility at approximately $2.1 million of prorate equity priced at $620 per unit to park it. Subsequent to year end, we engaged in two additional transactions. First, we sold our 50% interest in a non-core industrial property in Dartmouth, Nova Scotia, totaling approximately 65,000 square feet, with our share of gross proceeds of $5.7 million. Second, we're in the process of acquiring 100% interest in a single-tenant 2024 built 10-year leased industrial building in Moncton, New Brunswick, totaling approximately 60,000 square feet of GOA for $12.3 million. Our focused presence in robust secondary markets continues to deliver compelling results. According to CDRE, our core markets of Halifax, Winnipeg, and Ottawa all outperformed the national average in terms of market rent growth in 2025. Turning to leasing activity, our leasing momentum was sustained throughout the year, driven by contractual rent escalations as well as stronger renewal rates at higher rents on new leases. As of today, we've secured 80.1% of GLA maturing in 2025 at a positive average spread of 34.2%. Excluding the St. Hyacinth property, which I'll address shortly, we've renewed 95% of our 2025 GOA. We've also secured renewals on 68.2% of GOA maturing in 2026 at a 33.8% positive average spread, reflecting one of the strongest leasing cycles at this stage in our history and providing meaningful embedded growth heading into 2026. This includes, among other transactions, five leases renewed starting in 2026, with rent increases ranging from 40% to 45%. Overall portfolio occupancy was 95.4% at year end, compared to 97.8% a year earlier. As noted on previous calls, our occupancy rate was impacted by a single vacancy in a 176,000 square foot property located at 6375 Picard Street in Saint-Hyacinthe, Quebec. On February 27th, we entered into a non-binding offer to lease for approximately 74,000 square feet at this property to a new tenant for a term exceeding 10 years at a market rent. Subject to the completion of the binding lease, rent commencement is expected mid-2026. Including this property, our portfolio occupancy would have been approximately 98.1% at year end. With that, I'll now turn the call over to Allison. Allison, over to you.

Thank you, Gordy, and good morning, everyone. We are pleased with our fourth quarter and full year results. In the quarter, property revenue totaled $26.2 million. That's up 5.4% year over year, despite owning 10 fewer properties. The increase is mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases. For the full year, property revenues amounted to $104.1 million, up 4.9% year over year. Net operating income, or NOI, was $16.1 million, an increase of 9.6% compared to last year due to the same factors. For the full year, NOI amounted to $63.4 million, which was up 8.4% year-over-year. Fourth quarter, same property NOI, representing 98 of our 105 properties, reached $14.1 million. That was up 8.1% year-over-year, driven by robust 9.1% growth in our industrial segment. The increase reflects contractual rent escalations, stronger renewal rates, and higher rents on new leases. This was achieved despite a decline in overall average occupancy related to the single tenant vacancy Gordy mentioned earlier. For the full year, same property NOI reached $53.0 million, up 8% year over year. Our funds from operations, or FFO, amounted to $7.8 million for the quarter, which was up 14.3%. This was driven by increases in contractual base rent, higher rates on renewals, and higher rental rates on new leases. This was offset by an increase in interest and financing costs. Basic AFFO payout ratio was 99.1% in Q4, compared to 96.1% for the same quarter last year. This is primarily driven by the timing of the sale of 17 properties we completed in 2025, an increase in interest and financing costs, and the issuance of equity in connection with the Parkit transaction in Winnipeg. We expect improvement on our payout ratio, creating some financial flexibility and some room for future acquisition. The weighted average capitalization rate of our portfolio was stable year over year at approximately 6.7% at December 31st, 2025. Moving on to our balance sheet. Adjusted debt to annualized adjusted EBITDA ratio came in at 9.0 times at December 31st, 2025. That was down from 9.2 times at the previous year end. While our adjusted debt to growth book value decreased to 48.8% from 50.3% at the same time last year. Our midterm goal is to reduce our adjusted debt to adjusted EBITDA ratio and adjusted debt to a growth book value further as we continue to grow the business. At year end, our total debt, including current and non-current portions, totaled $525 million compared to the $531.1 million at September 30, 2025, and $499 million at December 30, 2024. Looking at our upcoming maturities, In 2026, we have $157.1 million maturing. We are actively engaged with lenders on these maturities and expect to secure refinancing on competitive terms with robust refinancing proceeds. In 2027, we have another $48.7 million maturing, mainly tied to high-performing industrial assets in Burnside Industrial Park. And for 2028, we have $59.8 million in maturities. The weighted average interest rate on these mortgages is 3.7% for 2026, 4.8% for 2027, and 3.5% for 2028. Finally, our distribution of 3.75 cents per unit was maintained for the fourth quarter of 2025. That wraps up our financial review. Gordy, back to you for closing remarks.