Canadian Net Real Estate Investment Trust

Good morning. I would like to welcome everyone to Canadian NetReach 2026 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session and instructions will be provided at that time. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would like to advise everyone that this conference is being recorded. Before we start, I have been asked by CanadianNet to read the following message regarding forward-looking statements and non-IFRS measures. In talking about financial and operating performance, And in responding to questions today, management may make forward-looking statements, including statements concerning Canadian NET's objectives and strategies to achieve them, as well as statements with respect to plans, estimates, and intentions, or concerning anticipated future events, results, circumstances, or performance, which are not historical facts. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the risks that could impact actual results and the expectations and assumptions management applied in making these forward-looking statements can be found in Canadian NETS Most recent annual information forum for the year ended December 31, 2025, and management's discussion and analysis for the period ended March 31, 2026, which are available on their website at www.cnetreit.com and on CDARplus at www.cdarplus.com. Management will also refer to non-IFRS financial measures today, which are widely used in the Canadian real estate industry, including FFO, normalized FFO, AFFO, and NOI. Management believes these financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of Canadian net. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similarly titled measures reported by other entities. For more information, please refer to the section Non-IFRS Financial Measures of Canadian Nets MD&A for the period ending March 31, 2026. I would now like to turn the conference over to Kevin Henley, Canadian Net REITs President and CEO. Please go ahead, Mr. Henley.

Thank you, Operator, and good morning, everyone. Thank you for joining us today as we walk you through our Q1 2026 results. Q1 2026 was a steady quarter for Canadian Net. FFO per unit grew 1% quarter over quarter, and most importantly, we announced a 3% increase in our annual distribution to $0.36 per unit. our 13th distribution increase in our history. It's worth noting that we have increased our distribution every year, except for 2024. FFO per unit growth was modest this quarter, primarily reflecting the temporary drag of undeployed capital. In 2025, we repaid our $6 million convertible debenture using refinancing proceeds, then issued a fresh $4 million debenture to fund future acquisitions. As those proceeds are deployed into accretive opportunities, FFO growth will accelerate. The portfolio continued to operate as expected, and our team remained focused on sourcing and analyzing new acquisition opportunities. We are very well positioned today to act on acquisitions that meet our investment criteria, and we will do so with the same discipline that has guided us in the past. One often overlooked strength of our model is that we repay approximately $6 million in mortgage principal annually, close to $0.30 per unit. which continuously expands our capacity to grow organically through property refinancing. On the leasing front, 2026 activity has been great. Of the 14 leases scheduled to mature this year, representing 3.47 million in NOI, 13 have already been renewed at an average rental increase of 6.5%, covering 99.9% of expiring NOI. The remaining lease is set to renew automatically during Q4. For 2027, we have 19 leases maturing, representing approximately 2.4 million in NOI, of which three have already been renewed at an average increase of 2.2% and representing 19.1% of the expiring NOI. We expect the reminder to be addressed over the coming quarters. Our weighted average lease term stands at 5.6 years with 100% occupancy as of March 31st, 2026. Looking ahead, we are focused on deploying the capital currently on hand potentially complemented by proceeds from property refinancing into accretive acquisitions. The pipeline is active and our platform now has national reach. We will continue to act with patience and conviction, investing when the right opportunity meets our standards. I'll now hand over the call to Ben Gacis, Canadian Net's Chief Financial Officer, for a detailed review of our financial results. Ben?

Thank you, Kevin. We had a solid quarter. For the three-month period ended March 31, 2026, we generated FFO per unit of 16.6 cents compared to 16.4 cents for the same period in 2025, which represents an increase of 1%. FFO for the period ended March 31, 2026 increased to $3.41 million compared to $3.38 million for the same three-month period last year. FFO was impacted by higher rental income from property acquisitions in January 2025 and lower interest charges on credit facilities. During the same period, NOI was $5.01 million, up 1% from $4.97 million for the same period in 2025. NOI was impacted by increases in rental revenue due to the additions of new properties and increases in rent on certain existing properties. Property rental income was $6.94 million, an increase of 1% compared to $6.85 million for the same period last year, and was impacted largely by the same elements as NOI. It was also impacted by increases in recoverable additional rent. The IFRS value of our adjusted investment properties, which is the total of our wholly owned investment properties and our proportionate share of the investment properties held in joint ventures, was $343.3 million as of March 31, 2026, consistent with the value of adjusted investment properties a year earlier. We continue to maintain a prudent approach with respect to our leverage and our payroll ratio, having a debt-to-growth assets ratio of approximately 54% compared to 55% as at the same time last year. Including convertible debentures, debt to gross assets was 53% as at Q1 2026 compared to 54% as at Q1 2025. Our FFO payout ratio for the period ended March 31st, 2026 was 53%, an increase from 52% for the same period last year. Our properties are typically financed with fixed rate amortizing mortgages. As of March 31st, 2026, the REIT's exposure to variable rate debt is limited to its credit facility and a mortgage on one property. We have $7.7 million of mortgages rolling over in 2026. This includes mortgages, this excludes mortgages in our JVs, and the rest of our debt ladder remains well structured. The current average chance of maturity on our mortgages is 3.3 years. Finally, as Kevin mentioned earlier, we increased our distributions by 3% from $0.35 to $0.36 on an annualized basis, representing the 13th time Canadian Net has increased its distribution since 2012. That summarizes our key results for the quarter. We will now open the line for any questions. Operator?