CT Real Estate Investment Trust

Thank you, Shannon, and good morning, everyone. Thank you for joining us today on our Q1 2026 earnings call.

We are pleased with our start to the year and our first quarter results once again demonstrate the strength and stability of our portfolio, the benefits of our disciplined operating approach and the resilience of our business model. CT REIT's objective has always been straightforward to deliver dependable and growing results, supported by a high-quality portfolio and a conservatively managed balance sheet.

Our Q1 results reflect our continued execution against this objective. From an operating perspective, our portfolio continued to perform very well.

Occupancy remained high at 99.4% consistent with prior periods, and we continue to benefit from the contractual rent escalations embedded in our long-term leases. Same-property NOI grew by 2.3% and net operating income increased by 4.7% year-over-year, respectively.

This steady growth at the property level translated into continued improvement in our earnings metrics. AFFO per unit increased by 2.8% compared to the first quarter of last year, and FFO per unit increased by 3.5%.

It is important to note that this growth was achieved while maintaining a disciplined approach to costs and capital allocation and while keeping our payout ratio stable in the low to mid-70% range. Against this backdrop, we are pleased to announce that our Board of Trustees has approved a further increase in our monthly distributions.

Effective with the July 2026 payment, distributions will increase by 3.5%, which marks our 13th increase since our IPO and brings our cumulative distribution growth to more than 50% over that period. Turning to capital deployment.

We were pleased to announce 3 new third-party investment opportunities with a total expected capital commitment of approximately $43 million. These investments include the acquisition of a Canadian Tire anchored retail property in Edmonton as well as the acquisition of 2 separate properties that are located adjacent to existing CT REIT-owned assets.

One, a land parcel in Oliver, British Columbia and the other, an existing retail property in the Greater Montreal area. Collectively, these transactions are expected to deliver an attractive going-in yield and will add nearly 130,000 square feet of incremental GLA to the portfolio.

While individually modest in size, these investments are good examples of how we continue to source capital-efficient growth opportunities that align with our strategy. In each case, we are leveraging our portfolio, existing relationships and market knowledge to deploy capital in a prudent manner.

This approach has been a consistent hallmark of CT REIT's growth over time and works particularly well in a transaction environment where discipline and selectivity remain critical. At the same time, our development pipeline remains well positioned.

We continue to advance a number of projects with 4 expected to be completed through the course of this year and others extending into 2027 and beyond, including our Canada Square retrofit project. These developments are all substantially pre-leased.

And as Jodi will outline in more detail, they are designed to deliver incremental growth while maintaining the overall quality and balance of our portfolio. From a balance sheet perspective, it remains in a very strong position.

We ended the quarter with our indebtedness ratio sitting at 39% and our interest coverage ratio at 3.52x. The potential liquidity that this provides, coupled with our conservative approach, differentiates us from our peers and will position us well to continue to execute on our strategy going forward.

Looking ahead, we remain confident in CT REIT's ability to deliver reliable performance and long-term value creation with a stable, predominantly net lease portfolio, visible organic growth, a well-positioned development pipeline and a strong balance sheet, CT REIT will continue to navigate current environment and capitalize on opportunities as they arise. With that, I'll now turn the call over to Jodi to discuss our investment development and leasing activities in more detail.

Jodi?

Thanks, Kevin, and good morning, everyone. As Kevin noted, as highlighted in our press release yesterday, we were pleased to announce 3 new investments this quarter.

The first acquisition relates to a property in the eastern part of Edmonton, roughly 76,000 square foot property is anchored by a Canadian Tire store and has 2 additional freestanding pads, 1 leased to the Bank of Montreal and 1 leased to McDonald's. The second acquisition is a 54,000 square foot CRU building anchored by Value Village that is directly adjacent to the CT-owned Canadian Tire store in Rosemere, Quebec, which is a suburb located just north of Montreal.

Lastly, we will be acquiring roughly 3.4 acres of land adjacent to a CT REIT-owned Canadian Tire and grocery store anchored open-air shopping center in Oliver, BC. These new investments are subject to closing conditions and are expected to close in Q2 and will require a total of $43 million to complete and are projected to earn a going-in yield of 6.28%.

Combined, they will add approximately 130,000 square feet of high-quality GLA to our portfolio. Looking ahead, our development pipeline remains healthy.

We currently have 11 projects at various stages of progress. These developments, including the Canada Square office retrofit project in Toronto, represent a committed investment of approximately $380 million of which $177 million has been spent to date.

We expect to invest roughly $78 million over the next 12 months to advance these projects. Once completed, they will add 629,000 square feet of new GLA to the portfolio approximately 95% of which has already been pre-leased.

Turning to leasing. During the first quarter, CT REIT completed 2 Canadian Tire store lease extensions.

In the quarter, we also renewed nearly 200,000 square feet of third-party tenancies. On a blended basis, total renewal spreads came in at 5.9% on approximately 340,000 square feet of GLA.

It should be noted that approximately 226,000 square feet of this GLA related to extensions that were exercised with fixed options to renew at flat rents. Excluding this GLA, blended renewal spreads came in at 11%.

As of quarter end, we maintained a long weighted average lease term for the portfolio at 7.0 years and our occupancy rate remained robust at 99.4%. I will now turn the call over to Lesley to discuss our financial results.

Lesley?

Thanks, Jodi, and good morning, everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in the first quarter.

Once again, our results demonstrated the steady growth and resilience of our portfolio. Same-property NOI, which includes the impact of intensifications, grew by 2.3% in the quarter compared to Q1 of 2025.

These increases reflect the contractual rent escalations of approximately 1.5% per year in many of our Canadian Tire leases as well as the contributions from intensification projects completed in 2025 of $1.2 million for the quarter. Overall, NOI grew by 4.7% year-over-year, representing an increase of approximately $5.6 million.

This strong performance was supported by the same property NOI growth I just spoke to and the impacts of 7 acquisitions completed in 2025 as well as development activity over the relevant period. In the first quarter, general administrative expenses as a percentage of property revenue were 2.6% compared to 2.9% in the same period last year.

The decrease was mainly due to the timing of the deferred income tax provision. Excluding the fair value adjustments, G&A as a percentage of property revenue decreased 20 basis points to 2.5%.

The fair value adjustment on investment properties was $31.2 million in the quarter, compared to $24.8 million in the prior year. The gain was primarily driven by contractual rent increases and leasing activity within the property portfolio as well as adjustments to certain assumptions in our discounted cash flow models.

In the first quarter, AFFO per unit on a diluted basis was $0.327, up 2.8% compared to the first quarter of last year. FFO on a diluted basis was $0.354 per unit, up 3.5% compared to Q1 of 2025.

Growth in FFO and AFFO primarily reflects the increase in NOI, partially offset by higher property expenses, interest costs and $1 million of development fee revenue earned in Q1 2025. Cash distributions paid in the quarter increased 2.5% compared to Q1 2025 to $0.237 per unit, reflecting the higher monthly distribution rate that became effective in July of 2025.

As Kevin mentioned earlier, we are pleased to announce our 13th distribution increase since our IPO, reflecting our financial strength and consistent delivery of strong results. The new rate will become effective with the July 2026 distribution.

The AFFO payout ratio for Q1 was 72.5%, stable from 72.6% in the same period last year. Turning to the balance sheet.

Our interest coverage ratio for the first quarter was 3.52x, which is stable compared to 3.55x in Q1 of 2025. This small change reflects our higher interest costs arising from the reset of interest rates on several series of our Class C LP units effective June 1, 2025, increased utilization of our credit facilities to fund acquisitions, intensification and development, and the issuance of $200 million of the Series J unsecured debentures in June of last year, partially offset by higher capitalized interest on properties under development.

Even with these financing activities, our total indebtedness to EBIT fair value improved to 6.46x in 2026 from 6.77x a year ago as earnings growth outpaced the increase in debt. Our strong balance sheet provides ample financial flexibility to fund future growth initiatives.

With respect to liquidity, we ended Q1 with approximately $6 million of cash on hand. Our committed $300 million bank credit facility and our $300 million uncommitted credit facility with CTC, with roughly $132 billion (sic) [ $ 132 million ] available on the line at quarter end, which provides adequate liquidity and balance sheet capacity to fund ongoing investments and to pursue new opportunities.

And with that, I'll turn the call back over to the operator for any questions.

I was just saying congrats on a good start to the year. On the acquisition front, clearly, a little bit of a flurry here in, I guess, what will be 2Q.

I was just wondering if you could provide us a little bit of an outlook in terms of the acquisition outlook for the balance of the year.

Sure, Lorne. So obviously, we're very pleased with the acquisitions that we've announced.

They all fit very well into the portfolio and align with our strategy. I think the way we're thinking about 2026 is hitting singles and doubles.

We're going to be out there trying to find these opportunities, working obviously with our existing relationships to try to source them. We're pretty confident in our ability to continue finding these types of deals.

We've talked about our development pipeline. It's still obviously quite robust.

We're happy with the pipeline, but we'll be delivering a bunch of that through the course of the year. So we're trying to find the backfills to keep our investment activity up towards our typical run rate in a given year.

So no specific deals to announce at this time or specific guidance on quantum or type. But I would say we're hopeful the balance of the year shapes up similar to the way it started off.

Okay. That's pretty helpful.

And then maybe a quick one here just for Lesley. On the capped interest side of things, it bumped up, I think, a little bit quarter-over-quarter.

What -- how should we be thinking about that over the balance of the year and into 2027?

Lorne, the increase in the capped interest relates to us having moved the Canada Square property into properties under development on December 31. So sort of the higher run rate that you're seeing in Q1 that will sort of continue as that development continues over the course of the next 2, 2.5 years.

Okay. So kind of use this as a good jumping off point.

The Oliver BC land purchase, is that just to -- are you banking some land there? Or are there some plans for building on that site?

I wouldn't call it a land bank. I think we have active intention to develop the parcel.

It's about 3.4 acres. So it can probably build somewhere around 40,000 to 50,000 square feet of GLA there.

It's a really good market, South Okanagan. We got a lot of productive stores in and around the neighborhood.

So when the opportunity came up, we wanted to obviously protect our existing assets and add to it because it's quite productive. So we do have some tenant interest.

We're working through that right now. And as long as that goes as we hope it will, it will hopefully join our development pipeline soon.

Okay. And then I guess I was just curious, Choices -- Choice Properties has moved forward with the proposal to acquire at least part of First Capital's portfolio.

I'm wondering, given that both you and Choice started at roughly the same time with similar structures, like did this sort of open your eyes maybe to larger type transactions that might be possible for CT REIT? Or are you and Canadian Tire more interested in just kind of sticking to your knitting rather than branching out in that fashion?

I'd say it's probably more likely to be the latter than the former, Tal. I mean we always scan the market for opportunities.

Obviously, we're aware of the notion around something larger, transformational on the M&A side, but that hasn't been the way that we've grown to date, and our growth to date has obviously been secret to our success in terms of our outperformance, in terms of earnings and NAV growth, and our ability to continue to pushing our distribution increases on an annual basis. So obviously, we think about these things, we contemplate them.

We talk with our Board and obviously, Canadian Tire about the merits. But to date, we have not found anything that we believe is in our best interest, but that doesn't mean that can't change over time.

And are you seeing any larger retail portfolios in the market right now that you would be interested in? Or has it been relatively quiet on that front?

In terms of marketed opportunities, definitely quiet. The marketed opportunities that we're seeing are more single-tenant assets in the retail space, a lot of grocery anchored.

But I would say even the quantity of marketed offerings has slowed down a little relative to where the last year ended off. There's 1 or 2 bigger single property acquisitions that we're aware of that are coming to market, but no specific portfolios that I'm aware of at this time.

Just on the development cost for the pipeline that's active. It looks like the cost per square foot went up rather materially.

Can you maybe just expand on that and what drove that? Or was it really just a function of maybe the transfer of Canada Square into PUD?

I think a couple things, Pammi, I definitely think Canada Square is a contributing factor to that. Obviously, an office retrofit is a unique type of development investment for us.

So the profile would look different than, say, building new retail GLA. The other thing that's happened is we've completed a lot of new larger store projects and now we're left with on the retail side are store expansions.

And typically, when you're expanding a store 20,000, 30,000 square feet at a time, it's slightly less efficient. You lose some of the economies of scale.

So on a per square foot basis, it can be a little bit more expensive. So I think it's the combination of those 2 things that's driving that increased cost on a per square foot basis.

With the bulk of it, what you just described in terms of the expansions or really the bulk of it because some of these other ones do seem to be sort of rather smaller projects, but -- or with the bulk of it...

Yes, we'd have to get back to you on the breakdown. I don't know that off the top of my head, but just those 2 things at a high level would be the contributing factors.

But if you'd like to break down, we can circle back with you.

Sure. Okay.

And then just last one for me. Just in terms of the -- I think it was Jodi's comments and Lesley's comments on the leasing spreads.

Are there a lot of leases in the portfolio where you do have flat rents. I think you mentioned 200,000 or over 200,000 square feet had options on flat rents.

And just curious if that was also -- if those were Canadian Tire related.

So 226,000 of those were the fixed flat renewals. We do not have -- that's really in the minority of the portfolio.

And it's a combination of the tenancies, it's not just exclusively CTR. It was a combination.

So -- but it is an anomaly, it is not the norm.

Yes. Pammi, just for a little extra color.

They were, I'd say, 2 anchor leases that were acquired subsequent to our IPO and our typical vend-in or development-related transactions with Canadian Tire. So these would be the 2 that would be most prominent in the portfolio, and they just happened to come up at the same quarter.

So obviously, your leverage is running pretty low. I think you're at 6.5% this quarter.

I'm just wondering, is that anticipation of really ramping up Canada Square? Or should we kind of expect that to be trending higher?

And if so, where would you be investing that capital or directing that capital to be M&A or just incremental developments?

Giuliano, it's Lesley. The leverage is down at 39%.

It's not sort of anticipation of leveraging that up. As we spend through our development portfolio, the -- because this development portfolio is being spent over the couple of years and largely we can fund the vast majority of that through retained cash, not expecting that to sort of increase significantly over the next little while.

It's really more a factor just of the increases in the property portfolio as we continue to sort of increase value of those assets relative to development spend, it's crept down, but it's not a strategic objective to be lower, and we're not expecting it also to be sort of significantly higher in the coming quarters.

I think we view it as a conservative way to manage the balance sheet, while leaving dry powder on the side, should we find opportunities that we want to capitalize on. So really trying to be opportunistic in this marketplace and be in a good position to obviously run the portfolio and complete our developments, but also leave ourselves open to new acquisitions should they present.

And so the new acquisitions, would you say that's kind of more focused on like CT-related banners? Or is it going to be kind of more adjacent properties to your existing portfolio going forward?

A bit of a mixed bag. I mean, yes, buying the Canadian Tire anchored property in Edmonton, obviously, that's core to our strategy and repatriating Canadian Tire assets is what we do.

The other ones are just taking advantage of our existing market knowledge and our existing portfolio to sort of find new opportunities. So I think it will be a mix of both going forward, where you'll see us doing our typical stuff, but also trying to expand a little further afield while we try to find deals that's still aligned with our strategic objectives.

Thank you, Shannon, and thank you all for joining us today. We look forward to welcoming you to our Annual Meeting of Unitholders, which we will conduct virtually later this morning at 10:00 a.m.

We hope that you'll be able to listen in. We also look forward to speaking with you again in August after we release our Q2 results.

Thank you.