Thank you, operator, and good morning, everyone. Welcome to SmartCentres' Second Quarter 2026 Results Call.

I'm Peter Slan, Chief Financial Officer. And as in prior quarters, I'm joined on today's call by Mitch Goldhar, Executive Chair and CEO; and by Rudy Gobin, our Chief Portfolio and Asset Management Officer.

We'll begin today's call with some comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results.

We will then be pleased to take your questions. Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A.

This also applies to comments that any of the speakers make today. Mitch, over to you.

Thank you, Peter. Good morning, and welcome, everyone.

I will be brief so we can get to your questions. Q2 was very solid in all categories.

Here are a few examples. The SmartCentres portfolio delivered on same property NOI growth at 2.6% for the quarter or 4.4% ex-anchors.

Occupancy grew to 98.1% for in-place and committed deals. Rental lifts were up 12%, excluding anchors on lease extensions.

Leases have been executed at higher rents in 4 of the 6 ex-Toys locations, 3 of which we completed by the quarter end and 1 shortly thereafter. And 86% of 2026 maturing leases were executed by the end of Q2.

Our 200,000 square foot flagship Canadian Tire store in Leaside/Rosedale is on track and near completion with turnover expected in the next few months. All in all, the portfolio continues to show its strength.

This includes commitments by many of our major retailers to expand their store count in our existing portfolio as well as in our retail expansion program. In that regard, we will continue to stay on strategy expanding our retail portfolio around our major retailers' growth needs, like Walmart, Loblaws and Costco.

This expansion program continues to move forward step by step with specific projects and details to be made available in the months ahead. Stay tuned.

At the corporate level, we continue to carefully manage our balance sheet, debt and related metrics. We've also taken steps to insulate ourselves from potential interest rate increases, with 88% of our debt being at fixed rates.

And with that, I will pass the call over to Rudy for some more operational highlights. Rudy?

Thanks, Mitch, and good morning, everyone. Q2 gained further ground from the likes of grocers, TJX banners, pharmacy, dollar stores, banks and more, leading to the signing of nearly 0.25 million square feet of leases in the quarter.

Occupancy returned to above the 98% with 4 of the 6 ex-Toys boxes locations being leased. And as Mitch mentioned, operationally, the portfolio is strong, absorbing some of the best retailers in the country, replacing low rent-paying Toys locations.

And if you recall, typically visited 2 to 3 times a year by customers compared with weekly visits for food and pharmacy and dollar stores, which will not only provide a much stronger covenant, but will also drive higher rents for the vacated units. The higher customer traffic will also drive higher sales for all other tenants within the centers, which then drives higher future rents on renewals and further same properties NOI growth.

The ripple effect is immediate and impacts the entire property for years to come. This resiliency is also reflected in the 86% of the 2026 lease maturities already completed by Q2, with a rental lift of 6.6% all in or 12% ex anchors.

Turning to cash flow. Cash collection remained strong at 99% in the quarter.

And lastly, our Toronto and Montreal Premium Outlets remain at 99% -- actually closer to 100% leased and continue to excel in driving traffic, with improving tenant sales and percentage rent. Toronto Premium Outlets remains ranked in the top 3 in sales in this country, and the planned expansion for near 100,000 square feet is now scheduled to start construction in Q4, with average rents in the triple digits.

Overall, we see continuation of all of this momentum into the second half of the year. Thank you, and I'll now turn it over to Peter.

Peter?

Thanks, Rudy. As you've seen in our release, the FFO this quarter was unchanged from the comparable period last year at $0.58 per unit.

FFO with adjustments, which excludes the townhome profits, transactional gains and losses and the total return swap, was $0.54 per unit compared to $0.55 for the same period in 2025. The modest year-over-year decrease was primarily driven by higher interest expense and general and administrative expenses related to the new long-term incentive plan, partially offset by growth in net rental income.

We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO remained stable at 90.5% for the rolling 12 months ended June 30, 2026.

Adjusted debt to adjusted EBITDA was 9.8x, unchanged from the previous quarter. The weighted average term to maturity of our debt, including debt on equity accounted investments, was 2.9 years.

From a liquidity perspective, we remain very comfortable with our current liquidity position. We recently extended our corporate revolver for an additional 2 years to 2031.

As of June 30, 2026, we have approximately $715 million of liquidity, which includes both cash on hand and undrawn credit facilities but excludes any accordion features. Including the accordion, we have $965 million.

During the quarter, we also recorded a fair value loss on our investment properties portfolio of $196.2 million. This adjustment was mainly attributable to the deferral of development activities for certain properties under development, offset by some modest discount rate changes in our income-producing portfolio.

With the recent strength in our unit price, we unwound the remaining total return swap during the quarter and repaid the associated TRS debt. As a result, Q2 will be the last quarter that we report a TRS adjustment to our FFO other than for comparable periods.

We realized a modest gain on the unwind transaction. And looking back over the 4 years since we initiated the swap, it generated a meaningful positive return for the REIT.

As in previous quarters, we have updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you will see on Page 17, there were 9 projects under construction at the end of Q2, an increase of 1 from last quarter.

The Vaughan Northwest townhomes were completed and removed from the list, and 2 additional projects were added. One is a self-storage project in Edmonton, and the other is a 65-unit rental apartment project in the ArtWalk block in the Vaughan Metropolitan Centre.

And with that, we would be pleased to take your questions. Operator?

Just wondering, you mentioned starting some new developments. Obviously, it looks like there's going to be a kickoff here on the retail side in a more meaningful way.

How high are you comfortable taking developments as a percentage of asset value? Hello?

Yes, sorry. You stumped us with that question.

No, we're at 12%. And the development that we're referring to is low-rise, like single story with that great parking for the most part.

So it's not difficult to manage because the rents commence on these developments within -- like under a year from commencement of construction. So we're comfortable with where things are.

It might fluctuate up and down just because some quarters and some years, we might be developing a little bit more. But as I said, within a year, the rents kick in.

So it's not like density where we'll be in debt for years and years before we see any income.

Fair enough. Just confirming, you said you guys are at 12% of -- development is at 12% of asset value right now?

Yes, that's right. 12.5% or so.

Okay. Perfect.

And then this one is a little bit ticky tacky, but just noticed tenant receivables have climbed up quite sort of modestly quarter-over-quarter, but now you're kind of at levels you were at in December of 2020. ECL provision is still below.

But just wondering if you could give us an idea of what's behind that, if there's anything really to read into there.

It's Rudy. No, that's just seasonal with taxes, normal expenses we are incurring on the property.

ECL was not -- as you mentioned, was not unusual for the quarter. So nothing unusual in that category.

And the extent that the ECL that we booked in the first quarter have not been -- sorry, not the ECL, the receivables in the first quarter offset by the ECL, we have not adjusted that yet. So you're seeing both grow.

At some point, when we remove it, the receivables will disappear and the ECL will disappear.

And Lorne, I would just add -- it's Peter. I would just add that collections remain very, very high.

And so there's nothing from an aging perspective on those receivables to be worried about.

And in fact, we were -- in the last, I don't know, 3, 4, 5 quarters, we were at 99%. We were over 99% in Q2 from a collections, from our tenants' perspective.

Yes. Okay.

So it should slowly start to trend down then?

Yes.

Yes.

Just on the capital allocation side with the wind up of the TRS swap, does that change how you think about allocating capital? Units are still trading at about a 20% discount, give or take, to your IFRS fair value.

Yes. Just curious in terms of how it changes anything, if at all.

From the point of view of buying back, we don't have [indiscernible]. I buy units fairly often.

We're not suggesting it's not a good price. But at the moment, the REIT does not have any plans to buy back stock units.

Okay. And then just conversely, with respect to the balance sheet and asset sales, can you give us an update in terms of your conviction level in getting something done on the disposition side in '26 and whether kind of that $200 million to $300 million disposition pipeline over the next 2 to 3 years is still intact?

Very much so. I mean, things, I'd say they move all over the place from one week to the next, but more -- and things are slowly moving on that front.

I mean not so much that the economy is pumping or anything. It's just that I think people are just feeling a little bit more -- they have more visibility on the next period for good [indiscernible ].

And that some people are back in the market, some sectors are starting to get in the mood. So we are talking to various but nothing at the moment worthy of announcing, but we are very much committed to that level of acquisitions.

Okay. And then just switching over to operations.

You've done a really good job of re-tenanting or re-leasing 4 of the 6 Toys"R"Us. I think it was an expected 25% higher net rent as well.

Can you just maybe give us a sense of the cadence of getting the other -- the remaining 2 leased up?

We have interest in both, very interesting. Strong interest in one of them, a real upgrade and improved rents.

And the other one, good interest. So we're pretty optimistic about that in the other.

Yes. No, I would just say the uses that we're looking at will be, again, as I mentioned, for the first 4, better covenants, higher traffic generation, higher traffic for all the other tenants in the shopping center as well.

So I think it will be very much a big step-up from the traffic that the Toys has generated on site.

Got it. And is the expected rent commencement on the 4 that have been leased, is it still potentially in Q4 '26?

Or is that more of a '27 event? And do you think that the other 2 could be rent-producing in 2027 as well?

The 2 that are under negotiation will probably be -- very likely be '27 commencements.

Some enter in Q4 and maybe 1 [indiscernible] that may push into the early year depending on renovation to the space, but that's -- it's soon.

Just on the fair value loss taken on the land, was that a reflection of any ongoing discussions on dispositions of any parcels? Or is that just a choice you guys made independent of any...

No, no, it wasn't based on a negotiation. It was just based on appropriate -- our feeling at this point that for a variety of reasons that those were not reflecting accurately the value at this time.

So no, it's not -- those were not based on a negotiation.

Okay. And the fair value loss was -- I'm sure it was reflective of a number of parcels, but was the bulk of it concentrated in just maybe 2 parcels?

Or really how concentrated was that total provision in Q2?

Yes. I mean it's -- no, it's -- you know from probably in the past where we had focused our attention for potential high-rise.

And so it's sort of across half a dozen properties or more, whereby we are imminently going to do the high-rise development there. And we think it's not -- yes, we just don't think it's imminent.

So I thought it was prudent to make the adjustment, but it's not 1 or 2 properties.

Okay. And is there -- are you seeing any green shoots in the market -- the transaction market for residential density land in Toronto?

Can you say that one more time? Sorry.

Yes. Sorry, I was just asking, the market for -- the transaction market for residential land, is it -- are you seeing any signs of it potentially improving in the near term?

It's really -- at the moment, I'd say we're at the sort of moment of truth. Sometimes it will be clearer in the next little bit like -- but there have been transactions.

And -- so whereas a year ago, there were no transactions. So there are transactions.

And the question is, I guess, does it gain momentum? And that's sort of, I guess, depends on some of the macroeconomic issues and how people feel.

But there's still a lot of people out there in the business, both privately and institutionally, that have the capacity to buy and to think long term -- medium, long term. So some of them are buying, not many, but at least there's some, and we're sort of waiting and watching to see if it picks up.

So it will be interesting. The next 6 months will probably tell the tale or certainly clarify.

But it feels like there'll be some transactions. If you ask me intuitively, I think there's going to be -- start to see some transactions in the next year.

Okay. Great.

And last one for me is just, Mitch, your comments at the annual meeting about getting up to a sort of a cadence of 3 shopping center deliveries or being under construction annually. How would you see the buildup to that pace by 2027?

Yes. I mean I think that's still the case.

I mean things are moving along with respect to the new retail sites and developments around various anchors in new markets across the country. And I think that, that would be a fair number to use as a placeholder for now, maybe arguably on the conservative side.

But getting started is -- there's always lots of obstacles to getting started. So -- but I think in terms of what we're planning, if things go smoothly, I think that's fairly safe, if not conservative.

I just want to come back to the TPO expansion. What can you maybe share in terms of where leasing is at this stage?

And I'm just curious, are you seeing any demand from tenants that are not necessarily outlet type tenants, just given that there has really not been much new supply out there?

Well, first of all, Simon does our leasing. And by the way, they are really good at outlet centers.

So they really make us look good. And this is obviously a bit of a wonder child outlet center.

So the leasing is going very well, but it's a different type of leasing program than normal. Rudy, do you want to give some more additional color?

Sure. As I mentioned just a few minutes ago, the rents are in the triple digits.

And you know the tenants that are in the center and sort of the value of the center. What we found was some tenants that are -- in the center, the very strong tenants are asking to get bigger and move into the expansion area, and some other tenants are also looking to fill other spaces.

So net-net, we're about 50% leased and plan to be over that by the time we hit construction commencement in Q4 of this year. So things are going well.

And you remember, there's a parking deck that we're building with over 1,200 spots in that parking deck. It will displace some of the surface parking.

But net-net, it's going to be, I think, 600 or 700 new parking spots with the new GLA that's coming on stream.

I wanted to add, though, that they don't try to pre-lease at all. That's what I mean by it differently.

They do want to stage the leasing. The interest is very strong.

So hence, why we're expanding. And the big rents there, I mean, the tenants do huge volumes, and they are doing -- are very successful there.

The rents are pretty high relative to the rents in retail. But it's just -- its own thing.

So everyone is pretty happy with TPO.

Any change to that? I think you previously cited a target yield of north of 8%.

Any upside to that based on what you've done to date or what they've done to date?

Yes, we're above 8%, but we always try and be conservative with our -- such things. So yes, we're pretty comfortable with above 8% for now.

Okay. Just last one for me.

Coming back to the development write-downs. I think we've seen these charges now for a couple of years in a row.

So what maybe just gives you the comfort that the valuations that you're using now are more reasonable or that they bottomed out?

That's a good question. First of all, I guess part of the write-down goes towards the value, but some of it may be partly attributable to what we think we might be able to develop in terms of the amount of density.

But in terms of value for density, I'd say, again, I don't want to jinx the market, but I would say that it does feel like it's bottomed out. I'd say it's a little bit better than it was a year ago.

So I guess, by definition, it's bottomed out, and it's starting to improve. So yes, in terms of what one might pay for density, I'd say, it's definitely bottomed out at this point.

Mitch, just going back to the TRS and your comments around that. And first, I think, we all thank you for unwinding that.

Should we read into that, that your preference for, say, the next dollar or dollars spent would be advancing the current development pipeline, then debt, then buying back units? And if, in fact, that is the correct order, what would cause you to maybe change your view on sort of where you're going to put the next incremental dollars?

I mean that's more of a discussion, I think, a longer discussion, but we see the development as being accretive. I mean we're not -- this is not like speculative development.

We're going into each one of the new developments with an anchor tenant. So with a lease -- pre-leased substantial portion of the square footage.

So there's a year of construction for this type of thing, and we're in debt for that year, but then we're collecting rent for the next 20, 30 years. So -- and it's accretive.

So we see that as being a very good use of our balance sheet. Having said that, of course, simultaneously, we keep an eye on our debt levels.

And if we were to make any major transactions of a disposition variety or whatever, that would go towards lowering debt. But in a de facto, it would go -- some of that might go back into the development program, all the while keeping an eye on our various metrics.

So we lower debt, just gives us room to do whatever that we think is in the best interest of the unitholders, always subject to debt metrics. So kind of they're intricately weave together, those things.

But development is a great opportunity for us because that is something within our expertise and relationships and intel. So it's accretive.

We want to make the most of that, that's really the ultimate driver of significant material growth. It's not raising rents and paying for lower interest rates and whatever else we can do on the margins, like this is a robust kind of growth that we're talking about.

So that is, of course, a priority, yes.

Yes. You've been consistent on that for decades.

So I didn't expect that to change.

Okay. Well, thank you for participating in our Q2 call.

Please feel free to reach out to any of us if you have any further questions. Have a great rest of your day and weekend.

Thanks.