Thank you, and good afternoon, everyone. My name is Andrew Tamlin, Chief Financial Officer of Morguard REIT.

Welcome to Morguard REIT's first quarter 2026 earnings conference call. I am joined this afternoon by John Ginis, Vice President of Retail Asset Management; Tom Johnston, Senior Vice President of Western Office Management; and Todd Febbo, Vice President of Office Asset Management, Eastern Canada.

Thank you all for taking the time to join the call. Before we jump into the call, I would like to point out that our comments will mostly refer to the first quarter 2026 MD&A and financial statements, which have been posted to our website.

I refer you specifically to the cautionary language at the front of the MD&A, which would also apply to any comments that we would make on this call. Our first quarter results were in line with expectations and consistent with last year's results.

We have seen some softness in the office net operating income from two larger tenants that have given back space in Ottawa and Vancouver in recent months, but this has been mostly offset by improved retail results coming primarily from our enclosed model asset costs. The REIT's net operating income for the first quarter was $25.6 million, which was down slightly from $25.7 million in 2025.

While we are missing the income from the two failed Bay stores, which form part of the 2025 results, we have had some good success in adding other quality tenants in the last 12 months throughout the portfolio. Further, positive leasing spreads throughout 2025 have also helped to improve the retail net operating income.

Our community strip portfolio continues to produce solid same-store growth of 2.2%, allowing for one asset with a failed Peavey Mart, which I'll discuss in more detail later on. Just touching on the two Bay stores that we received back in 2025, at this point, we are focusing on short-term options for these two spaces.

It will take some time to sort through these former Bay tenancies at Cambridge, and we are dedicating more focus to the broader redevelopment going out at St. Laurent, rather than the specific Bay vacancy at the site for now.

Notwithstanding the failure of the Bay, there are still lots of positives in the retail sector. There remains lots of good conversations involve -- involving well-known national brands.

It still remains expensive to construct new retail space, and hence, a lot of retailers are looking at options of existing space. The decline in office net operating income is primarily attributed to 84,000 square feet in space that was returned to the landlord in two separate occasions in the last few months.

These two assets were located in Ottawa and Vancouver. All of our other office assets are seeing either similar or improved occupancy from a year ago and is consistent with the general theme of companies imposing back to the office policies.

We believe these two vacancies will be short term in nature as both buildings are well located in favorable urban areas in these two cities. Our teams are focused on leasing opportunities in these areas.

Just commenting quickly on our Penn West Plaza -- at our Penn West Plaza asset, our occupancy for this asset is still in the range of 80%, which we are pleased with. We are expecting net operating income for this asset to be approximately $2 million higher in 2026 than 2025, all to be reflected in the final three quarters of the year.

This relates to some inducements booked in 2025 to gain tenancies that have started to burn off. Our leasing teams have noticed increasing interest in tours from office space in major urban areas as companies continue to push their employees to get back in the office.

We are cautiously optimistic that this will translate into future office leasing deals into 2026 and 2027. Looking at the remainder of 2026, we do expect our retail results to remain stable.

While we have a full year of the missing Bay income to work through, we are still seeing positive retail fundamentals, and there are some retail developments that we were working on, which I will touch on in a few minutes. We are expecting to see some continued softness in the office members in 2026 as we work through the vacancies in both Ottawa and Vancouver.

Turning to financing and liquidity. The trust is $61 million in liquidity at the end of the year -- at the end of the quarter, which is down from $68 million at the end of 2025.

The trust also has $218 million in unencumbered assets, along with some up financing opportunities in 2026. The trust interest expense declined $400,000 in the first quarter of 2026, mainly due to some lower interest rates on mortgage renewals.

So far in 2026, the trust rated two mortgages totaling $27 million, lowering the interest rate from an average of 5.4% on these mortgages to an average of 4.7% on renewal. The trust has approximately 22% of its debt is variable at the end of the quarter, which has increased slightly from 21% at the end of the year.

We do expect to see some opportunities for up financing in 2026 as we are currently in discussions with a number of lenders about these mortgages -- mortgage renewals. In general, we have seen this market open up more in the last year with lower spreads, especially on attractive assets along with lenders being more open to looking at lending opportunities for office product.

As mentioned in past quarters, the trust's operating capital reserve has been established to be $35 million in 2026, which is unchanged from 2025. This equates to $8.750 million per quarter.

Actual cash spent for the quarter amounted to only $3.4 million, which is typical to have a slow quarter of capital spending during the Canadian winter. Our overall occupancy level of 84.8% at March 31, 2026, has declined from 87.7% a year ago, due primarily to the Bay failures at Cambridge and Ottawa in addition to the office vacancies that I mentioned previously.

We do expect this percentage to start to rise in the coming quarters as additional leasing deals get booked. When looking at the 1 million in remaining square feet that's coming up for renewal in the last three quarters of 2026, we do feel good about the vast majority of this space.

I note that there are two retail tenants between 10,000 and 15,000 square feet each, along with the 35,000 square foot industrial that we anticipate will not be renewing. We do not anticipate that the retail vacancies will have much of an impact on our overall net operating income, and we do anticipate finding a replacement tenant for the industrial building in short order.

Looking quickly at 2027 for the same tenant threshold. It is a similar story with only a couple of smaller office industrial type tenants that are at risk, none of which will be overly impactful.

As mentioned in past quarters, we are now embarking on a strategic merchandising program for St. Laurent, which will see the addition of some new nationally recognized brand names being added to the tenant roster along with expansion plans for other tenants on the existing rent roll.

The current development spend in the amount of $6.2 million includes build-outs for tenants such as Sephora and H&M. These are all now open, and we have received very positive reviews about their impact.

We ultimately expect to spend in the range of $25 million to $30 million as we look to add more discriminating tenants and also look to activate the former Sears space at St. Laurent.

We are looking to announce the next phase of this project shortly, which will continue to offer traffic generating mix of tenants to this asset. The trust also has had two No Frills grocery deals, which have been undertaken.

During the fourth quarter of 2025, a new No Frills grocery store opened at Parkland Mall in Red Deer, and we are now seeing the income for that space. This cost was $1.5 million and activated previously vacant space.

There is also a new Frills opening at the center in Saskatoon, an early center with a cost of approximately $5 million. The trust believes that both of these new popular grocery options will be strong additions to these malls.

The trust will also be retenanting the old Peavey Mart box at our open-air retail asset Airdrie. The new tenant will be a gym operator and will represent a combined spend of approximately $1.5 million and will be quite accretive to the income of the REIT starting in 2027.

Wrapping up, we continue to believe that there are strong fundamentals in the retail leasing environment and that the office fundamentals have changed for the better. We are looking forward to continued positive leasing conversations for all of our assets.

Most of our enclosed malls remain dominant in their geographical area and our strip malls, which are largely grocery-anchored, have performed steady. Beyond our retail assets with high-quality office buildings in Canada's largest markets with a high degree of government office tenants.

We continue to be positive about our business and the objective of building value for our unitholders. We look forward to continuing to execute our strategy, and thank you for your continued support.

We will now open the floor to questions.

This is Linda Wang on for Jonathan. So my first question is for the $159 million convertible debenture that's maturing at the end of this year.

I was wondering if you could please provide some details on the plan for this amount.

Thank you for the question. We're looking at doing a new issue for those debentures at some point later this year.

It will be at an interest rate higher than the existing rate, but we are forecasting really just to do a new issue approximately the same amount, give or take. We'll be monitoring the market and that will be instructive as far as when we're going to be doing that.

Okay. And then on the office vacancies in Vancouver and Ottawa that you mentioned earlier, I was wondering if you have a time line on the backfill of those spaces?

And then also specifically for the office portfolio, if there's any other similar downsizing or any material nonrenewals for the remainder of the year?

I would expect we'd be able to fill those vacancies in the next year or two. It's -- these are going to be pretty good areas and will be in demand.

So they shouldn't be open for too long. And there is nothing else that we're really worried about from an office perspective.

I've just mentioned a few retail tenants that will be vacating. But on the office side, we feel pretty good about everything in the next year or so.

Okay. Sounds good.

And then on the HBC location, I believe -- and I believe John mentioned during the last call, and you mentioned earlier that you can expect like a short-term lease. I was wondering if you have any updates specifically relating to that?

And then also any updates on the long-term plan?

Do you want to take that, John Ginis?

Sure. Thanks, Andrew.

Hi, Linda. So with respect to Ottawa, starting there, St.

Laurent, we have executed a deal to backfill the lower level of the former HBC box with Urban Behavior. They will took occupancy actually today, and they should be open and operational within a matter of 3 to 4 days.

Just as a reminder, they have been an occupant of ours at the shopping center in our former Sears. They have been operating there for about 4 years and have performed quite well.

So retaining them was true their benefit and our benefit as well. Andrew spoke in his introductory remarks that we are looking to announce remerchandising of the former Sears premises.

We'll talk about that in Q2. For the upper level of the former Sears, we're working through a transaction right now to lease that space and again, hoping to announce that in Q2 as well.

You want to pivot to Cambridge. Cambridge two-level space, albeit it is a single-level mall, so it's a little bit more difficult to lease both levels.

We are currently working through a transaction to lease the lower portion of the HBC space there. I can't give any specifics right now, but we're working through some documentation as we speak.

Okay. And then one last question for me.

On the renewal for retail space in Q1. I believe the uplift on renewal was negative 9% for the enclosed regional centers and plus 2% for the community strip centers.

I was wondering if there's any particular reason that drove this to be lower than 2025 average uplift?

Yes. We typically see a trend like that in the first quarter, and it's really a function of some of the Christmas-type tenancies that are coming off the roles.

So it's -- I would call that more temporary than anything.

Okay. And then I guess for the remaining, like the upcoming quarters, we can expect similar uplift compared to 2025 then?

I would be expecting uplifts. I can't -- it's tough to put a number to it, but, yes, what I would say is that I don't know that -- we're not anticipating is what we're seeing in the first quarter will continue for the rest of the year, and this is more of a short-term seasonal trend.

Okay. Thank you, everybody, for joining the call, and we look forward to talking to everybody in Q2.

Thank you, and enjoy the weekend.