Thank you, operator, and good morning, everyone. Before we begin, let me remind everyone that during our conference call this morning, we may include forward-looking statements about expected future events and the financial and operating results of CAPREIT, which are subject to certain risks and uncertainties.

We direct your attention to slide 2 and our other regulatory filings for important information about these statements. I will now turn the call over to Brad Cutsey, President and Chief Executive Officer.

Thanks, Nicole, and good morning, everyone. Joining me today is Stephen Co, our Chief Financial Officer.

Before we begin, I'd like to say that it's been a privilege to be joining you today for my first earnings call as President and Chief Executive Officer of CAPREIT. At this time, I'd also like to acknowledge my predecessor, Mark Kenney, for his many years of leadership and the significant contributions he made to CAPREIT.

While I'm still in the early stages of my tenure, the past several weeks have given me the opportunity to spend time with our people and our portfolio, and I have already been encouraged by the high quality of the platform and the depth of expertise across the organization. Together, they've reinforced my confidence in the solid foundation upon which CAPREIT is built, and I look forward to further building on that foundation in the years ahead.

With that, let's turn to slide 4 and walk through some highlights from the year to date. From a capital allocation perspective, CAPREIT has completed approximately $66 million of acquisitions and dispositions in Canada, $145 million of property divestments in Europe, and the privatization of European Residential REIT for $99 million, which provides us with the greater flexibility to manage the sale of the remaining European assets.

We've also continued to invest in our NCIB program, with $71 million deployed so far this year. Operationally, while market conditions remain pressured across the multi-family sector, CAPREIT continues to demonstrate resilience.

Physical occupancy for a same-property Canadian portfolio was 97.5% on June 30th, which is meaningful above Yardi's latest quarterly average of 95.3% nationally. More recently, CAPREIT's physical occupancy as of July 31st was down slightly to 97.3%, which is consistent with the typical seasonal trend observed between June and July.

While maintaining healthy occupancy levels, we've also achieved 2.3% growth in our same-property occupied AMR year-over-year. Combined with effective cost initiatives, our Canadian same-property NOI margin remained strong at 64.2% for the 6 months ended June 30th, 2026.

Our balance sheet, total debt represented 41.2% of gross book value as of June 30th, 2026, which is up modestly versus the previous year, mainly due to fair value losses recognized on investment properties. Overall, these results reflect the strength of the portfolio and the team in which continue to be a challenging operating environment.

That said, while market conditions remain competitive, we are beginning to see early signs that operating fundamentals may be stabilizing. In line with that, we have had several consecutive months of moderation in our lost-to-lease on turnovers, which we'll discuss in more detail later on in the call.

I'd now like to spend a few minutes highlighting our capital allocation priorities. Turning to slide 6, over the past several years, CAPREIT has significantly enhanced the quality of its portfolio.

Today, approximately 68% of the portfolio consists of core legacy assets, of which 97% are located in rent-controlled markets. This provides stability in our rent growth profile even in a softer operating environment given the significant embedded mark-to-market opportunity across these assets.

A further 19% of the portfolio is comprised of recently constructed communities that are expected to benefit from lower capital requirements, greater operating efficiencies, and strong long-term earnings growth potential as market fundamentals normalize. The remaining 13% of the portfolio across Canada and Europe represents the source of continued capital recycling.

With this, we will remain disciplined and opportunistic, selectively monetizing low-cash-yielding assets where value has been maximized and redeploying that capital into investments accretive to FFO per unit in the near term. In addition to optimizing the portfolio through ongoing repositioning, we've been investing in implementation of a new ERP system in order to enhance our leasing capabilities, improve data-driven decision-making, streamline processes, and support further optimization of our cost structure over time.

More broadly, as I continue to assess the business over the coming quarters, I'll be evaluating the entire portfolio to ensure that every capital allocation decision supports stronger FFO per unit growth, an enhanced long-term cash flow position, and the creation of sustainable value for our unitholders. With those objectives in mind, our NCIB program continues to represent a compelling use of capital available to us in the current environment.

You can see on slide 7 that since 2022, we've deployed approximately $1 billion to repurchase nearly 24 million trust units at an average price of approximately $43 per unit. As I mentioned earlier, during 2026, we've invested approximately $71 million to buy back trust units at a weighted average price of $36 per unit, which represents a sizable discount to our June 30th diluted NAV of $54 per unit.

We believe these accretive repurchases not only create immediate value today, but also positions unitholders to benefit more fully in the value created once rental housing market fundamentals return to balance, and that reflection is ultimately reflected in the capital markets. Going forward, we'll continue to evaluate the NCIB alongside every other capital allocation alternative, and deploy funds into the program where repurchases are accretive to FFO per unit and NAV per unit while remaining leverage neutral.

With that, I'll turn the call over to Stephen to walk through our operational and financial results.

Thanks, Brad. Let's start with our operating performance on slide 9.

While leasing conditions remain competitive across many parts of the Canadian rental market, our operating teams executed well throughout the quarter, maintaining a disciplined focus on managing occupancy, pricing, and resident retention. As a result, you can see on the slide that for each of our three largest regions, occupancy continues to compare favorably against broader industry benchmarks, supported by our strategic use of incentives given in the current environment.

In our largest market of Toronto, physical occupancy was 98.4% as of June 30th, notably higher than Yardi's reported quarterly average of 95.2%. At the same time, we grew occupied AMR in Toronto by 2.1% year-over-year to $1,867.

This reflects the strength of our legacy portfolio alongside our ability to effectively balance occupancy and rental growth even in today's more pressured operating environment. The same underlying themes are evident across a broader portfolio, with rent growth being driven by lease renewals and the substantial embedded mark-to-market opportunity that exists within our legacy portfolio, the vast majority of which is located in rent-controlled markets, as Brad mentioned.

However, our turnover remains weighted towards shorter-tenured leases that are above current market rents and continuing to reset towards today's market levels. Turning to slide 10, I'll provide an update on how that turnover dynamic evolved during the second quarter.

Approximately 51% of Canadian turnover during the quarter came from residents who had occupied their suites for less than 2 years. These leases experienced an average decrease in monthly rent of 7.1%, an improvement from a decline of 10.8% in the first quarter.

The remaining 49% of turnover came from residents with lease tenures of 2 years or longer, where we continue to achieve positive rent growth of 5.4%. As a result, our blended change in monthly rent improved to -1.2%.

This compares to -2.1% in the first quarter, reflecting some moderation in the negative rent spreads we're realizing on shorter-term tenured leases. This trend continued into July, with the overall change in rent on turnover improving further to positive 0.2% for the month.

Looking at the chart on the left of the slide, as of June 30th, approximately 31% of residents have lived in their home for less than 2 years, across which in-place average monthly rent is $2.53 per square foot. Within this segment, approximately 20% of the in-place rents remain more than 5% above our estimated market rents, indicating that there is still some additional normalization to work through.

The remaining 69% of our residents have lived in their homes for more than 2 years. These longer-tenured leases continue to generate positive average rent uplifts on turnover even in the current operating environment, providing an important source of stability, driving resilient overall rent growth until supply-demand fundamentals return to balance.

Alongside that turnover dynamic, we continue to utilize incentives to support occupancy, as you can see on slide 11. This strategy allows us to protect occupied AMR while remaining competitive against comparable offerings from our peers.

In the second quarter of 2026, new residential inducements granted were $4.6 million, up from $2.6 million a year ago, but modestly lower than the $4.8 million recorded in the first quarter. While there will be some moderation in the level of new incentives granted throughout the second half of the year, we expect them to remain elevated as market conditions continue to warrant a competitive leasing approach.

With that, I'll now briefly cover our overall second quarter financial results on slide 12. Same-property Canadian operating revenues increased by 0.8% while operating costs grew by 0.7%, driving NOI growth of 0.9% and a stable NOI margin of 66.2%.

Diluted FFO per unit was 65.4 cents compared to 66.1 cents in the second quarter of 2025, down 1.1% primarily due to the loss NOI from dispositions and higher financing costs, partially offset by accretive impact of trust unit repurchases under our NCIB. Looking at our year-to-date results on slide 13, same-property Canadian operating revenues increased by 1%.

With operating costs flat, our same-property Canadian NOI margin was up by 0.3% to 64.2% for the 6 months ended June 30th, 2026. Diluted FFO per unit was $1.249 for the first 6 months of the year, with FFO payout ratio of 62%.

Finally, slide 14 summarizes our liquidity position and laddered mortgage maturity profile. As of June 30th, our mortgages had a weighted average interest rate of 3.4% and a weighted average term to maturity of 4.2 years.

We also had $180 million of immediate available liquidity on our acquisition and operating facility. Moving ahead, we'll remain committed to reinforcing our prudent leverage profile while supporting stronger per-unit earnings growth.

With that, I'll turn the call back over to Brad to wrap up on slide 15.

Thanks, Stephen. Before we open the lines for questions, I'd like to close on a few thoughts.

While the near-term operating environment remains competitive, it's important to distinguish between today's market conditions and the long-term outlook for the business. The underlying fundamentals supporting Canadian rental housing remain robust, and CAPREIT is well-positioned to benefit as those fundamentals reassert themselves over time.

In the meantime, our focus is on disciplined execution in the areas we can control. That means continuing to direct capital towards its highest and best use on a risk-adjusted basis, whether that's investing through our NCIB program, strengthening sustainable cash flow generation, or further reinforcing the balance sheet.

Importantly, every capital allocation decision will be guided by the goal of driving stronger per-unit growth in FFO. As I've said throughout today's call, I continue to use the coming months to deepen my understanding of the platform.

One thing has already become clear to me: CAPREIT has an exceptional team and a high-quality portfolio, and I look forward to working alongside our residents, team members, leadership team, and the Board of Trustees to deliver on the opportunities ahead and enhance earnings for unitholders. On a final note, I'd like to remind everyone that we have rescheduled our Investor Day in Montreal to November 19th, as communicated earlier this week.

This additional time will allow us to deliver a more comprehensive program and provide a meaningful opportunity to discuss CAPREIT's strategy and portfolio in more detail. We appreciate your understanding and hope to see you there.

With that, operator, we'd be pleased to take your questions.

Thanks. Good morning.

Morning, Jonathan.

First off, I guess the capital allocation focus looks like it's going to be mostly on the NCIB. I guess first, how comfortable are you with where leverage is right now?

Would you take it up a little bit to buy back shares?

I think we're comfortable with where the leverage is right now, Jonathan. Over time, we'd like to maybe trend that a little lower, but as far as NCIB goes, we are committed to the NCIB, but on a leverage-neutral basis.

Okay. Then I guess so that means you'd be selling assets to kind of fund that.

If you look at the three buckets that you have, is it going to be strictly the non-core bucket or would you consider some of the either recent construction or core assets?

No, I think it'll be the non-core, and we'll continue to evaluate our dispositions opportunistically, driven by whether we believe value has been maximized on the asset.

Okay. That's helpful.

Then lastly, Stephen, you talked about the inducements, said maybe trend down over the back half of this year. I guess two things there.

What are some of the inducements that you're offering? If we look at a level, should we be thinking sort of 1 to 1.5% be a good level for inducements?

Yeah. Incentive use has trended up over the past quarters, more pronounced on the recent build than legacy.

We are offering in certain locations, again, it's all dependent on competition within that building and its area, but usually it's about 1 month's rent. Again, it's very targeted buildings.

There are some situations where we do offer 2 months, but a lot of it is just 1 month. We try to first do non-cost-bearing incentives first before we go into actually giving actual incentives.

While new residential incentives granted had declined slightly from Q1, we do expect them to remain elevated at levels, albeit like I did say, moderating lower to the last half of the year. We are constructive on the Ontario, particularly the GTA, which is our largest market.

We do have good visibility around incentives, and we have seen moderation in July and August so far.

Okay. That's it for me.

I'll turn it back.

Thanks. Send the first question to Brad.

I know you're still in assessment mode, but I was curious as to where are you seeing sort of the biggest opportunities to create per-unit value, kind of what are the low-hanging fruits, any color you can share from your initial assessment so far?

Yeah. Good morning, Jimmy.

It's still early days for me, but some of my initial observations point to opportunities probably in our leasing processes, and streamline some of our other operating processes. The other thing I would maybe mention on this is also we're in the middle of our multiyear ERP implementation, which I think is going to give us a much better platform to standardize and automate things like leasing and some of those other processes that we can improve on.

Okay. Then John referred to NCIB as your priority from a capital allocation perspective.

I don't know if you confirm that. Is that really where you see the biggest bang for the buck today?

I think every dollar of capital will be allocated to the highest and best use on a risk-adjusted basis, Jimmy. Mhm.

So,

Where do you see that today? Yeah.

It obviously depends, but if we're sitting on cash and we can do it on a leverage-neutral basis, I think our units represent a compelling investment at today's level.

Okay. Then last, just on the turnover rent growth, the sort of improvement you've seen from Q1 to Q2, I think -10 to -7%, is that to do with market rent improving?

Is that a tenant mix? I'm trying to understand, had those same tenants turn in Q1 and Q2, would that spread be the same?

Are we actually seeing some improvement in fundamentals?

I think there is, just in terms of, as the tenants have stayed there for the past 2 years and I would say generally we have seen some stabilization in market rents, that you will see when the lease turns over, that number will be just naturally lower. We have seen that even when I look at the July numbers, the under-2-years we talk about, we saw the Q2 number being 7.1% negative, and then July it's improved as well, it's about 5.2% negative.

I think that's a function of the market rents have become more stabilized, and then I think it's more that than anything else.

Thank you.

Thanks, Jimmy.

Good morning, Matt.

Hey, guys. Morning.

Maybe starting with occupancy because there was a bit of a sequential increase. Can you give us a sense, is that seasonal demand?

How has it continued into kind of Q3? Obviously, I think we need to see occupancy before we see rent growth, but what is the trend there in terms of demand relative to your portfolio?

Yeah. Matt, I kind of mentioned on the call, we did use incentives strategically to increase occupancy.

It was seasonality where the occupancy did increase, and we did show our July numbers, occupancy have come down slightly, but that's more of a seasonal change between June and July. Overall, I would say at these levels, we're very comfortable with them.

On on the incentive side Oops, sorry. Go ahead.

No, I was just going to say to you, we saw good leasing activity in Q2. Our conversion was a little down, which shows you how competitive the market is, but there is leasing activity.

Depending on which markets, specifically the GTA, we're getting quite constructive on that, Matt. As we kind of move through July and August, I think we're going to be in a better spot, but if I had to look at the top three markets, I would say the GTA, we're quite constructive.

I think Montreal is a little bit mixed. There's a little bit of new starts and rentals there, and it's more of a issue on the demand side.

I think Vancouver is still trying to work through the absorption of the supply that's been delivered, and it still remains about 4% under construction. Until demand really comes back, the net absorption is probably going to be pushed out in Vancouver, maybe closer to late 2027, early 2028, where we're hopeful of the GTA, we think we might be approaching a more balanced market in the quarters ahead.

Okay. That's interesting, and it makes sense.

Maybe even as well, are the turnover spreads that you provide, is that net of incentives? Because I know you'd mentioned that incentives have ticked up a bit, or are those kind of the face rates?

No, they're not. They're gross.

Okay. One other trend I was trying to figure out, and Brad, you wouldn't have the benefit of this, but you probably looked at it, but just going back, the move has actually been bigger in the greater than 2-year leases in terms of that spread would have been +30% in Q4 '24, and it's down to 5, although it does seem to be stabilizing at 5, whereas there's been less of a move in the less than 2-year.

That's a little confounding to me in terms of those longer-duration leases. Is it that you're not renovating those suites when you're putting them back on the market, or how should we think of that dynamic?

There are some leases that are now in negative territory that are aging into the 2- to 3-year mark, and as market rents have softened, some of that segment is being exposed to the rent reset as well. We have done more back-to-backs, and I think that's what we're seeing as well.

Okay. Fair enough.

That's it for me. Thanks, guys.

Thanks, Matt.

Morning, Kyle.

Thanks. Morning, guys.

Hey.

Just maybe looking at kind of leasing demand, I'm wondering, are you seeing any differences or changes in demand across the kind of two buckets in your portfolio, your kind of legacy assets versus your more recent construction? I'm just wondering if you're beginning to see a bit more strength in some of the more recently delivered product, or if that hasn't changed much.

It's a great question, Kyle. I think there's definitely more stability in the legacy assets and the rent-controlled markets.

We have seen it being a little more competitive in the new builds. That said, we strongly believe when the fundamentals do tighten, and depending on which market we're talking about, some of it's more constructive sooner than later, but we still feel quite good about the potential of those new builds.

It's just got to work through some of the absorption, but really that absorption is really going to be dependent on demand.

That makes sense. Just kind of sticking with leasing spreads, with kind of turnover and renewals in mind, where do you see the blended spreads trending through the balance of the year?

Obviously, you've provided some kind of guidance into July that turnover spreads improved a bit, but just trying to think about how the blended spread trends through the balance of the year, and maybe into the beginning of '27. Yeah.

For us, we think it's probably going to be modest. I think what we provided in July is probably a good indication of what Q3 is, but we're hopeful that we see some stabilization in certain markets as Brad has already indicated, but I don't want to jump the gun on that too early right now.

Noted. Just on the kind of operating cost efficiencies that you highlighted, obviously, the kind of other OpEx line was down 1 1.5% year-over-year this quarter.

Just wondering if you can talk through what some of those operating efficiencies actually were that drove that. Then, do you expect to be able to maintain a similar level of kind of year-over-year OpEx inflation through the balance of the year, obviously, taking in mind the kind of seasonal fluctuations that you expect into the winter months?

Yeah.

You've seen some improvements in our other OpEx line. We've talked about in prior calls.

It's really just getting very good at tendering, inviting new vendors, and just having a very good tendering process where bids are blind, and just having that competition with your vendors. All that is just translating to, I would say, flat to slightly declining R&M costs within that line.

I think we can probably see that go on for the balance of the year.

Thank you for that. I will turn it back.

Good morning, Brad.

Morning. Just sticking to slide 10 on the leasing spreads, just curious, obviously, you've highlighted for a few quarters here the amount of churn, I guess, in the newer, short-duration leases.

Is there any green shoots where the turnover in that segment is starting to moderate a bit, or is it simply that the improvement in leasing spreads more of a function just on the market rent growth as you suggested?

I think we've said this, we have seen moderation in terms of market rents, and as we go through that cohort of leases that are still negative, it will take us time. I think it will probably take us about 18 to 20 months, but I do think that the 1-year leases are now just very close to market.

As we get through that, the legacy portfolio, that large embedded mark-to-market on the 2+ years is going to you're going to really see that come through as we kind of work through the rest of that 20, you could say 20% of those rents that are still above market.

The other thing I would like to add to Stephen's point is also dependent on where market rents are headed, obviously. Not all markets are treated equally, and like we've said, we're quite constructive on the Toronto, Ottawa, Edmonton, Victoria markets, where we're still a little mixed.

The jury's still kind of out in Calgary and Halifax as far as a lot of supply has been delivered in Calgary. We'll see if the infrastructure spending continues to drive inter-migration there, then I think Calgary is really set up quite nicely.

While Halifax has performed quite strong as a market and will likely continue with all the defense spending to be had in Halifax, there is a lot of supply being delivered there, Kyle. You got to kind of balance that with, okay, these are today's estimate of the mark-to-market, but our biggest market being Toronto, we're getting quite constructive on.

Market could be moving.

That's quite helpful. As you're going through your assessment process and you're streamlining some processes, I think you touched on the operating expense side, just how should we think about from a G&A perspective on the back half of the year?

What would you guide for now on G&A as a run rate?

Just in terms of G&A, you can see in our MD&A, I think we're running about, excluding all the severance costs and whatnot, about 4%. I think this could be in around that range, and we're comfortable with that for the balance of the year.

Perfect.

Brad, I apologize. I think I called you Kyle.

[laughter] I don't know how I got that name mixed up. I apologize, Brad.

Yeah.

I'll give you a pass. That's fine.

Thanks.

I appreciate it. Thank you.

It won't happen again.

Morning, Mario.

Thank you. Good morning.

Just coming back to the revenue side of the equation, I think 3 months ago we were looking at potentially kind of 2026 same-store revenue in the 1 to 2% range. Q2 is a bit lighter than that.

Do you have an updated forecast or updated thoughts in terms of where that may end in the back half of the year?

I think we're probably going to see in terms of revenue relatively flat as compared to the first 6 months of the year, as you see in the MD&A.

Okay. For the full year, you're thinking that it's going to be kind of flattish, 1%?

Yeah. I think it's about 1%,

yeah. Okay.

Then the commentary on the Toronto market starting to look pretty interesting. You're overweight the Toronto market, obviously.

When do you think new lease spreads can approach inflationary levels? Do you think we need to wait until the spring leasing season in 2027?

Could it happen before that? Does it take longer than that?

What are your thoughts there?

I think it's definitely sometime in 2027. If the last couple months and what we're seeing today continues to hold, Mario, I'm hopeful that this is a first half 2027 event.

Okay. Then

just maybe shifting to capital allocation, you're tying the NCIB activity to dispositions. In the past, CAP has put out kind of target annual dispositions.

A lot of the heavy lifting has been done. Is that something you're considering doing today or if not today, later on once you've had a chance to go through the entire portfolio?

I'm just trying to get a sense of any visibility on the potential disposition side which may impact the volume of the share buyback.

Sure. No, short answer is no, Mario.

We'll continue to evaluate dispositions opportunistically. Really be driven by whether we believe value has been maximized on the asset.

Right. Okay.

Then just maybe a last one for you, Brad, in looking at kind of the key priorities that were highlighted in the report to unitholders, they look, on the surface, fairly consistent with what we've seen recently. Are there any kind of notable expected shifts in strategy on your end or points of emphasis, kind of relative to what we've seen over the past couple years that you'd like to highlight now or is it still too early to kind of go through that?

Let me caveat this with the point that I'm still fairly early on in the job, and I'm still in exploratory mode, Mario. I'm trying to spend a lot of time meeting the team and going and seeing the assets, but I would like to say that I really do believe the team's done an excellent job over the past couple years, and there's been a lot of the heavy lifting with repositioning of the portfolio, kind of enhancing the overall quality.

I do think, as I mentioned earlier, there could be some low-hanging fruit, specifically when it comes to things like the leasing and some other streamlining of processes, which I do believe should help drive organic growth. Those are some earlier on things, but as far as major strategic shifts, what I've seen today, I'm happy with what I've seen today.

That's great. Makes sense.

All right, thank you.

Thanks, Mario.

Morning, Dean.

Thank you.

Dean.

Morning, Brad. Welcome back.

Thank you. Happy to be back.

[laughter]

You and Kyle. Just go back to your prior life, and obviously, different circumstances, but you sort of had a proclivity to let the vacancy build a little in a view of sort of capturing a higher growth rate going forward.

Are you looking at that differently now, or is maintaining the occupancy more a function of having some newer assets or just what are your thoughts around that and has your approach to that changed?

I think if you're asking if this is InterRent 2.0, the answer is no. I think we'll have more to kind of disclose as far as the go-forward on the strategy and how we're going to approach things.

I think we're really excited to host you in Montreal in November, and I think we can get into more details on that.

Okay. We look forward to November.

Thanks, guys.

Great. Thanks, Dean.

Great, thank you. I'd like to thank everybody for your time today, and if you have any further questions, please do not hesitate to contact us at any time.

Thank you again, and have a great day.