Operator: Good morning, and welcome to PROREIT's second quarter results conference call for fiscal 2026. At this time, all lines have been placed on mute to prevent background noise. Management will make a short presentation, which will be followed by a question and answer period open exclusively to financial analysts. To ask a question, simply press the star key, then the number one on your telephone keypad. If you would like to withdraw your question, please press the star key followed by the number two. For your convenience, the results release, along with the second quarter financial statements and management's discussion and analyses are available at proreit.com, in the Investors section and on SEDAR+. Before we start, I have been asked by PROREIT to read the following message regarding forward-looking statements and non-IFRS measures. PROREIT's remarks today contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals, or achievements, or other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results, levels of activity, performance, achievements, future events, or development to differ materially from those expressed or implied by the forward-looking statements. As a result, PROREIT cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in PROREIT's MD&A, dated August 12, 2026, available at www.sedarplus.ca. Forward-looking statements represent management's expectations as at August 12, 2026, and except as may be required by law, PROREIT has no intention and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. The discussion today will include non-IFRS financial measures. These non-IFRS measures should be considered in addition to, and not as a substitute for, or in isolation from the REIT's IFRS results. For a description of these non-IFRS financial measures, please see the second quarter earnings release for fiscal 2026 and non-IFRS measures section in the MD&A for the second quarter of fiscal 2026 for additional information. I will now turn the call over to Mr. Gordon Lawlor, President and Chief Executive Officer of PROREIT.
Gordon Lawlor: Thank you, Vanessa. Good morning, everyone, and welcome. Joining me today is Alison Schafer, our CFO and corporate secretary. Also joining us for our Q&A session is Zachary Aaron, Vice President of Investments and Asset Management. We are pleased with our second quarter performance and the positive momentum across the business. Let me start with our investment activity. The second quarter was particularly active for PROREIT. In June, we completed the acquisition of 17 industrial properties in Quebec City and Winnipeg for a combined purchase price of CAD 136.8 million. These acquisitions meaningfully expand our industrial platform in two markets with strong underlying fundamentals. In Quebec City, we established immediate scale with 13 industrial properties representing approximately 609,000 sq ft of GLA, acquired for CAD 112.8 million. In Winnipeg, we further strengthened our position in one of Canada's tightest industrial markets, where we are now the second-largest industrial landlord. We added four properties representing approximately 159,000 sq ft of GLA for CAD 24 million. Together, the two portfolios were funded through a combination of proceeds from our recent equity financing, which I will discuss in a few minutes, and CAD 89.4 million of new mortgage financing. During the quarter, we also completed the previously announced acquisition of a newly built, fully leased industrial property in Moncton, New Brunswick, for CAD 12.3 million. Built in 2024, the single-tenant property comprises approximately 60,000 sq ft of GLA. Our investment activity continued following quarter end. We acquired four additional industrial properties in Winnipeg, totaling approximately 165,000 sq ft of GLA for CAD 21.7 million. At the same time, we continued to optimize the portfolio with the sale of a retail property in Bathurst, New Brunswick, for gross proceeds of CAD 1.4 million. Altogether, year-to-date, we have acquired 22 high-quality industrial properties for CAD 170.8 million, bringing our portfolio to 126 income-producing properties, representing approximately 7.4 million sq ft of GLA. We also completed CAD 107.3 million of equity financing during the quarter, including an CAD 83.3 million bought deal offering and a CAD 24 million private placement. The private placement included participation from our strategic partners, Collingwood Investments and Parkit Enterprise Inc. Financing strengthened our liquidity and financial flexibility and supported the execution of our growth plan. Let me now turn to our operating performance in the second quarter. Revenue, NOI, and FFO all increased year-over-year, while same property NOI continued to grow despite the impact of two previously disclosed vacancies. These results reflect the contractual rent growth, strong renewal activity, and the continued mark-to-market opportunity embedded in our portfolio. Our core geographic markets continue to present strong fundamentals. Nova Scotia, one of our key markets, is well-positioned to benefit from the anticipated boom of federal defense spending investment over the coming years. In Halifax, Amazon's recently announced operation hub is under construction in our Burnside Industrial Park, where we are one of the largest landlords. Together with increased defense and infrastructure investment, we believe these developments provide additional long-term demand drivers for this key industrial market. Turning to leasing activity, momentum remained strong during the quarter. As of today, we have renewed approximately 83% of our 2026 lease maturities at positive average spreads of 36.8%. Within our industrial portfolio, 80.4% of the 2026 maturities have been renewed at an average positive spread of 40.6%. Several completed lease renewals will begin contributing incremental cash flow during the second half of the year. More than 400,000 sq ft will begin generating higher rental rates in September, with the full quarter impact reflected in Q4. Notably, five lease renewals commencing in 2026, including rental increases ranging from approximately 40%-45%. Overall portfolio occupancy was 95% at quarter end, compared to 97.8% a year earlier. As noted on previous calls, the change was primarily driven by the impact of two vacancies. The first one is our 176,000 sq ft industrial property in Saint-Hyacinthe, Québec, which became vacant in 2025. As previously announced, we signed a 15-year lease for approximately 74,000 sq ft, representing 42% of the property that will be cash flowing July 1st, 2026. The new base rent of that space represents an increase of more than 122% compared to the previous tenant's rent for the same GLA. With rent commencement on July 1st, the new lease will contribute incremental cash flow beginning in the third quarter. Second vacancy relates to approximately 81,000 sq ft in Woodstock, Ontario, which became vacant April of this year. These are high-quality properties, and we continue to actively market the available space. Excluding these two property vacancies, portfolio occupancy would have been approximately 97.4% at quarter end. Alison, over to you.
Alison Schafer: Thank you, Gordy, and good morning, everyone. We are pleased with our second quarter performance. Property revenue totaled CAD 27 million, up 7.7% year-over-year. The increase was mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases, and contributions from four additional properties compared to the prior year. NOI was CAD 16.5 million, an increase of 6.5% year-over-year, driven largely by these same factors. Same property NOI, representing 97 of our 122 properties at June 30th, was CAD 14.3 million, up 3.3% year-over-year. Industrial same property NOI increased 2.9%. The increase reflects contractual rent escalations, stronger renewal rates, and higher rents on new leases. This was achieved despite a decline in overall average occupancy related to the two vacancies Gordy mentioned earlier. FFO totaled CAD 8.5 million for the quarter, an increase of 6.1% year-over-year, primarily reflecting higher contractual rents and stronger renewal and new lease rates, partially offset by increased interest and financing costs. On a per unit basis, basic FFO was approximately CAD 0.12, compared with CAD 0.13 a year ago, reflecting the higher weighted average unit count following the equity financing and the timing of capital deployment. The basic AFFO payout ratio was 98.9% in Q2, compared with 89.8% in the same quarter last year. The increase primarily reflects the timing differences between the June equity financing and the deployment of those proceeds into acquisitions, as well as higher interest and financing costs. As we deploy the proceeds from the equity financing and benefit from the contribution of our recent acquisitions and completed lease renewals, we expect these factors to support our financial performance going forward. Net cash flows provided from operating activities were CAD 10.6 million in the quarter, up 54.3%, mainly impacted by the timing of cash receipts and the settlement of payables. The weighted average capitalization rate for our portfolio remained stable year-over-year at approximately 6.7% at June 30th, 2026. Turning to the balance sheet. We remain focused on maintaining financial flexibility while reducing leverage over time. Total debt to total assets was 47.4% at June 30, down from 50.6% a year earlier. Adjusted debt to gross book value was also 47.4%, compared with 50.7% a year earlier. Adjusted debt to annualized adjusted EBITDA was 10.0x at June 30, compared with 9.8x a year earlier, reflecting the timing of the deployment of proceeds from the equity financing. We remain focused on maintaining financial flexibility and reducing leverage over time. At quarter end, our total debt, including current and non-current portions, totaled CAD 609.2 million, compared to CAD 562.4 million at the same date last year. At June 30th, we had CAD 71.7 million of remaining mortgage maturities in 2026. As of today, all of those maturities have either been refinanced or are subject to renewal commitments. Subsequent to quarter end, approximately CAD 32.9 million of maturing debt was refinanced with CAD 40.4 million of new mortgages, while approximately CAD 38.8 million was committed for one-year renewal. Looking beyond 2026, we have CAD 55 million of mortgage maturities in 2027 and CAD 66.8 million in 2028. The weighted average interest rate on those maturities are 4.8% and 3.5% respectively. Finally, our distributions of CAD 0.0375 per unit was maintained for the second quarter of 2026. That wraps up our financial review. Gordy, back to you for closing remarks.
Gordon Lawlor: Thank you, Alison. We're pleased with the progress we made during the quarter and enter the second half of 2026 with a larger industrial portfolio, meaningful leasing momentum, and increased financial flexibility. Our recent acquisitions have strengthened our presence in key Canadian markets, where our leasing results continue to demonstrate the embedded growth potential within our existing portfolio. Looking ahead, our priorities remain clear: driving growth, integrating our lease and acquisition, maintaining a disciplined approach to capital allocation, and continuing to strengthen our balance sheet. We believe we are well positioned to build on this momentum and to continue to create long-term value for our unitholders. Thank you for joining us today. Vanessa, we're now ready to take questions.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. We have our first question from Sam Damiani with TD Cowen.
Sam Damiani: Thank you, and good morning, everyone.
Gordon Lawlor: Morning to you.
Sam Damiani: Yeah. Good morning. First question from me, the headlines on the defense spending have seemed to continue building in recent months. I am just wondering if there is anything you are seeing in any of your leasing markets that materialize as a result of that government spending.
Gordon Lawlor: Yeah. I will let Zach jump in on that. He is on daily calls in Halifax and whatnot, so he probably can describe that to you a bit better.
Zachary Aaron: Yeah, sure. Zach here. Hi, Sam. There is definitely a lot of buzz related to the defense spending and what that might mean, especially for a market like Halifax and Atlantic Canada in general. In our portfolio specifically, we haven't seen anything just exactly direct yet on that front, but we are starting to see some rumblings about that. I think just in the last quarter or two, between some of the leasing in Bayers Lake and some other chunkier spaces in and around Halifax and Burnside, that we believe some of that has been tied to defense spending and related contracts to those kind of projects. So we are starting to see that heat up here significantly. I think you're seeing it in the office side as well. I know Lockheed had a recent larger announcement with more jobs to come here in Halifax. So it's definitely real and palpable here, and I think we'll start to see more effects of that as some of these contracts get awarded out and more progress is made on that front.
Sam Damiani: Thanks, Zach. That's interesting and helpful. I guess, over to the acquisitions, which just recently closed. Anything surprising that you've seen since closing?
Gordon Lawlor: It's Gordy. No. I mean, as expected, to date, the Winnipeg eight assets, former Artis assets that were very close to our portfolio. No major leasing to be done in the next couple of years there. Kind of picked up the keys in a day, and just part of the portfolio, so nothing there. Quebec City, no negative surprises. At this point in time, we're setting up our processes, setting up our property management office in Quebec City. Zach's heavily involved with the leasing there and the rent roll that we assumed in those transactions. Zach can jump in because he's talked to the leasing there specifically, but I think there's a little bit of a buzz in Quebec City as well, just compared to even six months ago. So maybe Zach can highlight it better.
Zachary Aaron: Yeah. Not too much to add. Winnipeg, I would say status quo to what we expected and what we kind of already know about Winnipeg. Quebec City, obviously a bit more of a learning experience there. We are working closely with the CBRE team locally in Quebec City, who knows that market super well. And just already, just little tidbits of just in terms of working with some tenants on renewals already this year and for next year, some activity on some vacancy and things like that. It seems to be performing the way we kind of underwrote and are expecting. So I think Quebec City will be kind of a great complement to our existing platform, and I think we will do well there.
Sam Damiani: Okay, great. Thank you. And last one from me. Just, you have got the two sort of chunkier vacant spaces in the portfolio. Do you see any other known or expected move-outs in the near term of any consequence in terms of size as well?
Gordon Lawlor: It is Gordy. Nothing in 2026. We have told you about anything material for 2026. We are starting to knock on the doors in 2027. Nothing formal there yet for positives or negatives, really. Just rolling through the business.
Sam Damiani: Great. Thank you. I will turn it back.
Operator: We have our next question from Brad Sturges with Raymond James.
Brad Sturges: Hey, good morning.
Gordon Lawlor: Morning.
Brad Sturges: Just following on Sam's last question there, just looking ahead to next year in terms of the 2027 lease expiries. Do you have a sense or have a rough estimate what the potential mark to market could be on rollover for next year?
Gordon Lawlor: Zach, I'll turn that over to you. He just spent some significant time on a five-year model reforecast, so I'm sure he can enlighten you a bit on that one.
Zachary Aaron: Yeah. Hi there. I think we're in line to see more of the same. I think where we're still kind of achieving 35% spreads and up on a weighted average basis, I think we'll probably be just realistically maybe closer to kind of 25%-30%, but still overall very healthy spreads as we still see a lot of rents coming out of Winnipeg, Ottawa, and Burnside that are still quite significantly below market. Still a healthy amount of runway looking into 2027.
Brad Sturges: The two larger vacancies you're working on, I guess just to understand a bit better, where do things stand today? When you think about timing of re-leasing and rent expectations, have much changed as you've been progressing through some of your discussions?
Zachary Aaron: Sure. I'll jump in. We have the vacancy in Woodstock, Ontario, the 80,000 sq ft. That's really class A space on the highway, effectively turnkey ready for a tenant to come in and operate pretty quickly there. We're coming off sub CAD 9 rent there. We're marketing the space at CAD 11.50 right now, which, looking at kind of competing space in that area and other areas nearby, we think that's a very competitive rate and offers healthy upside to the space. Activity's definitely on the slower end when it comes to Southwest Ontario and closer to kind of that Windsor, London corridor, just as the automotive users aren't in peak demand mode right now. But we've seen a few kicks of the can, but nothing noteworthy. On our Picard building in Saint-Hyacinthe, obviously we did the 75,000 sq ft deal we had talked about in Q1. We're seeing a decent amount of activity on the remaining 100,000 sq ft. I would say most likely that 100,000 sq ft will get split up into two units, somewhere along the lines of a 40,000 sq ft and a 60,000 sq ft or a 50,0000 sq ft and a 50,000 sq ft. We have some groups at the table now that we're talking to, getting a bit more serious, kind of in that 40,000 sq ft-50,000 sq ft range. We'll see if that materializes to something real, but we are still seeing some good demand there.
Brad Sturges: Just if you do split up that remaining space, what would be the CapEx spend potentially for that?
Zachary Aaron: It depends, is the soft answer. Obviously you would have to kind of build out a demising wall, and improve some entrances. There are already some doors there and existing mechanical that we could all feed off of, so that helps and saves a lot on cost. So it frankly just depends on what these users will need. If the need is basically just warehouse, it is kind of good to go as is, and then you just have to put in a demising wall. If there is a need for a bit more, then we will have to look into that at that time. But really, in terms of splitting it up today, it would just be improving some entrances that exist and then adding some demising walls and maybe a washroom or two.
Gordon Lawlor: When you look at that, Brad, we are looking and hopeful for 10 year deals on these. So when you think about those costs relative to, 10 year rates jumping from the historic CAD 4-CAD 10, this would be significantly positive NERs in any respect, right?
Brad Sturges: What type of contractual rent growth do you think you can get on a 10-year deal? Right now, are you targeting like 3%+?
Zachary Aaron: Yeah, 3%. That is what we achieved on our existing [inaudible] deal. It is 3% annual rent escalations. I see no reason we would not be able to achieve the same on any future deals at the property.
Brad Sturges: Okay, appreciate it. I will turn it back.
Operator: We have our next question from Kyle Stanley with Desjardins.
Kyle Stanley: Thanks. Morning, everyone. Maybe just going back to Halifax and kind of talking about the strength there. What is your availability in Halifax today, and what is the lease maturity profile in that market? I am just trying to think about what the near term upside for PRO could be as you start to benefit from maybe some of those structural tailwinds we talked about kind of going forward.
Zachary Aaron: Sure. Zach here again. I mean, we have one chunkier vacancy. In Burnside, it is a 50,000 sq ft unit. Again, 25,000 sq ft of that hits our books. I think that is a specific unit that we will see some significant tailwinds from all the recent kind of defense spending demand. We have some good activity on that space right now where that was coming off of a single digit rent and will be comfortably into the double digit rents. Just a question of time there, and that will kind of add a nice bump once we get something there. In terms of the greater portfolio, I think we are trending around 95%, 94% occupancy, plus or minus. Some of that included is some second floor office, which is always a bit of a laggard. But on our typical 5,000-10,000 in industrial, we still see really good demand. We see tenants renewing at rent in kind of that CAD 14-CAD 15 range with minimal TIs, 3% steps. We are still seeing good demand that when tenants do churn, we are backfilling them with either existing tenants in the portfolio who want to expand or new tenants coming into the portfolio again at really solid market rents. I do not know or have an exact WALT per se of the portfolio today, but I would suspect it is in that three to four year range, just given the nature of a small bay portfolio, kind of typically doing three to five year lease deals.
Kyle Stanley: Okay. No, that is, I think, very helpful. Maybe just kind of sticking with Halifax, you mentioned in your prepared remarks, obviously Amazon coming to Burnside, vote of confidence for the park and the market generally. I am just wondering, do you have a sense of what the existing 3PL presence is in Halifax? Is there maybe a bit of a risk that some of the demand from those types of players steps back if Amazon is kind of running its own delivery? Or I am trying to think about how to understand that.
Gordon Lawlor: Well, just as a Halifax guy, I see the Amazon trucks in my driveway all through the weekend. So Amazon in Atlantic Canada still delivers on the last mile piece from them. So clearly this is 1 million sq ft, so there is going to be more inventories moving to that piece. I mean, in the Halifax side, I am only reading on LinkedIn. We do not have intimate knowledge, but two brand new 3PL users are coming in on the Halifax side in the 400,000 sq ft in Bayers Lake. You have typical got all the regular folks, Midland there, Armour Transport, all the big players that I see their trucks driving between Halifax and Montreal weekly. So I do not think it is going to be a negative to put that facility there. To the extent that they do not do all of their own 3PL, then there is probably more opportunities. And perhaps some of this new stuff is tied to that, we just do not know. We knew of the land sale. We knew who was going to build the building. But the announcement kind of just broke this week on the size, which, unless I am corrected, is probably the largest industrial building in Atlantic Canada. So I will ask ChatGPT about that later, but I think it is pretty close to being a pretty good sized building.
Kyle Stanley: Okay. No, thank you for that. And then just the last one, more just thinking about the organic growth profile. Obviously, the temporary vacancy has maybe held that down a little bit this quarter, but you have dealt with a little bit of the space in Quebec, and it sounds like there is some good upside in Woodstock. Do you see the REIT getting back to the high single digit same property growth profile that we saw in the first quarter or in the fourth quarter of last year towards the end of the year? Is that really going to be kind of a 2027 story?
Gordon Lawlor: Well, I think you will see incremental from the 3% in Q3 for sure with the 74,000 coming on. And then Q4, I think you will see the mid to high digits again. I mean, we had 3% same store rent growth in Q2 with 250,000 sq ft vacant compared to the last year. So that really talks of the magnitude. And those empty spaces were CAD 4 rents that now are going to be CAD 10 or CAD 9 rents, that is hopefully going to be CAD 11. So there is cranking to happen there. We just need to fill those spaces. And then we honestly forget about the natural flow through of these 2,000 sq ft-5,000 sq ft spaces that Zach approves these deals every second day with these bumps. They roll in and roll through, and then it's only when you're looking back, you remember, "Oh, I did that deal eight months ago. I forgot our rent's jumping by CAD 4/sq ft" We're definitely seeing that. We're looking for a much better Q3 and Q4 just with the 400,000 ft that I mentioned there with contracted rent jumps that Q4 will be very interesting quarter for us, hopefully.
Kyle Stanley: Okay, perfect. Thank you for that. I'll turn it back.
Operator: As a reminder, if you wish to ask a question, please press star then one. Our next question is from Edward Zhang with RBC. Edward, perhaps you're muted. I'm not receiving a response from Edward. I will drop the line. We have no further questions. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
