Automotive Properties Real Est Invt TR Q2 Earnings Call Highlights

Q2 2026 results strengthened: Property rental revenue rose 22.8% year over year to CAD 30.2 million, cash NOI increased 20% to CAD 24.8 million, and AFFO grew 18.6%. Diluted AFFO per unit reached a record CAD 0.263. Distribution increased approximately 2%: The annual cash distribution will rise to CAD 0.839 per unit, with the monthly payment increasing to CAD 0.0699. The AFFO payout ratio improved to 78.3% from 80.7%. Portfolio and growth expanded: Lease renewals extended the REIT’s material lease-expiration schedule to 2028, while a Vaughan joint arrangement secured a 16-year triple-net lease and preserved redevelopment potential. The REIT also continued U.S. expansion, supported by acquisitions and available credit capacity. Automotive Properties Real Est Invt TR TSE: APR.UN reported higher revenue, net operating income and adjusted funds from operations in the second quarter of 2026, supported by acquisitions completed during 2025 and the first quarter as well as partial-period contributions from three properties acquired in California early in the second quarter. President and CEO Milton Lamb said the quarter reflected both acquisition activity and the REIT’s net-lease structure, which includes contractual fixed or CPI-adjusted rent increases. Property rental revenue rose 22.8% from a year earlier, while cash net operating income increased 20% and AFFO rose 18%. Record AFFO Per Unit and Distribution Increase Property rental revenue totaled CAD 30.2 million in the quarter, compared with CAD 24.6 million in the prior-year period, CFO Andrew Kalra said. Total cash NOI was CAD 24.8 million, up 20% year over year, while same-property cash NOI rose 2.2% to CAD 21.1 million. Net income and other comprehensive income increased to CAD 18.1 million from CAD 11.2 million a year earlier. Kalra attributed the increase primarily to higher NOI, changes in non-cash fair-value adjustments on investment properties and a foreign-exchange gain, partly offset by higher interest costs and changes in non-cash fair-value adjustments for interest-rate swaps. FFO increased 19.4% from the second quarter of 2025, while AFFO increased 18.6%. Diluted FFO per unit was CAD 0.270, compared with CAD 0.244 a year earlier, and diluted AFFO per unit reached a record CAD 0.263, up from CAD 0.249. The REIT paid distributions of CAD 0.206 per unit during the quarter, resulting in an AFFO payout ratio of 78.3%, down from 80.7% in the prior-year quarter. Based on the results, the board approved an approximately 2% increase in the annual cash distribution to CAD 0.839 per unit from CAD 0.822 per unit. The monthly distribution will rise to CAD 0.0699 per unit from CAD 0.0685, effective with the distribution expected to be paid around Sept. 15 to unitholders of record on Aug. 31. Lamb said the increase marked the second consecutive year the REIT has raised its distribution and reflected management’s confidence in the stability of cash flow. During the quarter, Automotive Properties REIT renewed leases at dealership properties in Vancouver and Regina. The extensions averaged 7.5 years and included base-rent increases of about 4.8%, followed by annual fixed rent increases. The REIT also extended the lease for its VW Des Sources dealership property in Montreal for six years beyond its 2027 maturity, subject to a CPI adjustment in 2027. A dealership property in Calgary was extended for five years, with rents to be determined when that renewal begins. Lamb said the new lease activity, together with a subsequent Vaughan, Ontario, transaction, means the REIT has no material lease expirations until 2028.