Automotive Properties Real Est Invt TR Q1 2026 Earnings Report

Automotive Properties Real Est Invt TR EPS Results

• Actual EPS: C$0.45
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Automotive Properties Real Est Invt TR Revenue Results

• Actual Revenue: $29.10 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Automotive Properties Real Est Invt TR Announcement Details

• Quarter: Q1 2026
• Date: 5/13/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 14, 2026
• Conference Call Time: 9:00AM ET

Automotive Properties Real Estate Investment Trust is an unincorporated open-ended real estate investment trust focused on investing in high-quality Canadian automotive properties tenanted by automotive dealership groups and automotive brands ranging from mass-market to ultra-luxury. The company holds a portfolio of best-in-class properties located in strategic Canadian urban markets across Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec. The primary objectives of the REIT are to provide Unitholders with stable, sustainable and growing cash distributions, and to enhance and expand the REIT's asset portfolio to maximize Unitholder value.

Automotive Properties Real Est Invt TR Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Automotive Property REIT posted a strong Q1, with property rental revenue up 21.7%, Cash NOI up 19%, and diluted AFFO per unit rising to CAD 0.262, a quarterly record for the company.
• Positive Sentiment: The AFFO payout ratio improved to 78.6% from 81.4% a year ago, helped by the acquired portfolio and contractual fixed/CPI-linked rent increases, despite a higher distribution rate.
• Positive Sentiment: The company continued to expand its portfolio with U.S. and Canadian acquisitions, including a Hyundai dealership in Quebec City, a Rivian facility in California, and two Penske-operated dealerships in Santa Ana after quarter-end.
• Neutral Sentiment: Management said it now owns nearly 100 properties with 100% occupancy and rent collection, and highlighted growing geographic and tenant diversification across Canada and the U.S.
• Positive Sentiment: The REIT said its balance sheet remains flexible, with 46.3% debt-to-GBV, 77% fixed-rate debt, CAD 32.5 million of undrawn capacity, and additional interest-rate hedging completed during the quarter.

Presentation

[Operator]

Good morning, ladies and gentlemen, welcome to Automotive Properties REIT's 2026 First Quarter Results Conference Call and Webcast. At this time, all lines are in listen-only mode. Following management's remarks, we will conduct a question-and-answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures.

[Operator]

Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on May 14, 2026. I would now like to turn the conference over to Milton Lamb, President and CEO. Please go ahead, Mr. Lamb.

[Milton Lamb, President and CEO at Automotive Properties REIT]

That's great. Thank you, Joanne, and good morning, everyone. Thank you for joining us today. With me is Andrew Kalra, our Chief Financial Officer. Our strong first quarter performance reflects the positive impact of the 13 property acquisitions we completed in 2025 for an aggregate purchase price of approximately $200 million, and the partial contributions of the two additional property acquisitions completed during the quarter. Compared to Q1 of last year, our property rental revenue has increased by 21.7%. Cash NOI was up 19%, and AFFO per unit diluted increased to CAD 0.262 from CAD 0.247. This represents a record quarterly AFFO per unit amount for APR, demonstrating the positive impact of our acquisitions and the embedded growth from contractual fixed or CPI-adjusted annual rent increases in our net lease structure.

[Milton Lamb, President and CEO at Automotive Properties REIT]

This is further reflected in a reduced AFFO payout ratio of 78.6% in the quarter, even after our 2025 distribution increase. The two acquisitions we completed during the quarter, a full-service Hyundai dealership located in Quebec City and a Rivian-tenanted sales, delivery, and service facility in Vista, San Diego County, California. Subsequent to quarter end, on April 7th, we completed our second property acquisition in Southern California, consisting of two Penske Automotive dealership properties in Santa Ana in Orange County. The dealerships are situated on parcels of land totaling approximately 6 acres within the Santa Ana Auto Mall, one of the area's premier dealership corridors. The dealerships include Audi South Coast, a 32,000 sq ft full-service Audi dealership, and South Coast Volkswagen, a 29,000 sq ft full-service VW dealership, both operated by Penske Automotive Group.

[Milton Lamb, President and CEO at Automotive Properties REIT]

We expect our acquisitions from last year, sorry, and to date in 2026 to drive continued growth in our AFFO per unit going forward. At this point, I'd now like to turn it over to Andrew Kalra to review our financial results in greater detail. Andrew.

[Andrew Kalra, CFO at Automotive Properties REIT]

Thanks, Milton. Good morning, everyone. Our property rental revenue for the quarter increased to CAD 29.1 million from CAD 23.9 million in Q1 a year ago, reflecting growth from the properties acquired during and subsequent to Q1 last year and contractual annual rent increases. Total Cash NOI and Same Property Cash NOI for the quarter totaled CAD 23.8 million and CAD 20.4 million, respectively, representing increases of 19% and 2.1% compared to Q1 last year. Interest expense and other financing charges for the quarter were CAD 7.3 million, an increase of CAD 1.3 million from Q1 last year, reflecting additional debt incurred to fund our acquisitions. Our G&A expenses were CAD 1.6 million for the quarter, an increase of CAD 0.1 million from Q1 last year, and in line with our expectations.

[Andrew Kalra, CFO at Automotive Properties REIT]

Net income and other comprehensive income was CAD 25.3 million, compared to CAD 7.6 million in Q1 last year. The increase was primarily due to higher NOI changes in non-cash fair value adjustments for investment properties and interest rate swaps, partially offset by higher interest costs and the change in non-cash fair value adjustments for Class B units and unit-based compensation. FFO, AFFO increased by 20.4% and 19.1% respectively compared to Q1 last year, reflecting higher rental revenue from the acquisitions and contractual rent increases. On a per unit basis, FFO increased to CAD 0.268 diluted, up from CAD 0.251 in Q1 last year, and AFFO increased to CAD 0.262, up from CAD 0.247.

[Andrew Kalra, CFO at Automotive Properties REIT]

We paid unitholder distribution totaling CAD 0.206 per unit in the quarter, representing an AFFO payout ratio of 78.6%. This compares with total distributions of CAD 0.201 per unit in Q1 last year for a payout ratio of 81.4%. The decline in our payout ratio, despite the increase in our monthly cash distributions effective last year, 2025, demonstrates the positive impact of the properties we acquired subsequent to Q1 last year and contractual rent increases. The cap rate applicable to our portfolio was 6.75% at quarter end, which was flat compared to 2025 year end, up slightly from 6.7% at the end of Q1 last year. We continue to be proactive with our debt strategy, limit with our exposure to interest rate fluctuation, and enhance our financial flexibility.

[Andrew Kalra, CFO at Automotive Properties REIT]

During the quarter, we entered into floating to fixed interest rate swaps within facility three, totaling CAD 45 million for terms of five to seven years at rates between 4.45% and 4.59%. We also increased the amount of the revolving portion of facility one by CAD 25 million, extended the maturity to June 2029 with the same credit spread. At quarter end, we had a Debt to GBV ratio of 46.3, providing further acquisition capacity. As at March 31st, 2026, 77% of our debt was fixed with a weighted average interest rate of 4.48%, a weighted average interest rate and mortgages remaining of 4.2 years, and a weighted average term maturity of debt of 2.8 years as we continue to increase and extend our credit facilities.

[Andrew Kalra, CFO at Automotive Properties REIT]

As at May 13th, we had approximately CAD 32.5 million of undrawn capacity under our credit facilities, 13 unencumbered properties valued at approximately CAD 195.4 million. I'd like to turn the call back to Milton for closing remarks. Thank you very much.

[Milton Lamb, President and CEO at Automotive Properties REIT]

Great. Thanks, Andrew. Following our entry into the U.S. market last year, we're pleased with the increased geographic and tenant diversity we've established through our latest acquisitions south of the border. We now own properties in Ohio, Florida, and California, representing leading automotive brands, including Tesla, Rivian, and Penske Automotive with their Audi and Volkswagen properties. We continue to position APR as an attractive partner to major automotive dealerships, groups, and OEMs in Canada and the United States. Following a highly active year of acquisitions in 2025 and a solid start to 2026, we're now approaching just under 100 properties in total of our portfolio, with tenant leases with leading automotive groups and OEMs contributing to our cash flows in support of unitholder distributions. We are successfully executing on our key objectives, including driving AFFO per unit and to build value for unitholders.

[Milton Lamb, President and CEO at Automotive Properties REIT]

We look forward to building our positive momentum in the year ahead, supported by growing property portfolio featuring high-quality tenants, providing essential retail and services, 100% occupancy and rent collection, locations in prime metropolitan markets featuring GDP and population growth, with attractive net lease structures and embedded fixed or CPI-adjusted rental growth. That now concludes our remarks. I'd like to open up the line for questions. Joanne, please go ahead.

[Operator]

Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. In the interest of time, we ask that you please limit yourselves to one question and one follow-up. Thank you. Our first question comes from Jonathan Kelcher from TD Cowen. Please go ahead. Your line is open.

[Jonathan Kelcher, Analyst at TD Cowen]

Thanks. Good morning.

[Milton Lamb, President and CEO at Automotive Properties REIT]

Good morning.

[Jonathan Kelcher, Analyst at TD Cowen]

Questions just on what sort of drives the activity in the U.S. I guess in Canada, a lot of your deals are sort of driven by dealer M&A. How does that compare to the U.S.?

[Milton Lamb, President and CEO at Automotive Properties REIT]

A, the U.S. just has more metropolitan markets that have GDP and population growth. B, whether it's the underlying 1031 tax structure, big, beautiful bill, there just tends to be a higher velocity of trading. People are more willing to take profits and losses, where in Canada, people tend to buy assets and hold onto them for significant amounts of time, if not perpetuity. That's a lot of the reason why we end up being more active when it is a transaction related to M&A, where we stand beside dealers as they do the operations acquisition.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Then do you see that opportunity with some of the groups you're talking to in the U.S.?

[Milton Lamb, President and CEO at Automotive Properties REIT]

I think that M&A side will be in common on both sides of the border. There's just a lot more velocity in the U.S., and there's just larger markets. The M&A theme that we've been active in growing and built a good portfolio working with dealers, that I think will occur on both sides of the border.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay, thanks. I'll turn it back.

[Operator]

Our next question comes from Sairam Srinivas from ATB Cormark. Please go ahead. Your line is open.

[Sairam Srinivas, Analyst at ATB Cormark]

Thank you, operator. Guys, obviously, going back to the question on the U.S. acquisitions, can you kind of put that in line with OEM requirements and capital requirements in the business? Do you find the dealerships in the U.S. being a lot more intense in terms of, you know, owning capital coverage and actually investing a lot of capital into their assets versus in Canada, it's probably not as much. Is that something you're seeing?

[Milton Lamb, President and CEO at Automotive Properties REIT]

No, I'd actually say it's flipped a bit. Canada has a bit of a higher cost component to both the underlying land, depending on the market, but certainly in the markets we're looking at on the Toronto, Vancouvers, Montreals, Calgarys. Construction costs are greater in Canada. The OEM requirements are pretty similar, but the cost to complete those requirements, I would say, often are higher in Canada.

[Sairam Srinivas, Analyst at ATB Cormark]

Fair enough. That's good. Thanks so much. I'll turn it back.

[Operator]

Our next question comes from Brad Sturges from Raymond James. Please go ahead. Your line is open.

[Brad Sturges, Analyst at Raymond James]

Hey, good morning.

[Milton Lamb, President and CEO at Automotive Properties REIT]

Good morning, Brad.

[Brad Sturges, Analyst at Raymond James]

Just on the Orange County acquisition, I think the rent growth, the contractual rent growth is based on California CPI, but there's a cap. I am just curious if you could give a little more color how the cap would work.

[Milton Lamb, President and CEO at Automotive Properties REIT]

We can't and don't get into specifics, but it's similar to other caps where you've got a maximum. And that is, you know, that CPI kicks in on the renewal. It's a roll-up formula at that point. You know, similar to what we have with Des Sources, the one we recently did as well. It's not that uncommon in the market where you get a bit of a floor and a cap.

[Brad Sturges, Analyst at Raymond James]

Gotcha. Okay. I guess my other question is there any update at this point on Vaughan, whether strategically you're looking at re-leasing or a potential asset sale?

[Milton Lamb, President and CEO at Automotive Properties REIT]

Yeah. We talked about it. It's not that long ago when we did the end of year call. It's amazing how quickly this Q1 creeps up on us. The short answer is we're trying to balance the fact that that 3 acres of land there, it's got great high density potential, but it's also got great retail value. It's where, how much do we want to invest for a long-term tenancy? Can we get a termination option to allow us to potentially access that density sooner? Do we do a shorter term deal that has immediate access to that when we want it? As you can imagine, it's a bit of a balancing act. The good news is it's a great property, so we're doing some head scratching in a good way.

[Brad Sturges, Analyst at Raymond James]

Okay. Turning back. Thank you.

[Operator]

Our next question comes from Jimmy Shan from RBC Capital Markets. Please go ahead. Your line is open.

[Jimmy Shan, Analyst at RBC Capital Markets]

Thanks. We saw last quarter the W.P. Carey deal with Go Auto. Obviously, they have, you know, a little bit lower cost of capital. Do you see them or any new entrants sort of changing the competitive landscape in getting deals? Do you see change in pricing on deals? Any thoughts there?

[Milton Lamb, President and CEO at Automotive Properties REIT]

It's interesting. I mean, that was a very large deal. Certainly, where we're trading right now at a discount to NAV, has some implications. Go Auto is an existing tenant of ours, so obviously we know them. You know, the lower cost of capital on access to bonds for a few groups, they have to be larger transactions or often would be larger transactions. There is also drainage because of Canada's tax system when you're bringing that money into the States. That's the first deal in a while that we've seen someone come up and play in our sandbox. You know, is there gonna be competition? Sure. Is it something that makes us worry? We've been very active on our pipeline.

[Milton Lamb, President and CEO at Automotive Properties REIT]

You know, in some ways it's confirmational, in other ways, it just shows that we continue to have discipline, and continue to have access to markets to place money in attractive real estate.

[Jimmy Shan, Analyst at RBC Capital Markets]

Okay. Sorry, my follow-up would be just a different question, basic question. Maybe for Andrew. Sequentially, the interest expense declined from Q4 to Q1. That balance went up. I'm just curious, what's the dynamic there?

[Andrew Kalra, CFO at Automotive Properties REIT]

The dynamic there is, there's more floating in Q1, and the floating rate's considerably lower. When we did buy the acquisitions, we bought them on revolving. That's basically the difference there.

[Jimmy Shan, Analyst at RBC Capital Markets]

Okay. We should expect that. You gonna keep it floating?

[Andrew Kalra, CFO at Automotive Properties REIT]

The strategy has always been to use the revolver for the acquisitions and then to play swaps. We did that at the beginning of the year, and we were probably averaging, let's say, between 4.5 to 5 year to 6 year money. Since the conflict, we've seen the five to seven year go up about 50 basis points. The anticipation is that we'll hope to taper off by the end of the year, and we'll see the long-term swap rates come down to where we're averaging. The opportunity with our credit facility is that we can react relatively very quickly and play swaps and move that floating to fixed. It provides us with considerable amount of flexibility.

[Jimmy Shan, Analyst at RBC Capital Markets]

All right. Okay. Makes sense. Thanks.

[Andrew Kalra, CFO at Automotive Properties REIT]

Okay.

[Operator]

For any additional questions, please press star followed by one. Our next question comes from Zemin Liu from Desjardins. Please go ahead. Your line is open.

[Zemin Liu, Analyst at Desjardins]

Hi. Good morning. I just want to turn to Canada, like how does the Dilawri acquisition pipeline looks like?

[Milton Lamb, President and CEO at Automotive Properties REIT]

You know, they continue to be, we continue to have a strategic alliance with them. As they continue to grow, we anticipate and hope that we'll do more deals with them. Again, they are the largest group, and we certainly have good relationship with them. Unlike grocery and other industries within Canada, we have to work with a large number of dealership groups. The very nature of, you know, the largest being, you know, 3% market share, and we already own the vast majority of the real estate. We anticipate there's going to be as many or probably a lot more outside of the Dilawri Group that we'll continue to be active with.

[Zemin Liu, Analyst at Desjardins]

Okay. That's, that's very helpful. Another question is that I'm just wondering whether there's any other leases rolling in 2026. Also, can you remind us about the NOI impact of the Pfaff lease expiry?

[Milton Lamb, President and CEO at Automotive Properties REIT]

I don't think we've been specific on the NOI impact, a little scratching, and I'm sure everyone around this call can figure it out approximately. That is the only outstanding 2026 lease expiration. We have very little that has, in 2027 as well.

[Zemin Liu, Analyst at Desjardins]

Okay. That's good. Yeah. I'll turn it back. Thank you.

[Milton Lamb, President and CEO at Automotive Properties REIT]

Thank you.

[Operator]

We have no further questions. I'd like to turn the call back over to Milton Lamb for any closing remarks.

[Milton Lamb, President and CEO at Automotive Properties REIT]

That's great. Thank you, everyone. We look forward to getting back on a call for Q2. Enjoy the long weekend.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Analysts

• Andrew Kalra, CFO at Automotive Properties REIT
• Brad Sturges, Analyst at Raymond James
• Jimmy Shan, Analyst at RBC Capital Markets
• Jonathan Kelcher, Analyst at TD Cowen
• Milton Lamb, President and CEO at Automotive Properties REIT
• Sairam Srinivas, Analyst at ATB Cormark
• Zemin Liu, Analyst at Desjardins