Automotive Properties Real Est Invt TR Q2 2026 Earnings Report

Automotive Properties Real Est Invt TR EPS Results

• Actual EPS: C$0.27
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Automotive Properties Real Est Invt TR Revenue Results

• Actual Revenue: $30.21 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Automotive Properties Real Est Invt TR Announcement Details

• Quarter: Q2 2026
• Date: 8/13/2026
• Time: After Market Closes
• Conference Call Date: Friday, August 14, 2026
• Conference Call Time: 9:00AM ET

Automotive Properties REIT is an unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive and other OEM dealership and service properties located in Canada and the United States. The REIT's portfolio currently consists of 91 income-producing commercial properties, representing approximately 3.4 million square feet of gross leasable area, in metropolitan markets across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Québec in Canada, and Florida and Ohio in the United States. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive and OEM dealership and service real estate properties.

Automotive Properties Real Est Invt TR Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q2 performance: Property rental revenue rose 22.8%, cash NOI increased 20%, and diluted AFFO per unit reached a record CAD 0.263, up from CAD 0.249 a year earlier.
• Positive Sentiment: Trustees approved an approximately 2% distribution increase to CAD 0.839 annually per unit, supported by a lower AFFO payout ratio of 78.3% versus 80.7% last year.
• Positive Sentiment: Lease renewals added term and rent growth, while the portfolio remains 100% leased with no material lease expirations until 2028.
• Positive Sentiment: APR agreed to sell a 50% interest in its Vaughan property to a Dilawri affiliate for CAD 16 million, above IFRS value, while retaining 50% ownership and redevelopment optionality under a new 16-year lease.
• Neutral Sentiment: Acquisitions expanded APR’s presence across the U.S., including California, Ohio, and Florida, but related financing lifted quarterly interest expense by CAD 1.7 million; debt-to-GBV stood at 47.5% as of August 13.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Automotive Properties REIT's 2026 second quarter results conference call and webcast. At this time, all lines are in a 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 August 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]

Thank you, Morgan, and good morning, everyone. With me on our call is Andrew Kalra, our Chief Financial Officer. Our strong second quarter performance reflects the positive impact of the property acquisitions we completed during 2025 and Q1 of this year, plus partial contribution of the three properties we acquired in Greater San Diego and Santa Ana, California in early Q2. Compared to Q2 of last year, our property rental revenue has increased by 22.8%, cash NOI is up 20%, AFFO has increased by 18%, and AFFO per unit diluted increased to CAD 0.263 from CAD 0.249. This represents a record quarterly AFFO per unit amount for APR, up from our prior record of Q1 this year, demonstrating the positive impact of our acquisitions and embedded growth for contractual fixed or CPI-adjusted rent increases in our net lease structure.

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

This is further reflected in our reduced AFFO payout ratio of 78.3% in the quarter, compared to 80.7% in Q2 of last year. Despite our distribution increase last year in issuance of REIT units through the completion of our CAD 57 million equity offering last October. With our strong financial performance, the REIT's trustees have approved an increase of approximately 2% to our annual cash distribution from CAD 0.822 to CAD 0.839 per unit. Our new monthly distribution will be CAD 0.0699 per unit, up from CAD 0.0685. This increase will be effective for this month's distribution to be paid on or about September 15th, 2026, to unitholders of record on August 31st, 2026. This marks the second consecutive year we have implemented a distribution increase, which highlights our confidence in the stability of our cash flow.

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

Further, the underlying stability of our cash flow, we were active in Q2, renewing several of our leases, including one of our dealership properties in Vancouver, one of our dealership properties in Regina, which were extended by an average of 7.5 years, with base rent increases of approximately 4.8%, with subsequent annual fixed rent increases. Our VW Des Sources dealership property in Montreal was extended beyond its current lease maturity of 2027 for a further six years, subject to a CPI adjustment in 2027. One of our dealership properties in Calgary was also extended by five years at rents to be agreed upon as that renewal commences.

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

We also announced yesterday that subsequent to quarter end, we entered into a new lease and joint arrangement with a member of the Dilawri Group, pursuant to which we've agreed to lease our 69,000 sq ft automotive dealership property located at 9088 Jane Street in Vaughan, under a 16-year triple net lease, whereby the landlord has a redevelopment option. We expect rent payments to commence on December 1st, 2026. Concurrently, we've agreed to sell 50% interest in the property for a cash purchase price of CAD 16 million, reflecting a premium to IFRS value, with the expected closing in September of 2026. We expect to retain the remaining 50% interest of the property and all parties have waived conditions. It should be noted that the demand for automotive facilities has allowed us to maintain 100% leased portfolio, even though some of the properties have experienced changes in the OEM franchises.

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

With the new lease at 9088 Jane Street, combined with the recent lease renewal activity, we'll have no material lease expirations until 2028. I'd now like to turn it over to Andrew Kalra to review our financial results in more detail. Andrew?

[Andrew Kalra, CFO at Automotive Properties REIT]

Thanks, Milton, and good morning, everyone. Our property rental revenue for the quarter increased to CAD 30.2 million from CAD 24.6 million in Q2 a year ago, reflecting growth from properties we acquired during and subsequent to Q2 last year, and contractual annual rent increases. Total cash NOI, same-property cash NOI for the quarter totaled CAD 24.8 million and CAD 21.1 million, respectively, representing increases of 20% and 2.2% compared to Q2 last year. Interest expense and other financing charges for the quarter were CAD 8.1 million, an increase of CAD 1.7 million from Q2 last year, reflecting additional debt incurred to fund the acquisitions. Our G&A expenses were CAD 1.6 million for the quarter, an increase of about CAD 80,000 from Q2 last year, and in line with the REIT's expectations. Net income and other comprehensive income was CAD 18.1 million, compared to CAD 11.2 million in Q2 last year.

[Andrew Kalra, CFO at Automotive Properties REIT]

The increase was primarily due to higher NOI, changes in non-cash fair value adjustments for investment properties, and foreign exchange gain, partially offset by higher interest costs and a change in non-cash fair value adjustments for interest rate swaps. FFO and AFFO increased by 19.4% and 18.6%, respectively, compared to Q2 last year, reflecting higher rental revenue from the acquisitions and contractual rent increases. On a per-unit basis, FFO increased to CAD 0.27 diluted, up from CAD 0.244 in Q2 last year, and AFFO per unit increased to CAD 0.263 diluted cents, up from CAD 0.249. We paid unitholder distributions totaling CAD 0.206 per unit in the quarter, representing an AFFO payout ratio of 78.3%. This compares with the total distribution of CAD 0.201 per unit in Q2 last year, for a payout ratio of 80.7%.

[Andrew Kalra, CFO at Automotive Properties REIT]

The cap rate applicable to our portfolio was 6.7% at quarter end, which was flat compared to 2025 year-end. We continue to be proactive with our debt strategy to enhance our financial flexibility. During the quarter, we increased the amount of the non-revolving portion of Facility Two by CAD 35 million and extended the maturity date to June 2030 with the same credit spread. At quarter end, 74% of our debt was fixed, with a weighted average interest rate of 4.49%, a weighted average interest rate swap term and mortgages remaining of 3.9 years, and a weighted average term of maturity of debt of 2.9 years as we continue to increase and extend our credit facilities. As at August 13th, we had a debt-to-GBV ratio of 47.5%, with approximately CAD 64 million of undrawn capacity under our credit facilities and 11 unencumbered properties valued at CAD 166.7 million.

[Andrew Kalra, CFO at Automotive Properties REIT]

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]

Thanks, Andrew. Following our entry into the U.S. market last year, we're pleased with the progress we've made in expanding our portfolio, including the U.S. portfolio properties. We now own properties in Ohio, Florida, and California, representing leading automotive brands including Tesla, Rivian, and Penske Automotive Group, with their Audi and VW properties. This increased geographic and tenant diversity enhances the underlying strength of our portfolio and provides a broader array of acquisition opportunities for us. We continue to position APR as an attractive partner to major automotive dealership groups and OEMs in Canada and the United States. We are successfully executing our key objectives, including expanding our geographic market presence and diversifying our tenant base through our property acquisitions, optimizing our portfolio and capital position with our bound property transaction and recent value-enhancing lease renewals, driving AFFO per unit growth and increasing our cash distributions.

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

Looking ahead, we look forward to building on our positive momentum, supported by a growing property portfolio featuring high-quality tenants providing essential retail and services, locations in prime metropolitan markets in Canada and the U.S. with GDP and population growth, an attractive net lease structure, and embedded fixed or CPI-adjusted rental growth. That concludes our remarks. I'd now like to open the line for questions. Morgan, please go ahead.

[Operator]

Thank you, Mr. Lamb. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and join the queue. To allow adequate time for all participants, we ask that you limit yourself to one question and one follow-up. If you would like to withdraw your question, simply press star, then the number one again. Your first question comes from Jonathan Kelcher with TD Cowen. 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]

First on this deal with Dilawri, can you maybe give a little bit of color on why you are selling a 50% interest? What is the landlord redevelopment option? How that would work?

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

Yeah, sure. The thought process is, it follows on to what we have been saying for a while. We love the underlying dirt. It is an automotive zoned property that has good demand. It was trying to balance our ability in the future to potentially do mixed use redevelopment, plus the desire obviously to get strong income and have a strong tenant. So it is a bit of a trade-off for flexibility. If you do a flashback almost 10 years, we bought this property for just over CAD 17 million. Have certainly had a nice 10 years with it, including some good rental growth. Now being able to take CAD 16 million, which for 50%, which almost equals what we bought it for originally, get some good income and maintain some of that flexibility in the future. It worked very well to get that balance.

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

Certainly now is not the right time to be leaning into redevelopment. So this allows us to straddle both worlds of good income and good underlying value.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. I am guessing your ability to get that redevelopment, so like it had been four years or something, you want to do it, that you would be just able to do so?

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

Yeah. It's not four years. There's a minimum term, and then at that point, with appropriate notice, which certainly if you're going through planning, it's easy to give a significant notice. We can go ahead and look at doing a redevelopment.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Then I guess just in order to get Dilawri to agree to that was the quid pro quo was selling the half interest in the property.

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

I don't know if I love that word because of good old Trump. But, yeah, it was the balance between having flexibility. Obviously, there's investment that has to go into the property as they put the new OEM in place. So it worked very well that if there is that underlying, or I'd really like to think when there is that underlying higher and better use, that we can do it together, both win, and then hopefully there'd be a relocation of any new tenant or potentially have that tenant stay within the new redevelopment complex.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay, thanks. I'll turn it back.

[Operator]

Your next question comes from Sairam Srinivas with ATB Cormark Capital Markets. Your line is open.

[Sairam Srinivas, Analyst at ATB Cormark Capital Markets]

Thank you. Good morning, guys.

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

Good morning.

[Sairam Srinivas, Analyst at ATB Cormark Capital Markets]

Following up on other line of questioning on the Vaughan leasing. Milton, just to clarify the CAD 16 million or odd you paid for the property, that's for the 100%?

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

Sorry. It was CAD 17 million. We bought it for just over CAD 17 million in 2016 for 100%.

[Sairam Srinivas, Analyst at ATB Cormark Capital Markets]

Okay.

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

Now we're selling 50% for CAD 16 million or the equivalent of CAD 32 million for 100%.

[Sairam Srinivas, Analyst at ATB Cormark Capital Markets]

That is amazing math. Thank you. Just kind of looking at acquisition pipeline now, obviously, you guys have been active in the U.S. and Canada as well. How would you characterize the pipeline in terms of your geographic dispersion?

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

Sorry, can you repeat that?

[Andrew Kalra, CFO at Automotive Properties REIT]

Pipeline geography.

[Sairam Srinivas, Analyst at ATB Cormark Capital Markets]

Looking at your pipeline of acquisitions and the spread between the U.S. and Canada.

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

Yeah. Last quarter, CAD 1.42 was not looking that attractive. We loved getting the income at CAD 1.42. We think we are watching that dollar resettle back into the high CAD 1.30s, CAD 1.39 and change now. There is a bit of a balance there. I have always found the summer, I say this with a bit of a smile. Most dealers enjoy their summer. We look forward to the back half of the year when often there is more M&A and more deals that do occur. The balance between the two, we like some of the GDP and population growth markets in the States, especially in that Southeast through the Southwest. It will be interesting. There is a balance on where we want to see growth.

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

There are certainly more opportunities when we are looking at both sides of the border. We are looking forward to the back half of the year.

[Sairam Srinivas, Analyst at ATB Cormark Capital Markets]

That is great, Milton. Thank you for the call. I will turn it back.

[Operator]

Your next question comes from Brad Sturges with Raymond James. Your line is open.

[Brad Sturges, Analyst at Raymond James]

Hey, good morning.

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

Good day.

[Brad Sturges, Analyst at Raymond James]

Just going back to the Vaughan property in terms of the new lease with the Dilawri affiliate. Wondering if you could give.

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

Yep.

[Brad Sturges, Analyst at Raymond James]

A bit of color just on the new rent versus prior rents.

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

We talked about the rent starting in December 1st, so that's already public. There's some money that has to go into it. The rents are nicely above when we acquired this property, and they continue to grow. They grew nicely over the last 10 years. Not a significant difference. Again, there's probably a bit more, sorry, a bit of flexibility in there because of the redevelopment clause. But it's not materially different than what we would've looked at previously.

[Brad Sturges, Analyst at Raymond James]

Okay. It would be similar to other Dilawri leases with like a 1.5% fixed price.

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

Yeah. Outside of the one clause that we talked about, it's very much a standard Dilawri lease.

[Brad Sturges, Analyst at Raymond James]

Yeah. Makes sense. Okay. Just looking at the other lease extensions, could you give a bit of more color in terms of when those extensions would be effective?

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

The two that we have talked about, the increase that was announced, those were effective. We announced them before, it was just coming up with the formula. So those are already in place. The other ones are early to mid next year, on when they would actually kick in. We've received the renewal notices, but the actual increases and new lease rates would be, call it mid next year.

[Brad Sturges, Analyst at Raymond James]

The ones that are already effective, have we seen much of an impact in the quarter, or was that at sort of the end of the quarter?

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

No. These were rollovers from the original IPO, so that was done in July of 2015. So most of the rent increases with regards to the original portfolio are in July or August, so they'd be in Q3.

[Brad Sturges, Analyst at Raymond James]

Perfect. Okay. I'll turn it back. Thank you.

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

Thank you.

[Operator]

Your next question comes from Zemin Liu with Desjardins. Your line is open.

[Zemin Liu, Analyst at Desjardins]

Thanks. Good morning.

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

Yeah.

[Zemin Liu, Analyst at Desjardins]

Just a follow-up on the one property. I am just wondering whether you can disclose the estimated cap rate on the new 16-year lease.

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

Yeah, we do not tend to disclose cap rate, and certainly in this case, when we already own the property. I love the back math because that is basically asking us to tell you what the net rent is. No, it is not disclosed.

[Zemin Liu, Analyst at Desjardins]

Okay. Thanks. After this sale of the 50% interest, are you contemplating any other dispositions in the near term?

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

This was a special circumstance with a high-quality property and the desire to get income and maintain the redevelopment optionality. Short answer is, we like our portfolio. We still remain at 11 years, 100% leased and 100% rent payment. We never say no to look at anything, but right now we have nothing contemplated.

[Zemin Liu, Analyst at Desjardins]

Okay. That's helpful. I'll turn it back. Thanks.

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

Thank you.

[Operator]

Once again, if you would like to ask a question at this time, please press star, then the number one on your telephone keypad. Your next question comes from Jimmy Shan with RBC Capital Markets. Your line is open.

[Jimmy Shan, Analyst at RBC Capital Markets]

Thanks. On the various extensions and early renewals, I am just curious if you could provide a bit of background and context for doing that. Is it more tenant-driven? Is it you being proactive? Just trying to understand that a little bit more.

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

Kind of both. Certainly some of them, it was option periods. Other ones had demand, either if they relocated, if we did not get the renewal, then we had backup demand. So they stepped up and renewed. It is partly that we are now hitting some of the maturity on the original 11 to 19-year deal. Certainly, on the Das Sources, the VW, we originally said one of the terms was fairly short, but we had very strong confidence that they would renew. To no surprise, they renewed. So it is a bit of what was anticipated, and we have been working with them to kind of hit the numbers and get that in place.

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

So it is partly that what I kind of like is, A, the backup demand, and B, in a number of cases, the dealer group have used this for other OEMs as opposed to the original one. So even when you are seeing transition within the property, the dealer community likes to hold onto these assets because they can use them to achieve other franchises. It kind of goes to supporting our backstory that we have kind of talked about for the last 10, 11 years.

[Jimmy Shan, Analyst at RBC Capital Markets]

Yeah. No, that is helpful. Then just a quick follow-up on the Vaughan site. So what is that minimum term before you can contemplate redevelopment?

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

It's not announced, and they've asked us not to announce it. But in the near future, I don't see that land value being at a level that I anticipate it will be once this market matures and gets back to having true residential mixed-use value.

[Jimmy Shan, Analyst at RBC Capital Markets]

But certainly, was it a 16-year lease? Is it a, yeah, 16-year lease.

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

Yep.

[Jimmy Shan, Analyst at RBC Capital Markets]

It'll be shorter than 16 years.

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

Oh, yeah. Very much so.

[Jimmy Shan, Analyst at RBC Capital Markets]

All right. Thanks.

[Operator]

Your next question comes from Giuliano Thornhill with National Bank. Your line is open.

[Giuliano Thornhill, Analyst at National Bank]

Thanks. Good morning, everyone. I just want to ask you about the Vaughan site as well. I am wondering, can you give us some more description on who the old tenant was, maybe the OEM there, and the rationale for leaving the site?

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

Yeah. It was Pfaff, which got acquired by Lithia, so Lithia Pfaff within Audi. Audi, they did extremely well there. It was 60 odd thousand feet. They wanted to expand. They have moved their location around the corner and done a new build. I got to say, it is a beautiful building. That left this opportunity available.

[Giuliano Thornhill, Analyst at National Bank]

Are you aware of the, or can disclose the new OEM that will be putting in place by Dilawri, as well as?

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

We are aware. They are asking not to disclose it. It is similar to Tesla. Dealers like to be able to announce it, because it is a bit marketing, a bit promotional when they do announce it. We do not want to take away that fanfare from them.

[Giuliano Thornhill, Analyst at National Bank]

Yep, absolutely. Just on the modeling, I know it closes September, so will you be recognizing straight line rent for the first bit and then cash rent on December? Is that how the lease will be working?

[Andrew Kalra, CFO at Automotive Properties REIT]

We will recognize, it is kind of small, we will recognize straight line September, and then the cash will be coming in December 1st.

[Giuliano Thornhill, Analyst at National Bank]

Right. Okay. Perfect. I'll turn it back.

[Andrew Kalra, CFO at Automotive Properties REIT]

But when we do close it within September.

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

Yeah.

[Giuliano Thornhill, Analyst at National Bank]

Yep, absolutely.

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

But obviously, it's not reflected in the Q2s. That'll be reflected in Q3.

[Operator]

Concludes our Q&A session. I will now turn the conference back over to Milton Lamb for any closing remarks.

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

That is great, everyone. Thank you very much, and enjoy the rest of the summer.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect and have a wonderful rest of your day.

Participants

Analysts

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