PROREIT ANNOUNCES SECOND QUARTER 2025 RESULTS

Executive Summary

• PROREIT reported its financial and operating results for the second quarter and first half of fiscal 2025, highlighting growth in Net Operating Income (NOI) and Same Property NOI driven by embedded rent growth and higher renewal spreads.
• The REIT completed the acquisition of six industrial properties in Winnipeg for $96.5 million and entered into a binding agreement to sell six non-core retail properties in Atlantic Canada for $39.8 million to support its capital recycling strategy.
• Key financial metrics include a 4.5% year-over-year increase in NOI to $15.4 million for Q2, an AFFO payout ratio of 89.8%, and total debt to total assets of 50.6%.

Key Details

• Financial Performance (Q2 2025):
  • Property Revenue: $25.0 million (up from $24.6 million in Q2 2024).
  • Net Operating Income (NOI): $15.4 million (up 4.5% year-over-year).
  • Same Property NOI: $14.6 million (up 8.2% year-over-year), with Industrial Same Property NOI rising 9.6%.
  • Funds from Operations (FFO): $8.0 million (up 8.1% year-over-year).
  • Adjusted Funds from Operations (AFFO): $7.6 million.
  • Basic AFFO per Unit: $0.1253 (up 3.7% year-over-year).
  • AFFO Payout Ratio (Basic): 89.8% (down from 93.1% in Q2 2024).
  • Net Income: $5.2 million.
• Financial Performance (Six Months Ended June 30, 2025):
  • Property Revenue: $50.8 million.
  • NOI: $30.3 million (up 2.4% year-over-year).
  • Same Property NOI: $28.6 million (up 6.6% year-over-year).
  • FFO: $15.9 million (up 5.1% year-over-year).
  • AFFO: $14.9 million.
  • Basic AFFO per Unit: $0.2452.
• Portfolio & Operational Metrics:
  • Occupancy Rate: 97.8% at June 30, 2025 (including committed space), up from 97.1% a year earlier.
  • Portfolio Size: 118 investment properties totaling 6.7 million square feet of Gross Leasable Area (GLA).
  • Lease Renewals: 63.1% of 2025 GLA renewed at an average spread of 35.7%; 52.5% of 2026 GLA renewed at 33.8% average spread.
  • Weighted Average Lease Term (WALT): 4.5 years.
  • Industrial Segment: Accounts for 88% of GLA and 83.5% of base rent.
• Transactions:
  • Acquisition: Completed acquisition of six industrial properties in Winnipeg from Parkit Enterprise Inc. for $96.5 million (excluding closing costs).
    • Financing: Funded via a new $63.0 million 3-year secured non-revolving credit facility (fixed swap rate ~4.54%) and issuance of ~$40.0 million in trust units and Class B LP Units at $6.20 per unit.
    • Use of Proceeds: $3.2 million to repay revolving credit facility; $5.5 million for general business purposes.
    • Governance: Parkit nominee Steven Scott appointed to the REIT board under an investor rights agreement.
  • Disposition: Entered into a binding agreement to sell six non-core retail properties in Atlantic Canada (~221,000 sq ft GLA) for $39.8 million in gross proceeds.
    • Use of Proceeds: ~$21.5 million to repay related mortgages; balance to repay credit facilities or for general business/working capital.
    • Closing: Scheduled for Q3 2025.
    • Impact: Pro-forma industrial base rent will reach 88%, supporting the medium-term target of 90%.
• Financial Position & Leverage:
  • Total Debt: $562.4 million at June 30, 2025 (up from $495.0 million at March 31, 2025).
  • Total Debt to Total Assets: 50.6%.
  • Adjusted Debt to Gross Book Value: 50.7%.
  • Adjusted Debt to Annualized Adjusted EBITDA Ratio: 9.8x (up from 8.8x in Q2 2024, primarily due to recording associated debt from the Parkit transaction).
  • Interest Coverage Ratio: 2.6x.
  • Debt Service Coverage Ratio: 1.6x.
  • Weighted Average Interest Rate on Mortgage Debt: 3.94%.
• Distributions:
  • Monthly distributions of $0.0375 per trust unit declared for Q2 2025 ($0.45 annualized).
  • July 2025 distribution of $0.0375 per unit declared, payable August 15, 2025.

Notable Quotes

• "PROREIT's second-quarter results reflected a 4.5% NOI growth and an 8.2% increase in Same Property NOI*, year-over-year, fueled by embedded rent growth, higher renewal spreads and strong lease-up performance," said Gordon Lawlor, President and Chief Executive Officer of PROREIT.
• "We are actively executing our capital recycling strategy by reinvesting in industrial opportunities that support long-term cash flow and net asset value growth... Including the announced binding sale agreement, year-to-date non-core property sales total $52.2 million, bringing pro-forma industrial base rent to 88% and putting us on track to reach our 90% medium-term target."
• "While Adjusted Debt to Annualized Adjusted EBITDA Ratio* and certain debt metrics rose in Q2, as expected following the transaction with Parkit, we remain fully committed to disciplined balance sheet management and to reducing leverage with the announced asset sales."