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Operator: Good morning. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Choice Properties Real Estate Investment Trust Second Quarter 26 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star and 1 again. Thank you. I will now hand the call over to Simone Elizabeth-Jasmine Cole, general counsel and secretary. Please go ahead.
Simone Elizabeth-Jasmine Cole: Thank you. Good morning, and welcome to Choice Properties Q2 2026 Conference Call. I am joined this morning by Rael Lee Diamond, President and Chief Executive Officer; Aaron Johnston, Chief Financial Officer; Niall Collins, executive vice president, development and construction, and David Muallim, Senior Vice President, Leasing and Operations. Rael and Aaron will provide a recap of our second quarter operational results and highlights. Before we open the line for Q&A, where Niall and David will join to answer your questions. Before we begin today's call, I would like to remind you that by discussing our financial and operating performance, and in responding to your questions, we may make forward looking statements, including statements regarding Choice Properties' objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in these forward looking statements. Additional information on the material risks that can impact our financial results and estimates and the assumptions that we made in applying and making these statements can be found in our recently filed Q2 2026 financial statements and management discussion and analysis, which are available on our website and on SEDAR+ And with that, I turn the call over to Rael.
Rael Lee Diamond: Thank you, Simone, and good morning, everyone. We are pleased with our second quarter results, which reflect the strength of our portfolio and the disciplined execution of our strategy. During the quarter, we continued to unlock value through strategic leasing across our necessity based retail portfolio. We also capitalize on tenant demand to drive rental rate growth in our well located industrial portfolio. Across our portfolio, fundamentals held strong. Occupancy remains near full, leasing activity and spreads were robust and same asset NOI growth was solid. Portfolio occupancy was 97.7%, down 40 basis points from the previous quarter. This primarily reflects planned vacancies tied to strategic repositioning initiatives which I will discuss shortly. Outside of these initiatives, operating performance was solid. Average leasing spreads were robust at 19% supported by same asset NOI growth of 2.8%. In our retail portfolio, demand remained resilient across our core necessity based tenant categories. Retail occupancy ended the quarter at 97.4%. During the quarter, we completed 643 thousand square feet of renewals and 83 thousand square feet of new leasing. Renewal spreads were 12.4% with increases across categories such as liquor, restaurants, and dollar stores. This includes 318 thousand square feet of fixed rate option renewals. Excluding these fixed rate renewals, average retail renewal spread was very strong at approximately 20%. Retention was 66% primarily reflecting known nonrenewals of 2 large spaces previously leased to Loblaw totaling 172 thousand square feet. Both spaces were utilized for storage or temporary uses and had single digit gross rents, reflecting the flexible nature of their leases. The first space was a 90 thousand square foot strategic repositioning at Bloor and Dundas that we mentioned last quarter. We will be creating a multi tenant configuration with commitments from Shoppers Drug Mart and Good Life. During the quarter, we turned over the space to Shoppers Drug Mart for fixturing with a target opening later this year. Possession for Goodlife is targeted in early 2027. The second, an 82 thousand square foot space in Laval, we are pursuing similar backfill strategy and will provide an update on our progress in the coming quarters. Excluding these 2 nonrenewals, retention was ~80% broadly in line with our historical levels. Backfilling of our Q2 vacancies is already well advanced. With approximately 50% of the space having been released at rent well above expiring rates. We also made progress on the backfill of our 3 former Toys R Us locations. No Frills took possession and is now fixturing at Dartmouth Crossing and we are in active discussions on our remaining 2 locations with our JV partner. We expect to provide further updates on the remaining locations during our next conference call. In addition, subsequent to the quarter, we completed the renewal of our 2027 tranche of Loblaw leases, representing 15 locations and 3.6 million square feet. All of the leases renewed were retail locations and were completed at an average spread of 8.8% and an average term of 5 years. These renewals provide steady cash flow growth and address approximately 67% of our 2027 retail lease maturities. Our industrial portfolio also delivered healthy operating results during the quarter, with occupancy stable at 98.6%. We completed 353 thousand square feet of renewals in the quarter achieving a retention rate of 80.6%. Activity was concentrated in our Ontario and Alberta, with an average renewal spread of 40.2%. In the GPA, rent commenced in April at our recently completed NLS building in Choice Caledon Business Park. Construction is also progressing well on building d, with completion and occupancy targeted for the second half of 27. Our team remains active in the market and continues to respond to RFPs for single- and multi-tenant users interested in the site. Looking ahead, our industrial portfolio remains well positioned, supported by high quality assets strong tenant base, and locations in core urban markets across the country. We expect leasing momentum to support robust organic growth through the balance of the year. Our renewal spreads are expected to moderate in the second half as the mix of expiring leases changes and better mark to market opportunity remains a meaningful driver of future growth. Lastly, we also saw positive momentum in our mixed use and residential portfolio. Mixed use occupancy increased 50 basis points while leasing improved across our residential assets supported by our focus on tenant retention. Turning now to transaction activity. Transaction activity was relatively modest during the quarter. As our focus remained on advancing the proposed First Capital transaction and maintaining balance sheet flexibility. We completed a total of $14 million of transactions in Q2 and $30 million of transactions subsequent to quarter end. Bringing our total year to date capital recycling activity to approximately $55 million. During the quarter, we acquired a retail property in Waterloo, Ontario, for $7.4 million. The site is adjacent to 1 of our existing high performing grocery anchored retail properties. Together, the properties create a significant land assembly along a major commercial corridor in a neighborhood benefiting from growth in student housing. Ownership of both properties unlocks an attractive intensification opportunity enhancing the transaction's overall economics. We are pursuing early stage approvals for additional retail density to enhance the site's long term value. We completed $6.8 million of dispositions during the quarter. And subsequent to quarter end, we sold our remaining 50% interest in an Alberta retail property for $13.2 million. Finally, we continue to make progress on our previously announced acquisition of First Capital. Last month, First Capital unitholders posted overwhelmingly favor of the proposed transaction in Ontario Superior Court subsequently approved the plan of arrangement. We continue to work constructively through the regulatory process and closing remains on track. We will provide further updates as the process advances. And with that, I will now turn the call over to Aaron to discuss our financial results and capital allocation activity. Aaron?
Erin Johnston: Thank you, Rael, and good morning, everyone. Q2 was another solid quarter for Choice's core business. For the quarter, we reported funds from operations, or FFO, was $193 million or $0.267 per unit on a diluted basis. An increase of 0.8% year-over-year. This performance was driven by same asset cash NOI growth of 2.8% and higher lease surrender revenue of $1.6 million Contributions from acquisitions and development transfers were offset by dispositions. Higher interest expense from refinancing, higher G&A and lower investment income also tempered FFO growth. Adjusting for the impact of non-recurring items, including lease surrender revenues of $1.6 million and the reduction in Allied Distribution of $3.2 million, FFO growth was 1.5%. AFFO in the quarter was $0.217 per unit down 6.1% from the prior year, which was largely related to timing of maintenance capital and tenant improvements. Looking ahead, we expect 2026 capital spend to be broadly in line with the prior year. Turning to our property performance. Same asset cash NOI was healthy, increasing $6.9 million or 2.8% over the prior year. Retail same asset cash NOI increased by $3.7 million or 1.9%. Excluding bad debt expense primarily related to Toys R Us termination, growth was 2.4%. Industrial same asset cash NOI increased by $2.9 million or 5%. Excluding bad debt reversals in the current year, growth was 5.2%. Both asset classes performed well in the quarter, and benefited from strong renewal spreads, higher base rents from new leasing and contractual rent steps. Mixed use and residential same asset cash NOI increased by approximately $0.3 million or 4.1% primarily due to lower operating costs. Moving to the balance sheet. IFRS net asset value, or NAV, was $14.73 per unit, an increase of approximately $145 million or 1.4% compared to the prior quarter. The increase reflected a $46 million net contribution from operations, $105 million net fair value gain on investment properties and an $8 million fair value gain on our investment in Allied Properties units. As a reminder, under IFRS, we are required to mark to market this investment based on Ally's trading price at the end of each period. Fair value gains on investment properties were primarily driven by our retail portfolio, including the impact of the 2027 Loblaw renewals and cap rate adjustments supported by external appraisals. We recorded a gain in our industrial portfolio, primarily supported by an external appraisal at our Ajax property. We also recorded a modest write down in our mixed use and residential portfolio largely related to cap rate adjustments at certain Ontario residential assets. Our balance sheet remains in excellent shape. With strong debt metrics and significant access to capital ahead of the expected closing of the FCR transaction. We have approximately $2 billion of available liquidity through our corporate facility and cash on hand. This includes the recent $500 million increase to our credit facility, providing additional liquidity to support our increased scale following the closing of the transaction. We also have approximately $14.1 billion of unencumbered properties and our debt-to-EBITDA ratio was unchanged from the prior quarter at 7.0x. Financing activity was modest during the quarter. This included the repayment of 2 mortgages totaling $64 million and securing a new construction facility for Building D at Choice Caledon. Looking ahead, we remain encouraged by the state of the unsecured market and are well positioned to both refinance our next unsecured maturity in November along with the financing required to support the FCR transaction. Turning to our development activity. During the quarter, we completed 2 retail land lease intensifications totaling 66 thousand square feet for a blended yield on cost of 27.2%. These projects included a 65 thousand square foot land lease with Nautical in Kingston, Ontario at a 28% yield on cost and a 1 thousand square foot land lease at a 50% owned site in Winnipeg to a QSR tenant at a 23% yield on cost. Together, these deliveries are another example of our ability to create value on excess land across our retail portfolio. Executing on our retail intensification pipeline and advancing the next phases of our Choice Caledon development remain key priorities for the balance of the year. Looking ahead to the second half of 2026, we are prioritizing operational excellence across the portfolio, while continuing to execute on a commercial development pipeline and value creation initiatives. We will also continue to progress towards the closing of the FCR transaction, However, given the timing of closing remains uncertain, we are continuing to reference our outlook excluding the impact of the transaction. We are reiterating our outlook and expect to deliver stable occupancy, 2% to 3% same asset cash NOI growth, and with FFO per unit diluted between $1.08 and $1.10 for the year. With that, Rael, David, Niall, and I will be glad to answer your questions.
Operator: At this time, I would like to remind everyone in order to ask a question, please press star and the number 1 on your telephone keypad. Your first question comes from the line of Himanshu Gupta of Scotiabank. Your line is open.
Himanshu Gupta: Thank you and good morning. I mean, solid quarter here, so maybe I will focus a bit on the ending FCR transaction. How's the process coming along with the competition bureau? And when do you expect to receive the necessary approvals?
Simone Elizabeth-Jasmine Cole: Himanshu, it is Simone. So the process is going really well. As we said in our last call, you know, we did a lot of work in advance of announcing the deal. And so at this point, everything is on track. We are still saying that it is going to be in the second half of the year that we expect to close. And more particularly in Q4.
Himanshu Gupta: Okay. And then in terms of closing is that the main hurdle now, or what other, you know, approvals or significant approvals are you looking for?
Simone Elizabeth-Jasmine Cole: Yeah. So that is that is the main approval as you would have seen in this past quarter the First Capital's unitholder vote was overwhelmingly successful. And the court approved the plan of arrangement. So it is just in the regulatory process now.
Himanshu Gupta: Got it. Thank you. And then maybe, Aaron, with respect to the debt financing required to close the transaction? I mean, how's the cost of financing trended since the announcement? Do you still expect adding mid 4 industry? On that closing?
Erin Johnston: Yeah. So since the transaction, Himanshu, as you know, it is been quite volatile in the underlying rates. But fortunately, spreads have held in quite well and are still hovering around 10 year lows, which is great. And we have heard that there continues to be demand for particularly for our name and our BBB high rating. When I think about 10 year financing today, it is hovered between 4.7% and 4.8% in the last couple weeks.
Himanshu Gupta: Okay. And do you have any hedging in place to fix the interest rate given, you know, like, a big debt financing coming at the end of the year? I think there is some debt maturity for Choice as well, and then FCR, some maturity in January. So do you have any hedging in place?
Erin Johnston: So we have the ability to hedge, Himanshu, close to our refinancing. We do not have any in place right now. But what I would say is 1 of the reasons we also increased our line is we have that flex and we are also being very thoughtful on when we go to market between now and closing and how we want to spread out that.
Himanshu Gupta: Okay. that is very helpful. And then, you know, sticking with that balance sheet, your debt rating is obviously triple b high, very, very strong. Is there a leverage threshold you need to maintain for that rating? I mean, does the transaction change anything with respect to that rating?
Erin Johnston: So our credit ratings were affirmed right after the deal. And the way that we are thinking about and the way this particular DBRS is thinking about it is as long as the transaction comes to fruition, as we have said, I. E, the NOI comes online, we are fine. And then deleveraging will also support as we continue to pursue a higher rating.
Himanshu Gupta: Yeah. Okay. No. that is a good point. Okay. So thank you. And maybe just last 1 question and not regarding FCR, by the way. On this Caledon building d, any update on the lease up? Also, I saw I think you are expected yield was revised higher, I mean, slightly higher. Any reason for that?
Niall Collins: Himanshu, it is Niall. As Rael mentioned, there is good buoyancy in the market, which we are really encouraged by. And secondly, Building D is the only 1 million square foot project that is under construction right now, so we feel really good about that. There is a number of offers that are going back and forth, so we are encouraged that we will be able to download these offers as soon as we can. Thanks, team.
Himanshu Gupta: And then the yield Yeah. that is gone up as well.
Erin Johnston: We have we have not updated our yield. It remains the same.
Himanshu Gupta: Okay. So around, like, 6 low 6 percentage Correct. Okay. Okay. Thank you so much, and I will turn it back.
Operator: Thank you. And, again, if you have a question, please press 1 on your telephone keypad to join the queue. Your next question comes from the line of Pammi Bir of RBC Capital Markets. Your line is open.
Pammi Bir: Thanks. Good morning. Just on the FCR deal, I think, you know, you cited that $0.04 of, you know, estimated dilution from an FFO standpoint.
Erin Johnston: As you kind of work toward closing, are there any pieces that maybe could shift the outlook I mean, the only things that would shift it are we are going to continue to update our debt assumptions, which we just spoke about depending on financing. We will refresh NOI based on new budgets that will be done, but those would be the material pieces. So nothing big.
Pammi Bir: Would there be maybe any opportunities to maybe improve the recovery ratios Maybe from a G&A standpoint, I think, you know, you have modeled that into your forecast in terms of the additional G&A.
Erin Johnston: But I am just curious if there is any ways to maybe offset some of that I think it is too early to say, and our teams continue to work through the impacts of integrating the 2 platforms. So as we have better clarity, we will share.
Pammi Bir: Okay. Just on the retail occupancy, can you maybe just go through that, the backfill of that, the releasing? Sounds like I think, Bloor and Dundas, I think you talked about it last quarter, but that should be income reducing by, I think, almost of it should be back to about early next year. But maybe some color on the on the Montreal-area vacancies that surfaced this quarter.
David Muallim: So hi, Pammi. David speaking here. Yes. So as we as Rael mentioned, yeah, Bloor and Dundas, where Loblaw vacates this quarter. We are actually very, very encouraged with how quickly our team turned over that site in the sense of it vacated this quarter, and we got shoppers in, within the same quarter. So we are very encouraged by that collaboration across the team. In Laval, the site is requiring a bit of a rezoning process, so it is going to take a little bit more time, but we are working through a similar type of, a plan from a build perspective, and we should have more to share in upcoming quarters.
Pammi Bir: Okay. So that space is more of a 2027-type releasing. Okay.
Analyst: And then just lastly, with the on the industrial side, just with all this new all these new issues, I guess, or these new tariffs that were announced, And maybe just some broader color here. Are you are you seeing any changes in terms of from a leasing velocity? It sounds like, I mean, it looks like leasing or occupancy held pretty steady. But in terms of as you look forward over the balance of the year, any shifts in tenant behavior or willingness to commit or maybe even just in terms of delays in any decision making on some of your existing tenancies?
Niall Collins: Pammi, it is Niall. In terms of new opportunities, no. there is been a consistency over the last number of quarters. On moving forward with expansion opportunities as they arise.
David Muallim: And, Pammi, David speaking. In terms of the existing portfolio, we are actually fairly encouraged by where we are seeing things going towards the end of the year. So as of now, it has not been an impact, but something that we are closely monitoring.
Pammi Bir: Okay. Thanks very much. I will I will turn it back.
Operator: Again, if you have a question, it is star and 1. Your next question comes from the line of Tal Woolley of CIBC Capital Markets. Your line is open.
Tal Woolley: Himanshu. Good morning. Just wondering if we could talk a little bit about the disposition plan post the closing of the acquisition, is, I am assuming you have gotten an idea of you know, what is in the what is in the acquired portfolio, what is in your own portfolio, Do you have, like, sort of a an idea of when investors should start to expect to see the start of that disposition process? After the deal has closed.
Rael Lee Diamond: Yeah. Hey, Tal, it is Rael. Hope you are doing well. So, look, I would say the first thing is, you know, the team has a track record of you know, bringing down, you know, the leverage post a major acquisition as we did after, you know, the acquisition or the integration of CREIT. You know, we are busy working through it. I would tell you that there is likely more to be solved on the Choice portfolio than the First Capital portfolio because we were very selective on the assets we purchased, as Simone mentioned. But as soon as we have more color to share, we will share it. But you will likely see sales start happening you know, call it, early 2027.
Tal Woolley: Alright. that is great. And then something we have not talked about in a while, but, I mean, the market had, you know, the market's started to change, but you know, you obviously have a large residential pipeline. Potential within the Choice portfolio. You are also going to be acquiring a portfolio that also has large residential opportunities Have you thought about you know, ways to extract value from that over time? Is it gonna be something where, you know, whether we are we sort of in the window where maybe you could consider starting to green light some residential developments, or would you look at trying to monetize some of that density value? Look.
Rael Lee Diamond: I will say I will say a few things. So 1, we have said over the last few quarters that we agree things are starting to turn. there is not a lot of new construction. The condo supply is, you know, slowly dwindling. So we actually think there is you know, an opportunity to lean in, and Nile's team has been you know, really advancing, the Grenville-Grosvenor project. And if there was 1 to go first, it would be it would be that 1. It would be that 1. Then I would say we are always looking at ways to extract value. As you know, right now, the land market is just not there, and we do not think as a long term owner with a strong balance sheet now would be the right time. to try and sell density.
Tal Woolley: Okay. that is great. Thanks very much, everybody.
Operator: Next question comes from the line of Giuliano Thornhill of National Bank. Your line is open.
Giuliano Thornhill: Hey guys, good morning everyone. Just 1 question on the Loblaws renewal. And I saw it went up to, like, 8.8%, and that is a bit higher than previous years. I am just wondering if this kind of mid 8 high 8% area is the go forward kind of trend that we should be expecting for those renewals, or is there anything onetime in there?
David Muallim: Hey, Giuliano. David speaking. So what we are seeing is, as you observed, you know, with the strength of the retail market, we have been seeing that rate or that increase, go up over the last few years. So we have been very positive about that, which is what we have seen in the grocery market. And all of the rest of our retail portfolio. I think on a go forward basis, it is a little early to tell based on the composition of the sites and the stores in the portfolio. But what we are seeing across the rest of our portfolio we are hoping we will continue to work its way through the renewals.
Giuliano Thornhill: And by the composition, just saying there could be more Toronto versus the actual portfolio broadly. Is that kinda what you are indicating?
David Muallim: So it depends on in every year, because it was a tranche of stores, it is mixed across the country, but it is a mix of market sizes, store sizes, and then in some cases, rent levels. So that was more of the comment on composition.
Giuliano Thornhill: Okay. Alright. Thanks, guys. that is all for me.
Operator: With no further questions, I will now turn the call back over to Rael Lee Diamond. CEO, for closing remarks. Thank you, JL.
Rael Lee Diamond: Once again, our business and portfolio remain in excellent shape. Thank you all for your interest in Choice Properties and for joining us this morning. We look forward to providing you another update on the business in the fall.
Operator: This concludes today's conference call. You may now disconnect.