Watch the Skyline Industrial REIT Discussion
Wayne:
Hello and welcome. I’m Wayne Byrd, CFO at Skyline. Thanks for joining us for a quick update on Skyline Industrial REIT.
Now in its 13th year, the REIT continues to show the strength of its focused strategy and high-quality portfolio—even in a challenging environment.
I’m pleased to be joined today by Mike Bonneveld, President, Skyline Industrial REIT, to get his perspective on Skyline Industrial REIT’s performance in 2024 and what’s ahead for 2025.
Mike:
Thanks, Wayne.
2024 tested the entire sector, but it was also a year where our strategy delivered. I’m excited to walk through some of the highlights.
Well, let’s start with the big picture. Despite some clear economic headwinds in 2024, Skyline Industrial REIT delivered strong results.
What were those key drivers? Resilience and discipline. With strong fundamentals and prudent capital management, we positioned the REIT to outperform in a competitive market environment and deliver solid returns to our investors.
Our asset focus continues to be on logistics, warehousing, and light manufacturing—essential sectors that can underpin Canada’s supply chain. Demand for functional, well-located industrial space remains strong.
Even with rising interest rates and broader market volatility, the REIT saw strong financial performance across the board. Total income rose nearly 28% to $141 million. Net operating income climbed to almost $96 million. Portfolio fair value increased 6.71%. Unit value rose by 1.11%. And average in-place rents grew by 11.8%—all while keeping occupancy high at 98.4%.
On the asset management side, despite elevated interest rates, a surge in construction completions—particularly late in 2024—and tariff uncertainty, we remain disciplined. Given the conditions, we were selective with new acquisitions and opportunistically disposed a single non-core asset to an existing tenant to fortify our balance sheet.
Wayne:
Thanks, Mike. Since you mentioned occupancy, let’s turn to the leasing side. 2024 was a standout year for the REIT. How did we achieve such consistency through a time of economic volatility?
Mike:
In 2024, Canada’s industrial sector saw a wave of new supply—more than 35 million square feet—which raised the national availability rate to 4.8% approximately: a higher figure than in previous years, but still strong by historical standards. Further to this, our availability rate declined to 3.3% by year end. That speaks to the strength of our portfolio, tenant alignment, and long-term leasing strategy.
Our portfolio demonstrated resilience in the market, achieving double-digit growth in our new average net rent.
Looking ahead, trade policy uncertainty is expected to weigh on the timing of leasing decisions in some sectors in the second half of 2025. However, with 98.4% occupancy and strategic focus on [the] warehousing and logistics space, the REIT is well-positioned to grow alongside Canada’s domestic supply chain and build out our economy.
To summarize, our success comes down to tenant alignment and proactive lease management. We maintain long lease terms and low availability. Even as the national industrial availability rate rose, ours dropped. And that speaks volumes about the quality and relevance of our portfolio.
Looking ahead, we’re already 50% of the way through our 2025 lease renewals, with double-digit rent increases forecasted to add $2 million by year end.
Wayne:
That’s so great to hear, Mike. Sticking with the topic of the economic environment, interest rates were a major concern industry-wide in 2024. How did Skyline Industrial REIT manage that risk?
Mike:
We managed interest rate risk conservatively, keeping total debt to fair value at 52.2%, well under our 60% ceiling. We also recycled capital efficiently, selling a non-core asset and acquiring two high-quality logistics properties in Montreal.
As refinancing conditions continue to improve, we’re positioned to lock in lower rates. 24% of our mortgages mature in 2025, with an expiring average rate of 4.93%, which represents a meaningful opportunity to reduce our weighted average mortgage rate and enhance cash flow.
Wayne:
You mentioned acquisitions. Looking ahead, what’s the plan for growth in 2025 and beyond?
Mike:
I am optimistic about our exceptional portfolio. While some near-term challenges remain regarding new supply absorption and tariff risk, the market is poised for robust growth once these transitory bottlenecks clear the system.
We’re anticipating a strong impact from the external lease-up of a large portion of our development portfolio, with over 2.1 million square feet of space expected to be stabilized between now and hopefully end of 2027, including major sites in Laval [Quebec], Ottawa [Ontario], and Halifax [Nova Scotia].
Despite slower-than-anticipated lease-up directly resulting from tariff concerns, these are purpose-built assets that align with our long-term strategy and will result in strong net income growth once stabilized.
With Canada’s population growth and infrastructure investment, we see a sustained need for 30-40 square feet of industrial space per new resident. That’s a powerful growth driver for our portfolio.
Wayne:
Thanks again. Before we wrap up, any closing thoughts for our unitholders?
Mike:
We continue to be well-positioned to pursue accretive acquisitions and value-add opportunities. We’re hopeful that tariff noise quiets down so that tenants have some comfort on how their businesses will operate and can return to normal business decisions.
While we were a little delayed on the stabilization of a couple of our development projects as a result of slower-than-expected lease take-up, we remain confident in the end result.
To our investors: thank you. Your trust fuels everything we do. We’re proud of the REIT’s performance in 2024, and we’re entering 2025 with strong momentum and a clear path for growth.
Wayne:
Thanks again for the insight and the outlook, Mike. Investors: if you have any questions or want to learn more, please reach out to your Skyline Wealth Relationship Manager. As always, we’re grateful for your continued confidence and support.
Disclaimer
The presentation is an overview of the operations and conditions for the year ended December 31, 2023 and should be read in conjunction with the Management’s Discussion and Analysis (“MD&A”) and the Skyline Industrial Real Estate Investment Trust’s (“Skyline Industrial REIT” or the “REIT”) audited consolidated financial statements. Certain statements in this presentation could be considered forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT’s control, which could cause actual results to differ materially from those disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions, the financial condition of tenants, our ability to refinance maturing debt, rental risks, including those associated with the ability to rent vacant suites, our ability to source and complete accretive acquisitions, and interest rates. The information in this presentation is based on information available to Management as of April 30, 2024, except where otherwise noted. Skyline Industrial REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. In some instances, forward-looking information can be identified by the use of terms such as “may”, “should”, “expect”, “will”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potentially”, “starting”, “beginning”, “begun”, “moving”, “continue”, or other similar expressions concerning matters that are not historical facts. Forward-looking statements in this presentation include, but are not limited to, statements related to acquisitions or dispositions, development activities, future maintenance expenditures, financing and the availability of financing, tenant incentives, and occupancy levels.
Commissions, trailing commissions, management fees and expenses all may be associated with investments in exempt market products. Please read the confidential offering documents before investing. The indicated rate of return is the annualized return including changes in unit value and reinvestment of all distributions and does not consider sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. There is no active market through which the securities may be sold, and redemption requests may be subject to monthly redemption limits. The payment of distributions is not guaranteed and may fluctuate. The payment of distributions should not be confused with an exempt market product’s performance. Distributions paid as a result of capital gains realized by an exempt market product, and income and dividends earned are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero. Exempt market products are not guaranteed, their values change frequently, and past performance may not be repeated.