2026 AGM – Skyline Industrial REIT Discussion
Wayne Byrd:
Hello everyone. I’m Wayne Byrd, Chief Financial Officer at Skyline. Welcome to our 2026 Industrial REIT AGM discussion. Joining me today is Mike Bonneveld, President of Skyline Industrial REIT, to share highlights from 2025 and perspectives on what [lies] ahead for the REIT in 2026. Thanks for joining me, Mike.
Mike Bonneveld:
Glad to be here, Wayne.
Wayne Byrd:
Let’s jump into it. Some analysts have described 2025 as a transition year for Canada’s industrial real estate sector. Looking back, how did the REIT strategy perform within a more complex market compared to previous years?
Mike Bonneveld:
There’s no question that 2025 was a transition year in the industrial space. Canada continued to operate in a relatively low-growth economic environment, while a significant wave of post-pandemic industrial supply came online. At the same time, evolving US tariff policies created additional uncertainty around supply chains and export demand.
Taken together, these factors created a more measured operating backdrop than what we experienced in prior years. That said, the conditions didn’t alter the REIT’s core strategy. They simply reinforced the importance of discipline.
We remained selective on acquisitions, preserved balance sheet flexibility, and focused on operational execution. As a result, we maintained portfolio quality, strong tenant relationships, and high occupancy throughout the year.
While we were intentionally less aggressive on expansion in 2025, that discipline positioned us well. Overall, we believe the REIT performed well relative to both the broader market and many of our peers.
Wayne Byrd:
So, at the onset, you touched on some of the headwinds. Are you seeing signs that Canada’s industrial real estate sector is starting to turn a corner?
Mike Bonneveld:
Absolutely. Several industry indicators suggest the sector may have reached an inflection point and is positioned for improving growth.
First, the broader national leasing market was highly active in Q4 of 2025 with 5.9 million square feet of net absorption, up 20% from the previous year. Total net absorption for all of 2025 reached 8.7 million square feet compared to 2.3 million in 2024, reflecting a meaningful acceleration in leasing demand and occupied space across the market.
More recently, we’re seeing forecasts indicate net absorption—or the change in occupied space nationally—could rebound further and potentially exceed 20 million square feet in 2026. This would bring activity more in line with pre-pandemic levels.
National construction starts also totaled 5.1 million square feet in Q4 and remain well below 2022 peak levels. With new industrial development slowing after the pandemic, demand for space is now exceeding new supply, which bodes well for the future.
We’re also seeing improved business sentiment, which is often an important leading indicator. As business confidence improves, capital investment and leasing commitments tend to follow.
So, taken together, we believe the Canadian industrial market is shifting towards incremental growth. Much of the uncertainty that tempered decision-making over the past year is beginning to subside. Transaction activity is picking up, and businesses are feeling more confident in general. Headwinds have become tailwinds for the benefit of our portfolio.
Wayne Byrd:
So, for the Canadian industrial market, it’s a great news story. Let’s bring it back to Skyline Industrial REIT specifically. Which operational metrics or performance drivers best define the portfolio in 2025?
Mike Bonneveld:
Occupancy is certainly one of the primary indicators of portfolio strength. At 97.7% as at December 31, 2025, our occupancy remained exceptionally strong and well above broader industry averages.
In a market where many tenants were taking a more cautious approach, we continued to operate from a position that was effectively near full capacity. That speaks directly to asset quality, location, and tenant demand.
A major contributor here is our strategic market positioning, particularly our significant exposure to Western Canada, including the greater Calgary area, where almost 38% of our portfolio is situated. Calgary has continued to demonstrate compelling fundamentals, including population growth, business investment, and comparatively resilient industrial conditions. The market positioning has been an important advantage for us.
I often view occupancy as the foundation of portfolio performance. Financial metrics can move with broader market cycles, but sustainable growth starts with leased, in-demand space. Our ability to maintain that level of occupancy gives us a strong platform for both stability and future upside.
Wayne Byrd:
So, one area that may stand out to investors is the REIT’s mark-to-market rental upside. Can you explain what that means and why it matters to investors?
Mike Bonneveld:
Sure thing, Wayne. Mark-to-market rental growth refers to the difference between what we’re currently earning on existing leases—so, in-place rent—and what those same spaces could command in today’s market when leases renew or they are leased to new tenants. In practical terms, it represents embedded organic growth already sitting within the portfolio.
For example, in Quebec, our in-place rents at the end of 2025 were approximately $11.29 per square foot, while current market rents are closer to $14.50 per square foot. That represents a meaningful gap of roughly 28%, which reflects implied rental growth upside in the portfolio. In Alberta [and] Ontario, that number is closer to 20%.
As leases come up for renewal, this gap allows the REIT to progressively reset rents at market levels. With a weighted average lease term of 6.7 years, the REIT’s ability to access this rental growth should continue to occur year after year. In other words, even without acquiring new assets, the portfolio can generate organic growth simply by repricing expiring leases at higher market rates.
This embedded rental upside is important because it creates a built-in pathway for organic income growth through disciplined lease management. Over time, as more leases roll to market, they can contribute meaningfully to net income and to overall portfolio performance.
Wayne Byrd:
Thanks, Mike. That’s a very helpful explanation. As we wrap up, what final message would you like to leave with our investors?
Mike Bonneveld:
First and foremost, I’d like to express our appreciation to our unitholders, partners, and employees for their continued trust and support. While 2025 brought challenges, it also reinforced the importance of discipline, strategic patience, and portfolio quality.
We believe the actions we took over the past year have positioned the REIT well as market conditions continue to normalize. Industrial real estate remains a fundamentally important asset class, and we believe Skyline Industrial REIT is well-positioned to benefit as improving market dynamics increasingly shift from headwinds towards tailwinds.
To our investors, thank you for your continued confidence in our long-term vision.
Wayne Byrd:
Thank you, Mike. And again, thank you to all of our investors for joining us today. If you’d like further information or any details on today’s topics, please reach out to your Relationship Manager. We’re grateful for your continued support.
Disclaimer
The presentation is an overview of the operations and conditions for the year ended December 31, 2025 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, 2026, 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.