2026 AGM

2026 AGM – Skyline Retail REIT Discussion

Wayne Byrd:

Hello everyone. I’m Wayne Byrd, Chief Financial Officer at Skyline. Welcome to our 2026 Retail REIT AGM discussion. Joining me today is Craig Leslie, President of Skyline Retail REIT, to share highlights from 2025 and perspectives on what lies ahead for the REIT in 2026 and beyond. Thanks for being here, Craig.

Craig Leslie:

Thanks, Wayne.

Wayne Byrd:

So, let’s dive straight in here. To start, can you walk us through how the REIT performed over the past year, particularly against the backdrop of a challenging Canadian economy and softer discretionary retail demand?

Craig Leslie:

Certainly, Wayne. Overall, our REIT’s performance has been solid and steady in a sector that continues to show stronger resiliency than most. Across all Canadian real estate segments, the data has consistently shown that essential retail, in which around 80% of our portfolio is concentrated, has been one of the top performers.
Regardless of economic conditions, consumers still need essential goods and services like groceries, medication, doctors, dentists, and banking services. That built-in, inelastic demand is a key reason our retailers continue to perform well, even in a period of slower economic growth.
Of course, this differs from discretionary retail such as clothing and furniture, where demand and consumer spending is more sensitive to the economy. When it comes to spending decisions, consumers tend to prioritize needs over wants. By concentrating on essential retail, we continue to reap the benefits from more stable, consistent demand with fewer fluctuations throughout the cycle.
So, in a broad sense, we’re pleased with the performance in 2025, having delivered steady returns in a market where investors have seen considerable global volatility.

Wayne Byrd:

Incredible narrative, Craig. Looking at the numbers, we saw steady growth across key metrics and a portfolio that’s nearly fully occupied. What were the main drivers behind that performance?

Craig Leslie:

So, when we look at 2025, a few key factors really defined our performance. First, we saw an increase in net income supported by higher rents across the portfolio. Our average in-place rent reached a record $20.12 per square foot, reflecting continued strong demand for our space.
Base rental revenue continues to reach new quarterly records, with a notable jump following the accretive acquisition of our first grocery-anchored asset in the Maritimes in Q4 of 2025.
Second, occupancy remained exceptionally strong at over 97%, which effectively puts the portfolio in a functionally leased position. Our committed occupancy rate—or percentage of our space that is either currently leased or contractually committed to be leased—is even higher at nearly 98%, which again reinforces the favourable demand and supply conditions inherent to the portfolio.
Overall, the combination of incrementally increasing base rent, positive leasing spreads, and strong occupancy through sustained tenant demand reaffirmed our portfolio’s position in supply-constrained retail markets. As lease renewals take effect, we expect continued positive momentum in same-property NOI for the remainder of 2026.

Wayne Byrd:

So, let’s walk back to the first point you made. You mentioned the Q4 acquisition, a nearly-74,000-square-foot open-air strip mall in Paradise, Newfoundland, our first asset in Atlantic Canada. What was the strategic rationale behind that acquisition?

Craig Leslie:

Our acquisition strategy is focused on enhancing portfolio quality while driving long-term income visibility. This property in Paradise, Newfoundland aligns with that strategy by offering necessity-based retail while being immediately accretive to the portfolio. So, it began generating positive cash flow for the portfolio on day one.
In effect, this acquisition is the latest implementation of a cost strategy we’ve pursued since our inception in 2013. We look to buy value through acquiring the best asset in smaller communities where the property can capitalize on population growth that sustains strong consumer demand.
This property’s prime positioning ensures both immediate value to the REIT and future growth, given its dominant status in the market, for many years to come.
I touched on population growth there, and it’s worth highlighting that many of these secondary and tertiary markets are experiencing some of the strongest population growth in Canada, driven by migration towards more affordable markets—a trend that’s likely to persist as Canadians continue to seek more affordable places to live.
The Paradise acquisition expands our presence into a fifth province and demonstrates our continued focus on disciplined, measured growth in markets where we see strong fundamentals and attractive valuations.

Wayne Byrd:

So, you talked about 2025. Now, let’s turn our attention to the current year. What are you seeing so far in 2026 and how is the essential retail landscape evolving?

Craig Leslie:

So far, 2026 is showing a continuation of many of the trends we saw last year. Cost-conscious behaviour remains a key theme. While “buy Canadian” sentiment is still present, price continues to be the primary driver, particularly for lower and middle-income households.
Reflective of that, we’re seeing a clear rise in discount retail demand as higher-income consumers trade down and actively shop multiple stores to find better value. This is resulting in a smaller basket size, but increased foot traffic across many of our tenants as consumers make a larger number of smaller shopping trips.
Sustained high development costs ensure supply constraints continue to limit new retail development in the communities we serve, which supports our portfolio’s occupancy and long-term stability. So, while the economic environment in Canada remains uncertain, essential retail continues to stand out.
In the end, the data shows that consumers are prioritizing essential purchases over discretionary ones. We have built our portfolio around this reality and investors can expect continued sustained performance in 2026, broadly in line with the trajectory we’ve seen in the prior year.

Wayne Byrd:

Great insights, Craig. As we wrap up, any final thoughts for our investors?

Craig Leslie:

Absolutely. I would just like to emphasize that our portfolio is exceptionally positioned to align with Canada’s needs-based retail environment. Our portfolio is anchored by some of the country’s most financially stable and recognized tenants: retailers such as Loblaws, Shoppers Drug Mart, Metro, Sobeys, Tim Hortons, and the banks.
Despite ongoing economic uncertainty, our strategy remains consistent. We’re focused on resilience, disciplined growth, and long-term value creation. And on behalf of the team, I’d like to thank our investors for your continued trust and support.

Wayne Byrd:

We appreciate the update, Craig, and thank you to our investors for joining us today. If you’d like further information on any of today’s topics, reach out to your Relationship Manager. We are here to help you stay informed and confident in your investment.

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