AUTOMOTIVE PPTYS REAL EST INVT TR (TSX:APR) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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<h2>Summary</h2>
APR.UN reported a strong first quarter, with property rental revenue up 21.7%, cash NOI up 19%, and AFFO per unit diluted increasing to 26.2 cents, reflecting the positive impact of recent acquisitions.

The company completed two property acquisitions during the quarter, including a Hyundai dealership in Quebec City and a Rivian facility in California, with plans for further growth supported by strategic acquisitions.

APR.UN has a debt to GBV ratio of 46.3%, with 77% of its debt fixed at an average interest rate of 4.48%, providing financial flexibility for future acquisitions.

The company has expanded its presence in the U.S. market, now owning properties in Ohio, Florida, and California, and continues to target high-quality tenants and prime metropolitan locations for growth.

Management expressed confidence in the company's ability to build momentum and achieve its objectives, including driving AFFO per unit and enhancing unitholder value.

<h2>Full Transcript</h2>
OPERATOR
Good morning ladies and gentlemen and welcome to Automotive Property REITs 2026 First Quarter Results Conference Call and Webcast. At this time all lines are in a listen only mode. Following Management's remarks, we will conduct a question and answer session. Please be aware that certain information discussed today may be forward looking in nature. Such forward looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward looking information. For more information on the risks, uncertainties and assumptions relating to forward looking information, please refer to the REIT's latest MDA and Annual Information form which are available on SEDAR plus. Management may also refer to certain non IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MDA for additional information regarding non IFRS financial measures. This call is being recorded on May 14, 2026. I would now like to turn the conference over to Milton Lamb, President and CEO. Please go ahead Mr. Lamb.

Milton Lamb (President and CEO)
That's great. Thank you John and good morning everyone. Thank you for joining us today. With me is Andrew Kalra, our Chief Financial Officer. Our strong first quarter performance reflects the positive impact of the 13 property acquisitions we completed in 2025 for an aggregate purchase price of approximately $200 million and the partial contributions of the two additional property acquisitions completed during the quarter. Compared to Q1 of last year, our property rental revenue has increased by 21.7%, cash NOI was up 19% and AFFO per unit diluted increased to 26.2 cents from 24.7 cents. This represents a record quarterly AFFO per unit amount for apr, demonstrating the positive impact over acquisitions and the embedded growth from contractual fixed or CPI adjusted annual rent increases in our net lease structure. This is further reflected in a reduced AFFO payout ratio of 78.6% in the quarter even after our 2025 distribution increase. The 2 acquisitions we completed during the quarter A full service Hyundai dealership located in Quebec City in a Rivian tenanted sales, delivery and service facility in Vista, San Diego County, California subsequent to quarter end. On April 7th we completed our second property acquisition in Southern California consisting of two Penske Automotive dealership properties in Santa Ana in Orange County. The dealerships are situated on parcels of land totaling approximately six acres within the Santa Ana Auto Mall, one of the area's premier dealership corridors. The dealerships include Audi south coast, a 32,000 square foot full service Audi dealership and South Coast Volkswagen, a 29,000 square foot full service VW dealership, both operated by Penske Automotive Group. We expect our acquisitions from last year sorry, and to date in 2026 to to drive continued growth in our AFFO per unit going forward. At this point, I'd now like to turn it over to Andrew Kalra to review our financial results in greater detail.

Andrew Kalra (Chief Financial Officer)
Andrew thanks Milton and good morning everyone. Our property rental revenue for the quarter increased to $29.1 million from 23.9 million in Q1 a year ago, reflecting growth from the properties acquired during and subsequent to Q1 last year and contractual annual rent increases. Total cash NOI and same property cash NOI for the quarter totaled 23.8 million and $20.4 million respectively, representing increases of 19 and 2.1% compared to Q1 last year. Interest expense and other financing charges for the quarter were $7.3 million, an increase of 1.3 million from Q1 last year, reflecting additional debt incurred to fund our acquisitions. Our G&amp;A expenses were $1.6 million for the quarter, an increase of $0.1 million from Q1 last year and in line with our expectations. Net income and other comprehensive income was $25.3 million compared to 7.6 million in Q1 last year. The increase was primarily due to higher NOI changes in non cash fair value adjustments for four investment properties and interest rate swaps, partially offset by higher interest costs and the change in non cash fair value adjustments

Andrew Kalra (Chief Financial Officer)
for Class B units and unit based compensation. FFO and AFFO increased by 20.4 and 19.1% respectively, compared to Q1 last year, reflecting higher rental revenue from the acquisitions and contractual rent increases. On a per unit basis, ffo increased to 26.8 cents, diluted up from 25.1 cents in Q1 last year and AFFO increased to 26.2 cents, up from 24.7 cents. We paid unitholder distribution totaling 20.6 cents per unit in the quarter, representing an AFFO payout ratio of 78.6%.

Andrew Kalra (Chief Financial Officer)
This compares with total distributions of 20.1 cents per unit in Q1 last year for a payout ratio of 81.4%. The decline in our payout ratio despite the increase in our monthly cash distributions effective last year 2025 demonstrates the positive impact of the properties we acquired and subsequent to Q1 last year and contractual rent increases. The cap rate applicable to Our portfolio was 6.75% at quarter end which was flat compared to 2025 year end up slightly from 6.7% at the end of Q1 last year.

Andrew Kalra (Chief Financial Officer)
We continue to be proactive with our debt strategy, to limit our exposure to interest rate fluctuation and enhance our financial flexibility. During the quarter we entered into floating-to-fixed interest rate swaps within Facility 3 totaling $45 million for terms of five to seven years at rates between 4.45 and 4.59%. We also increased the amount of revolving of the revolving portion of Facility 1 by $25 million and extended the maturity to June 2029 with the same credit spread. At quarter end we had a debt to GBV ratio of 46.3 providing further acquisition capacity. As at March 31, 2026, 77% of our debt was fixed with a weighted average interest rate of 4.48%, a weighted average interest rate mortgages remaining of 4.2 years and a weighted average term maturity of debt of 2.8 years. As we continue to increase and extend our credit facilities as at May 13th we had approximately $32.5 million of undrawn capacity under our credit facilities, 13 unencumbered properties valued at approximately $195.4 million.

Andrew Kalra (Chief Financial Officer)
I'd like to turn the call back to Milton for closing remarks. Thank you very much.

Milton Lamb (President and CEO)
Thanks Andrew. Following our entry into the US Market last year, we're pleased with the increased geographic and tenant diversity we've established through our latest acquisition south of the Border. We now own properties in Ohio, Florida and California representing leading automotive brands including Tesla, Rivian and Penske Automotive. With their Audi and VW properties, we continue to position APR.UN as an attractive partner to major automotive dealerships, groups and Original Equipment Manufacturers in Canada and the United States.

Milton Lamb (President and CEO)
Following a highly active year of acquisitions in 2025 and a solid start to 2026, we're now approaching just under 100 properties in total of our portfolio with tenant leases. With leading automotive groups and Original Equipment Manufacturers contributing to our cash flows in support of unitholder distributions, we are successfully executing on our key objectives including driving AFFO per unit and to build value for unitholders. We look forward to building our positive momentum in the year ahead, supported by growing property portfolio featuring high quality tenants providing essential retail and services, 100% occupancy and rent collection locations in prime metropolitan markets featuring gross domestic product and population growth with attractive net lease structures and embedded fixed or CPI adjusted rental growth. That now concludes our remarks. I'd like to open up the Line for questions. Julian, please go ahead.

OPERATOR
Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. In the interest of time, we ask that you please limit yourselves to one question and one follow up. Thank you. Our first question comes from Jonathan Kelcher from TE Cowan. Please go ahead. Your line is open.

Jonathan Kelcher
Thanks. Good morning. Good morning. Questions just on what sort of drives the activity in the U.S. i guess in Canada a lot of your your deals are sort of driven by Dealer M&amp;A. How does that compare to the U.S. a, the U.S. just has more metropolitan markets that have GDP and population growth. But B, whether it's the underlying 1031's tax structure, big beautiful bill. There just tends to be a higher velocity of trading. People are more willing to take profits and losses. Where in Canada people tend to buy assets and hold on to them for significant amounts of time, if not perpetuity. That's a lot of the reason why we end up being more active when it is a transaction related to ma where we stand beside dealers as they do the operations acquisition. Okay, and do you see that opportunity with some of the groups you're talking to in the US I think that M&amp;A side will be in common on both sides of the border. But there's just a lot more velocity in the States and there's just larger markets. But the M and a theme that we've been active in growing and built a good portfolio working with dealers that I think will occur on both sides of the border. Okay, thanks. I'll turn it back.

OPERATOR
Our next question comes from Siram Srinivas from ACB Cormark. Please go ahead. Your line is open.

Siram Srinivas
Thank you, Alberto. Guys, obviously by the question on the US acquisitions, when you kind of put that in line with OEM requirements and capital requirements in the business, do you find the dealerships in the US being a lot more intense in terms of owning capital, actually investing a lot of capital into their assets versus in Canada, it's probably not as much. Is that something you're seeing?

Milton Lamb (President and CEO)
No, I'd actually say it's flipped a bit. Canada has a bit of a higher cost component to both the underlying land depending on the market, but it's certainly in the markets we're looking at on the Toronto, Vancouver's, Montreals, Calgary's and then construction costs are greater in Canada. So the OEM requirements are pretty similar. But the cost to complete those requirements I would say often are higher in Canada. Fair enough. That's good. Thanks Madonna.

OPERATOR
our next question. Comes from Brad Sturgis, from Raymond James. Please go ahead. Your line is open.

Brad Sturgis
Hey, good morning. Good morning, Brad. Just on the Orange county acquisition. I think the rent growth, the contractual rent growth is based on California cpi.

Milton Lamb (President and CEO)
But there's a cap. I'm just curious if you give a bit more color what, how the cap would work. We can't and don't get into specifics, but it's similar to other caps where you've got a maximum and that is, you know, that CPI kicks in on the renewal. So it's a roll-up formula at that point, you know, similar to what we have with DASource, the one we recently did as well. So it's not that uncommon in the market where you get a bit of a floor and a cap. Gotcha. Okay. I guess my other question is, is there any update at this point on Vaughan property, whether strategically you're looking at releasing or a potential asset sale? Yeah, we've, you know, we talked about it. It's not that long ago when we did the end of year call. It's amazing how quickly this Q1 creeps up on us. But the short answer is we're trying to balance the fact that that three acres of land there has got great high density potential, but it's also got great retail value. So it's, you know, where how much do we want to invest for a long term tenancy? Can we get a termination option to allow us to potentially access that density sooner or do we do a shorter term deal that has, you know, immediate access to that when we want it? As you can imagine, it's a bit of a balancing act. The good news is it's a great property. So we're doing some head scratching in a good way. Okay, turn it back. Thank you.

OPERATOR
Our next question comes from Jimmy Shawn from RBC Capital Markets. Please go ahead. Your line is open.

Jimmy Shawn
Thanks. So we saw last quarter the WP Carey deal with Goauto. Obviously they have a little bit lower cost of capital. Do you see them or any new entrance changing the competitive landscape in getting deals? Do you see change in pricing on deals? Any thoughts there?

Milton Lamb (President and CEO)
Yeah, it's interesting. I mean, that was a very large deal and certainly where we're trading right now at a discount to NAV has some implications. Goauto is an existing tenant of ours, so obviously we know them. The lower cost of capital on access to bonds for a few groups, they have to be larger transactions or often would be larger transactions. But there is also drainage because of Canada's tax system. When you're bringing that money into the States. That's the first deal in a while that we've seen someone come up and play in our sandbox. Is there going to be competition? Sure. Is it something that makes us worry? We've been very active on our pipeline, so in some ways it's confirmational. In other ways it just shows that we continue to have discipline and continue to have access to markets to place money in attractive real estate.

Andrew Kalra (Chief Financial Officer)
Okay. And sorry, my follow up would be just a different question. Basic question for Andrew. Sequentially the interest expense declined from Q4 to Q1, that balance went up. I'm just curious, what's the dynamic there? The dynamic there is there's more floating in Q1 and the floating rate's considerably lower. So when we did buy the acquisitions, we bought them on revolving and that's basically the difference there. Okay. And so we should expect that to going to keep it floating. Yeah. The strategy has always been to use the revolver for the acquisitions and then to place swaps. We did that at the beginning of the year and we were probably averaging let's say between four and a half to five year to six year money. And since the conflict we've seen the five, five to seven year go up about 50 basis points. The anticipation is that we'll hope to taper off by the end of the year and we'll see the long term swap rates come down to where we're averaging. The opportunity with our credit facility is that we can react relatively very quickly and place swaps and move that floating to fixed. So it provides us with considerable amount of flexibility. Okay, makes sense. Thanks.

OPERATOR
Okay, for any additional questions, please press star followed by 1. Our next question comes from Zemin Liu from Jiaobe. Please go ahead. Your line is open.

Milton Lamb (President and CEO)
Hi, good morning. So I just want to turn to Canada. Like how does the Delore acquisition pipeline look like. They continue to be. We continue to have a strategic alliance with them as they continue to grow. We anticipate and hope that we'll do more deals with them. But again, they are the largest group. We certainly have good relationship with them. But unlike grocery and other industries within Canada, we have to work with a large number of dealership groups. So the very nature of the largest being 3% market share and we already own the vast majority of the real estate. We anticipate there's going to be as many or probably a lot more outside of the Dilawri group that we'll continue to be active with. Okay, that's very helpful. So another question is that I'm just wondering whether there's any other leases rolling in 2026. And also, can you remind us of the NOI impact of the FAF lease expiry? I don't think we've been specific on the NOI impact, but a little scratching, and I'm sure everyone around this call can figure it out. Approximately, that is the only outstanding 2026 lease expiration, and we have very little that has in 27 as well. Okay, that's good. Yeah, I'll turn it back. Thank you. Thank you.

OPERATOR
And we have no further questions. I'd like to turn the call back over to Milton Lamb for any closing remarks.

Milton Lamb (President and CEO)
That's great. Thank you, everyone. We look forward to getting back on a call for Q2. Enjoy the long weekend.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.

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Automotive Properties Real Estate Investment Trust (TSX:APR) reported strong Q1 2026 results, with property rental revenue up 21.7% and cash NOI up 19%. AFFO per unit diluted increased to 26.2 cents, driven by recent acquisitions, including a Hyundai dealership in Quebec City and a Rivian facility in California. The company has a debt to GBV ratio of 46.3% and 77% of its debt is fixed at an average interest rate of 4.48%. Management is optimistic about future growth and enhancing unitholder value through strategic acquisitions.

Transcript: AUTOMOTIVE PPTYS REAL EST INVT TR Q1 2026 Earnings Conference Call