Slate Grocery (TSX:SGR) held its second-quarter earnings conference call on Friday. Below is the complete transcript from the call.

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Summary

Slate Grocery REIT completed over 569,000 square feet of leasing in Q2 2026, with renewal spreads 16.7% above expiring rents and new deals 41% above the average in-place rent.

Same property net operating income increased by $3.8 million or 2.3% on a trailing 12-month basis, with portfolio occupancy at 93.6% and average in-place rent at $13.10 per square foot.

The REIT maintains a stable financial outlook with a weighted average interest rate of 5% on over 90% fixed-rate debt, enabling positive leverage.

The grocery sector remains resilient with limited new retail development due to high construction costs and tight lending, supporting rent increases.

No update was provided on the strategic review process, with ongoing costs not affecting funds from operations (FFO).

The company dealt with 260,000 square feet of tenant vacancies, with several spaces already leased or under negotiation.

One property, Heritage Heights, is held for sale and expected to close in Q3 2026 following due diligence.

Full Transcript

OPERATOR

Good morning, ladies and gentlemen, and welcome to the Slate Grocery REIT Second Quarter 2026 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Friday, August 7, 2026, and I would now like to turn the conference over to Sana Bishore.

Thank you. Please go ahead.

Sana Bishore, Investor Relations

Thank you, operator, and good morning, everyone. Welcome to the Q2 2026 conference call for Slate Grocery REIT. I am joined this morning by Blair Welch, Chief Executive Officer, Joseph Pleckaitis, Chief Financial Officer, and Alan Gordon, Senior Vice President. Before getting started, I would like to remind participants that our discussion today may contain forward-looking statements, and therefore we ask you to review the disclaimers regarding forward-looking statements as well as non-IFRS measures, both of which can be found in Management Discussion and Analysis.

You can visit Slate Grocery REIT's website to access all of the REIT's financial disclosure, including our Q2 2026 investor update, which is available now. I will now hand over the call to Blair Welch for opening remarks.

Blair Welch, CEO

Thank you, Sana, and hello, everyone. We are pleased to report Slate Grocery REIT's second quarter financial and operating results. The REIT completed over 569,000 square feet of total leasing throughout the quarter, achieving strong rent growth on new and renewed leases. Renewal spreads were completed at 16.7% above expiring rents and new deals were completed at 41% above comparable average in-place rent. Adjusting for completed redevelopments, same property net operating income increased by 3.8 million, or 2.3% on a trailing 12-month basis.

Portfolio occupancy was 93.6%, and our portfolio's average in-place rent of $13.10 per square foot remains well below the market average. The REIT has a weighted average interest rate of 5%, with over 90% of its debt having fixed interest rates. This provides a stable outlook for the REIT's near-term financing costs, and the REIT's weighted average capitalization rate remains well above the REIT's weighted average interest rate for outstanding debt, allowing the REIT to maintain positive leverage.

We continue to believe in the resilience of grocery-anchored real estate. Fundamentals in the grocery sector remain favorable, with elevated construction costs and tight lending conditions continuing to limit new retail development and overall retail availability. This dynamic continues to give landlords meaningful pricing power, supporting tenant retention and driving continued rent increases as leases expire. On behalf of the Slate Grocery REIT team and the board, I'd like to thank the investor community for their continued confidence and support.

I will now hand it over for questions.

OPERATOR

Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you.

And your first question comes from the line of Sam Damiani from TD Cowen. Please go ahead.

Sam Damiani, Analyst at TD Cowen

Thank you. Good morning, everyone. Good morning. So I didn't see—was there an update on the strategic review at this point? I think it's been a couple months now.

Blair Welch, CEO

Yeah, there's no update at this time, and when there is, we will come out quickly, but the special committee is still continuing their process.

Sam Damiani, Analyst at TD Cowen

Okay. And just to be clear, it looked like some costs were incurred, but added back to FFO. Was there any net costs that actually flowed through to FFO this quarter related to the review?

Joseph Pleckaitis, CPA, Chief Financial Officer

No, that would all have been flushed out. So nothing that went through FFO.

Sam Damiani, Analyst at TD Cowen

Okay. Okay, thanks. And just on the vacancy, I guess a couple of tenants vacated in some smaller market properties. Can you talk about who the prior tenants were and the prospects to backfill those two vacancies at this point?

Alan Gordon, Senior Vice President

Yeah, this is Alan Gordon. We had roughly 260,000 square feet of vacates this quarter. Most of those vacates we were aware of and have began already leasing up. We have already leased four of the ten of the largest vacates that we have, and we already have prospects for several of those and letters of intent ongoing for some larger notable vacates as well.

Sam Damiani, Analyst at TD Cowen

Okay. And just on dispositions, any sort of continued focus on that? I didn't see any new ones announced this quarter.

Alan Gordon, Senior Vice President

Yeah, there's one property that's held for sale right now at the end of Q2, which is Heritage Heights. We're looking to close that in the next couple weeks. So looking to report that in Q3, but just going through normal due diligence and looking to close that shortly.

Sam Damiani, Analyst at TD Cowen

Okay, that's it for me. Thank you. And I'll turn it back.

Blair Welch, CEO

Thanks, Sam.

OPERATOR

Thank you. Once again, should you have a question, please press star and one on your telephone keypad. Once again, that is star and one to ask a question. No further questions at this time. I will now hand the call back to Sana Bishore for any closing remarks.

Sana Bishore, Investor Relations

Thank you, everyone, for joining the Q2 2026 conference call for Slate Grocery REIT. Have a great day.

OPERATOR

This concludes today's call. Thank you for participating. You may all disconnect.

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.