Table of contents
Skyline Apartment REIT | Skyline Industrial REIT | Skyline Retail REIT | Skyline Clean Energy Fund | CFO Insights Video
Key takeaways:
- Skyline Apartment REIT: Net Operating Income Margin increased 2.58% year over year.
- Skyline Industrial REIT: Average annual in-place rent increased 5.56% to a record high.
- Skyline Retail REIT: Funds From Operations delivered mid-single-digit growth.
- Skyline Clean Energy Fund: Assets under management reached record levels.
Skyline’s investment products continued to deliver solid results in the second quarter of 2026. Our disciplined and strategic approach across the Apartment, Industrial, Retail, and Clean Energy portfolios continues to drive sustainable earnings and create value for investors through both unit value and distribution growth.
Unless otherwise indicated, all quarterly metrics are presented on a trailing twelve-month basis as of June 30, 2026.
Skyline Apartment REIT: Net operating income margin improves on disciplined expense control
Skyline Apartment REIT, the largest within our platform by portfolio value at over $5.3 billion in fair market value, delivered another solid quarter of performance. The results, supported by a diversified portfolio of 20,209 suites across 47 communities in five provinces, continued to perform in a dynamic operating environment while maintaining key performance drivers.
Turning to the portfolio’s underlying profitability, NOI (Net Operating Income) increased 0.78% year over year to $54.52 million. This improvement was reflected by a 2.58% increase in NOI% (Net Operating Income Margin), indicating stronger operating efficiency across the portfolio.
In turn, margin expansion was primarily driven by disciplined cost management, with operating expenses declining 5.05% from the prior year, alongside continued rental rate growth. Average monthly in-place rent reached another record of $1,614 per unit, up 3.46% from the prior year.
Looking ahead, we remain focused on the fundamentals that have long defined our Apartment REIT strategy: well-located rental communities, disciplined operations, and thoughtful geographic diversification. These attributes give the portfolio stable avenues for growth while helping to buffer the impact of individual market cycles, providing a durable foundation for cash flow generation and long-term value creation.
Multi-residential sector headlines in Q2 2026
- B.C. multi-family market continues to demonstrate resilience
- Demographic trends continue to support rental demand
- Ontario’s development charge cuts will spark new projects
- Processing times ease for temporary residence applicants
- Canada’s mid-size cities are growing like big ones
Quarterly chart spotlight
Skyline commentary: According to Yardi’s Canadian National Multifamily Report (Q2 2026), a key market indicator points to potential stabilization in Canada’s multifamily rental sector. The national apartment vacancy rate fell 40 basis points to 4.7% in Q2 2026, ending a nine-quarter streak of consecutive increases.
While preliminary, the decline suggests rental market conditions are beginning to stabilize following elevated new supply, much of it condominium inventory in major metropolitan markets where Skyline has limited exposure. A second consecutive quarterly decline would provide further evidence that the increasing national vacancy trend may have run its course.
The data also showed a 2.2% year-over-year increase in the nominal dollar value of in-place rents, broadly in line with inflation, while lease-over-lease growth in new rents declined 0.6%. If the recent improvement in vacancy proves sustainable, we would expect lease-over-lease rent growth to turn positive in the coming quarters.
Skyline Industrial REIT: Average annual in-place rent rises 5.56%
Skyline Industrial REIT experienced measured growth in the value of its industrial portfolio, with investment fair value now standing at approximately $1.7 billion. The portfolio includes 50 properties across four provinces, comprising over 9.7 million square feet of gross leasable area and 172 tenants. The REIT maintains 7 active development projects, with 6 anticipated to stabilize through the end of 2027.
For the year, average annual in-place rent increased 5.56% to $10.06 per square foot, supported by steady leasing fundamentals. Monthly base rental revenue rose 2.20% to $8.15 million, as rental continues to comprise a greater share of total income. Net operating income came in at $22.36 million, with net operating margin compressing slightly by one percentage point to 65.0%, reflecting normal variability amid positive leasing trends.
Additionally, the REIT also completed several important strategic initiatives that further strengthened the portfolio. These included the sale of the Winnipeg Cold Storage asset back to Congebec for $63.6 million extended and expanded lease with Sunset Converting in Saint-Jean-sur-Richelieu, with the tenant now committed for approximately 15 years.
With respect to investor returns, unitholders benefited from a special distribution of over $0.11 per unit, payable to unitholders of record as of June 26. And effective August 4, 2026, the annualized distribution for Class A Units increased to $1.09 per unit, with monthly distributions rising above $0.09 per unit.
As we look ahead, management continues to see positive leasing momentum across both the existing portfolio and development pipeline. As additional development properties stabilize through the remainder of 2026, we expect them to generate additional distributable income and support Industrial REIT’s long-term growth strategy.
Industrial sector headlines in Q2 2026
- Canada’ economy recovers in April
- Commercial real estate market at turning point as vacancies drop
- Colliers’ Q2 2026 National Market Snapshot: Industrial vacancy drops as market fundamentals strengthen
- Calgary’s strong population growth fuels industrial real estate market surge
- Ontario unveils framework for defence industrial strategy
Quarterly chart spotlight
Skyline commentary: After steadily rising national industrial vacancy rates in recent quarters (although remaining well below long-term historical averages), market fundamentals are once again favouring landlords in Canada. According to data provided by Colliers, national industrial vacancy rates have fallen over 13% over the last two quarters as industrial demand continues to outpace new supply.
In conjunction with this trend, net absorption, or the net change in occupied industrial space over a given period, exceeded 7.1 million square feet in Q2 2026, indicating that tenants are taking up space faster than new inventory is coming to market. In addition, asking rents showed signs of stabilization, further reinforcing the sector’s improving fundamentals.
The tightening market reflects both structural and cyclical factors, including the conversion of obsolete industrial space and a broader pullback in new development. With new supply constrained and tenant demand improving, the availability of quality industrial space is expected to remain limited through the remainder of 2026.
Skyline Retail REIT: Funds From Operation increase 6.10%
Through the second quarter of 2026, Skyline Retail REIT’s investment property fair value increased 2.83% to $1.66 billion. As noted previously, this growth was supported by the addition of an Atlantic Canada grocery-anchored retail plaza acquired in late 2025. The property is a key retail destination in a growing municipality, anchored by a pharmacy and full-service Loblaw grocery store, consistent with our strategy of acquiring high-quality assets in strong locations.
For the quarter, average annual in-place rent increased 1.10% to $20.19 per square foot, supporting a 1.63% increase in base rental revenue to $25.36 million. Following an outlier quarter a year ago, NOI rose 56.94% to $23.24 million and net operating margin gained 22.3 percentage points to 61.6%, reflecting a shift back to historical norms. Collectively, these results translated into a 6.10% increase in FFO, reaching nearly $11.82 million.
Of note, we saw leasing spreads increase to 12.00% in Q2, compared to 6.69% in Q1, bringing the year-to-date average to 7.41%. This speaks to the strength we are seeing in the underlying leasing environment and gives us confidence in continued improvement through the remainder of 2026.
Looking forward, we remain focused on deploying capital toward projects that can generate attractive returns and enhance the value of the portfolio. At our Sooke, B.C. property, the expansion of BC Liquor’s space nearly doubled its footprint, enabling the retailer to better serve the local market while transitioning to its latest format.
More broadly, the project reflects our pursuit of opportunities to enhance asset value through infill development and the use of available density.
Retail sector headlines in Q2 2026
- Strategic expansion and consumer shifts define Canadian retail in early June
- Necessity-based retail drives sector’s resurgence in British Columbia
- Food and Beverage Driving Retail Traffic and Leasing Activity
- Protecting and simplifying CUSMA exemption top trade priority for small business: CFIB
- Why major brands can no longer ignore Dollarama
Quarterly chart spotlight
Skyline commentary: Canadian retail spending is showing positive momentum, according to the latest national retail sales data from Statistics Canada.
For the 12-month period from June 2025 to May 2026, the latest data available at publication, cumulative nominal retail sales growth outpaced inflation as measured by the CPI (Consumer Price Index). While this comparison is not a substitute for a volume-based measure of retail sales growth, the positive spread (1.23%) provides a useful indication of consumer resilience and overall constructive backdrop for the Canadian retail environment.
Should inflation stay contained around the Bank of Canada’s 2% target and bond yields remain stable, the need for further rate hikes would likely diminish, while favourable borrowing conditions could provide ongoing support for consumer demand.
Skyline Clean Energy Fund: Assets under management reach a record $424.5 million
By the end of Q2 2026, the Fund’s assets under management reached a record $424.5 million, comprising 84 solar projects and two biogas facilities with a combined generation capacity of 95.75 megawatts of direct current. The portfolio generated 53.1% of revenue from solar and 46.9% from biogas, reflecting a diversified renewable energy asset base. Notably, cumulative renewable electricity generation surpassed 500 million kilowatt-hours for the first time since the Fund’s inception.
For the quarter, total revenue increased 23.83% to $71.68 million, driven primarily by an increase in biogas revenue through the monetization of Clean Fuel Regulation credits generated from 2022 to 2025. This resulted in expanding Net Operating Margin increasing 3.8% percentage points and the Fund posting a Net Operating Income of $23.38 million.
The Fund’s unit value also increased steadily throughout the quarter, rising from $19.28 on April 1, 2026 to $19.78 on June 1, 2026, for a cumulative quarterly increase of 2.18%. By quarter end, the 1-year annualized return stood at 10.45%* .
A key focus throughout 2026 has been our solar repowering program, which upgrades existing assets with more efficient technology to increase electricity output, revenue and asset life. The goal is to provide a cost-effective way to drive internal growth from within the existing portfolio.
To date, we have repowered 9 solar projects, with 3 of those being completed subsequent to quarter-end in July. By year-end, we anticipate that 14 of our targeted 19 projects to be completed, with project-level internal IRR (rate of returns) ranging from 13% to 36% across the 19 assets.
As these projects come online, they are expected to increase the Fund’s electricity generation capacity and support recurring revenue growth across the portfolio over the long term.
* Access the Skyline Clean Energy Fund’s complete return history
Renewable energy sector headlines in Q2 2026
- Quebec unveils first long-term energy plan, targeting 77% renewable energy by 2050
- Federal adviser says data centres ‘provide markets’ for gas
- Quebec’s pension fund stopped investing in oil and made better returns in renewable energy
- Canada aims to double electricity grid capacity by 2050 as demand soars
- Ontario completes one of Canada’s largest battery storage projects
Quarterly chart spotlight
Skyline commentary: According to the latest numbers from Statistics Canada, solar assets produced 725,111 MWh (megawatt-hours) of electricity in Canada in May 2026, marking a record for any May on record. As we move into the traditionally stronger power-generation months of June and July, we see potential for a new aggregate MWh benchmark to be established.
More broadly, a clear pattern has emerged over time: each successive summer cycle has generally established a higher generation peak, reflecting the continued expansion of Canada’s solar-generation base. While output naturally declines during the lower-light, snow-prone winter months, the underlying trajectory remains firmly upward.
