Transcript
00:14 — Wayne Byrd:
Hi, I’m Wayne Byrd, Chief Financial Officer at Skyline. Thank you for joining us for our Q4 2025 financial update, which addresses all of our investment products.
While economic unevenness continues to define the current market landscape, Skyline continued to deliver predictable income and resilient risk-adjusted returns for investors.
Now, let’s review each fund’s performance highlights and what they mean for investors. A reminder that all numbers [are] provided on a year-over-year basis unless otherwise indicated.
Let’s begin with Skyline Apartment REIT, our largest fund by portfolio value. In Q4, the REIT’s fair market value remained steady at $5.25 billion, with 20,491 suites across 49 communities in six provinces.
Underscoring rental strength, average in-place rent increased 5.25%, contributing to a 0.15% rise in total income to $95.71 million, while gross potential rent—the total rental income a property could generate if every unit or space were 100% leased at market—remained steady at $98.76 million.
Meanwhile, both net operating income (NOI) and NOI margin experienced material increases, rising 7.47% and 7.32%, respectively. The latter increases in margin represents a full 4.3% above the 2025 annual forecast of 56.11%.
While economic occupancy eased slightly from 94.6% to 94.2%, it remained virtually unchanged in [a] period defined by slowing population growth throughout Canada. The REIT’s avoidance of cyclical sectors like student housing and urban condo markets has been central to the REIT’s ongoing financial resilience.
With its focus on purpose-built multifamily assets in secondary and tertiary markets, among today’s stronger-performing sectors, Skyline Apartment remains well-positioned to benefit from improving rental market conditions in smaller communities across Canada.
We now turn to Skyline Industrial REIT, whose portfolio edged higher to approximately $1.78 billion with gross leasable area spanning over 10 million square feet across 51 properties in five provinces.
Base rental revenue grew 2.17% year over year to over $23.5 million, driven by a record-high average in-place rent of $9.64 per square foot. Total income increased 0.59% to $35.35 million, with this more modest growth reflecting the impact of lower non-core rental income.
Meanwhile, the occupancy rate registered 97.7% and remains above the Canadian industrial average, confirming to us that core fundamentals held steady amid ongoing tariff headwinds and macroeconomic uncertainty. With a portfolio-wide vacancy rate remaining well above the national average of 4.3%, we’re continuing to see strong tenant retention and sustained rental growth.
Taken collectively, these results reflect the portfolio’s ability to perform amid [a] transitory market environment, demonstrating its capacity to sustain net income, underpinned by continued rental growth.
We now turn to Skyline Retail REIT, with a portfolio valued at approximately $1.66 billion, approaching 5.21 million square feet of gross leasable area across 109 properties in five provinces.
During the quarter, the REIT reached a significant milestone with the acquisition of its first Atlantic Canada open-air retail property, totalling nearly 74,000 square feet of gross leasable area. At the revenue level, portfolio-based rental revenue came in at $24.96 million, with average annual in-place rent rising 1.72% to a record $20.12 per square foot for the quarter.
Growth was further aided by the recent Atlantic Canada acquisition, which closed at the end of the quarter in December. The property represents approximately 1.4% of the total portfolio’s gross leasable area.
Occupancy remains strong at 97.2%, easing modestly as demand for high-quality space continues to exceed available supply. At these levels, the retail portfolio is effectively fully leased, reflecting sustained demand from essential service tenants across properties in secondary and tertiary markets. For investors, the portfolio’s stable income generation is reinforced by its ongoing demand from a reliable tenant base of Canada’s top essential retailers.
Finally, Skyline Clean Energy Fund exited the quarter with approximately $416 million in assets under management, comprised of 84 solar projects and two biogas facilities with a total generation capacity across the portfolio of 94.72 MW/DC (megawatts of direct current).
Total revenue growth accelerated sharply, rising 27.49% on an annual basis. This resulted in a sharp 69.1% increase in NOI to $30.92 million from $18.28 million, driven by a more than 10% improvement in net operating margin. This revenue increase in the biogas assets was primarily attributable to the timing of clean fuel regulation credit recognition from 2022 to 2025 and may not be representative of future results. However, the fund nonetheless expects a higher biogas revenue baseline going forward.
Subsequent to the quarter end on December 31, the Fund’s Board of Trustees approved a $0.53 unit value increase from $18.75 to $19.28 per unit, resulting in a one-year annualized return of 9.24%.
With the Canadian government reaffirming its support for renewable energy in Budget 2025 and the fund’s repowering initiatives gaining traction, Skyline Clean Energy Fund is well-positioned to benefit from the accelerating adoption of renewable power over the next decade.
Across all our investment products, our ability to perform admirably through one of the most challenging periods in Canadian real estate in a generation has made us stronger, and we are confident in our ability to capitalize on a stronger macroeconomic and real estate environment over the next quarter and beyond.
Thanks for tuning in, and we look forward to delivering our next quarterly financial update.
Thank you. For more information, email us at Invest@SkylineWealth.ca or call 1(888) 977-7348