Outlook for the year ahead

Dear valued partners:

As we look back on the first half of 2026, the Canadian real estate market continued to show some signs of stabilization, but the overarching sentiment remains uncertain. Elevated geopolitical uncertainty, ongoing volatility in financial markets, and fluctuating bond yields continued to affect the cost of debt and investor sentiment. This is further exacerbated by a challenging operating environment with slowed or no rent growth in some asset classes. Capital remained selective, with increasing focus on downside protection, durable income streams, and high-quality assets. Against this backdrop, Fengate’s real estate strategy remained grounded in its trademark focus on discipline, execution, and long-term conviction.

Navigating a more selective market

Across our portfolio, we continue to operate with a clear focus on value creation, liquidity, and long term fundamentals. While market conditions vary by sector, demographic trends support our core areas of focus, particularly in purpose-built rental housing, seniors housing, industrial and logistics. As excess density loses value, the current environment demands disciplined asset management, thoughtful capital allocation, and the ability to execute through complexity.

Advancing our highest-conviction strategies

In residential, our focus remains on strong locations, improving the resident experience, strengthening leasing performance, and driving operating efficiencies across the portfolio. The launch of Fengate Communities was an important milestone in this evolution, bringing our growing residential portfolio together under one unified, resident-first brand and supporting a more consistent, approachable experience across our communities.

In the first half of the year, Fengate, together with our investor, the LiUNA Pension Fund of Central and Eastern Canada (LPFCEC), celebrated the ribbon cutting of 500 Upper Wellington in Hamilton, bringing 260 new high-quality rental homes to market, and broke ground on West Orchard Urban Rentals, which will introduce 425 much-needed rental homes, including affordable units, to Ottawa. These milestones reflect the momentum we are building across our residential platform. With five additional communities expected to break ground this year, we are advancing more than 2,100 new homes in Canada and the United States at a time when supply remains constrained, and demand continues to be strong.

We saw a strong absorption across industrial in Canada after several years of above average development. We remain committed to stabilizing our new product with a keen focus on leasing, and value creation. This includes advancing leasing strategies that unlock value through renewals and repositioning opportunities, and reviewing non-core assets where capital can be recycled into higher-conviction opportunities. These initiatives reflect the same disciplined approach we are applying across the platform: optimizing performance today while positioning the portfolio for the next cycle.