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"Additionally, we continue to unlock embedded value across our portfolio. In 2024, approximately 83.6% of maturing GLA was renewed at an average spread of 38.5%, including a robust 50.4% spread for industrial leases. For 2025, approximately 27.3% of expiring GLA has been renewed at a solid average spread of 26.7%.

" Our strategic focus on small and mid-bay properties continues to prove its value, as reflected by low vacancy rates of 2.5% for small-bay and 3.5% for mid-bay spaces, compared to a 4.3% overall industrial vacancy rate in Canada for the third quarter of 2024⁽¹⁾.

"Overall, I am pleased with the progress we have made upgrading our portfolio through accretive opportunities while managing our balance sheet prudently. I am confident that our growth strategy and focus on being a pure-play industrial REIT will continue to deliver substantial value for our stakeholders," concluded Mr. Lawlor.

Financial Results
Table 1 - Financial Highlights

At September 30, 2024, PROREIT owned 116 investment properties (including a 50% ownership interest in 42 investment properties), compared to 126 investment properties (including a 50% ownership interest in 42 investment properties) at September 30, 2023. The decrease in total properties is a result of the sale of a 100% interest in 11 investment properties and an acquisition of a 100% interest in one investment property during the twelve months ended September 30, 2024. At September 30, 2024, total assets amounted to $1.00 billion, compared to $1.05 billion as at September 30, 2023.

For the three-month period ended September 30, 2024:

• Property revenue amounted to $24.0 million, which is comparable to the same prior year period, mainly as a result of the change in the number of properties in the portfolio during the twelve-month period ended September 30, 2024, offset by contractual rent increases and higher rental rates on lease renewals and new leases.

• Net operating income (NOI) amounted to $14.3 million, compared to $14.1 million in the same period in 2023, an increase of 1.5% mainly driven by contractual rent increases and higher rental rates on lease renewals and new leases, despite having 10 fewer properties compared to the same prior year period.

• Same Property NOI* reached $13.7 million, an increase of $1.0 million or 8.1%, compared to the same prior year period, primarily attributable to contractual rent increases and higher rental rates on lease renewals and on new leases across all asset classes, combined with higher occupancy rates in the industrial and retail asset classes. Excluding the impact of the temporary vacancy of a 102,000-square-foot industrial property in Montreal, Quebec between April 1, 2023, and September 30, 2023, which was fully leased in 2024, overall Same Property NOI* for the three-month period ended September 30, 2024 increased by 4.4% compared to the same prior year period.

• Net cash flows provided from operating activities were $9.9 million, compared to $11.0 million in the third quarter of 2023, largely as a result of the timing of cash receipts and the settlement of payables.

• FFO* amounted to $6.5 million, relatively flat compared to the same period in 2023, as a result of an increase in debt settlement costs related to property sales, offset by general increases in contractual base rent, higher rates on renewals and higher rental rates on new leases, despite owning 10 fewer properties compared to the same period in 2023.

• AFFO Payout Ratio – Basic* was 97.7%, compared to 96.9% for the same period in the prior year, primarily resulting from an increase in stabilized leasing costs, partially offset by general increases in contractual base rent, higher rates on renewals, and higher rental rates on new leases despite having 10 fewer properties compared to the same period in 2023.

For the nine-month period ended September 30, 2024:

• Property revenue amounted to $74.3 million, a slight increase of $0.1 million compared to the same prior year period, mainly as a result of contractual rent increases and higher rental rates on lease renewals and new leases, partially offset by the change in the number of properties in the portfolio during the twelve-month period ended September 30, 2024.

• Net operating income (NOI) amounted to $43.9 million, compared to $43.0 million in the same period in 2023, an increase of 1.9% mainly driven by contractual rent increases and higher rental rates on lease renewals and new leases, despite having 10 fewer properties compared to the same prior year period.

• Same Property NOI* reached $41.2 million, an increase of $3.4 million or 9.0%, compared to the same prior year period, primarily attributable to contractual rent increases and higher rental rates on lease renewals and on new leases, combined with higher occupancy rates across all asset classes. Excluding the impact of a one-time $0.1 million revenue adjustment and the temporary vacancy of a 102,000-square-foot industrial property in Montreal, Quebec between April 1, 2023 and September 30, 2023, which was fully leased in 2024, overall Same Property NOI* for the nine-month period ended September 30, 2024 increased by 5.6% year-over-year.

• Net cash flows provided from operating activities reached $19.4 million, compared to $22.2 million for the first nine months of 2023, largely as a result of the timing of cash receipts and settlement of payables, namely prepaid property taxes and prepaid property insurance.

• FFO* reached $21.6 million, compared to $18.7 million in the first nine months of 2023, an increase of $2.9 million or 15.3%, achieved with 10 fewer properties compared to the same period in 2023. This increase was primarily driven by a general increase in contractual base rent, higher rates on renewals and new leases, and a reduction of one-time costs, including CEO succession costs, partially offset by an increase in interest rate expense and debt settlement costs related to the sale of properties.

• AFFO Payout Ratio – Basic* was 94.1%, compared to 93.5% for the same period in the prior year, primarily resulting from an increase in stabilized leasing costs, partially offset by general increases in contractual base rent, higher rates on renewals, and higher rental rates on new leases despite having 10 fewer properties compared to the same period in 2023.

TABLE 2 - Reconciliation of net operating income to net income (loss) and comprehensive income (loss)

For the three months ended September 30, 2024, net income and comprehensive income amounted to $3.3 million, compared to $11.3 million during the same prior year period. The $7.9 million decrease is mainly due to the $2.6 million impact of a non-cash fair value adjustment on Class B LP Units, the $1.8 million impact of a non-cash fair value adjustment on derivative financial instrument and the $1.6 million impact of the non-cash fair value adjustment on investment properties.

For the nine months ended September 30, 2024, net income and comprehensive income amounted to $0.5 million, compared to net income and comprehensive income of $26.1 million during the same prior year period. The $25.6 million variance mainly relates to a $20.8 million impact of the non-cash fair market value adjustment on investment properties and the $3.7 million impact of a non-cash fair value adjustment on Class B LP Units.

Sustained Operating Environment

At September 30, 2024, PROREIT's portfolio totaled 116 investment properties (including a 50% ownership interest in 42 investment properties), aggregating 6.1 million square feet of GLA, with a weighted average lease term of 3.7 years.

The occupancy rate of the portfolio was 97.2 % as at September 30, 2024 (including committed space), compared to 98.2% at the same date last year. The decrease in occupancy rate mainly relates to two larger-space vacancies in industrial properties located in Dartmouth, Nove Scotia and Woodstock, Ontario, where management is currently experiencing strong leasing interest.

The weighted average in‐place rent for industrial properties at September 30, 2024 was $9.05 per square foot, an increase of 10.2%, compared to $8.21 per square foot at the same date last year, mainly driven by the increase in leasing rates in the industrial sector.

At September 30, 2024, PROREIT had renewed 83.6% of GLA maturing in 2024 at a positive average spread of 38.5% and, for the industrial sector, at a positive average spread of 50.4%.

For GLA maturing in 2025, 27.3% has been renewed at an overall spread of 26.7%. Specifically, for a tenant expiry in January 2025, PROREIT secured a lease for the 128,000-square-foot space with a new quality international tenant for a 15-year term with annual rent steps and base rent in excess of 30% over the expiring lease.

Portfolio Transactions

On September 5, 2024, PROREIT completed the previously announced sale of one non-core office property in Ottawa, Ontario totalling approximately 69,000 square feet for gross proceeds of $11.3 million (excluding closing costs). Net proceeds of the sale were used to repay a $8.2 million related mortgage, with the balance used for general business and working capital purposes.

On September 13, 2024, PROREIT completed the previously announced sale of one non-core office property in Ottawa, Ontario totalling approximately 94,000 square feet for gross proceeds of $15.3 million (excluding closing costs). The net proceeds of the sale were used to repay a $10.5 million related mortgage, with the balance used for general business and working capital purposes.

On September 17, 2024 PROREIT completed the previously announced acquisition of a 100% interest in an industrial property located in Montreal, totalling approximately 134,000 square feet, for a purchase price of $32.6 million (excluding closing costs). The purchase price was financed through a new $21.2 million mortgage, with the balance funded by proceeds of previous non-core property sales and a draw on available operating facilities.

Subsequent to quarter-end, on October 17, 2024, PROREIT completed the sale of one non-core retail property in Lacombe, Alberta totalling approximately 11,000 square feet for gross proceeds of $5.0 million (excluding closing costs). The net proceeds of the sale were used to repay approximately $3.4 million of a related mortgage, with the balance used to repay a portion of the line of credit or for general business and working capital purposes.

On September 30, 2024, the industrial segment accounted for 85.6% of GLA, while the retail segment accounted for 11.8%. With only four office properties remaining in our portfolio, the office segment accounted for just 2.5% of GLA and represented less than $30 million in asset value.

Financial Position

At September 30, 2024, PROREIT had $24.0 million available through its credit facility and $10.7 million in cash.

Total debt (current and non-current) was $501.1 million at September 30, 2024, down from $519.1 million at the same date last year, a decrease of $18.0 million.

PROREIT has 7% of total debt at a variable rate, and only $2.4 million of remaining mortgages expiring in 2024.

Adjusted Debt to Gross Book Value* was 50.2% at September 30, 2024, compared to 50.0% at the same date last year. The weighted average interest rate on mortgage debt was 3.87% at September 30, 2024, compared to 3.76% at the same date last year.

Distributions

Distributions to unitholders of $0.0375 per trust unit of the REIT were declared monthly during the three months ended September 30, 2024, representing distributions of $0.45 per unit on an annual basis. Equivalent distributions are paid on the Class B limited partnership units of PRO REIT Limited Partnership ("Class B LP Units"), a subsidiary of the REIT.

On October 23, 2024, PROREIT announced a cash distribution of $0.0375 per trust unit for the month of October 2024. The distribution is payable on November 15, 2024 to unitholders of record as at October 31, 2024.

Strategy

PROREIT remains focused on the successful execution of its strategy for growth by expanding its portfolio organically and through disciplined acquisitions, while optimizing its balance sheet and capital allocation. Management continues to evaluate acquisition opportunities under strict criteria, while also implementing its capital recycling program to move assets away from non-core properties to increase holdings in quality industrial properties in strong secondary markets. Over the next three to five years, PROREIT has a target of reaching $2 billion in assets, 90% industrial base rent and 45% Adjusted Debt to Gross Book Value*. These targets are based on the REIT's current business plan and strategies and are not intended to be a forecast of future results. See "Forward-Looking Statements".

Investor Conference Call and Webcast Details

PROREIT will hold a conference call to discuss its third quarter 2024 results on November 14, 2024, at 9:00 a.m. ET. There will be a question period reserved for financial analysts. To access the conference call, please dial 1-888-510-2154 or 1-437-900-0527 (conference: 18517). A recording of the call will be available until November 21, 2024 by dialing 1-888-660-6345 or 1-289-819-1450 and using access code: 18517#.

The conference call will also be accessible via live webcast on PROREIT's website at www.proreit.com or at  https://app.webinar.net/JlVjL0ODzx6

About PROREIT

PROREIT (TSX:PRV.UN) is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. Founded in 2013, PROREIT owns a portfolio of high-quality commercial real estate properties in Canada, with a strong industrial focus in robust secondary markets.

For more information on PROREIT, please visit the website at: https://proreit.com.

Non-IFRS Measures

PROREIT's consolidated financial statements are prepared in accordance with International Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. In addition to reported IFRS measures, industry practice is to evaluate real estate entities giving consideration, in part, to certain non-IFRS financial measures, non-IFRS ratios and other specified financial measures (collectively, "non-IFRS measures"). Without limitation, measures followed by the suffix "*" in this press release are non-IFRS measures.

As a complement to results provided in accordance with IFRS, PROREIT discloses and discusses in this press release (i) certain non-IFRS financial measures, including: adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA"); annualized adjusted earnings before interest, tax, depreciation and amortization ("Annualized Adjusted EBITDA"); adjusted funds from operations ("AFFO"); funds from operations ("FFO"); gross book value ("Gross Book Value"); net operating income ("NOI"); Same Property NOI; and (ii) certain non-IFRS ratios, including: Adjusted Debt to Annualized Adjusted EBITDA Ratio; Adjusted Debt to Gross Book Value; AFFO Payout Ratio – Basic; AFFO Payout Ratio – Diluted; Basic AFFO per Unit; Diluted AFFO per Unit; Basic FFO per Unit; Diluted FFO per Unit; Debt Service Coverage Ratio; Interest Coverage Ratio. These non-IFRS measures are not defined by IFRS and do not have a standardized meaning under IFRS. PROREIT's method of calculating these non-IFRS measures may differ from other issuers and may not be comparable with similar measures presented by other income trusts. PROREIT has presented such non-IFRS measures and ratios as management believes they are relevant measures of PROREIT's underlying operating and financial performance. For information on the most directly comparable IFRS measures, composition of the non-IFRS measures, a description of how PROREIT uses these measures and an explanation of how these measures provide useful information to investors, refer to the "Non-IFRS Measures" section of PROREIT's management's discussion and analysis for the three and nine months ended September 30, 2024, dated November 13, 2024, available on PROREIT's SEDAR+ profile at www.sedarplus.ca, which is incorporated by reference into this press release. As applicable, the reconciliations for each non-IFRS measure are outlined below. Non-IFRS measures should not be considered as alternatives to net income, cash flows provided by operating activities, cash and cash equivalents, total assets, total equity, or comparable metrics determined in accordance with IFRS as indicators of PROREIT's performance, liquidity, cash flow and profitability.

TABLE 3 - Reconciliation of Same Property NOI to net operating income (as reported in the consolidated financial statements)

TABLE 4 – Same Property NOI and Same Property NOI by asset class, adjusted to exclude a one-time revenue adjustment and one 2023 vacancy impact fully leased in 2024

TABLE 5 - Reconciliation of AFFO and FFO to net income and comprehensive income

TABLE 6 - Reconciliation of Adjusted EBITDA to net income and comprehensive income

TABLE 7 - Calculation of Debt to Annualized Adjusted EBITDA Ratio

TABLE 8 - Calculation of the Interest Coverage Ratio

TABLE 9 - Calculation of Gross Book Value and Adjusted Debt to Gross Book Value

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities legislation, including statements relating to certain expectations, projections, growth plans and other information related to PROREIT's business strategy and future plans. Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond PROREIT's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intent", "estimate", "anticipate", "believe", "should", "plans", or "continue", or similar expressions suggesting future outcomes or events. Forward-looking statements contained in this press release include, without limitation, statements pertaining to the execution by PROREIT of its growth strategy, the future financial and operating performance of PROREIT, the proposed increase of PROREIT's footprint in the light industrial sector, and the medium-term goals of reaching $2 billion in assets, 90% industrial base rent and 45% Adjusted Debt to Gross Book Value* in the next three to five years.

PROREIT's objectives and forward-looking statements are based on its current assumptions about future events, including that (i) PROREIT will receive financing on favourable terms; (ii) the future level of indebtedness of PROREIT and its future growth potential will remain consistent with PROREIT's current expectations; (iii) there will be no changes to tax laws adversely affecting PROREIT's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on PROREIT's operations, including its financing capacity and asset value, will remain consistent with PROREIT's current expectations; (v) the performance of PROREIT's investments in Canada will proceed on a basis consistent with PROREIT's current expectations; and (vi) capital markets will provide PROREIT with readily available access to equity and/or debt.

Without limiting the foregoing, the medium-term targets of PROREIT are based on PROREIT's current business plan and strategies and are not intended to be a forecast of future results. The medium-term targets contemplate the REIT's historical growth and certain assumptions including but not limited to (i) current global capital market conditions, (ii) access to capital, (iii) interest rate exposure, (iv) availability of high-quality industrial properties for acquisitions, (v) dispositions of retail and office properties, and (vi) capacity to finance acquisitions on an accretive basis.

Although PROREIT believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct, and since forward-looking statements inherently involve risks and uncertainties, undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such forward-looking statements. The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. PROREIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by law.

Additional information about these assumptions and risks and uncertainties is contained under "Risk Factors" in PROREIT's latest annual information form and "Risk and Uncertainties" in PROREIT's management's discussion and analysis for the three and nine months ended September 30, 2024, which are available under PROREIT's profile on SEDAR+ at www.sedarplus.ca

SOURCE Pro Real Estate Investment Trust

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