Dream Industrial Real Estate Investment Trust ($DIRUN)

Welcome to the Dream Industrial REIT First Quarter Conference Call for Wednesday, May 6, 2026. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. During this call, management of Dream Industrial REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Industrial REIT's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions, risks and uncertainties is contained in Dream Industrial REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit.ca. Your host for today will be Mr. Alexander Sannikov, CEO Dream Industrial REIT. Mr. Sannikov, please proceed.

Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's First Quarter 2026 Conference Call. Here with me today is Gord Wadley, our Chief Operating Officer; and Lenis Quan, our Chief Financial Officer. We started off 2026 with strong momentum, and we saw that reflected in our solid operating and financial results. While geopolitical uncertainty and trade tensions persist, the industrial sector continues to demonstrate broad resilience and the execution on our core pillars is translating into tangible results across the business. The occupier markets in Canada are strengthening, and we are seeing continued absorption not only for small and mid-bay units, which we have observed for some time, but also more recently in large big format. We're also encouraged by the activity in the European portfolio and are seeing robust occupier dynamics for infill mid-bay assets and multi-tenant light industrial properties. These occupier dynamics inform our operating results as well as our capital allocation decisions. For the quarter, we delivered 9% year-over-year comparative properties NOI growth, driven by healthy leasing activity leasing spreads, strong occupancy and tenant retention. This strong pace of organic growth drove FFO to $0.26 per unit, in line with our expectations and outlook we communicated last quarter. Most notably, our FFO per unit continued to grow year-over-year, even though we completed the disposition of the first tranche of assets to the DCI JV and used the proceeds to temporarily pay down debt. This gives us the opportunity to redeploy the capital towards our strategic growth initiatives. We are on track with the capital allocation plan we outlined at the beginning of the year. So far this year, we have returned nearly $100 million of capital to unitholders through NCIB activity. This activity is consistent with the targets we communicated when we announced the formation of JV. We also have a robust pipeline of acquisitions for DIR's on-balance sheet program with over $500 million of opportunities in Canada and in Europe in exclusive negotiations and in various stages of due diligence. Over 85% of this pipeline is comprised of income-producing assets with a going in cap rate of just over 6% and a mark-to-market cap rate of over 7%. We're also evaluating compelling development opportunities in our target markets for small and mid-bay industrial assets at a yield on cost of just under 8%. Our existing development program is progressing well. This quarter, we achieved substantial completion over 125,000 square foot build-to-suit expansion in the Netherlands that is already contributing over $1.7 million of NOI on an annualized run rate basis. Our Strategic Private Ventures segment continues to provide us with a competitive edge, supporting the growth of our operating platform and revenue growth. So far this year, we closed on approximately $130 million of acquisitions within our private JVs, including DCI JV's first acquisition beyond the initial portfolio. We have another $250 million of acquisitions in exclusive negotiations for the account of private ventures. Lastly, our power procurement program is also advancing. Our solar portfolio is expanding with multiple projects under construction, including a pilot project that includes a battery storage solution. Our near- to medium-term pipeline stands at over $140 million with a target yield on cost of over 8%. On the data center initiative, we are in advanced stages of securing commitments on over 260 megawatts of power in the GTA with phased delivery over the next 2 to 5 years. Concurrently, we're exploring opportunities to realize this progress on power procurement through joint ventures, development or dispositions. Put together, we are encouraged by the progress we are making across the key drivers of the business. With that, I will now turn it over to Gord to discuss our operational highlights.

Thank you, Alex. Stepping back, we continue to see the Canadian industrial market hold up well from a macro perspective. While uncertainty has extended decision-making time lines in pockets of the market, Dream Industrial continues to perform well, as demand for well-located, functional urban logistics spaces remains resilient and the new supply pipeline continues to moderate. On occupancy, we saw a meaningful improvement in Canada. Committed occupancy was 96.8%, up from 94.4% a year ago, driven by small bay lease-up and recent development completions. Overall, committed occupancy across the total portfolio was 95.7%. Against that backdrop, we are encouraged by the operating results. We signed 1.8 million square feet of new leases and renewals delivering a weighted average rental spread of 26.4% over expiring rents. The regional mix was approximately 1.4 million square feet in Canada at 33.1% average spreads and about 400,000 square feet in Europe. In Toronto and the broader GTA, demand continues to be the most pronounced for well-located functional space, particularly in small and mid-bay. As Alex mentioned, over the past couple of quarters, we've seen meaningful absorption of larger units. Based on the pipeline we see, we expect this trend to continue in 2026. The improvement in absorption and the pace of leasing activity is resulting in stable to improving net effective rents and a shrinking gap between achieved rents and asking rents. In our portfolio, we saw a healthy retention and strong mark-to-market on near-term rollover and leasing economics remain disciplined with stable incentives. Ontario comparative properties NOI grew 6.8% year-over-year. Fundamentals in Western Canada are robust with low vacancies, solid demand and demographic trends. We're observing continued rental growth. With our 20 development coming online and the lease-up of several vacancy Calgary, we transacted approximately 0.5 million square feet across our platform during the quarter and saw a 100 basis point lift in occupancy. Western Canada comparative properties NOI grew 8.5% year-over-year. In Montreal, the market ultimately fared better than most expectations. While asking rents have moved down across the market, our achieved rents have remained higher, reflecting the quality and location of our portfolio and strong demand for well functioning space. With the lease-up of small bay vacancies, our Quebec occupancy improved, and Quebec comparative properties NOI increased 31.1% year-over-year. Looking ahead, our leasing pipeline in Canada remains healthy. We have over a dozen new deals in advanced negotiations, totaling over 700,000 square feet. Decision-making time lines are longer than average, but our customers and prospective occupiers are showing resiliency and remain committed to their space requirements despite gel political uncertainty. Many of them are expanding organically and renewing to longer-term commitments in advance of the expiry. Further evidence of this is that we had 1.9 million square feet of remaining uncommitted expiries in 2026 as of Q1. We've already secured approximately 0.5 million square feet at an average spread of 38.2%, and we are in advanced renewal discussions on the balance. We expect that the retention ratio for the year will be consistent with our long-term average. In addition, we expect leasing spreads on our remaining 2026 rollovers in Canada to be in line with our Q1 results. Over in Europe, the industrial sector remains supported by durable structural demand drivers. As inflation is likely to ramp up, our portfolio remains relatively insulated as the majority of our leases are indexed to CPI. At the portfolio level, European occupancy was modestly impacted this quarter due to the acquisition of a vacant value-add asset in the Netherlands which had approximately 80 basis point impact. We acquired this asset for its prime location and strong physical attributes and see meaningful value creation potential through planned upgrades, with lease-up expected by the end of the year and a stabilized cap rate of approximately 8%. Committed occupancy in Europe was 95% this quarter, and overall performance remained consistent with our expectations with 4.9% comparative properties NOI growth. Over the next few quarters, we expect to see some transitory vacancies in Spain. However, given the underlying strength of the market, we're confident in re-leasing process. Overall, our occupancy and NOI outlook for the business remain intact. Thank you. And I'll now turn it over to Lenis to discuss our financial highlights.

Thank you, Gord. Our portfolio delivered comparative properties NOI growth of 9% for the quarter. The strong pace of organic growth allowed us to absorb a higher average cost of debt and to operate at lower leverage following the first tranche of asset sales to the DCI JV, while continuing to deliver FFO growth. We delivered diluted FFO per unit of $0.26 for the first quarter, 2% higher than the prior year quarter. In addition, the lease-up of newly completed developments and property management income generated from our Private Ventures platform also contributed to our overall FFO growth. Our net asset value at quarter end was $16.76 per unit, up from $16.60 last quarter, reflecting stable investment property values and the impact of our NCIB The proceeds from the first tranche of asset sales to the DCI venture in early February were used to repay most of the outstanding balance on our credit facility. Consistent with the capital redeployment plan that we communicated in late 2025, we have completed $97.2 million of unit buybacks through our NCIB program to date in 2026 at an average price of $12.95 per unit. We expect the second tranche of asset sales to the DCI venture to close in mid-2026, with proceeds used temporarily to repay our credit facility until it is redeployed accretively. We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity. We ended the quarter with leverage at 36.8%, which was 160 basis points lower than year-end 2025. Our net debt-to-EBITDA ratio was 7.3x. As we deploy our available balance sheet capacity, we expect leverage to remain in the targeted mid- to high 30% range and our net debt-to-EBITDA on a run rate basis to trend back towards the mid-7x range. Subsequent to the quarter, we repaid our $200 million Series E debentures that matured on April 13, 2026, by temporarily drawing on our credit facility. On April 21, we closed on the issuance of our $200 million Series H unsecured debentures at an all-in rate of 4% after swapping the proceeds to euros. The proceeds were used to repay the outstanding balance on our credit facility. We retain over $600 million in total available liquidity. Combined with the growing cash flow generated by the business, we are well positioned to fund our strategic initiatives, including our development pipeline, power procurement program and contributing to our private ventures. Our first quarter performance demonstrates the strength of our business, and we remain confident in our growth trajectory for the balance of the year. We reiterate our previously issued outlook across our key metrics, which, as a reminder, were for the full year 2026 average in-place occupancy stable in the high 94% to low 96% range. For the first half of 2026, comparative properties NOI growth relatively consistent with our Q4 2025 growth rate. For the full year, dependent on the timing of leasing, 2026 comparative properties NOI growth stronger than full year 2025 growth, which was 5.7%. And full year 2026 FFO per unit between $1.8 to $1.10. With the deployment of proceeds from the second tranche sale to the DCI venture expected to be weighted towards the middle and second half of this year, we expect our quarterly FFO per unit run rate to accelerate accordingly. Our FFO growth expectation is predicated on current foreign exchange rates and interest rate expectations. I will turn it back to Alex to wrap up.

Thank you, Lenis. Dream Industrial's business is anchored by a functional high-quality urban portfolio, supported by a diverse occupier base and increasingly meaningful new revenue streams. Together with the scale of our operating platform, this positions the business well for continued growth, and we expect to continue delivering strong results for our unitholders. We will now open it up for questions.

Your first question comes from the line of Mark Rothschild from Canaccord Genuity.

Alex, you made some comments about being encouraged by some things in Europe. Can you just talk about what's driving that improvement? And do you think that that's something we should see in better leasing spreads? And maybe just connected to that, is that connected at all to your confidence in buying a property that's vacant? And if you could just expand more on what the time line is for expected stabilization of that asset?

Yes. Thanks, Mark. We continue to observe the strength from mid bay infill industrial in core Western Europe and Netherlands and Germany. These are assets that are located in close proximity to major population centers such as Runstad, rural region, et cetera. And the strength is not new. We've seen that throughout 2025. You see that in our operating results, and we see that translate into continued -- our continued ability to push rents beyond business plan and we are seeing kind of these data points in our everyday leasing. When it comes to buying a vacant property, again, this is not new. So if you recall, last year, we bought an asset that was vacant in the Netherlands. We stabilized that within 2 months of ownership at yields that exceeded our underwriting. And this asset is in a different submarket in the Netherlands, but it's a submarket that's equally strong and the physical attributes of the assets are robust as well, and we are pretty confident in our ability to lease this asset at yields that Gord quoted.

Your next question comes from the line of Sam Damiani from TD Cowen.

Great to see the outlook reiterated in full there. As you go into 2027, I know it's early days, but any comments you can share in terms of target leverage level that you'd be running -- wanting to run the read at post -- sort of redeployment of the proceeds of the sale into the DCI JV?

Thanks, Sam. I think we communicated that we would -- as we redeploy the proceeds that we expected on a net debt-to-EBITDA basis that we would trend towards the mid-7 and that would be happening by the end of the year. And it will -- and I think we would see that as we grow our EBITDA, you're going to see that trend downwards into 2027 [indiscernible].

Okay. That's helpful. And I guess, just looking at the data center sort of disclosure update there. I wonder if you could clarify with the megawatts for the 3 sites totaling 260 megawatts, like what is the REIT sort of net ownership in that 260 and also the net ownership and the remaining 350 megawatts-or-so beyond that that you've identified?

Thank you, Sam, for that follow-up. The vast majority of the 260 is on REIT's balance sheet. There's only 1 asset for about 15-megawatt capacity that's in JV. Of the 600, again, the majority is in the REIT's wholly owned portfolio. .

Okay. Great. Maybe just 1 last quick one. I mean market rents seem to be stable. Alex, you've spoken fairly confidently about the trajectory sort of evolving over the coming quarters. Has anything changed in your outlook sort of we were 3 months later?

So far, Sam, we're seeing data points that support the outlook of market rents. Broader market rent growth in Canada resumed in second half of 2026. Again, we're seeing evidence of that happening already in the West, seeing pockets of that happening in the GTA, more -- less on the asking rents, but more on the achieved rents. And we hope that as we continue the pace of absorption coming through that this is going to come through in the headline metrics that many market participants are focusing on.

The next question comes from the line of Brad Sturges from Raymond James.

Just looking at the Cambridge and Whitby projects, I think you noted that you're in active discussions for 500,000 square feet there. Just curious how far along would those potential discussions be? And do you have any line of sight, I guess, of if the leases were executed, where when occupancy and maybe rent payments could commence?

Thanks, Brad. So for 1 of the properties, we're in the LOI stage, with a couple of prospective tenants. And the other one, we're seeing some good interest through tours.

Okay. So we'll call it early days still. In terms of you're progressing towards closing the second tranche on the CPP JV, and I'm sure the focus is on that for now. But I guess, what would be the appetite from CP from your point of view in terms of expanding that JV beyond what's been committed to date?

Just wanted to go back to the previous question on your takeaways there. It's a bit more advanced than sort of initial stages, just on the leasing inquiries. But just switching gears to the second question, look, as we commented in our prepared remarks, we've acquired already our first asset with the DCI JV from the market. We have good pipeline of additional assets that we're evaluating. assets into that JV from a balance sheet, there's no active discussion. But as we've always commented with respect to our private ventures generally, opportunity to have a dialogue is always there if it's strategic for both parties.

I appreciate the clarification there, Alex. So I guess it's just more a little bit too early to comment beyond what you just provided there on the leasing front.

Yes.

Perfect. And then just any update, I guess, on the European JV opportunity? I know you've been working towards that, but if there's anything new you like to share at this point?

Nothing that we can share at this point. We're making progress there as that advances, we'll provide an update. But nothing imminently to comment on. Again, just to reiterate, formation of a European JV will be part of build-out of our private -- strategic private venture business, which is going to be in addition to all the ventures and over capital partnership that we have today. So when we communicate our outlook for 2026 or 2027, and I believe when broadly market is modeling our business -- these additional growth drivers are not -- certainly not in our outlook. We don't believe that they're in the broader market outlook. So this is all going to be in addition to what we currently have in front of us.

Your next question comes from the line of Kyle Stanley from Desjardins.

Maybe just going back to the kind of reiteration of the outlook year. Obviously, a very strong quarter in Q1 with the 9% same property NOI growth for the first half of the year, you've kind of highlighted maybe roughly above 8% and maybe in the 6-ish percent range on the full year. Just wondering, given the strong start to the year, like why you maybe see that slowing into the balance of the year to kind of hit that lower full year guidance number?

Kyle, thanks for that question. You're correct in your observations. I think as we progress through the year, there's a significant amount of leasing that is still assumed and forecast to happen. So certainly, as we progress through the year and those are committed, we will revisit the guidance or the outlook...

Okay. That's fair. And then I think it was in the prepared remarks, a leasing pipeline of roughly 700,000 square feet, would that be a combination of new and renewals?

It is -- well, it's a combination of both, more for new deals, though, it's more skewed towards new deals.

Okay. And then just turning over to kind of your leasing spread this quarter. Obviously, the 66% brand in Ontario, highest it's been in a little while. Really good to see that occurring. What's the driver there? Is it strength in the market? Is it just mix of leases turning? I just love to understand what drove the increase again?

Yes. Thanks, Kyle. As Sam observed in his question, the market rents have remained relatively steady in our disclosure this quarter. So we haven't seen dramatic changes in market rents. The spreads are really informed by the composition of space rolling and the quality of the space that is rolling. That's what drove the spread of the market rent situation in our portfolio didn't change dramatically.

Okay. Fair enough. And then just last 1 for me. In your leasing discussions today, is there a premium for sites that have elevated existing power capacity? Just trying to think through that maybe there is a higher and better use for what traditionally would have been an industrial facility transitioning towards data center. So I'm just wondering if that's something that's happening in your leasing discussions where you have an ability to ask for higher rent given an existing higher power capacity?

What we're seeing in that regard is it doesn't necessarily drive data center demand, but it drives a broader demand from a more diverse pool of occupiers, including defense occupiers are attracted to higher levels of industrial power. In certain cases, having higher level of power makes it easier to kind of convert a site for data centers, but it's less of a driver in the day-to-day leasing. It's mostly just appealing to a broader range of occupiers.

And certainly, when you have more demand for the space, but sort of indirectly creates upward pressure on rents.

Next question comes from the line of Himanshu Gupta from Scotiabank.

So you mentioned around $5 million of acquisitions under exclusive negotiations. Can you elaborate like which markets, quality of assets or time line? And then also, how much is on the balance sheet versus on the joint venture?

Thanks, Himanshu. So just to kind of reiterate. So $500 million is on balance sheet. We have another $250 million in exclusive negotiations for the joint ventures. So that's $250 million in addition to the $500 million, it's not part of the $500 million. As far as the on-balance sheet assets, we are looking at product that is very consistent with what you've seen from industrial. So these are mid-bay assets predominantly in core locations in Canada, in Europe, in markets that we've talked about with our unitholders over the past few years. Going in cap rate is just around 6%. And with mark-to-market potential that takes us to over 7%. And included in that is some development opportunities for small and mid-day assets at a yield on cost of around 8%.

Got it. This is helpful. $500 million all on balance sheet. And in terms of time line, like Q2, Q3 or over the rest of the year?

Some are going to be closing over the next couple of months, and we'll see probably most of them closing in kind of in around second half and more likely towards Q3, but timing is not exactly certain.

Got it. And sorry, the mix between Canada and Europe, I mean, I think you mentioned kind of both regions. Is the preference here Canada versus Europe?

We have some acquisitions in Canada. A significant chunk of the pipeline is in Europe as we also communicated in our broader capital allocation outlook at the beginning of the year, we're seeing more of a pipeline in Europe. So not the entire pipeline is in Europe, but a significant chunk is in Europe.

Got it. Okay. And then maybe just a follow-up there. I mean obviously, quite a bit of acquisitions here in the market here for. Are you seeing like change in valuation trends or cap rate compared to 6 months or 1 year?

Nothing material. We're seeing around the edges, there's possibility of that, but we haven't seen material changes over the last 6 months. They are competing forces at play, we've seen, obviously, interest rates impact some occupier -- some buyers underwriting. On the other hand, we've seen more capital generally looking for industrial opportunity, both in Canada and in Europe. And so the -- they are competing forces at play. And as a result, we haven't seen material changes on cap rates.

Yes. And maybe I should clarify more on the Europe side, I mean, given the geopolitics and all still nothing -- no change in trends in Europe so far?

We didn't have material changes in trends in Europe so far.

Your next question comes from the line of Fred Blondeau from Green Street.

Just 1 question for me. Focusing on the GTA. I was wondering, given the extended leasing time lines, can you comment on how much free rents are recorded to attract tenants today? And how this quantum of free rent may have changed over the last, call it, over the last 12, 18 months?

Thank you, Fred. We have seen free renter stabilizing. We haven't seen free rent increasing over the last couple of quarters. If anything, we're starting to see trends that support kind of -- or point of incentives generally declining and free rent as part of that declining marginally. Usually, we're talking on the new leads, but a couple of months of free rents on on a 5-year deal. And in the context of a renewal, this is highly bespoke that it ranges from no free rent to, again, maybe a couple of free rent, depending on the circumstances. Overall, as we said, we've seen NERs improving in the GTA on a year-over-year basis, and that is a function of stronger absorption and declining vacancy rates.

A couple of months, that would be less than 6 months, of course, right?

Sorry, Fred, can you repeat that?

Yes. We're just saying when you say a couple of months, that would be less than 6 months, of course, correct?

Less than 6 months, correct yes.

Your next question comes from the line of Tal Woolley from CIBC.

Just wondering, can you characterize like the industries or tenant types where you're seeing kind of like the best interest and demand right now?

Tal, it's Gord. We're seeing the bulk of our tours from various 3PLs in the market. Alex touched on defense. We're seeing more interest from federal government and Crown Corps as well too, taking stock of our inventory. So we've been taking a lot of questions from them. But the bulk of our tours have been predominantly from 3PLs in the market.

And we just -- we're starting to see with the price of oil having shot up here, although fingers crossed retreating, we've seen some pressure on a lot of transportation companies, whether it's airlines, freighters, that kind of stuff. Any concerns on the tenant side just as we enter into sort of an area of era of higher oil prices?

Very topical question, Tal. We are in conversations with a lot of our occupiers about how this impacts their business. What we have observed is that old pace of activity didn't really change over the last couple of months, as we've seen oil prices increase and that is informing our resiliency commentary. In this environment, closer in locations do become much more relevant to these occupiers because to save on freight, which is very consistent with the thesis we've been articulating over the last few years about urban industrial, and that is, again, playing out right now.

Great. And then lastly, you talked a lot on the call here about types of assets you might be interested in. I'm just wondering where they're coming from and have public -- we haven't really seen a lot of like -- a lot of take privates in the public space, but I'm just wondering if given where some of the industrial REITs are trading globally, like are you seeing opportunities to approach some of these companies looking for either individual assets or portfolios?

Thanks for the follow-up. Look, we see a broad range of vendors out there in the market. There's all sorts of drivers that lead to potential transactions, finalization of business plans and the fund life, broader capital recycling. So we're pretty happy with the pipeline that we have in front of us. There's lots to execute on. And we'll always look for off-market opportunities, whether it's with the groups that you just summarize it with others, we continue to look for those opportunities across our target markets.

[Operator Instructions]. Your next question comes from Matt Kornack from National Bank Capital Markets.

Just looking at third-party stats, Toronto or the GTA, I should say, seems to be getting the lion's share of absorption. Can you give us a sense as to why this market, in particular, is doing so well? And then maybe on the other side, Montreal, it seems like you're outperforming the market. So how are you kind of winning away tenants maybe from others or getting new tenants in the market?

Yes. Thanks, Matt. Maybe starting with Montreal. Our portfolio in Montreal is predominantly small and mid bay. And that segment of the market is healthy in Montreal. We're seeing rents in the mid-teens, escalators, kind of on either end of 3. And that is -- that theme is consistent and we haven't seen sort of a material change in that theme over the last couple of years. And it is continuing into 2026, and that is what's driving our results. When it comes to the GTA market, it's the largest market in the country and the most diverse market in the country, and we have obviously seen a bit of a pause in the GTA as interest rates spiked in 2023, inflation spike, there was a lot of occupiers in the GTA market that were, let's say, on pause with their expansion needs and some occupiers who took more space than they needed in 2021-2022. So that space came back to the market. We saw a bit of a supply delivery in 2024. And what we're seeing now is that the pent-up demand is coming through, and there's gradual absorption of that new supply, including in the big boxes, which is encouraging. Again, that's not a significant part of our business, but it's encouraging to see.

Maybe looking south of the border as well. I mean there's increasing confidence, I think in the U.S. around guys taking space in large amounts. Do you think there's -- you mentioned the hesitancy, do you think we need to get past kind of USMCA negotiations, at least have a little bit of certainty before you see that flood of interest appear maybe on a broader basis? Or are you having those discussions around trade with your tenants at this point?

There's very few discussions with our occupiers that were kind of centered around trade at the moment, including renegotiations of USMCA. So we haven't seen that impact. Occupier sentiment as to whether there's added demand, should there be more certainty around USMCA, it's likely the case, but we don't really have empirical evidence to sort of support that claim. It seems right, but it remains to be seen. If anything, it's going to be net-net additive to what we're seeing already.

Okay. No, that's fair. And then maybe just lastly, in terms of again, the sense of urgency as Toronto and other markets kind of see availability peak here, do you think that inspires guys to make decisions in advance of kind of supply may be becoming more constrained here as we would expect given kind of normal absorption levels in the Toronto and other markets?

Yes, you're referring to occupiers moving faster?

Yes. I'm just trying to get in ahead of potentially a tightening market.

Look, that's a possibility. We're already seeing some of that with some occupiers where occupiers are looking to blend and extend and/or secure early renewals for 2027 in -- well, 2027 onwards lease expiries and in many cases, asking for longer lease terms.

Your final question comes from the line of Pammi Bir from RBC Capital Markets.

Maybe just coming back to the Matt's question. Trying to reconcile the comments earlier about extended lease time lease time lines, I think that was made in the opening remarks, versus some tenants looking to do some early renewals to blend and extend. Can you just clarify that? Like is it taking longer to get these deals done or not really?

It's taking longer to get new lease deals done. So to fill vacancy or new developments taking still longer. We -- to give you an example, some of the LOIs that Gord referred to, we've been in discussions with this group for close to 6 months and under -- and this is not new. We commented on that last quarter and probably the quarter before. Now normal time lines would be half of that. So the decision time line for new space -- for new leases are still longer. At the same time, retention ratios are consistently high because still occupiers are looking to stay in place. And some of them may feel that now is a good time in the market, going back to Matt's comment and question, to secure space for longer, given the supply pipeline in the GTA broadly is declining and market is looking like it's turning the corner from an occupier standpoint. So some occupiers are thinking, but securing renewals for longer.

Okay. Got it. And then just, again, maybe sticking with that theme, these for the extended time lines on new deals, is this more skewed to Canada? Or have you seen that start to play out in Europe as well or maybe it already was, I guess?

Generally, it would be skewed to Canada. In Europe, we haven't seen sort of changes to new leasing time lines dramatically. For bigger boxes, the time lines have been relatively long for a couple of years, and that didn't really change up or down. And again, small and mid boxes, we're seeing pretty solid pace of demand.

Okay. And then just in terms of the -- I guess, the capital coming back for the DCI JV transaction, you've been obviously pretty active on the NCIB. You're at the low end of your, I guess, $100 million to $200 million initial target. How are you feeling about additional buybacks at this stage? Or is the thinking maybe perhaps to keep more dry powder for that pipeline of acquisitions you cited?

So look, we'll evaluate. Obviously, the NCIB activity will be a function of the unit price accretion to FFO and NAV that we achieved from NCIB relative to opportunities that we see on the acquisition side. So we'll continuously evaluate this as we see movements in the unit price. And as we compare that to the acquisition of opportunities in front of us.

Got it. Okay. And then just the last one. On the, I guess, the first tranche of assets that were sold in the quarter that JV. Was the pricing or the cap rate on that pretty much in line with the overall portfolio or is this much of a difference?

The cap rate on the second tranche would be a bit lower overall. And obviously, we'll provide the details as we close the tranche, but it's going to be a bit lower than the first tranche. The cap rate overall is in line with what we quoted. Obviously, that's the metric that is the most relevant and how it's broken out by tranche is informed by -- or the cap rate by tranche is informed by occupancy, primarily of the assets that are in a tranche.

That concludes our question-and-answer session. I would now like to turn the conference back to Mr. Sannikov for any closing remarks.

Thank you for your interest and support of Dream Industrial REIT. We look forward to reporting on our progress next quarter. Goodbye.

This brings today's meeting to the close. You may now disconnect.