Mr. Kevin Henley reports

CANADIAN NET REIT ANNOUNCES SOLID 2023 FIRST QUARTER RESULTS

Canadian Net Real Estate Investment Trust has released its results for the quarter ended March 31, 2023. The REIT also declared distributions for the months of July, August and September, 2023, and modifications to grants under its equity incentive plan that reflect recent management changes.

"We continued to generate solid performance in the quarter, including a 4-per-cent increase in [funds from operations] per unit (1)," said Kevin Henley, president and chief executive officer. "Our triple-net and management-free structure continues to generate stable, reliable income with low overhead expenditures and 100-per-cent occupancy. We are also benefiting from the positive contributions of our most recent acquisitions, in addition to organic growth from incremental rent attributable to scheduled rental rate increases. As we move forward, we expect interest rates and capitalization rates to stabilize, translating into a more favourable acquisition environment for the REIT.

"Subsequent to quarter-end, we sold a single-tenant restaurant property in Timmins, Ont., for total consideration of $1.3-million," added Mr. Henley. "The sale price represented a capitalization of 6.2 per cent, or approximately 19-per-cent premium to our [international financial reporting standard] capitalization rate for the property. This sale highlights the significant discrepancy between the stock price and the price observed in the private market."

Q1 2023 results

Canadian Net reported that funds from operations (1) increased 5.3 per cent to $3.2-million, or 15.7 cents per unit (1), compared with $3.1-million, or 15.1 cents per unit, for first quarter 2022. Adjusted funds from operations (1) (AFFO) increased 6.6 per cent to $3.1-million, or 15.1 cents per unit, compared with $2.9-million, or 14.4 cents per unit, in Q1 2022. The increases in FFO and AFFO were primarily attributable to rental revenues of properties acquired subsequent to the first quarter a year ago, which were partially offset by the increase in financial expenses related to mortgages on the properties and higher interest rates on existing variable-rate mortgages and credit facilities.

Rental income was $6.4-million in Q1 2023, an increase of 18.1 per cent from the three-month period ended March 31, 2022. This increase was due to the addition of new properties and increases in rent from certain existing properties. These rents are composed primarily of fixed monthly rents, as well as variable rents based on gross sales for certain tenants.

Net operating income (NOI) (1) in Q1 2023 was $4.9-million, an increase of 15.4 per cent from Q1 2022, primarily reflecting the strong year-over-year increase in rental income. The REIT generated net income attributable to unitholders of $4.8-million in Q1 2023 compared with $1.5-million in Q1 2022. The variance is primarily attributable to the change in fair value of investment properties, in addition to the impact of NOI (1) from newly acquired properties, partially offset by interest on mortgages associated with said properties.

Distributions

Canadian Net announced that it will make monthly cash distributions of 2.875 cents per unit, representing 34.5 cents per unit on an annualized basis, on July 31, Aug. 31 and Sept. 29, 2023, to unitholders of record on July 14, Aug. 15 and Sept. 15, 2023, respectively.

The attached table represents other financial highlights for Q1 2023 and Q1 2022. This information should be read in conjunction with the consolidated financial statements and management's discussion and analysis for the quarters ended March 31, 2023, and March 31, 2022.

Earnings webcast

Canadian Net will host a webcast on May 25, 2023, at 9 a.m. EST, to discuss the results.

Cancellation and grant of performance units

Following the recent changes in management, the REIT announced the cancellation of 92,143 performance units and the grant of 25,766 performance units, resulting in a net decrease of 66,377 performance units granted. The grant of performance units of Canadian Net constitutes a portion of salaries as per the equity incentive plan approved by unitholders on May 25, 2022. These units will vest in accordance with the criteria set forth in the equity incentive plan and the achievement of performance targets, set by the board of trustees.

About Canadian Net Real Estate Investment Trust

Canadian Net is an open-ended trust that acquires and owns high-quality triple-net and management-free commercial real estate properties.

(1) This is a non-international financial reporting standard measure that does not have any standardized IFRS meaning and as such may not be comparable with other issuers.

We seek Safe Harbor.