Q2 2025 Market Overview

• While tariff-induced uncertainty remains, its impacts on the Canadian economy appear to be modest so far. Advance estimates suggest the economy was essentially unchanged in the second quarter of 2025, with increasing Canadian consumer spending and unexpectedly large job gains helping to offset weakness concentrated on the country’s more trade-dependent sectors.
• The Bank of Canada held its policy interest rate steady in the second quarter, extending a slower-than-expected recovery in homebuying activity stemming in part from trade uncertainty. Home resales rose for three consecutive months in the quarter as softening prices appeared to find their bottom in several cities. While it may be too soon to declare a rebound, these could be early signs that a recovery is taking shape.
• Normalizing after years of rapid growth, Canadian average asking rents remain historically high — up 11.9% from three years earlier — despite ending the quarter down 3.3% Y/Y. Purpose-built apartment rents remained the most resilient, decreasing only 1.1% Y/Y at the end of the quarter versus 4.9% for condo apartments and 6.6% for houses and townhomes.
• In a display of its characteristic resilience, Ottawa ended the quarter with rent growth across all unit types (+3.7% Y/Y).
• Led by Canada’s western provinces, the pace of housing starts increased nationally by 4% in the first half of 2025 compared to the same period in 2024, at a rate of 283.5k annualized units in June. However, most homebuilding activity did not take place in Canada’s densest urban markets, particularly in Ontario and Quebec, where the gap between supply and demand is expected to widen.

Portfolio Update

Market fundamentals for multifamily assets remained strong while affordability challenges in the broader Canadian housing sector persisted. Against this backdrop, Management maintained fundraising momentum and continues to evaluate and pursue targeted growth opportunities for the Equiton Residential Income Fund Trust (the Trust).

Portfolio expansion in Western Canada

The Trust recently acquired two properties in Western Canada. Mountain Park Residences, a purpose-built rental community in Burnaby, British Columbia, represents a strategic entry into one of Canada’s fastest-growing rental markets and the Trust’s first property in the province. Central Tower, a newly built (2018) building, is the Trust’s fourth property in Alberta.

These acquisitions build on the Trust’s growth in 2024, when nine buildings were added to its portfolio.

Progress at Maison Riverain rental development

The Trust’s Maison Riverain development project in Ottawa continued to make strong progress in Q2’25, with Tower 1 lease-up advancing steadily and Tower 2’s foundation construction underway. Ottawa’s resilient occupancy levels and rental growth continue to support the project’s immediate and future outcomes.

Performance

Management’s disciplined financial strategy continues to support long-term value creation, backed by strong operating results and prudent leverage.

Portfolio-wide, revenue and net operating income (NOI) increased Y/Y by 39.3% and 38.3%, respectively. For the six months ended June 30, 2025, the Trust achieved operating revenues of $36.6M and NOI of $20.6M — reflecting the incremental contribution of 2024 acquisitions and operational enhancements across the Trust’s portfolio. Second-quarter same store metrics remained resilient, with Y/Y revenue and NOI up 4.2% and 3.4%, respectively.

Occupancy remained healthy at 96.0%, aligned with the national average and supporting continued income stability. Same store market rent growth of 8% Y/Y, combined with the turnover of 329 units in the first half of 2025, resulted in a 14.6% lift on rents and 5% growth for in-place rents. At 29.1%, the Trust’s gap to market provides healthy potential for future growth as market conditions evolve.

The Trust continued to implement expenditure controls and operational efficiency initiatives, with same store water expenses reduced by 5% Y/Y through sub-metering efforts and targeted energy conservation initiatives. The Trust’s average cap rate held steady at 4.48%, reflecting stable valuations and the strength of its income-producing portfolio.

The Trust’s mortgage profile remains conservative, with a mortgage debt to gross book value ratio of 52.3%. In addition, 99% of the Trust’s outstanding mortgage principle is CMHC-insured, providing access to favourable lending rates and enhanced financing stability. With limited debt maturities in the near term, the Trust maintains refinancing flexibility, stable distributions, and the ability to capture long-term upside as borrowing conditions improve.

Average Resident satisfaction scores continued to improve in every category, climbing 2.8% Y/Y across the Trust’s portfolio, further reinforcing Management’s commitment to providing high-quality, community-oriented rental housing.

Outlook and Portfolio Strategy

While rents have softened from historic highs across Canadian rental markets — particularly in higher-cost urban centres where new supply is being absorbed — Management continues to monitor the market and each property’s leasing activity to optimize rental rates, preserving long-term net asset value.

Confidence in multifamily rental market

Management has prioritized targeted leasing incentives and operational efficiency over aggressive repricing strategies, reflecting a disciplined approach in line with institutional best practices. This strategy underscores Management’s confidence in the long-term strength of multifamily rents, which are expected to rise steadily as population growth — despite recent moderation — continues to trend upward then ultimately outpace the supply added during the current wave of completions. A potential recovery will be shaped by a range of external factors, including ongoing tariffs, delayed policy implementation, and a more cautious investor climate.

Apartment-style housing completions are expected to continue through the remainder of 2025. A sharp decline in new starts will likely result in a significant supply shortfall by 2027-2029. At the same time, government incentives such as GST relief and development charge reductions have been announced but not enacted, prompting many buyers and developers to remain on the sidelines.

Building a resilient foundation for future growth

In this environment, the Trust’s disciplined strategy and long-term focus offer a distinct advantage. The Trust continues to advance development projects, such as Maison Riverain, while actively exploring future rental development opportunities.

With lower construction labour costs and fewer competitors in-market, there remains a narrow window to access high-quality sites at more favourable pricing. This allows the Trust to enter otherwise exclusive markets at a discount and build affordably into a period of expected supply scarcity.

Through a combination of selective acquisitions, proactive portfolio management, and diversification that includes new development, the Trust is building a resilient foundation for future growth. By focusing on well-located, income-generating assets and positioning for tomorrow’s supply-demand dynamics, Management continues to navigate the market cycle and deliver growth opportunities, laying the groundwork for sustained value creation in the years ahead.

Find Equiton’s previous quarterly report here: Q1 2025 Market Commentary and Outlook – Private Canadian Rentals a Bright Spot Amid Volatility

Forward-Looking Information

Certain information in this communication contains “forward-looking information” within the meaning of applicable securities legislation.

• Forward-looking information may relate to future events or the Trust’s performance.

• Forward-looking information includes, but is not limited to, information regarding the Trust’s distributions, growth potential and volatility, investor returns, ability to achieve operational efficiencies, objectives, strategies to achieve those objectives, beliefs, plans, estimates, projections and intentions; and similar statements concerning anticipated future events, results, circumstances, performance or expectations and other statements that are not historical facts. These statements are based upon assumptions that the management of the Trust believes are reasonable, but there can be no assurance that actual results will be consistent with these forward-looking statements.

• Forward-looking information involves numerous assumptions, known and unknown risks, and uncertainties that contribute to the possibility that the forward-looking statements will not occur and may cause actual results to differ materially from those anticipated in such forward-looking statements. Some of these risks are discussed in the section “Risk Factors” in the Offering Memorandum. These forward-looking statements are made as of the date of this communication and the Trust is not under any duty to update any of the forward-looking statements after the date of this communication other than as otherwise required by applicable legislation.