RFA Financial used its first quarterly results call as a newly formed public company to outline its post-merger strategy, including plans to sell real estate assets and redeploy capital into its banking and mortgage lending businesses.
The diversified financial services organization was formed on February 1, 2026, through the merger of RFA Capital and Artis Real Estate Investment Trust Unit (TSE:AX.UN). President and Chief Executive Officer Ben Rodney said the combined company brings together “a growing bank-led financial services platform and a high-quality, diversified real estate portfolio and asset manager.”
RFA Sets Multi-Year Lending and Asset Sale Targets
Management laid out several three- to five-year targets for the company, including total lending assets of CAD 8 billion to CAD 12 billion. Rodney said RFA is targeting a bank return on equity in the low- to mid-teens range as it deploys capital into lending opportunities.
To support that growth, RFA plans CAD 1.3 billion to CAD 1.5 billion in cumulative real estate asset sales over the next three to five years. Rodney said the company expects RFA Bank’s net income to grow at a compound annual growth rate of 40% to 50%, driven by capital reallocation and disciplined execution.
RFA also said it intends to maintain a targeted payout ratio below 65%. Rodney said the company is offering an annual dividend of CAD 1.32 per common share, paid quarterly, during the initial growth phase. He said management expects dividends to be fully covered by RFA’s earnings as the capital redeployment strategy progresses.
Integration Progress Includes High Retention and Early Asset Sales
Chief Operating Officer Melody Lo said the merger integration is being handled in three phases: stabilize, integrate, and optimize and grow. She said the company’s initial focus was continuity across employees, brokers, clients, tenants and operations.
Lo said RFA retained 100% of its leadership team and 98% of its overall team following the merger. She also said the company maintained public and regulatory reporting and advanced its real estate disposition strategy ahead of schedule at or above IFRS values.
RFA has also introduced an employee founders share grant, which Lo said is intended to reinforce ownership and alignment across the organization. The company has integrated its global capital allocation framework through its investment committee and is reviewing opportunities for efficiencies and shared services where appropriate.
Real Estate Portfolio Remains Key to Capital Recycling
RFA owns approximately 9.4 million square feet across 88 properties in Canada and the United States. Lo described the portfolio as diversified by geography and asset class, with stable occupancy and consistent cash flow.
During the quarter, RFA reported a 6.1% increase in weighted average rental rates on renewals. Lo said the assets are “well leased and well-positioned for sale,” adding that the portfolio supports the company’s capital recycling strategy.
RFA has closed approximately CAD 60 million of asset sales to date and has an additional CAD 433 million in its asset sale pipeline, including unconditional and conditional transactions. Lo said the company has executed sales at or above IFRS values. RFA also has an additional 1.1 million square feet currently being marketed for sale.
Mortgage Originations Rise as Credit Metrics Remain Strong
Lo said RFA Mortgage Corporation has grown originations across all product lines from CAD 14.5 million to CAD 5.4 billion since it was established in 2018. She said first-quarter origination momentum remained strong, with a 40% year-over-year increase compared with the first quarter of last year. That growth primarily reflected the company’s prime insured product.
Management emphasized that lending growth is being pursued alongside disciplined underwriting. Lo said RFA’s prime residential portfolio has maintained borrower credit scores consistently above 790. The mortgage arrears rate was 0.024% in the first quarter of 2026, which Lo said was approximately 90% better than the national average.
RFA Bank’s alternative portfolio also showed near-prime average credit scores of 698, according to Lo. Actual write-offs were 0.86% in the first quarter of 2026, which she said was significantly lower than expected credit losses.
First-Quarter Results Reflect Merger Accounting
Chief Financial Officer Jaclyn Koenig said the first-quarter financial statements reflect a unique accounting presentation. For accounting purposes, Artis REIT was determined to be the accounting acquirer based on majority ownership and board representation. As a result, the quarter reflects a continuation of the former Artis, with two months of RFA Capital results included from the February 1 closing date. Comparative figures reflect only the former Artis.
Koenig said RFA’s common shares were consolidated on a three-for-one basis as part of the arrangement, leaving approximately 46 million common shares outstanding as of March 31, 2026. Artis paid a CAD 0.05 distribution to common unitholders for January, while RFA declared its first prorated quarterly dividend of CAD 0.22 for February and March.
During the quarter, RFA closed the sale of two Canadian retail properties for an aggregate price of CAD 45 million and sold industrial land in the U.S. for CAD 15.5 million. The company also acquired the remaining 25% of an eight-property Canadian industrial portfolio. As of March 31, investment properties held for sale totaled approximately CAD 452 million.
RFA reported occupancy, including committed leases, of 86.2% at quarter end. Financial services metrics included a net interest margin of 2.7% and a CET1 ratio of 18% for RFA Bank.
Rodney said the company’s priorities include accelerating origination growth, maintaining portfolio quality, executing the real estate disposition strategy and reducing the payout ratio over time. He said RFA expects to reinvest in its core banking and mortgage businesses while supporting a dividend that management intends to grow as the business scales.
About Artis Real Estate Investment Trust Unit (TSE:AX.UN)
Artis is a diversified Canadian real estate investment trust with a portfolio of industrial, office and retail properties in Canada and the United States.
