Alaris Equity Partners Income Trust (TSX: AD) declared a trust distribution of $0.39 per trust unit for the third quarter of 2026.

The payout represents an annualized rate of $1.56 per unit. The Board of Trustees announced the decision on September 18, 2026.

Payment Details

The distribution is payable on October 15, 2026. Unitholders must be on record as of September 30, 2026 to receive the payment.

Investment Strategy

The Trust invests in a diversified group of private businesses through structured equity. This approach aims to deliver stable returns via cash distributions and capital appreciation. Common equity positions allow alignment with founders of partner companies.

Alaris Equity Partners Income Trust ("Alaris" or the "Trust") reported a record net book value of $25.83 per unit for the three months ended June 30, 2026, reflecting robust growth in its underlying investment portfolio and strong operational performance. The Calgary-based trust saw its net distributable cash flow surge 41.8% year-over-year to $25.4 million, providing significant flexibility to fund future investments while maintaining a payout ratio below its long-term target range. This financial strength positions Alaris to capitalize on continued opportunities in the private credit market, with management highlighting an active pipeline for the second half of the year.

The Trust’s results were filed with Canadian securities regulators, with detailed financial statements and Management’s Discussion and Analysis available on SEDAR+. The reporting period covers both the three and six months ended June 30, 2026, with all amounts presented in Canadian dollars unless otherwise noted. Management emphasized that the improvement in earnings was primarily driven by unrealized foreign exchange gains and higher contractual partner distributions from recent investments.

Financial Performance Highlights

Total revenue and operating income increased 24.5% to $42.9 million compared to $34.5 million in the same quarter of 2025. This growth was fueled by higher partner distribution revenue from new and follow-on investments, including Kubik Inc., as well as realized and net unrealized gains on partner investments. Earnings and comprehensive income turned positive at $41.9 million, a sharp contrast to the loss of $17.9 million recorded in Q2 2025, largely due to a $21.1 million unrealized foreign exchange gain versus a loss of $44.8 million in the prior year period.

The year-to-date payout ratio stood at 58%, well below the Trust’s long-term target range of 65%–70%. This conservative distribution policy allows Alaris to retain cash for reinvestment, debt repayment, or potential acquisition opportunities. The annualized distribution yield on preferred capital invested was 12.8% in Q2 2026, up from 12.2% in Q2 2025, underscoring the resilience of the preferred investment portfolio.

Capital Deployment and Portfolio Expansion

Alaris deployed $76.2 million in capital during Q2 2026, a 132.7% increase from $32.7 million in the prior year period. Key transactions included a $75.3 million investment in Kubik Inc. during the quarter and a subsequent US$35.0 million investment in Tesco – The Eastern Specialty Company, LLC. These moves expanded the Trust’s portfolio to a record 25 partners, the largest in its history.

The portfolio maintains a weighted average Earnings Coverage Ratio (ECR) of approximately 1.5x, with 19 partners reporting ECRs above 1.2x. Notably, 16 partners have no senior debt or leverage below 1.0x senior debt to EBITDA, indicating a high-quality, low-risk asset base. Total partner revenue of $50.6 million exceeded guidance by 5.6%, benefiting from a stronger U.S. dollar relative to assumptions.

What the Numbers Show

A critical observation from the Q2 results is the divergence between reported earnings and underlying cash flow generation. While comprehensive income swung to a $41.9 million profit from a loss, this was heavily influenced by non-cash unrealized foreign exchange gains. In contrast, the 41.8% rise in net distributable cash flow reflects sustainable operational improvements, driven by higher partner distributions and lower cash taxes paid by acquisition entities. This suggests that core business fundamentals are strengthening independently of currency fluctuations, providing a more reliable foundation for future distribution growth and capital appreciation.

Outlook and Guidance

Management expects total partner revenue of approximately $69 million in Q3 2026, reflecting seasonal timing of common distributions. This estimate includes approximately $20.4 million of common distributions, notably including US$13.8 million received from Fleet Advantage, LLC subsequent to June 30, 2026. The estimated run rate revenue for the next twelve months increased to a record $208.4 million, based on current contractual terms. Management anticipates the run rate payout ratio to remain between 60% and 65%, excluding the impact of potential future investments.

Steve King, President and CEO, stated that the second quarter results reflect positive momentum built on solid free cash flow generation. He noted that adding the 25th partner and maintaining a payout ratio below target signals further growth ahead, with a strong environment for quality capital deployment continuing into the second half of the year.