First Capital, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the first capital REACH Q3 2020 results conference call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press star one on your telephone keypad. I would like now to turn the conference over to Alison. Please proceed with your presentation.

Thank you and good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. A summary of these underlying assumptions, risks, and uncertainties is contained in our various securities filings, including our Q3 MD&A, our MD&A for the year ended December 31, 2019, and our current AIF, which are available on CDAR and on our website. These forward-looking statements are made as of today's date, and except as required by securities law, we undertake no obligation to publicly update or revise any such statements. During today's call, we will also be referencing certain financial measures that are non-IFRS measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these measures as a complement to IFRS measures to aid in assessing the REIT's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this conference call. I'll now turn the call over to Adam.

Thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today for our Q3 conference call. Some of the positive signs we saw emerging towards the end of Q2 continued through the third quarter. resulting in FFO that was ahead of expectations entirely through higher than expected NOI. This is only to a number of things, including the resiliency of many of our tenants who are categorized as non-essential by governments. A good number of these tenants reopened and performed well, which is a tribute to both their ability to adapt and the quality of our real estate. Real estate fundamentals and consequently asset quality are paramount at FCR and have been since our start 20 years ago. I'll focus on that theme today with my comments. So let's start with leasing. Our leasing activity through the pandemic has been strong. In Q2, despite the fears raised by the pandemic, we did a substantial amount of leasing. Following reopenings that took place, Q3 was even better. Since both quarters were squarely during the pandemic environment, I'll speak to them on a combined basis. We completed a total of over 1.3 million square feet of leasing activity across 346 transactions during the last two quarters. This volume was comprised of two components. The first is renewal activity. which totaled 1 million square feet and spanned a wide array of tenant categories from grocery stores to medical to restaurants to gyms. Roughly 60% of this leasing was to tenants who were deemed non-essential by government and 40% that were deemed essential. For clarity, we consider all of our tenants essential to our efforts to create thriving neighborhoods regardless of how governments classify them during a global pandemic. Heading into this year, we had 38 bank expiries, totaling 213,000 square feet in 2020. We have now renewed all 38. The average rent increase across all 1 million square feet of renewals during the last two quarters was a healthy 9.2%, consistent with our 10-year average of 9.3%. our renewal volume also compares well to our historical volume. The second component is our new leasing activity. In Q2 and Q3, we completed just under 300,000 square feet of new leasing on vacant space. Roughly 70% of this new leasing was to tenants who were deemed non-essential by government. Net rental rates for the new leases in Q3 We're consistent with pre-pandemic levels averaging $24 per square foot, roughly 10% higher than in-place rents. We're also encouraged by our pipeline for space that is currently under active negotiation. As always, internal targets for lease-up and tenant mix have been considered and set for all vacant space. We do not operate in a take-what-you-can-get mode. We never have. Enhancing our tenant mix with new retail concepts, remains an important part of our strategy. We've added some unique retailers over the last few months. Couples Diamonds is one of our newest tenants in Yorkville Village Mall. This innovative concept is a leader in omni-channel retail and aligns well with FCR's ESG focus. For those who aren't familiar, Couples is a digitally native leading seller of lab-grown diamonds that are chemically identical to mine diamonds but with a much more positive environmental and ethical impact. Another new tenant that will soon join Couples in Yorkville Village Mall with a flagship store is Pulsar. Pulsar is a global, design-focused electric performance car brand. They have a new take on automotive retail, which utilizes carefully designed, unique retail environments instead of conventional dealerships. Both tenants are great additions to our offering in Yorkville and are indicative of continued demand for high-quality space in a very dynamic retail marketplace. In fact, our luxury retailers in Yorkville, such as Brunello Cucinelli, Chanel, and Versace sales over the last few months have exceeded the same prior year periods. The bulk of our leasing activity continues to come from uses more typical to FCR, including grocery, pharmacy, pet stores, medical uses, and restaurants, among others. Yes, we have been doing active deals with restaurants. We have many types of restaurants, and they have been impacted by COVID differently. So this quarter, we have broken the category down further in our MD&A and investor presentation to reflect these differences. Restaurants as a category comprise 14.6% of our rental revenue. Now the components. Quick service restaurants, or QSRs, have performed quite well with many of our QSR tenants experiencing sales growth over the same prior year period. This group is typically in smaller spaces, sometimes with drive-thrus, and are continuing to generate meaningful sales through takeout and delivery. and to a lesser extent right now, in-store dining where permitted. Coffee shops and national chains are other subcategories, both of which are generally comprised of retailers who have the wherewithal to come through this and prosper, even those in which sales are down. Together, QSR, coffee shops, and national chains are represent the vast majority of our restaurant category at 12.9% of total rent. The remaining ones are generally comprised of sit-down restaurants that were profitable pre-pandemic. However, this group continues to require support. We believe these restaurants will once again become vibrant hubs of the thriving neighborhoods in which we operate. Government aid is well targeted to this group including the new SERS program. At 1.7% of FCR's rental revenue, this is a fairly small category, but very important to our long-term tenant mix. So we will do our part as well to support them through. We continue to feel good about what we're seeing on the ground and specifically leasing. Market reactions to retail real estate since the start of the pandemic would indicate that many are taking a macro generalized approach. A great majority of investors have not spent time at our properties. This makes it more difficult to recognize the qualities which differentiates FCR from other real estate companies. These include the strength of our locations, our focus on demographics, the above average performance of our essential tenants, and our leasing and operations teams, among others. The physical interaction with real estate provides one with a very important perspective. I vividly remember the Great Recession of 2008 and 2009. Like today, there was a very significant disconnect between public market valuations of high-quality REITs and the value of their underlying real estate in the private markets, or said differently, their net asset values. Like every other crisis when this has occurred, private market values held and public market values rebounded, although that was never an obvious outcome in the midst of the crisis. I also remember how encouraging it was to spend time at properties and to see what was actually happening on the ground. Real estate has always been a local business and experiencing properties and neighborhoods has always been an essential part of assessing their health. My colleagues and I continue to do just that, although we do it in a larger bus these days. We allocate full days to tour properties together in a safe, socially distanced way. And what we're seeing is reassuring and encouraging. Our properties are busy. They're typically the most productive, gross re-anchored centers in each of the trade areas in which we operate. Our long-term commitment as the industry leader in property operations for our product type is shining through. whether it's the additional weather protection measures being installed to manage line queuing as winter approaches, or FCR's Quick Shop, which was rolled out nationally to facilitate curbside pickup and buy online, pick up in store, something that we have now made permanent. We don't just tour our own assets, we also tour competing properties in each respective trade area. We observe how well grocery stores are stocked, which is an indicator of their volume and turnover. We look at access, signage, cleanliness, energy efficiency, parking lot and building conditions, and much, much more. We focus on merchandising mix. We speak to store managers and gather valuable information on these tours, and we come away with an on-the-ground sense of how properties are doing, what we can do to improve ours, and a lot of raw material for valuable brainstorming sessions that result in action plans. We can't take you with us on these tours, so instead, we have started filming the typical activity at our properties and are releasing short videos of sub markets that cover our portfolio in attempts to bring the on the ground sense a little closer. At this time, please refer to page four of our conference call deck. There's a video link that's embedded in the slide and I would ask you to now please click on it to play the video. This is our GTA West portfolio. comprised of Oakville, Burlington, Brampton, and Mississauga. This video footage was all shot during the last two weeks, so you get a very current sense. While the activity is evident, I'll provide some additional details on this portfolio. It includes 11 properties totaling 1.7 million square feet on 160 acres of land. It represents roughly 8% of our total portfolio value and carries an IFRS value that is well below current replacement costs. The current occupancy of this GTA West portfolio is 97.6%. Every property with one small 20,000 square foot exception has a grocery or food store. The majority of our grocers report sales on an annual basis which averages $725 per square foot in this portfolio, a very healthy number that will increase substantially once 2020 sales are included. So in summary, an exceptional, well-positioned portfolio that I encourage you to visit. Seeing really is believing. While the video is wrapping up, I will finish with ESG. It's wonderful that many of our peers have started to focus on this topic. This is great for our industry. As an ESG pioneer in the real estate sector, we have earned our right as a leader in this area, which means we're able to leverage our position by holding more of our stakeholders accountable to our high ESG standards. We have a track record that includes 11 years of commitment to publishing an annual ESG or CRS report that outlines our activities in progress. Looking back, It included multi-year greenhouse gas emission reduction targets that started 10 years ago. That was also the timeframe when we started installing electric car charging stations at our properties. And in 2006, nearly 15 years ago, we committed to building all new developments to LEED standards. Our team members fully appreciate that being an industry leader in ESG is business as usual for SCR. It has been long embedded in our DNA and our culture. It is also deeply and naturally intertwined with our super urban strategy. Building on our ESG track record and platform, we are nearing completion of our new five-year ESG roadmap that is the most detailed, wide-reaching and ambitious set of targets that we have tackled. These targets are good for employee retention, recruitment and engagement, reducing our carbon footprint, and reducing operating expenses for our tenants. Simply, it's just good for business. We look forward to sharing further details in due course. Before I turn it over to Kay, I do want to touch on CFO succession. As you know, Kay is soon retiring from full-time executive life. I will hold my departing comments for her until our next conference call. We recently announced that Neil Downey will soon join us as EVP Enterprise Strategies and CFO. Given the opportunities and challenges that lie ahead, his unique skill set will be very beneficial to FCR and our stakeholders. We're thrilled to have someone of Neil's caliber join our leadership team, and we look forward to formally welcoming him very soon. So, there's been a lot going on at FCR, and the team has made very meaningful progress. With that, I will now pass things over to Kay to review our quarter in more detail. Kay?