Granite Real Estate Inc.

Good morning, ladies and gentlemen, and welcome to the conference call of Granite REIT. Speaking to you on the call this morning is Kevin Gorey, President and Chief Executive Officer, and Teresa Netto, Chief Financial Officer. Before we begin today's call, I would like to remind you that statements, information made in today's discussion may constitute forward-looking statements and forward-looking information, including but not limited to expectations regarding future earnings, and capital expenditures, as well as potential impact of COVID-19, and that actual results could differ materially from any conclusion, forecast, or projection. These statements and information are based on certain material facts or assumptions, reflect management's current expectations that are subject to known and unknown risk and uncertainties. These risks and uncertainties are discussed and grounded material filed with Canadian securities administrators and the U.S. Securities and Exchange Commission from time to time, including the risk factors section of its annual information form for 2021 filed on March 3, 2021. Readers are cautioned not to place undue reliance on any of these forward-looking statements and forward-looking information. Granite undertakes no intention or obligation to update or revise any of these forward-looking statements or forward-looking information, whether as a result of new information, future events, or otherwise, except as required by law. In addition, the remarks this morning may include financial terms and measures that do not have standardized meaning under international financial reporting standards. Please refer to the Auditor Combined Financial Results and Management Discussion Analysis for the year ended December 31, 2020, for Granite Real Estate Investment Trust and Granite REIT Incorporated. The other material is filed with the Canadian Securities Administrators and U.S. Securities Exchange Commission from time to time for additional relevant information. I now would like to turn the call over to Kevin Gorey. Just go right ahead.

Thank you, Operator. Thank you, everyone, for taking the time to join us on our Q4 and full year 2020 earnings call. I hope everyone is doing okay. As usual, I am pleased to be joined this morning by Theresa Netto, our CFO, Oren Kummer, our Executive Vice President of Real Estate, and Michael Remperis, Executive Vice President and Head of Investments. For our call this morning, Theresa will begin our discussion with a review of the financial highlights, and I will then provide an update on our operations, acquisitions, development, and ESG activities and then open up the call to any questions that you may have.

Thank you, Kevin, and good morning, everyone. Granite's fourth quarter financial results completed a year of strong performance in 2020 with Granite posting FFO and ASFO per unit growth for the year of 9.9% and 8.2% respectively relative to 2019. FFO per unit in Q4 was $1, a $0.09 or 10% increase relative to prior year and $0.04 higher than Q3. Included in this quarter's FFO is the reversal of $1.7 million of current income tax provisions in Europe or tax positions relating to taxation years that have become statute hard. Offset partially by the temporary dilutive impact of the $288 million equity offering that closed on November 24th as well as the $500 million bond offering, which closed on December 18th, where proceeds have not yet been fully deployed. FFO this quarter was positively impacted by NOI growth from acquisitions completed in the year, as well as strong same property NOI growth, partially offset by negative foreign exchange translation of our foreign-based income, representing over 85% of our FFO, as the U.S. dollar and euro weakened by 2.2% and 0.3% respectively, relative to Q3. Part of the foreign currency translation loss was mitigated through Granite's hedging program, which utilizes derivatives that protects Granite against significant declines of both the U.S. dollar and euro. The settlement of such U.S. dollar foreign exchange derivatives resulted in approximately 1 million of foreign exchange gains realized in the fourth quarter, partially offsetting the translation losses. Granite's AFFO on a per unit basis in Q4 was $0.94, which is $0.06 or 6.8% higher than prior year and $0.03 higher than Q3. AFFO-related capital expenditures, leasing costs, and tenant allowances incurred in the quarter were $2.3 million, which was higher than the $1.6 million in the same quarter last year and higher than the $0.8 million incurred in Q3. Fiscal year 2020's maintenance capex and leasing costs came in lighter than expected, totaling only $6.2 million due to the delay of certain projects of the spring and summer months and also impacted by leasing activity that did not occur at Granite's Millby, Michigan property. 2020's maintenance capex spend is not reflective of forward maintenance capex trends. As mentioned in the Q3 earnings call, we are expecting maintenance capex tenant allowances and leasing costs to increase in 2021 to approximately $15 million or about $0.30 per square foot. ASFO also continues to be impacted by the temporary diluted impact of the November equity and December bond offerings mentioned earlier. As a result of a relatively low CapEx quarter and strong FFO performance, the ASFO payout ratio came in below 80% at 79% for the fourth quarter, contributing to a full-year ASFO payout ratio of 77%. NOI on a cash basis for the quarter increased $13.6 million, or 21.3% from the same quarter in 2019, and $3 million, or 4% from Q3. Same property NOI for Q4 came in strong relative to last year, increasing 4.6%, and on a constant currency basis, increasing 2.1%. Driven by contractual rent increases, incremental rent earned from an excess land at a GTA 9 property and rent from an expansion completed at one of our West Jefferson, Ohio properties. Excluding this expansion rent, same property NOI for the quarter is 4.8% and on a constant currency basis, 1.6%. G&A for the quarter was 0.1 million lower than the same quarter last year and 1.7 million lower than Q3. A positive variance relative to Q3 is primarily due to the $1.1 million severance charge recognized in that quarter. For 2021, based on current run rates, we estimate G&A will come in approximately $8 million per quarter, which includes approximately $1.6 million of non-cash compensation expense, but assumes no fair value losses or gains associated with increase or decrease in non-cash compensation liabilities, which cannot be predicted. With respect to current income tax, for Q4, current income tax was $1.1 million, which was lower than Q3 by $1.1 million due to the reversal of the $1.7 million of tax revisions previously mentioned, offset partially by current taxes of $700,000 relating to the gain on the sale of Granite Spanish property in October. For 2021, our current tax run rate is approximately $2.3 million per quarter, With respect to the potential recognition of tax assets, Granite will be recognizing 0.2 million of tax assets in Q1, therefore reducing its estimated current tax expense for that quarter, for this quarter, of 2.1 million for the quarter. Granite has a further potential 2 million of tax assets that may be recognized in Q4 2021 relating to tax positions on taxation years, which will go statute bar. but we cannot assess whether these tax assets can be realized at this time. The trust balance sheet comprising total assets of approximately $6.7 billion at the end of the year was positively impacted by approximately $140 million in fair value gains to Granite's investment property portfolio in the fourth quarter, offset by approximately $160 million of translation losses on Granite's foreign-based investment properties. particularly impacted by the decline in the U.S. dollar of 4.3% relative to the end of Q3. The fair value gain on grants investment property portfolio is attributable to fair value gains in the trust's GTA, U.S. properties, as well as the trust's modern distribution warehouse assets in Germany and the Netherlands, due to increases in fair market rent assumptions and declines in capitalization rates, partially offset by fair value reductions in a few of the trust's Austrian assets. The trust's overall weighted average cap rate at 5.6% decreased 20 basis points from the end of Q3. The net leverage as of December 31st was 25%, only slightly higher by 1% from Q3. Following the redemption of Granite's 2021 debentures on January 4th of this year, the trust's current liquidity is approximately $1.1 billion, representing cash on hand of approximately $580 million, and the undrawn operating line of $499 million. I will now turn the call over to Kevin. Thank you.