Allied Properties Real Estate Investment Trust

Good day and welcome to the Allied Properties REIT fourth quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Emery, President and Chief Executive Officer. Please go ahead, Mr. Emery.

Thank you, Jess. Good morning, everyone, and welcome to our conference call. Tom, Cecilia, and Hugh are here with me to discuss Allied's results for the fourth quarter and year-ended December 31st 2021. We may in the course of this conference call make forward-looking statements about future events or future performance. These statements by their nature are subject to risks and uncertainties that may cause actual events or results to differ materially, including those risks described under the heading risks and uncertainties in our most recently filed AIF and in our most recent quarterly report. Material assumptions that underpin any forward-looking statements we make include those assumptions described under forward-looking disclaimer in our most recent quarterly report. By way of overview, 2021 was a strong year operationally and financially for Allied. 40.5 cents and AFFO per unit at $2.09. In both cases at record levels and at the high end of the range contemplated in our internal forecast. Leasing activity exceeded our expectations for the year with the result that our average in place net rent per occupied square foot rose in all four quarters finishing at $24.64 in the fourth quarter compared to $23.88 in the comparable quarter last year. Cecilia will summarize our financial results and speak about the ongoing augmentation of our financial and ESG reporting. Tom will follow with an overview of leasing and operations. Q will provide a development update, and I'll finish with our current thinking about the future. So now over to Cecilia.

Good morning. I'll touch on our balance sheet, internal forecast, and ESG. First, our balance sheet. As you know, we flexed our balance sheet over the past two years to take advantage of acquisition opportunities that would not have been available to us in a normal environment. Our confidence in doing so was bolstered by the fact that our current developments will increase our EBITDA by approximately $80 million annually in the next few years. That said, we're not prepared to flex our balance sheet further and have begun the process of getting our net debt to EBITDA back to our target range. Our recently established at-the-market program will be helpful. We test ran it in Q4. raising $30 million of equity at a weighted average price of $44.05. Also helpful will be our development completions starting to become economically productive later this year and into 2023 and 2024. Their contribution to earnings combined with discretionary use of the ATM program will effectively allow us to more actively manage towards our targeted debt metrics. On to our internal forecast. We expect low to mid single digit growth in each of FFO per unit, AFFO per unit, and SAMASA NOI in 2022. Consistent with previous internal forecasts, we've assumed no new acquisitions and using debt to finance all activity, both of which are highly unlikely. Growth in FFO and AFFO per unit will be the result of development completion, a full year of acquisitions completed in 2021, rent growth, and occupancy growth to 94% later this year. As with all our development projects on completion, the financial impact is moderated by the simultaneous decapitalization of costs, resulting in the full impact not being realized for 12 to 24 months. Development completions are expected to contribute an incremental $0.06 to FFO per unit in 2022, net of $1 million less in capitalization of costs. This is primarily from economic occupancy commencing at the well, Duncan and Adelaide, and Bright Hop Phase III. Same asset NOI growth will be the result of occupancy and rent growth in Toronto, Montreal, Vancouver and our UDC portfolio. Parking is assumed to return to pre-pandemic levels. Straight line rent on the total portfolio is expected to almost triple in 2022 from 2021 levels as turnover vacancy is addressed in the latter half of 2022. This sets us up for a strong 2023 when economic productivity from development completions continues to grow. Development completions are expected to contribute an incremental $0.14 of FFO per unit, net of $16 million less in capitalized costs. This would be primarily from the Well, Duncan and Adelaide, Bright Hub Phase 3, and QRC Phase 2. Combined with a full year of the acquisitions expected to close in Q3 of 2022 and economic occupancy from leasing activity completed in the rental portfolio, in the latter half of 2022 our current internal estimates are for growth in the mid to high range of ffo per unit affo per unit and say massa noi in 2023 now to esg we continue to advance our esg program in 2022 last year we set an inaugural greenhouse gas intensity target and a long-term goal of achieving net zero for all new developments or major redevelopments. This year, we will be evaluating our possible pathways to net zero and preparing our team members and relevant partners for implementation of our decarbonization roadmap. We are committed to evaluating climate risk across the business and will be undertaking a climate scenario analysis in the first quarter. You can expect our third annual ESG report to be released by July of this year, including disclosure of our performance against the Task Force on Climate-Related Financial Disclosures, or TCFD, recommendation. I'll now pass it to Tom for a discussion of our operating and leasing results.