Allied Properties Real Estate Investment Trust

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Allied Properties REIT first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Michael Emery, President and CEO, you may begin your conference.

Thank you, Rob, and good morning, everyone. Welcome to our conference call. Tom and Cecilia are here with me to discuss Allied's results for the first quarter ended March 31st, 2023. Anthony Mallingham, our incoming CFO, is also with us today. 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. Despite ongoing macroeconomic uncertainty, Allied's business is larger, stronger, and better managed than ever before. Our operating income was up 14.5% in the first quarter, an all-time high made possible by development completions and contribution from last year's portfolio acquisition. Our interest cost was also up in the quarter, entirely due to variable rate debt encouraged to fund development. that will continue to propel operating income in the coming years. We plan to retire the variable rate debt fully and increase our liquidity materially with the proceeds from the sale of our UDC portfolio. While the sale process is not complete, it is definitely nearing completion. The first quarter of 2023 was positive from an operating perspective and supportive of our outlook. Cecilia will summarize our financial results. Tom will follow with an overview of leasing and operations. I'll finish with our current thinking about the future, particularly the future of the allied team. Now over to Cecilia.

Good morning. I'll highlight key operating metrics, our financial position, progress on development and upgrade activity, and priorities for the year. Our operating metrics continue to be strong. Operating income was up 14.5% from the comparable period due to a full quarter of contribution from the choice portfolio, as well as development completion. Average in-place net rent for occupied square foot was also up to $23.35. This is higher from year end by 1% and higher from a year ago by 3.6%. We also continue to see strong rent growth on renewing space in the quarter, which was 11.4% on an ending to starting basis and 18.2% on an average to average basis. Tom will provide more details on our leasing activity. We're pleased with our financial position. We expanded our operating line by $100 million to $700 million, while keeping the $100 million accordion intact. On closing of the UDC portfolio sale, we intend to use the majority of the proceeds to pay off debt, including our operating line, which we expect to pay off in full, increasing our liquidity and pushing our debt metrics back within our targeted ranges. Our debt metrics will continue to improve thereafter, and our development completion continues to be increasingly economically productive. We do not intend to allocate any capital to discretionary activities, including acquisitions in the coming year. We allocated $85 million of capital in the quarter to revenue enhancing activity and development completion, which is what we'll continue focusing on for the foreseeable future. Our development and upgrade activity is progressing well. In Toronto, at 19 Duncan, Thomson Reuters has taken physical occupancy. And at TRC West Expansion, Northeastern University has finalized its spit-out design. In Montreal, at Tour VJ, Novartis has taken physical occupancy, and the remaining space is under negotiation with other interested users. Our priorities for 2023 continue to be leasing, development and upgrade completion, and completing the UDC sale to strengthen our balance sheet and reaffirm our commitment to urban workspace. The goal continues to be to propel our operating capabilities. Our outlook for 2023 remains unchanged at low to mid single-digit growth in each of FFO and ASFO per unit and SAMASA and AWADO. We also expect to continue increasing our distribution at our historical rate of 2 to 3% per year. Our team and our operating platform has never been stronger. With that, I'll pass the call to Tom.