Allied Properties Real Estate Investment Trust

Good morning. My name is Rob, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Allied Properties REIT third 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'd 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. Cecilia Williams, President and CEO, you may begin your conference.

Thanks, Rob. Good morning, everyone, and welcome to our conference call. I'll discuss Q3 highlights briefly. Michael, Nan, and JP are with me to answer questions that follow. 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 2022 annual report and our most recent quarterly report. Material assumptions that underpin any forward-looking statements we make include those assumptions described under forward-looking statements in our most recent quarterly report. In Q3, we accomplished an overriding goal, the successful sale of our UDC portfolio. We can now focus exclusively on our workspace portfolio with a view to completing upgrade and development activity, optimizing renewals, and leasing vacant space over the remainder of the year through 2024. Our net debt as a multiple of annualized adjusted EBITDA at the end of Q3 was 7.9 times, and our available liquidity was $1.4 billion. We expect our net debt as a multiple of annualized adjusted EBITDA will decline over the next three years as developments are completed and begin to generate material amounts of EBITDA. We remain committed to our investment grade rating and to improving it over time. The process of transferring development completion to the rental portfolio continued in Q3. with 365,413 square feet of GLA moving from PUD to the rental portfolio, an average net rent per square foot of $34.28, reducing the cost of PUD as a percentage of gross book value to 11.6% at the end of the third quarter. This will add to our annual EBITDA run rate by approximately $12 million from the beginning of 2024 onward. will continue to transfer material amounts of GLA from PUD to the rental portfolio over the remainder of the year and throughout 2024 and 2025. This will, one, reduce the cost of PUD as a percentage of gross book value to approximately 4.5% by the end of 2025, two, increase average in-place net rent for occupied square foot in our rental portfolio, and three, Add to our annual EBITDA run rate by approximately $46 million from the beginning of 2026 onwards. As disclosed in our NVNA, leasing activity this quarter was strong. We expect sustained and successful leasing activity for the remainder of the year and into 2024. We'd now be happy to answer any questions.

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from the line of Jonathan Kelcher from TD Cowan. Your line is open.