Canadian Apartment Properties Real Estate Investment Trust

Hello, everyone, and welcome to the Canadian Apartment Properties First Quarter 2022 Results Conference Call. My name is Juan, and I will be coordinating your call today. All participants have been placed on mute to prevent any background noise. There will be a question and answer session at the end of the presentation. If you would like to ask a question at this time, please press Start, followed by number one on your telephone keypad. I would now like to turn the call over to your host, David Miller. Please, David, go ahead when you're ready.

Thank you, Juan, and welcome, everyone. Before we begin, let me remind everyone that the following discussion may include comments that constitute forward-looking statements about expected future results and the financial and operating results of CAPREIT. Our actual results may differ materially from these forward-looking statements, as such statements are subject to certain risks and uncertainties. Discussions concerning these risk factors, the forward-looking statements, and the factors and assumptions on which they are based can be found in our regulatory filings, including our annual information form and MD&A, which can be obtained at CDAR.com. I'll now turn things over to Mark Kenney, President and Chief Executive Officer.

Thanks, David. Good morning, everyone, and thank you for joining us. Stephen Coe, our Interim Chief Financial Officer, is also with me this morning. So turning to slide four, we booked another solid year in 2021. Despite operating for a full year under the challenges presented by the pandemic, all of our key benchmarks were up, including revenues, NOI, and NFFO. And we continue to generate solid and accretive growth for our unit holders. It's also important to note that we continue to experience very few rent collection issues. Today, we've collected over 99% of our rents as we continue to get close to our residents and understand their issues. Turning to slide five, while we were pleased with our results in the first quarter, we experienced certain increased costs compared to last year that led to a smaller increase to our quarterly NFFO. The key challenges were an acceleration of largely weather-related and COVID catch-up maintenance costs. Remember that in last year's first quarter, we were in total lockdown in Ontario and Quebec, as well as increased gas costs and consumption due to the colder weather this year and higher realty taxes. NFFO per unit was impacted by the 1.7% increase in the number of units outstanding in the quarter. Having said this, revenues were up over 8% driven by the contribution from our acquisitions, increased monthly rents, and continuing high occupancies, resulting in a 4.4% increase in our NOI. However, like all issuers today, we believe inflationary cost pressures will impact our results over the short term. From an operating perspective, our ability to generate solid performance in both good times and bad is clearly demonstrated by the results of our stabilized portfolio, as you can see on slide six. Occupancies improved again in the first quarter, while net average monthly rents continued to increase. As mentioned, our same property NOI was impacted by the increased costs we experienced in the first quarter. Higher maintenance costs, the increase in natural gas costs and consumption, and slightly higher realty taxes. We believe such inflationary cost pressures will impact our NOI over the next few quarters. Our leasing and marketing programs continue to generate increasing occupancies, as you can see on slide seven. After two years operating under significant pandemic restrictions, our occupancies remain highly stable at 98% at quarter end. You can also see our bad debts as a percentage of total revenues have remained low throughout the pandemic. and continue to track historic low levels. Tenant incentives also continue to decline to pre-pandemic levels, and we expect a majority of the amortization of our lease incentives to be completed by the end of 2022. A key factor in our ability to generate solid results is the solid increase in rent on turnover we are achieving, as shown on slide eight. While turnovers have been impacted by the pandemic, we are now starting to see solid increases as we move rents closer to market. At more than 10% increase on turnover in the Canadian portfolio, we believe is a solid result. And we expect to see this to continue and grow in the balance of the year. Our churn rates are also strengthening and tracking historical trends of seasonal variations. Renewals also started to improve in the first quarter. We noted last year we increased rents on January 1 by the mandated amount of 1.2% in Ontario and 1.5% in BC as of quarter end. Ontario and BC represent over 57% of our total NOI. As mentioned, we experienced a solid and positive trend in rent increase on turnover each quarter since we bottomed out at the height of the pandemic in Q1 of last year, as shown on slide 9. Looking ahead, we are experiencing more in-person and online visits. We expect we will start to see more and higher mark-to-market rent increases in the quarters ahead, moving us toward the higher levels of increase we generated prior to when the pandemic set in. Turning to slide 10, we continue to increase the size and scale of our property portfolio. Through 2021, we acquired 3,744 suites and sites, the majority in our key GTA BC markets. And another 1,015 suites and sites have been acquired to date in 2022. Our acquisition pipeline remains strong and robust, and despite cap rate compression, we expect to generate further accretive portfolio growth in the quarters ahead. I'll now turn things over to Stephen for his financial review.