Canadian Apartment Properties Real Estate Investment Trust

Good morning. Thank you for attending today's Canadian Apartment Properties REIT fourth quarter and year-end 2022 results conference call. My name is Forum, and I will be your moderator for today's call. All lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. It is now my pleasure to pass the conference over to our host, Nicole Dolan, Associate Director of Investor Relations for Capri. Ms. Dolan, please proceed.

Thank you, operator, and good morning. Before we begin, let me remind everyone that during our conference call this morning, we may include forward-looking statements about expected future events and the financial and operating results of Capri, which are subject to certain risks and uncertainties. We direct your attention to Side 2 and our other regulatory filings for important information about these statements. I'll now turn things over to Mark Kenney, President and CEO.

Thanks, Nicole. Joining me this morning is Stephen Cope, our Chief Financial Officer, as well as Julian Sharpe Belt, our Chief Investment Officer. Starting with slide four, you will see that 2022 was another strong performing year for CAPRI, with positive increases across the board. Revenues at NOI both up as a result of higher occupancy, growth in average monthly rents of nearly 5% and contributions from our net acquisition activity. This drove the increase in our NSFO, which was more modest due to the impact of certain inflationary and other unexpected costs. We experienced higher repairs and maintenance costs, including catch-ups from COVID-19 related delays, as well as increased energy expenses. However, we've effectively implemented numerous mitigating programs in response, which I will expand on shortly. This all accumulated in the approximate 1% increase in our diluted NFFO per unit, despite the 0.5% increase in the weighted average number of units outstanding. Our fourth quarter results, as detailed on slide 5, show a snapshot of our improving operational and financial returns. Operating revenues and NOI were both up by approximately 7% compared to the fourth quarter of last year, while our diluted NAV per unit grew nearly 3% versus Q3 of 2022. Although diluted NFFO per unit did increase more moderately, up by 1.4% compared to the same period last year, this is This is double the increase which we realized on an annual basis. This demonstrates the beginning impact of the many cost-mitigating programs we've put in place and prioritized this year. For instance, we've refined our robust procurement practices and are proactively monitoring natural gas rates in order to hedge as much as possible. The strategic modernization of our portfolio further contributes to inherently higher margins. and we're accelerating our sub-metering and other energy-saving investments across our more vintage assets. As of year end, energy costs, approximately 65% of our Canadian portfolio, are now the responsibility of our residents. In addition to lowering costs, this also lowers consumption, contributing to our ESG commitment to enhance our environmental footprint. The increase in our same property NOA margin To 64.3%, this past quarter evidences the effectiveness of these initiatives, which we will continue to prioritize going forward. Elaborating on that strong same-property performance, Site 6 shows it's continuing to strengthen from an annual perspective as well. With significant increases in demand for quality rental accommodation, we are seeing net average monthly rents rise alongside consistent near full occupancy. Slide 7 further demonstrates the effectiveness of our highly skilled and experienced leasing and marketing teams, who have kept occupancy high and stable even throughout the pandemic, while simultaneously achieving meaningful rent increases, which are up 5% on average compared to the prior year. driver of the strong increases in monthly rents over the past few quarters is the positive trend on turnover that we are seeing post-pandemic as detailed on slide 8. We are generating unprecedented increases on turnover prior to the pandemic and have quickly returned to record-breaking increases. A rental uplift on turnover for this past fourth quarter is 24.3%, which is up substantially from the 8.6% we realized in the fourth quarter of 2021. This not only reflects a return to our normal and increasing productive sales and marketing programs, but also the worsening of the housing crisis in Canada, which we expect will continue to drive mark-to-market rent increases in the quarters ahead. I'll now turn things over to Julian to outline how we are repositioning and remodeling the quality of our property portfolio.