Canadian Apartment Properties Real Estate Investment Trust

Good morning, everyone, and thank you for standing by. Welcome to the Canadian Apartment Properties Third Quarter 2023 Results Conference Call. My name is Chach, and I'll be coordinating today's call. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. And if you change your mind, please press star followed by two. I'd now like to turn the call over to Nicole Dolan, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. 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 CAPRE, which are subject to certain risks and uncertainties. We direct your attention to slide two and our other regulatory filings for important information about these statements. I will now turn the call over to Mark Kenney, President and CEO.

Thanks, Nicole, and good morning, everyone. Joining me this morning is Stephen Coe, our Chief Financial Officer, and Julian Schoenfeldt, our Chief Investment Officer. Let's begin on slide four. We're pleased to be reporting another quarter of robust operational performance. Vacancies remain stable at all-time lows, with nearly 99% of our Canadian residential suites occupied at period end. This reflects the tight rental conditions that we're operating in today. driven by the increasingly undersupplied Canadian housing market. As a result, our occupied AMR on the total Canadian residential portfolio has grown to $1,490 a month as of September 30th, 2023. We summarized our financial results for the third quarter on slide five. Operating revenues were up by 6.5% which reflects our solid rent growth, especially in the context of a smaller portfolio. That operating income was up even higher, growing by 7.1%, with lower operating costs as a percentage of revenues. As a result, our margin on the total portfolio expanded to 66.5%. In part, this highlights the effectiveness of our strategy and the strong earnings that come from our new construction rental properties, as compared to the non-core buildings that we're selling. It demonstrates that by upgrading the quality of our portfolio, we're also upgrading the quality of our earnings. Diluted FFO per unit increased by 4.6% to 63.8 cents for the quarter, primarily due to this operational growth. as well as attractive purchases previously made under our NCIB program. This decreased the weighted average number of units outstanding by 2.8%. Our diluted NAV per unit was down to 54.36 cents as of September 30th, 2023, mainly a result of the fair value loss recognized on our portfolio. This is due to an increase in the weighted average cap rate. Slide 6 highlights some key performance metrics year-to-date. Operating revenues and NOI grew by 5.7% and 6.2% respectively, driving the expansion of our total portfolio margin to 65.1% for the nine months ended September 30th, 2023. This is up from 64.8% in the comparative period. Our same property margin also grew by 30 basis points to 65.4%. This reflects the fact that our rent growth was strong enough to offset higher property operating costs, which resulted from inflationary pressures and increased repairs and maintenance expenses. However, we're strategically incurring these higher repairs and maintenance costs as we've intentionally scaled back on our discretionary value enhancing capital expenditure, which flows through our balance sheet. Instead, we're allocating that capital to repairs and maintenance work, which impacts our margins. This strategic pivot was taken in response to the tight rental markets we're experiencing across Canada. Our consolidated operating costs, which include E-RES, were also inflated by movement in the exchange rate. However, the similarity increased our foreign exchange operating revenues upon translation. Diluted FFO per unit was up by 2.7%. This was a result of our operational growth and NCIV repurchases, partially offset by higher interest costs. Our payout ratio remained conservative at 60.5% for the current nine month period. We're continuing to make solid progress on our strategic initiatives as displayed on slide seven. Our portfolio modernization program is front and center. I've briefly mentioned some benefits of the program that we're seeing come through in our financial results, but the strategy really does pursue an upgrading of the portfolio in every capacity. We're purchasing newly built rental properties located in strong performing, quickly growing Canadian geographies that have higher returns and lower risk. We're funding purchases through the disposition of our older buildings that are no longer core to our strategy. Considering our competencies and objectives, it is important to us this recycling also contributes to the remediation of the Canadian housing crisis. We've established a robust development program that additionally helps with the solution to the housing problem without us having to deviate from our bread and butter business. We're working hard on this front to entitle our excess land and crystallize the significant under realized value embedded throughout the portfolio. In doing so, we're opening the door to the vital development of new homes in Canada. The NCIB constitutes another value creation tool at our disposal, which we can leverage whenever that presents itself as the best use of capital. Our proactive debt financing program is also a critical component of our strategy. As Stephen will discuss, it provides us with the financial flexibility we need to execute on all our strategic objectives and brings everything together to collectively form the CAPRI 2.0 strategy. I will now turn things over to Julian to provide a more detailed update on our capital recycling.