Choice Properties Real Estate Investment Trust

Good morning and welcome to the Choice Properties Real Estate Investment Trust second quarter 2022 earnings. My name is Rob and I will be your conference operator today. Today's call is being recorded and all lines have been placed on mute. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star followed by the number one in your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to hand the conference over to your speaker today, Erin Johnston, Vice President of Finance. Please go ahead.

Thank you. Good morning and welcome to the Choice Properties Q2 2022 conference call. I'm joined here this morning by Rayl Diamond, President and Chief Executive Officer, Mario Berrafato, Chief Financial Officer, and Anna Radek, Executive Vice President, Leasing and Operations. Before we begin today's call, I would like to remind you that by discussing our financial and operating performance and in responding to your questions, we may make forward-looking statements, including statements regarding choice, properties, objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook, and similar statements concerning anticipated future events, results, circumstances, performance, or exceptions that are not historical fact. These statements are based on our current estimates and assumptions and are subject to risk and uncertainties that could cause actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the material risk that can impact our financial results and estimates and the assumptions that were made in applying and making these statements can be found in our recently filed Q2 2022 financial statements and management discussion and analysis, which are available on our website and on CDAR. And with that, I will turn the call over to Ralph.

Thank you, Erin, and good morning, everyone. Welcome to our second quarter earnings call. To start the call, I'll provide a brief recap of our quarterly performance and cover the highlights of our transaction and development activities. Anna will cover operational results, followed by Mario, who will conclude the call with a review of our financial results before we open the lines for Q&A. Before we dive into the activities of the quarter, I'd like to first highlight that along with our earnings release, we announced that the Science-Based Targets Initiatives, or SBTI, has validated CHOICE's greenhouse gas emissions targets, making CHOICE one of the first entities in Canada to have net zero targets approved by the SBTI. As we've said before, Fighting climate change is fundamental to our purpose of creating enduring value for our stakeholders, and we are proud to deepen our environmental commitment with these targets. Turning to our results, last quarter we announced that we are focusing our time and capital on the opportunities available in our core business areas of essential retail, industrial, and our growing residential platforms. Our strong operating results in the quarter demonstrate this focus with improved occupancy in each of these core asset classes and same asset cash NOI growth of 3.8 percent. Our performance in the quarter was underpinned by several key themes. First, the strength of our retail portfolio. Next, the significant growth potential of our industrial portfolio. And finally, a focus on managing risk in the current economic environment. Our retail portfolio is one of the best performing in the Canadian REIT industry. It is primarily leased to necessity-based tenants that provide stable and steady cash flow growth. And we also benefit from our strategic relationship and long-term leases with Loblaw. This relationship provides us with both long-term stability and growth opportunities. An example of long-term stability includes the renewal of 2.9 million square feet of lovelorn leases subsequent to the quarter for an average term of 7.7 years, which Anna will expand on shortly. An example of growth are five active shoppers drug mart developments representing a total investment of $22 million, an expected initial yield of 6.75%. with additional projects in planning. The size, quality, and growth potential of our industrial portfolio contributed to our strong operating performance in the quarter. Our 17.4 million square feet industrial portfolio includes large purpose-built distribution facilities for Love Law, as well as high-quality generic industrial assets that can accommodate a wide range of tenants. We have significantly embedded growth in our industrial portfolio with non-lovelorn tenants representing two-thirds of NOI with leases being on average 40% below market. In addition to the growth in our existing assets, we believe that over time we have the ability to significantly increase our industrial portfolio through development. Our investment activity in the quarter significantly increased our future industrial development pipeline, which now has approximately 6.5 million square feet under development on various stages of the rezoning and planning process. First, we acquired an additional 97-acre path of land adjacent to the future industrial site in Caledon that we acquired in 2021. This acquisition increased our total future net development industrial land in this multi-phase industrial park to approximately 380 acres, of which we own 85% interest. The assembly has been completed at an attractive pricing of $700,000 per acre. We're currently working through the rezoning process for the town of Caledon to permit a total of approximately 5.5 million square feet of industrial space. Next, we exercised our previously announced equity conversion right from the Ross Group to acquire 75% ownership interest in 154 acres of developable industrial land in East Gwillimbury in the GTA. The plan is to build a multi-phase industrial park with the potential for approximately 1.8 million square feet of new generation logistics space. For the first phase of the development, we have entered into a 100-acre land lease with Love Law, where Love Law intends to build a 1.2 million square feet, fully automated, multi-temperature industrial facility. We expect an initial yield of between 6.5% and 7% on this land lease to Love Law, with rent commencing in the first quarter of 2024. And finally, we also have two other active industrial developments, under construction totaling 500,000 square feet in Vancouver and Edmonton, which are expected to be completed in the second half of 2023, with leasing expected to be completed prior to construction completion. Turning to the current economic environment, since the beginning of the year, concerns over inflation have resulted in a significant increase in interest rates. This increase has put downward pressure on the valuation of our investment properties and resulted in higher incremental borrowing costs. Mary will discuss shortly the steps we have taken during the quarter to ensure that in light of these changes, our balance sheet remains extremely strong. I'm now going to pass the call over to Anna to discuss our operational results. Anna?