Choice Properties Real Estate Investment Trust

Good morning, and welcome to the Choice Properties Real Estate Investment Trust second quarter 2023 earnings conference call. Today's call is being recorded. After the speaker's remarks, there will be a question and answer session. I'd now like to hand the conference over to your first speaker today, Erin Johnston, Vice President, Finance. Please go ahead.

Thank you. Good morning, and welcome to the Choice Properties Q2 2023 conference calls. I'm joined here this morning by Rael Diamond, President and Chief Executive Officer, Mario Barifato, Chief Financial Officer, and Anna Radek, Chief Operating Officer. Rael will start the call today by providing a brief recap of our second quarter performance and provide an update on our transaction and development activity in the quarter. Anna will discuss our 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 begin today's call, I would like to remind you that by discussing our financial and operating performance and then responding to your questions, we may make forward-looking statements that include 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 facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in those forward-looking statements. Additional information on the material risks that can impact our financial results and estimates and the assumptions that were made in making these statements can be found in the recently filed Q2 2023 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 Rep.

Thank you, Erin. Good morning, everyone, and thank you for joining us today. We are pleased with our second quarter results, delivering another solid quarter. We delivered strong same-asset cash NOI growth of 4.35%, and FFO growth of 5%. This was driven by strong leasing and active asset management. While inflation remains elevated and investors continue to be cautious, fundamentals across our three strategic asset classes remain strong. Our financial and operating performance in the quarter demonstrate the continued demand for necessity-based retail centers, well-located generic industrial assets, and transit-orientated residential buildings. Robust tenant demand for space within our properties continues to drive momentum in our leasing pipelines and inability to drive rent growth, which Anna will speak about in a moment. One trend that we continue to see since our last quarter update is in regard to the transactions market. The market has been impacted by uncertainty in the financing markets, and we continue to see a slowdown in transactions with wide bid-ask spreads persisting. Despite this, our team continues to be hard at work looking for opportunities to execute on our capital recycling program with a focus on ensuring we maintain our high-quality portfolio. in the second quarter we completed 103.1 million of transactions including 101.2 million of dispositions our dispositions were focused on continuing to exit office taking advantage of strong market fundamentals in assets we considered on call and improving the quality of our retail portfolio we completed the sale of one of our final two non-strategic office assets in the quarter, disposing of Metropolitan Place in Dartmouth, Nova Scotia, for proceeds of $13.4 million. This disposition completes choices office exits in Atlantic Canada. We are actively marketing our remaining office asset in Calgary. On the theme of selling non-core assets, during the quarter we leveraged the strong market for data centers and closed on the sale of a data center adjacent to the Love Law head office in Brampton for net proceeds of $74.2 million. Lastly, we completed the disposition of a single tenant retail site in Cornwall, Ontario for proceeds of $10 million. The site, which had been dark since 2019 and was tenanted by a large box home improvement retailer on a long-term lease. Our team was able to facilitate the sale of the asset to a buyer while capitalizing on the remaining value of the lease by negotiating receiving a lease termination payment of $7.4 million from the existing tenant. While transactions have slowed, our developments are progressing very well, and the team continues to focus on delivering on our development pipeline. In addition to our ongoing retail intensification program, we are on track to complete approximately 1.6 million square feet of industrial space and two residential projects this year. During the quarter, we commence servicing and site work at Choice Caledon Business Park. Servicing for the entire site is expected to take approximately 18 months and cost approximately $165 million a chair. Once complete, Choice will have a fully graded service site at a land cost of approximately $1.1 million per acre. We're also pleased to report that for the first phase of this development, we've entered into an approximately 90-acre ground lease with Lovelaw with rent commencement in the first quarter of 2025. The lease has an initial term of 25 years with 2% annual rent steps. The total cost of the first phase with Love Law, including land servicing and phase one specific costs expected to be approximately 125 million a chair and yield between seven and a quarter and seven and three quarters percent. For future phases of the site, our leasing team continues to see strong interest and is working through proposals with potential tenants. Subsequent to the quarter, our team also completed leasing at our development in South Surrey, BC, leasing the entire 353,000 square feet for initial term of 10 years. With the completion of this lease, our revised yield is now expected to be approximately 10.75% with a total cost of approximately $72 million. The advancement of each of these projects demonstrate our team's ability to create value and add high-quality assets to our portfolio. We continue to focus in the short term on the opportunities available to us in our retail and industrial development pipelines, which continue to deliver strong returns despite highs in interest rates. With that, I'll hand it over to Anna to provide more color on our operational results. Anna?