Choice Properties Real Estate Investment Trust

Good morning and welcome to the Choice Properties Real Estate Investment Trust third 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 would now like to hand the conference over to your first speaker today, Erin Johnson, Vice President of Finance. Please go ahead.

Thank you. Good morning and welcome to Choice Properties Q3 2023 conference call. I'm joined here this morning by Rail Diamond, President and Chief Executive Officer, Mario Barifato, Chief Financial Officer, and Anna Radek, Chief Operating Officer. Rail will start the call today by providing a brief recap of our third 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 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 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 these forward-looking statements. Additional information on the material risks that can impact our financial results and estimates and the assumptions that were made in applying and making these statements can be found in the recently filed Q3 2023 financial statements and MD&A, which are available on our website and on CDAR. And with that, I'll turn the call over to Raoul.

Thank you, Erin. Hello, everyone. Thank you for being here today. We are happy to report that performance in the third quarter was strong. Our ability to deliver stable and consistent cash flow was reflected in our results. As we remained near full occupancy, we delivered strong same-asset cash-in-a-while growth and year-over-year FFO growth. Our core business, backed by a strong balance sheet, is generating stable cash flows. This stability is a testament to the quality of our retail properties, which are anchored by grocery stores and cater to essential needs, as well as strong demand for our well-located generic industrial assets. Despite the economic uncertainty and ongoing market volatility, business fundamentals across our three strategic asset classes remains exceptionally strong. Our necessity-based retail tenants remain resilient with robust leasing demand. Many retailers are actively seeking to expand their presence, especially in non-urban markets. we're experiencing robust tenant demand and significant increases in rents upon lease renewals. This will drive further future cash flow growth as these leases roll over. And in our mixed use and residential portfolio, the lack of supply continues to support rental rate growth in our residential assets. As we address the impact of high interest rates on our business, our disciplined approach to financial management and industry-leading balance sheet continue to be exceptionally valuable. This is reflected through the quality of our credit. We demonstrated once again in the quarter our ability to mitigate interest rate risk and maintain a balanced tenure ladder at attractive all-in rates. Our property valuations also reflect a conservative financial approach. We've always had a policy of evaluating the impact of macroeconomic conditions on our values, and we were deliberate and thoughtful in adjusting our portfolio cap rates in response to the higher rate environment that began in the second quarter of 2022. We are confident in our current valuations. In the current elevated rate environment, we consistently trade at a narrower discount to our IFRS NAV as compared to how our peers trade to theirs. And beyond that, we have a compelling growth story and a tremendous opportunity to drive higher NAV through our income property portfolio and our development pipeline. Rising interest rates have impacted the transaction market, which continues to be challenging. Despite this, our team continues to demonstrate their ability to execute on our capital recycling program, finding the right private buyers to execute on deals at reasonable pricing. We remain focused on having a balanced program and on track to find our 2023 acquisitions with dispositions. Our 2023 dispositions have been focused on completing our exit from office as an asset class and continuing to dispose of other assets that are considered non-strategic to our portfolio. Acquisitions primarily relate to high-quality assets from large loans. With minimal transaction activity in the quarter, we completed two smaller transactions, including acquisition of a retail property with a Shoppers Drug Mart and a Life Mart in Hamilton. Subsequent to the quarter, we completed $93 million of dispositions, including one retail asset, two industrial assets, and one office property. The retail asset was a 360,000-square-foot secondary market power center with a standalone Love Law Superstore located in Munson, New Brunswick. This asset sold for $61.6 million and included a $10 million BTB at an interest rate of 6.5%, maturing one year post-closing. The two industrial properties located in Dartmouth, Nova Scotia were sold for $11.6 million. Consistent with our retail portfolio, we continually review our industrial portfolio and determine that these assets did not align with our strategy of holding high-quality, generic properties in key markets. Finally, we completed the disposition of our last office asset in Calgary, Alberta for 20 million. This transaction marks our successful exit from office as an asset class. This is a significant milestone for our team as it was completed in a very challenging transactions environment for office assets. Turning to our developments, we completed three commercial projects in the quarter, two retail intensifications, and an approximately 300,000 square foot industrial development in Edmonton. This industrial transfer represents the final phase of our six-building project at Horizon Business Park. So, after Prince of the Quarter, we also achieved several other significant development milestones. In our residential project in Ottawa, Ontario, which is named the Element, partial occupancy permits have been issued with initial occupancy commencing on October 15th. The remaining occupancy Permits are anticipated before the end of the year, and the building is currently 40% leased. At a residential project in Brampton, Ontario, condo owners began taking possession in October. We anticipate that two-thirds of condo purchases will take possession in the fourth quarter, with a remainder in the first quarter of 2024. For the rental portion of the project, the schedule has been delayed slightly, with initial occupancy expected in the first quarter of 2024. We transferred our 253,000 square foot industrial building in Surrey, B.C. to income producing with a tenant-taking occupancy on November 1st. The yield on this development was approximately 10.5%, a significant premium to a high-quality industrial wood trade in the Greater Vancouver market. At Choice Caledon Business Park, we signed a lease for an additional 625,000 square feet with the leading logistics provider. The building is being designed to be carbon zero ready and will be a generic 40 foot clear height distribution facility that is functional for a wide range of users. Construction is expected to commence once site servicing is complete near the end of 2024. We continue to drive cash flow and NAV growth through our development program. While our development team continues to work on zoning entitlements for future residential projects, given the current environment, we are prioritizing capital allocation to our commercial development projects as they continue to provide attractive returns even in the current environment. With that, I'd like to hand it over to Anna to provide more color on our operational results. Anna?