Choice Properties Real Estate Investment Trust

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to Choice Properties Real Estate Investment Trust fourth quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. And if you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Erin Johnston, Senior Vice President, Finance. Erin, you have the floor.

Thank you. Good morning and welcome to Choice Properties Q4 2023 conference call. I'm joined here this morning by Raelle Diamond, President and Chief Executive Officer, Mario Berrafato, Chief Financial Officer, and Niall Collins, Chief Operating Officer. Roehl will start the call today by providing a brief recap of our 2023 performance and cover the highlights of the fourth quarter. Mario will discuss our operational results and 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 fact. 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 our recently filed Q4 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 Rayl.

Thank you, Erin, and good morning, everyone. 2023 was an exceptional year for our business. as we delivered strong financial and operating results. At the beginning of the year, we set up our financial goals of capital preservation, generating stable and growing cash flow, and delivering NAV and distribution growth over time. Our team successfully delivered on these goals by focusing on our three strategic priorities of maintaining our market-leading portfolio, sustaining operational excellence, and delivering on our development pipeline. We maintain our market leading portfolio by continuing to be one of the most active REITs in the transactions market. We further enhanced the quality of our portfolio by completing approximately $620 million in real estate transactions, including $285 million of acquisitions and $335 million of dispositions. We also continue to deliver on our development pipeline by adding high-quality real estate to our portfolio. This included 1.8 million square feet of retail and industrial space, along with a residential rental building named Element in Ottawa. Investment of approximately $295 million was delivered at an average yield of 7.7%, resulting in significant NAV creation as the current fair value of these investments is over $425 million. Finally, we successfully met our 2023 outlook. We maintained near full occupancy rates through the year and achieved our same assets, cash NOI, and FFO growth targets. Turning to the operating and economic environment for a moment, we remain encouraged by the supply-demand trends that are supporting each of our asset classes. Specifically, our retail tenants continue to expand their store network and suburban trade areas continue to perform well. Despite headlines regarding the slowdown in industrial rent growth, there remains substantial embedded growth within our existing portfolio, as evidenced by the 60.6% rent spread we achieved this past quarter. While we are optimistic regarding underlying fundamentals of our asset classes, we acknowledge that significantly higher borrowing costs recessionary fears, and geopolitical threats continue to cause uncertainty and overall market volatility. Nevertheless, I'm confident that choice remains in an enviable position and well-prepared to navigate these uncertain times. The quality of our real estate, which includes grocery and neighborhood centers, industrial properties with inherent rent growth, and high-quality residential properties provides a strong buffer to gain potential economic impacts. Another source of confidence lies in our strong balance sheet and significant liquidity position. Real estate is a very capital-intensive business, and having a strong balance sheet is a must. We've been disciplined in our strategy of maintaining loan leverage, and over the past year, we have proven our commitment to a staggered debt maturity profile targeting a 10-year ladder. The strength of our balance sheet enables us to maintain consistency in our development activities, and importantly, we have the flexibility to be opportunistic. While the confidence that we have in our business to continue to deliver steady and growing cash flows supported by a strong and stable foundation, our Board of Trustees has approved another distribution increase effective March 2024. This increase demonstrates our commitment to sharing our growth with our unit holders. Turning to our fourth quarter results, our momentum continued in the quarter. We delivered increases in same asset cash NOI and FFO of 4.2% and 5.8% respectively. Leasing activity continues to be strong as the portfolio remains near full occupancy at 98%, up 30 basis points compared to last quarter. We had strong rental rate growth with an average rent spread of 23% in the quarter, supported by strong fundamentals in each of our three strategic asset classes. During the quarter, we continued to execute on a capital recycling program, completing 239 million of transactions, including 83 million of acquisitions and 156 million of dispositions. We acquired two high-quality grocery-anchored retail properties in Greater Montreal and one industrial property from Loblaw. The industrial property is a 425,000-square-foot building in Calgary leased to Shoppers Drug Mart. This asset is in an established industrial node and is 15 minutes from Calgary Airport. We obtained 15-year leases on these three properties with 2% annual rent steps. Included in $156 million of dispositions was $93 million related to selling a retail asset, two industrial buildings, and a non-core office building mentioned on the Q3 call. Additional sales in the quarter included an industrial asset in Dartmouth for $7 million, two retail assets in Cambridge, BC for $50 million, and a land parcel adjacent to a retail site in Edmonton, Alberta for $6 million. Turning card developments. We delivered four retail units, two industrial projects, and one purpose-built rental building during the quarter. Included in our industrial development transfers was approximately 930,000 square feet related to the first phase of our project at Choice Eastway Industrial Center in East Gwillimbury, leased to Loblaw. This phase of the project was delivered with an expected stabilized yield of 7.8%. Also included in our transfers was 350,000 square feet, a choice industrial center in British Columbia, which I spoke about on a Q3 call. This project was delivered with an expected stabilized yield of 10.2%. Cash rents on both sides commenced in January of this year. We also delivered one residential development in Ottawa, in which we own a 50% interest. This development of 252 units offers a unique rental community in the vibrant Westboro Village, one of Ottawa's most desirable neighborhoods. The building was delivered at an expected stabilized yield of 5.1%. There continues to be strong demand at the building, and it is now 44% occupied and 58% leased, with stabilization expected in the second half of this year. I'll hand it over to Mario to provide more color on operational and financial results.