Choice Properties Real Estate Investment Trust

Thank you for standing by. My name is Brianna and I will be your conference operator today. At this time, I'd like to welcome everyone to the Choice Properties Real Estate Investment Trust third quarter 2024 earnings call. Please note that this call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star 1 again. I will now turn the conference over to Erin Johnstone, Senior VP of Finance. Please go ahead.

Thank you. Good morning, and welcome to Choice Properties Q3 2024 conference call. I'm joined here this morning by Rail Diamond President and Chief Executive Officer Mario Berrafato, Chief Financial Officer, and Niall Collins, Chief Operating Officer. Raelle will start the call today by providing a brief recap of our third quarter performance, as well as our transaction and development activity in the quarter. Niall 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 2024 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, and welcome to our Q3 conference call. We are pleased with our third quarter results. once again delivering strong operational and financial results driven by increasing demand from retail tenants, by necessity-based neighborhood centers, and strong leasing spreads in our industrial portfolio. Our occupancy remained high at 97.7%, we achieved strong leasing spreads of 15.3%, and delivered same-asset cash NOI growth of 3%. As expected, FFO growth of 3.2% for the quarter was impacted by the timing of lease termination income and certain one-time costs related to our continued focus on operational efficiency, which we spoke about last quarter. Our results reflect the quality of our portfolio and our team's ability to consistently deliver on our strategic priorities. Fundamentals across our asset classes remain strong. Our leasing team is seeing strong demand for retail space across the country, a trend we expect to continue, especially from necessity-based and discount-focused tenants. These tenants are actively seeking opportunities to expand their store networks across the country. Our extensive footprint of grocery-anchored neighborhood centers is ideally positioned to support their growth plans. In our industrial portfolio, we continue to benefit from leasing spreads as our low in-place rents adjust to market rents. Despite the industrial market undergoing a period of adjustment, our portfolio, centered on high-quality generic industrial assets, remains attractive to a diverse range of tenants. In addition, we're seeing strong leasing interest for the future phases of our development at Choice Caledon Business Park, thanks to our location, competitive land cost, and access to services, including power. This quarter, we saw long-term bond yields fall and stabilize, creating more certainty over asset valuations, which led to renewed optimism and an increase in transaction activity. However, the recent rise in long-term rates highlights ongoing market volatility. Irrespective of the environment, we remain on track to deliver on our balanced capital recycling program for the year. In the quarter, we completed $172 million in total real estate transactions, which included approximately $130 million of acquisitions and $42 million of dispositions. Our most significant transaction in the quarter was the acquisition of a three-building portfolio from Love Law for approximately $129 million at our 50% share. The acquisition was completed as part of a 50-50 joint venture with Crestpoint. Choice will act as the property manager of the portfolio, which includes one distribution center and two retail properties. The distribution center is a 711,000 square foot shopper's drug mart facility located in Mississauga, Ontario. The two retail assets include a real Canadian superstore in Winnipeg and a stranded title interest in the lower floors of 16 Colton Street in Toronto. formerly Maple Leaf Gardens. Originally constructed in 1931, this iconic building was the home of the Toronto Maple Leafs until 1999, but now houses 95,000 square feet of retail space, including a flagship Loblaw grocery store, an LCBR outlet, a Joe Fresh location, and 150 underground parking spaces. Toronto Metropolitan University retains its ownership of the top level of the property, which houses the Mattamy Athletic Centre. The two Toronto assets, including the distribution centre and retail store, represent approximately 85% of the rent of the three-property portfolio acquisition. Concurrent with the transaction, the properties were leased back to Loblaw with lease terms between 15 and 20 years with 2% annual growth. This transaction not only adds three high-quality assets to our portfolio, but also demonstrates the benefit of our strategic relationship with Love Law and the strength of our relationships with our third-party partners. Our disposition activity for the quarter included the sale of two retail assets, a power center in Quebec City and another retail asset adjacent to Choices Power Center in Mississauga, for total proceeds of approximately $42 million. Our team also continued to advance our development pipeline in the quarter. We transferred approximately 41,000 square feet of commercial GLA through retail intensifications. These projects focus on adding accurate retail density to our existing neighborhood centers. We expect our retail intensification pipeline to continue to add value to our retail portfolio and provide steady cash flow growth. For industrial development, we remain on track to deliver the first phase of Choice Caledon Business Park in the fourth quarter of this year, with cash rent commencing in the first quarter of 2025. In addition, during the quarter, we broke ground on the second phase of this development, which includes a fulfillment facility leased to a national logistics provider. Before I turn the call over to Niall, I want to acknowledge our recent announcement that Mario will be retiring in early 2025. As you know, Mary is one of the most trusted and respected CFOs in Canadian real estate. He's been at the helm with me for many years and played an important part in shaping our business. Mary was instrumental in building and maintaining our industry-leading balance sheet and a first-class finance function. His commitment, strategic insights, and leadership have helped propel Choice into an industry leader. As part of a thoughtful succession plan, We are pleased to announce that Erin Johnson will be promoted to Chief Financial Officer effective March 1 of 25. Over the last three years, Erin has demonstrated her strong financial and strategic capabilities and has made a significant positive impact on our organization. She's a very capable executive and is the full support of our leadership team and our board as she prepares to succeed Mario in the CFO role. Erin and Mario have worked closely over the past three years, and this partnership will continue in the months ahead as Marriott formally transitions his responsibilities to Aaron. With that, I'll pass the call over to Niall to discuss our operational results. Niall?