CT Real Estate Investment Trust

My name is Justin, and I will be your conference operator today. At this time, I would like to welcome everyone to CT REITs Q1 2024 Earnings Results Conference 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 that time, simply press star 11 on your telephone keypad. To withdraw your question, please press star 11. The speakers on the call today are Kevin Salzberg, President and Chief Executive Officer of CTREIT, Jody Spielberg, Jody Spielgel, Senior Vice President, Real Estate, and Leslie Gibson, Chief Financial Officer. Today's discussion may include forward-looking statements. Such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see CT REIT's public filings for discussion of these risk factors, which are included in their 2023 MDNA and 2023 AIF, which can be found on CT REIT's website on CDAR. I will now turn the call over to Kevin Salzberg, President and Chief Executive Officer of CT REIT. Kevin.

Thank you, Justin. Good morning, everyone, and welcome to CTREIT's first quarter investor conference call. I thought I would start the call with a little color with respect to what we are seeing in the market currently. With respect to the economy at large, growth remains muted. Inflation has tempered, but it's still above the target rates set by our central bank. And housing affordability continues to become further out of reach for average Canadians, driven by high levels of immigration over the last few years, elevated construction costs, and excessively long timeframes that are required to complete new development. For some time now, market prognosticators have been considering when interest rate cuts will begin and by how much we should expect rates to decline. The answers to these questions continue to seem uncertain and something to be determined at some point in the future. A lack of clarity, driven by the aforementioned factors, continues to constrain the property markets. and transaction volumes remain relatively muted. Fundamentals for retail real estate, however, have been strong as increased population translates into new customers for our tenants and the high cost to build coupled with the conversion of commercial assets into residential development sites have fueled a supply-demand imbalance that has favored landlords of late. Despite the turmoil of this mixed market, CTREIT continues to perform. And our Q1 2024 results are yet another example of the stability, reliability, and growth that we have delivered to date, irrespective of market conditions. From our successful IPO through our initial phase of growth to the COVID-19 pandemic and the more recent challenging economic conditions, CTREIT has proven its resilience time and again. In the first quarter, our durability and performance were once again on full display. And I'm pleased to report that we achieved growth in net operating income, or NOI, of 5.6%, growth in same property NOI of 4.1%, and growth in diluted AFFO per unit of 4.8%. All in all, a great start to the year. On the back of these strong results, we were pleased to announce that for the 10th straight year, our Board of Trustees has approved yet another increase to our distributions. The 3% increase is the 11th since our IPO and represents a cumulative increase of 42.3% over that time, which is a true testament of our success and stability over the last 10 plus years. An investor who has been with us since our inception would now be enjoying a 9.25% yield on their initial investment based on our new distribution rate. And our future continues to look bright. We have over 740,000 square feet of gross leaseable area in our development pipeline, comprising one new Canadian tire store development, 16 Canadian tire store expansions, one redevelopment, and one site intensification for third-party tenants. With respect to our balance sheet, our low leverage, strong coverage ratios, and liquidity position us well to manage our way through this higher-for-longer rate environment. We only have one debt maturity this year, a $200 million series of Class C LP units that Canadian Tire holds that will be reset effective June 1st, 2024 for an additional five years at a rate of 5.43%, and we have no other upcoming debt maturities until midway through 2025. The strength of our balance sheet, the visibility of our cash flows, and our embedded growth all make CTREIT a very attractive option for investors as we continue to navigate these choppy waters. I'll now turn it over to Jody and Leslie to provide some additional details on the quarter, our results, and our investment leasing and development activities. Jody?

Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we were pleased to announce one new investment this quarter. This new investment relates to the expansion of an existing Canadian tire store located in Donacana, Quebec. It is anticipated that this $11.1 million Million-dollar investments will be completed by the end of 2025 at a going-in yield of 7%. In Q1, we continue to focus on our existing development pipeline. Building on the significant progress made in 2023, the REIT currently has 20 projects at various stages of development, with three of these expected to be completed this year and most of the balance expected to be completed in 2025 and 2026. These developments represent a total committed investment of approximately $287 million upon completion, $96 million of which has already been spent, and $52 million of which we anticipate will be spent in the next 12 months. Once built, these projects will add in total incremental gross leaseable area of approximately 742,000 square feet to the portfolio, 93.8% of which has been pre-leased at quarter end. During the quarter, we extended one Canadian tire store lease while maintaining a nearly fully occupied portfolio, with our occupancy rate now reaching 99.5%. As at the end of Q1, the weighted average lease term for our portfolio was 8.2 years, which remains one of the longest in the sector. With that, I will turn it over to Leslie to discuss our financial results. Leslie?