Dream Industrial Real Estate Investment Trust

is about to begin. Good day, ladies and gentlemen. Welcome to the Dream Industrial REIT fourth quarter conference call for Wednesday, February 14, 2024. During this call, management of Dream Industrial REIT may make statements containing forward-looking information with the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks, risks, and uncertainties, many of which are beyond Dream industrial REITs control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in DREAM industrial REITs filings with securities regulators including its latest annual information form and MD&A. These filings are also available on DREAM industrial REITs website at www.dreamindustrioreet.ca. Later in the presentation, we will have a question and answer session. To queue up for a question, press star 1 on your telephone keypad. Your host for today will be Mr. Alexander Sanikov, CEO of Dream Industrial REIT. Mr. Sanikov, please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's year-end 2023 conference call. Speaking with me today is Linus Kwon, our Chief Financial Officer. We continue to deliver strong operating and financial results in 2023 and executed on our key growth drivers. DIR achieved 11.3% comparative properties NOI growth in 2023, representing the strongest pace of organic growth since the REITs IPO. FFO per unit was 98 cents, 10% higher year over year, marking the third consecutive year of double-digit FFO per unit growth. Our private capital partnerships continue providing us new avenues for growth. In 2023, we grew our accretive and recurring fee stream with over $9 million of net margin generated from our property management and leasing platform, more than double compared to 2022. We continue to execute on our development pipeline with 300,000 square feet of projects completed in 2023, that are expected to achieve an unlevered yield on cost of 7.5%. Supported by a balance sheet strength, we have been actively deploying capital into strategic investment opportunities, especially within our private capital partnerships. These investments offer us the opportunity to generate strong returns and maintain balance sheet flexibility. We completed over $360 million of acquisitions through the Dream Summit Venture during the year. We're currently in exclusive negotiations on a number of additional assets in the GTA totaling 2.5 million square feet of GLA. Going forward, we will continue to focus on growing our private ventures. We will also explore capital recycling opportunities to fund our value-add initiatives and improve our overall portfolio quality. We're currently in negotiations on select disposition opportunities across the portfolio. These dispositions range from user sales to disposals of non-strategic assets to private buyers at compelling pricing parameters, allowing us to recycle capital accretively on a total return basis. Our development execution is progressing well, and we are on track to achieve our forecasted yields. Our 209,000-per-foot, net-zero-ready logistics facility in Mississauga is on track to be completed in mid-2024. We recently signed a 10-year conditional lease for over 60% of the space, achieving a starting rent of over $20 per square foot with annual contractual rent growth of approximately 4%. The remaining 80,000 square feet could be demised into small units, allowing us to capture demand from a broad range of prospective occupiers. Overall, we remain encouraged by the leasing activity across our portfolio. We're responding to numerous requirements both for our development projects and current vacancy, and have seen a significant increase in levels of touring activity since the beginning of the year. We continue to see significant strength in the small and mid-bay segments of the market, both in Canada and in Europe. We have also seen speculative construction activity decrease significantly in our markets, which should translate into continued strength in fundamentals over the near to medium term. Our occupancy rate of 96.2% at the end driven by anticipated transitory vacancies across our Ontario and European portfolios, and we expect to capture strong rental lifts on these vacancies upon lease-up. We continue to execute on our strategy of maximizing rental rates on our new leases and renewals. Since the beginning of 23, we have transacted 7 million square feet of new leases and renewals across DIR and Dream Summit portfolios at a combined average spread of 55%. achieving average contractual rent steps of 3%. Our lease maturities are well staggered, with 6 million square feet of GLA maturing in Canada over the next 24 months, of which approximately 75% is located in Ontario and Quebec, where average market rent is nearly double the in-place rent. In Europe, we have 2.4 million square feet maturing over the next two years, and the current average market rent for these European leases is nearly 10% higher than in-place rents. With market rents over 30% above in place, we are optimistic that we can continue capturing significant organic growth within our portfolio as leases roll. In the near term, we expect occupancy to fluctuate as we continue prioritizing rental growth in our leasing strategy. For 2024, we expect our in-place rents to grow by high single-digit percentage range by the end of the year. We expect that the pace of CP&OI growth will remain strong in the mid-single-digit range on a constant currency basis. Our CP&OI growth expectation is largely predicated on timing of lease-up over transitory vacancies. I will now turn it over to Lennis to discuss our financial highlights.

Thank you, Alex. We ended 2023 with strong financial results, which demonstrates the successful execution of our strategic initiatives over the past few years. Diluted FFO per unit was $0.24 for the quarter and $0.98 for the full year, more than 10% higher year-over-year. The solid year-over-year growth was primarily due to strong comparative properties NOI growth of 9.6% for the quarter and 11.3% for the year. in addition to the fee income generated from our property management platform. Our net asset value per unit at year end was $16.61, modestly lower compared to the prior quarter due to higher cap rates in Europe, partially offset by higher market rents in both Canada and Europe. We continue to actively pursue financing initiatives to maintain a strong and flexible balance sheet with ample liquidity. During the year, we issued $400 million of unsecured debt at an average rate of 5.2% and refinanced €229 million of European mortgages at a weighted average rate of 4.93%. We raised $107 million of capital through our ATM program in mid-2023 at an average price of $14.27 per unit. These proceeds were used to repay floating rate debt, generating immediate FFO per unit accretion. In addition, this enhanced our financial flexibility, allowing us to continue funding our development projects and co-investments in our private ventures, which are expected to generate attractive returns over time. In December, we priced a $200 million unsecured debt issuance via a reopening of our Series F unsecured bond at a lower implied interest rate than the original issuance in early 2023. The offering closed in early January 2024, and the proceeds were partly used to reduce the outstanding balance on our credit facility bearing an average rate of approximately 6.9%, with the remainder earmarked towards funding our development pipeline and contributions to our private capital partnerships. To date in 2024, we have repaid approximately $41 million of mortgage maturities. Our remaining unaddressed debt maturities for 2024 is approximately $260 million, including our Series B $200 million unsecured debenture maturing in June. We are currently evaluating proposals to refinance this bond with unsecured term debt at rates comparable or better than the current 4.5% rate, or we could opportunistically access the unsecured bond market. We ended 2023 with leverage in our target mid-30% range and net debt to EBITDA at 7.7 times. With total available liquidity of nearly $700 million, including the $200 million Series F reopening proceeds, we retained sufficient capital to execute on our strategic initiative. With our in-place rents more than 30% below market and several development projects coming online soon, Our portfolio is positioned well to continue producing strong organic growth that can absorb the higher interest costs from refinancing our debt maturities from 2023 and over the course of 2024. Based on our comparative properties NOI growth expectations, we expect mid-single digit FFO per unit growth in 2024. Our FFO growth expectation is predicated on current foreign exchange leverage levels and interest rate expectations, as well as expected timing of the lease-up of our transitory vacancies. We expect our in-place occupancy and FFO per unit to remain stable for the first quarter of 2024, with growth weighted towards the middle and back half of the year. I will turn it back to Alex to wrap up.