Dream Industrial Real Estate Investment Trust

Welcome to the Dream Industrial REIT Third Quarter 2024 Results Conference Call on Wednesday, November 6, 2024. Please be advised that all participants are currently in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then 0. During this call, management of Dream Industrial REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Industrial REIT's 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 REIT's filings with securities regulators, including its latest annual information form and MDNA. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit.ca. Your host for today will be Mr. Alexander Senikov, CEO of Dream Industrial REIT. Mr. Senikov, please proceed.

Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's third quarter 2024 conference call. Speaking with me today is Lennis Kwon, our Chief Financial Officer. In the third quarter, we continue to focus on executing on our key growth drivers. We reported FFO per unit of $0.26, 4% higher year over year. Our year over year comparative properties and OI growth was 3.3% for the quarter and 5.1% on a year-to-date basis. which was in line with our expectations. We remain on track to achieve our 2024 organic growth guidance. We ended the third quarter with 95.5 committed and in place occupancy. We have continued executing on our capital recycling program, but we plan to resurface additional value through reinvesting the proceeds towards our development and acquisition pipeline, which are creative on a total return basis. We're currently in active discussions on several built-to-suit opportunities across our excess land portfolio and are also looking to add further scale to our solar program at accretive returns. In the quarter, we achieved substantial completion on a solar project located in The Hague in the Netherlands with a system capacity of 3.4 megawatts and a forecasted yield on cost of over 8%. Market fundamentals remain healthy across our key geographies. We have seen an uptick in demand levels in Canada recently, and are encouraged to see growing activity levels for larger units. Over the past few weeks alone, in our Canadian platform, we have responded to over 1 million square feet of RFPs. We are also seeing an increase in leasing activity in Europe, primarily in Spain and France, where we have several pockets of availability. Supply remains predictable and we are not seeing new material construction starts across our key markets. As a result, We expect the structural drivers for our core operating markets in Canada and Europe to remain positive as we head into 2025. This translates into leasing activity in our portfolio. During the quarter, we signed a 10-year lease at our Abbotside development for the remaining 70,000 square feet, with space rents starting at $18.50 per square foot and 4% annual steps. The project is now fully leased, achieving a yield-on cost of 7.1%. We also signed a $300,000 per foot lease for 10 years at our Balzac development at starting rents of $9.75 per foot with 2.5% annual steps. This lease represents nearly half of the development and is one of the largest leases completed in Calgary Industrial Market in 2024. To date in 2024, we have completed over 800,000 square feet of development leasing at rental rates in line with our initial underwriting. Within our income-producing property portfolio, rental spreads on contracted leases remain strong. Since the end of Q2, we signed 1.9 million square feet of new leases and renewals at an average rental spread of 25%. In Canada, we signed 1.1 million square feet of leases at an average spread of 39%, with rental steps of 3%. In Europe, we signed 745,000 square feet of leases at an average spread of 10%. Year to date, we have signed 5.2 million square feet of leases at 40% average spread. This leasing volume is greater and the spreads are also greater compared to the same period in the prior year. As we communicated previously, we are increasingly pursuing opportunities to recycle capital out of non-strategic assets into our core business and market at accretive returns. Our capital recycling program continues to progress. Since the end of Q2, we sold three assets across our wholly owned and Dream Summit portfolio for gross proceeds to DIR of $29 million. Among these recent dispositions is a sale of 89,000 square foot flex industrial asset located in Montreal, which was sold to the existing tenant. Total proceeds were $20.3 million representing a 17% premium to the carrying value. As we recycle capital from these assets, our capital allocation priorities remain intact. We plan to reinvest the proceeds towards completing our existing development pipeline, executing on our solar program, and contributing towards our private capital partnerships, which are all accretive from a total return standpoint. We're also starting to see attractive acquisition opportunities in Europe, for well-located urban industrial assets. We continue to focus on growing our industrial platform in strategic Canadian markets. We're currently under contract on $226 million of acquisitions or $35 million at DIR's share across Canada, including a 32-acre zoned infill site in Brampton within our development joint venture. With a flexible balance sheet, our business is well-funded to pursue these initiatives through existing liquidity, disposition proceeds, and retained cash flow. To conclude, all of our growth drivers remain intact, and we expect that our 2024 results will be consistent with previously communicated outlook, and we continue to expect reacceleration of comparative properties NOI and a four per unit growth heading into 2025. I will now turn it over to Lennis to discuss our financial highlights.

Thank you, Alex. We're pleased with our solid financial results for the third quarter. We reported diluted FFO per unit of $0.26 for the quarter, 4% higher than the prior year quarter, primarily due to comparative properties NOI growth, early renewals of existing tenants, and development leasing coming online. Our net asset value per unit at quarter end was $16.73, which is in line with last quarter. We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity. During the quarter, we increased the limit on our unsecured revolving credit facility from $500 million to $750 million and extended the maturity to August 2029. In addition, we extended the maturity date of our $200 million term facility out to March 2028 in order to be coterminous with the corresponding cross-currency swap, enhancing both our liquidity and debt maturity profile. We ended Q3 with leverage in our targeted mid-30% range and net debt to EBITDA ratio of eight times. With total available liquidity of approximately $820 million, we retained sufficient capital to execute on our strategic initiatives including funding our development pipeline and contributing to our private capital partnerships. Having completed the repayment of a European mortgage at maturity in August, we have addressed all of our debt maturities for 2024. Comparative properties NOI growth for the year was partially impacted by 534,000 square feet of expected vacancies across Quebec and Spain. We are in discussions to lease up approximately 75% of these spaces. Our committed occupancy was 95.5% at the end of September, up slightly from last quarter. We expect our committed occupancy to remain largely flat in the fourth quarter. Our outlook for the remainder of the year remains intact, and we expect our FFO per unit for the fourth quarter to be in line with Q3. As such, our full year results are expected to be in line with our previously issued guidance on comparative properties NOI and FFO per unit. Looking beyond 2024, we continue to expect that the pace of organic growth within our portfolio will accelerate and will continue to exceed the pressure from higher interest rates, translating into sustained FFO per unit growth. I will turn it back to Alex to wrap up.