Dream Residential Real Estate Investment Trust

Good morning, ladies and gentlemen. Welcome to the Dream Residential REIT fourth quarter conference call for Thursday, February 16th, 2023. During this call, management of Dream Residential 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 Residential 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 Residential REIT's filings with securities regulators, including its MD&A. These filings are also available on Dream Residential REIT's website at www.dreamresidentialreit.ca. Later in the presentation, we will have a question and answer session. To queue up with your question, please press star 1-1 on your telephone keypad. Your host for today will be Ms. Jane Gavin, CEO of Dream Residential REIT. Ms. Gavin, please go ahead.

Thank you, operator, and good morning, everyone. Welcome to the fourth quarter and year-end conference call for Dream Residential REIT. Since we launched the REIT last May, we've been very focused on delivering the results we forecast in our IPO. In other words, doing what we said. We're pleased to report another quarter of strong results, growing rents, solid occupancy, good progress on our value-add program, and the launch of our NCIB. Our assets and communities are proving to be resilient stores of value in choppy economic times. We remain very focused on disciplined capital allocation to drive returns and NAV growth. But it's the combination of allocation and execution that really are the story for DRR for 2022 and going forward for 23. No doubt you have to buy well, but you also have to have strong operations, and those are demonstrated in DRR. We bought good assets with embedded upside, and we're running the real estate to maximum effect. Looking at 2023, we'll continue to watch the market for opportunities to add to our portfolio, but only on terms that make the REIT better. So far, activity in the investment market remains cautious. We have yet to see the distress some predicted, and we've not seen volumes that lead to price discovery. We continue to keep our eyes open and underwrite for those properties that are accretive and where we can add value. We're well-positioned to do that with our deep knowledge of markets, relationships, and a conservative balance sheet. In the meantime, we continue to invest in the properties we already own and where the returns are demonstrably compelling. With that, I'm going to turn it over to Scott and Derek to give you more color on our real estate and our results. Scott.

Thank you, Jane. Globally, 2022 consisted of volatile capital markets, heightened inflation, and uncharacteristic uncertainty. However, Dream Residential REIT apartment operations remain resilient. Our strong sub-markets, quality assets, and tightly knit communities sustain high occupancy and predictable cash flows, providing for safety in values and safety in distributions. Accompanying that safety, DRR's vertically integrated operating and in-house construction teams provide for continuous value creation and organic growth that outperforms national and regional benchmarks. while nationally indexed apartment rents and physical occupancy both declined month over month through the fourth quarter. In contrast, DRR rents increased 60 basis points each month in the fourth quarter and advanced occupancy nearly two percentage points. Occupancy climbed from 93.7% at the end of September up to 95.5% at the end of December, while still drafting a limited number of suites offline to construct interior renovations. Q4 net operating income grew to $5.7 million, improving 3.7% higher than Q3 and maintaining the growth path set within the IPO forecast. Operating expenses, excluding the impact of IFRIC 21, increased 3% from Q3 due to infrequent overages on contract labor and marketing to ensure that higher suite readiness and occupancy were prepared in the face of economic uncertainties. But the NOI margin held steady, the result of 3.4% quarter-over-quarter revenue growth driving to better-than-forecast investment property revenue of $11.4 million. DRR's above-the-line growth is being sustained by seasonally adjusted best-in-class lease tradeouts and our high-margin value-add renovation program. DRR's Cincinnati Hub led new leasing activity, registering 10.5% increases on new leases, and DRR's Oklahoma Hub led renewal activity, also registering double-digit spreads of 10.4% on renewal leases. Those data points in Cincinnati and Oklahoma do not yet reflect benefit from the value-add program because renovations have not begun in Cincinnati and and do not yet influence renewals in Oklahoma. Those organic tradeouts during the seasonally slower fourth quarter are strong indicators of the resilience across DRR's portfolio. When combined with our Dallas region, DRR blended lease tradeouts finished Q4 at positive 8.7% with a 55% renewal rate for calendar year 2022. During the third quarter call, we explained that interior suite renovations would deliberately slow through the fourth quarter in line with typical seasonality and that construction would pick back up in 2023, timed with the spring leasing season. That is precisely how we executed with 117 suites completing in Q3 and 85 renovations completing during Q4. In total, DRR upgraded 226 suites in 2022 across seven communities in two markets. Since IPO, the value add rent premium per suite has averaged positive $322, 32% more than the preceding lease. Compared to same property non-renovated lease to lease increases of 15% and $149, our renovated suites are earning a premium 17 percentage points higher than classics with returns on invested capital well within our underwriting band of 12 to 16 percent and renovation lease tradeouts beating 30 percent we plan to invest seven to seven and a half million dollars to renovate 400 more suites in 2023 finishing the year with rents of 1079 dollars per month and a dollar 22 per square foot DRR in-place rents rose 1.8% during Q4 and 12.5% since December 31st, 2021. This growth was nearly double what the broader markets reported for the year. Our Dallas and Oklahoma communities grew rents 12.7% and Cincinnati rents grew 12.1% without a value-add program yet underway. Q1, like Q4, is historically a slower leasing period However, early lease tradeouts are showing signs of rebound off the seasonal December deceleration. Interestingly, in Q4, rents in 85 of the 100 largest US cities decreased month over month. It is interesting to highlight that of the few cities which did not experience rent decreases each month during Q4, Cincinnati and Oklahoma City were two of only 15 nationwide. We foresee sustained performance in Cincinnati and value add continuing to pull up DRR performance in Oklahoma and Texas well over and above national and same market indexed data. Our NOI outlook for 2023 is forecast to be in a range from high 23 million range up to mid $24 million. We are also pleased to share our progress on the sustainability front. Many of you know DRR submitted for a pre-IPO Sustainalytics ESG assessment last year and our resolve to integrate practical and responsible practices into our business fabric continues. We conducted initial energy audits across all communities in 2022 and have budgeted small-scale, early-stage efficiency projects beginning in 2023. Physical improvements that reduce emissions, increase efficiency, and provide accretive returns on investment. DRR is now an official supporter of the Task Force on Climate-Related Financial Disclosures or TCFD. We have the conviction that inclusive stewardship of our people and residents, accompanied by sustainable improvements across our real estate, are important themes interwoven into successful operations and growth of business. Transaction volume is still slow. Sellers and buyers are noncommittal and indecisive. The ask bid spread remains wide. Nominal cap rates and transaction cap rates do not align and are widely varied within local and asset by asset circumstances. But we like our markets, we like our assets, the housing fundamentals and economic forecasts point to enduring demand for middle of the middle apartment living. Now I'm pleased to turn things over to Derek Lau, our Chief Financial Officer.