First Capital Real Estate Investment Trust

Good afternoon, thank you for standing by. Welcome to the Q2 2024 conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press star one on your telephone's keypad. I would now like to turn the conference over to Alison. Please proceed with your presentation.

Thank you and good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. A summary of these underlying assumptions, risks, and uncertainties is contained in our various securities filings, including our QQ MD&A, our MD&A for the year ended December 31, 2023, and our current AIF, which are available on CDAR and our website. These forward-looking statements are made as of today's date, and except as required by securities law, we undertake no obligation to publicly update or revise any such statements. During today's call, we will also be referencing certain financial measures that are non-IFRS measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these measures as a complement to IFRS measures to aid in assessing the REITs performance. These non-IFRS measures are further defined and discussed in our MD&A which should be read in conjunction with this call. I'll now turn the call over to Adam.

Okay, thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today for our quarterly conference call. I'll start by commenting on the successful execution of our strategy and the strong fundamentals for gross range of retail. Together, these have been the driving forces behind FCR's very good operating and financial performance. Of course, none of this would be possible without the tireless efforts of my talented colleagues who I'd like to thank for your dedication and commitment to the business. Moving to our future results, they were solid across the board with a major theme once again being strength in leasing. It was a busy quarter. We completed 231 lease transactions involving just over a million square feet of space for just over 900,000 square feet at FCR share. It's a 50% increase over Q1 and a 15% increase over last year's busy second quarter. These volumes are very healthy and so are the rents we're achieving with our average in-place net rental rate of $23.73 setting yet another all-time high. Included in our second quarter volume were 160 lease renewals totaling 720,000 square feet of space at SCR Share. Our renewals this quarter were fairly typical in terms of tenant mix and included grocery, a couple of Canadian tires, banks, restaurants, and the like. What was a bit different this quarter was that we achieved slightly higher contractual rent steps throughout the renewal term, as demonstrated by the 570 basis point spread between the lift on year one rent during the renewal term versus the lift on the average rent throughout the renewal term. We continue to be active across all of FCR's core tenant categories, including grocery, pharmacy, fitness, restaurants, medical, daycares, banks, pet stores, and value-oriented retailers such as Dollarama and the TGX banners. Our leasing pipeline remains deep and robust, which gives us confidence as we look ahead. At our investor day earlier this year, we highlighted several of SCR's core competencies and competitive advantages. A major part of these relate to our capabilities, our relationships, and most importantly, our portfolio of grocery-anchored shopping centers. core part of our business that we continue to invest in and grow. The supply-demand imbalance for grocery and shopping centers is the largest contributor to the sound fundamentals for our asset class. At our investor day, we also reiterated the key objectives our strategy is designed to deliver. One of those is consistent growth in FFO per unit. We noted that an important part of delivering FFO growth, particularly in the near term, is an even stronger balance sheet. 2024 has been a monumental period in that regard. Over the last year, our unsecured credit spreads have compressed by approximately 115 basis points, which is roughly double the compression experienced by our peer group. This put us in a competitive position to access the unsecured markets. In Q1, we issued $300 million of seven-year bonds. And last month, with further tightening in our spreads, coupled with lower government bond yields and a positive outlook for our credit by DPRS, we issued another $300 million of unsecured bonds in a series that had an eight-year term. Both issuances carried a coupon in the 5.5% range. And this most recent bond issue accomplished two important things. The first is it satisfies our entire anticipated financing needs for the rest of the year. And second, with the proceeds earmarked to repay our bond maturity in August, it extends our average term to maturity to four years. As Neil laid out on our investor day, we will continue to extend our ladder on a measured basis as appropriate, and our Q2 bond issuance was another step in that direction. Overall, we're very pleased with the success of our financing strategy, the benefits of which will continue to accrue directly to our unit holders. One of the most important parts of our investor day were the key metrics that we laid out for investors that we expect to deliver over the next three years. They included same property NOI growth averaging at least 3% annually. Similarly, average annual FFO per unit growth of at least 3%, all while continuing to reduce our debt to EBITDA. We continue to be confident that the combination of above-average earnings growth coupled with an even stronger balance sheet will be a unique and compelling offering across the Canadian reef landscape. And we believe this positions us well, particularly as the reef market recovers, for continued outperformance as it relates to total unit holder returns. We summarize the three-year opportunity for investors, which includes a unit price in the range of $21 to $24 as we continue to execute. We're now two quarters into our three-year plan. Our results for the first half of 2024 have been slightly better than we expected. So while still early, I'm pleased to say that we are firmly on track to deliver what we presented. A big part of this was our progress and results in Q2, which Neil will now expand on.