H&R Real Estate Investment Trust

Good morning and welcome to H&R Real Estate Investment Trust's 2021 First Quarter Earnings Conference Call. Before beginning the call, H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts, or projections in the remarks that follow, may contain forward-looking information, which reflect the current expectations of management regarding future events and performance and speak only as of today's date. Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties and actual results could differ materially from the statements in the forward-looking information. In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures which do not have a meaning recognized or standardized under IFRS or Canadian Generally Accepted Accounting principles. and are therefore unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows, and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same. Additional information about the material factors, assumptions, risks, and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements together with details on H&R's use of non-GAAP financial measures are described in more detail in H&R's public filings, which can be found on our website and www.cedar.com. I would now like to introduce Mr. Tom Hofstadter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstadter.

Good morning, everyone. I'd like to thank you all for joining us here today. With me on the call are Larry Froome, our CFO, Pat Sullivan, COO Primaris, Philippa LaPointe, COO Landtower, Alex Avery, Executive Vice President, Asset Management and Strategic Initiatives, and Robin Kestenberg, Executive Vice President, Corporate Development. It has now been over a year since the pandemic began, with growth down to a halt. The past year has had its challenges, and our Q&A results remain impacted by the difficulties some of our attendees face. The REIT's business, however, has shown stability and resilience, despite a few notable areas of softness. We have continued to work hard to position H&R for success as the pandemic impacts states and the economy reopens broadly. I'll turn it over to our team to provide details of the first quarter 2021 financials and operating results. Philippe will review our multi-residential operations. Paul and Pat will provide an update on our retail portfolio. And Larry will provide some context to our financial results. And finally, I'll make some closing remarks. Philippe, over to you.

Good morning, everyone. We've got some notable updates for this quarter, and so I'm delighted to share the latest from Landtower Residential. On the JV development front, the Pearl in Austin, Texas is scheduled to fully deliver in the third quarter of 2021. Nightingale in Seattle is in the early stages of pre-leasing and the project will be fully delivered by June of this year. Construction of phase two of our Hercules department, sorry, development named The Grand has remained on schedule and is expected to deliver in the second quarter of 2021. Lastly, Shoreline Gateway, our 35 story tower in Long Beach, California, is also on schedule and expected to be delivered in august of 2021. as mentioned last quarter we plan to supplement our jv development partnerships with our wholly owned development platform within land tower first i would like to provide an update on our infill site in dallas texas with proximity to the dallas love field airport and medical district the plan for the 5.4 acre site that we refer to as west love is a five-story wrap community with approximately 413 units We are finishing schematic designs as we speak, and we'll be moving through the drawing process throughout the year with the target date to break ground by the end of this year. Additionally, on January 28th, we purchased a 4.2-acre infill site with direct frontage to North Central Expressway, one of the most traffic thoroughfares in the core of Dallas. We are also in schematic design with this five-story wrap product that will include approximately 350 units. Lastly, we are finishing up schematic designs for garden-style property in Tampa, Florida. This development with approximately 270 units is adjacent to Highway 19, one of the most dominant thoroughfare in all of Pinellas County. The development is located in an infill location characterized by low future supply and healthy rental growth. Also of note, we originally purchased the site with entitlements for approximately 200 units. However, upon working with the local municipality, we were able to increase our density to our current level at no cost, resulting in an increase in development yield. In light of our strategic shift towards a ground-up development to take advantage of the widespread between development yields and prevailing cap rates, we look forward to sharing more exciting development updates in the future. On the Lantau River landing front, our leasing pace continues to beat expectations and budget. As of today, we are 45% occupied and have leased over 280 apartments. For context, our budgeted number of occupied units at this time was approximately 200, underscoring the strength of our lease-up efforts at River Landing, despite increasing our asking rents multiple times to keep pace with the overwhelming demand for our property. Perhaps most importantly, we would like to share an update on Jackson Park. While the return to stabilization will largely be driven by the workers returning to the office and students returning to the classroom, we are very encouraged by the return to normalcy in New York City. Social activity is resuming with the successful rollout of the vaccine and the declining new COVID case numbers. Just last week, New York City increased the restaurant capacity from 50% to 75%, and the mayor has targeted a full reopening by July. The property is expected to gain positive absorption as we enter the favorable summer leasing season, a trend that we are already beginning to observe with an increase in traffic. For context, we received nearly 700 pieces of prospect traffic in March and April, compared to only 156 pieces of traffic in March and April of last year. In the span of last month, when including pending applications, we have gone from 60% lease to 69% lease. We remain confident that Jackson Park is one of the best value propositions for prospective residents in the submarket when considering location, amenities, and quality of construction. On the financial front, when excluding Jackson Park, our same-asset quarter-over-quarter operating income growth equates to a positive 4.1% for the first quarter of 2021 compared to the first quarter of 2020. We are proud to announce that Q1 operating income growth represents over 12 straight quarters of same-asset quarter-over-quarter positive NOI growth when excluding Jackson Park, a feat that we are particularly proud of when considering the tumultuous 2020. And with that, I will pass along the conversation to Pat.