H&R Real Estate Investment Trust

Good morning and welcome to H&R Real Estate Investment Trust 2025 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, and 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 the 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 and 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 H&R's website and www.cedarplus.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. Thank you for joining us.

I'll pass it on to Larry from our CFO to give you the highlights of the quarter. Larry will then pass on to Watson on the last hour to give us the highlights of the quarter. Thank you. Thank you, Tom, and good morning, everyone. In my comments to follow, references to growth and increases in operating results, unless stated otherwise, are in reference to the three-month end of March 31, 2025, completed the three-month standard March 31st, 2024. In 2024, we sold $429 million of real estate assets. In Q1 of 2025, we sold eight retail assets for $60 million. 70% of our real estate assets by value are now in the United States. Overall, given the trend we faced with multi-family supply concerns and the weak office markets, Inflation, as well as a terrible war creating general market uncertainty, will very quickly lead to the general results, and in particular, the 4.4% growth in property net operating income on a cash basis. Breaking this down between our segments, where the potential segment of property net operating income on a cash basis decreased by 0.8% in U.S. dollars. The new supply added in the residential market is being absorbed. The public immigration trend has continued, and our tenants are also staying longer. The family will provide more details shortly. Our office segment, second property net operating income and cash basis, increased 1.2%, primarily due to the strengthening of the U.S. dollar. There's been a slate of back-to-the-office policies from different companies, and it seems clear that more and more employees are heading back to office, which is positive for the sector as a whole. Our office portfolio of 60 properties, which includes four properties with residential rezoning opportunities, now only comprises 18% of H&R's total portfolio by value. 87.8% of our office revenue comes from investments in great tenants. a testament to the quality and location of our office properties. Our office occupancy at March 31st, 2025 was 96.7% with an average remaining lease term of 5.8 euros. Our retail portfolio at March 31st, 2025 comprises 15% of A&R's overall portfolio value. Retail segment same property net operating income increased 8.2% due to opportunity gains in the program landing and projects. The tenants in our retail portfolio are predominantly grocers and the portfolio has been very stable. Industrial segment same property net operating income increased 4.5%. Industrial portfolio of 65 properties in March 31st, 2025 comprises 18% of H&R's total real estate assets by value and continues to perform well. Since the announcement of H&R's strategic plan, H&R's average Canadian industrial rent increased from $7.17 per square foot as of June 30th, 2021 to $9.42 per square foot as of March 31st, 2025. In addition, Industrial properties located in the GTA make up 59% of H&R's industrial portfolio as of June 30th, 2021, compared to 69% of H&R's industrial portfolio as of March 31st, 2025. Headline at the final unit of Q1 2025 was 29.7 cents, the same as Q1 2024. We are pleased with these results as we have sold $489 million of real estate assets since January 1, 2024. Our balance sheet remains strong. Debt to total assets of the region proportionate to that of March 3, 2025 was 44.1%, and debt to EBITDA was a healthy 9.3 times. Liquidity at March 3, 2025 was in excess of $870 million, with an unencumbered property pool of approximately $4.5 billion. Unencumbered assets are unsecured. The coverage ratio was 2.3 times at March 31, 2025. And with that, I will turn the call over to Emily.