InterRent Real Estate Investment Trust

Good morning, ladies and gentlemen, and welcome to the Interim Q4 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press the star zero for the operator. This call is being recorded on Thursday, February 29, 2024. I would now like to turn the conference over to Renee Wei, Director of Investor Relations, Please go ahead.

Welcome, everyone. Thank you for joining Interrent REIT's Q4 2023 earnings call. My name is Renee Wei, Director of Investor Relations and Sustainability. You can find a presentation to accompany today's call on the Investor Relations section of our website under Events and Presentations. We're pleased to have Brad Cutsey, President and CEO, Kurt Miller, CFO, and Dave Nevins, COO, on the line today. As usual, the team will present some prepared remarks and then we'll open it up to questions. Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. For more information, please refer to the cautionary statements on forward-looking information in the REIT's news release and MD&A dated February 29, 2024. During the call, management will also refer to certain non-IFRS measures. Although the REIT believes these measures provide useful supplemental information about its financial performance, They are not recognized measures and do not have standardized meanings under IFRS. Please see the REITs MD&A for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures. Brad, over to you.

Thanks, Renee. We ended 2023 on a strong note. We improved our total and same property occupancy by 180 basis points from Q3 2023, 20 basis points from Q4 2022. Total portfolio occupancy level at 97% marked the best as being thrown into a new year that we've experienced in six years. When you break down vacancy by reposition and non-reposition portfolios, a notable concentration of vacancies is in the non-reposition portfolio, which aligns with our business model of seeking greater upside potential in these suites through value-enhancing programs. Average market rents across the portfolio gained a further momentum reaching 7.9% year-over-year, our highest growth to date and surpassing pre-pandemic levels. We've seen strong growth in all regions, especially in the GTHA and other Ontario, each exceeding 8% for both total and same-property growth. Dave will give more information about regional rent and opportunity later in the call. Strong AMR growth and actually fueled our revenue and NOI growth. Total operating revenues increased by 8.8% to $61.9 million for the quarter, 10% to $238.2 million for the year ended 2023. Reviewed on the same property basis, our operating revenues have increased by 8.2% to $60.6 million for the quarter, 9% to $233.8 million for the year. demonstrating the strong organic growth potential of our portfolio. Throughout 2023, we consistently delivered double-digit NOI growth every quarter, including Q4. Same property NOI for the quarter was $39.7 million, a 10.5% increase. Total portfolio NOI was $40.6 million, an 11.1% increase. On an annual basis, same property NOI reached $153.4 million, and total portfolio NOI was $156.3 million, representing an 11.8% and 12.9% improvement, respectively, from 2022. We closed out the year with an NOI margin of 65.6%, in line with the strong levels we achieved prior to the pandemic. During the fourth quarter, the strong NOI growth that we produced was able to absorb the increased interest costs and still delivered bottom-line growth. Our FFO growth continued to strengthen throughout the year, reaching $20.8 million, or $0.142 per unit in Q4, reflecting an 11.2% and a 10.1% growth, respectively. We delivered $80.6 million in FFO for the full year at $0.551 on a per-unit basis, surpassing pre-pandemic high water levels. FFOs for the full year achieved a new record high, up 4.5% overall and 3.4% on a per-unit basis to reach $0.482. We've also seen strong momentum building throughout the year with the AFFO for Q4 increasing 13.1% to $18.1 million and up 12.7% to $12.4 per unit. Taking a closer look at our balance sheet, we ended the year in a solid financial position, Kurt will provide more details later in the call, but I'd like to highlight some post-quarter activities that have further enhanced our positioning. So far in 2024, we successfully financed $183.5 million of maturing mortgages with a weighted average rate of 4.25%, compared to a maturing weighted average rate of 6.06%. Our overall weighted average cost of mortgage debt is now sitting at 3.37%. Dave, over to you to take us through some of the operating highlights.