Slate Grocery REIT

Good day and thank you for standing by. Welcome to the Slate Grocery Read First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. And without further ado, I would now like to hand the conference over to one of your speakers today, Mr. Paul Wolanski. Please begin.

Thank you, operator, and good morning, everyone. Welcome to the Q1 2022 conference call for Slate Grocery REIT. I'm joined this morning by Blair Welch, Chief Executive Officer, and Andrew Agatap, Chief Financial Officer. Before getting started, I would like to remind participants that our discussions today may contain forward-looking statements, and therefore we ask you to review the disclaimers regarding forward-looking statements as well as non-IFRS measures, both of which can be found in Management's Discussion and Analysis. You can visit Slate Grocery REIT's website to access all of the REIT's financial disclosures, including our Q1 2022 investor update, which is available now. I will now hand over the call to Blair Welch for opening remarks.

Thanks, Paul. And good morning, everybody. We began investing in grocery real estate on the heels of the global financial crisis, recognizing that the asset class was uniquely defensive in all market conditions because of the critical role it plays in last mile food logistics. Today, amid inflationary pressures and global supply chain issues, our grocery real estate continues to demonstrate resiliency and strong performance. In the first quarter of 2022, our team continued its operational excellence and enhanced the durability of our portfolio. We completed over 410,000 square feet of leasing in the quarter, with strong rental spreads of 38.3% for new leasing and 8.9% for renewals. Demand is strong for our less than 10,000 square foot spaces, And our asset management team continues to see additional lease-up opportunities that are accretive and will push occupancy up further by the end of the year. We also continue to see positive momentum on our same property NOI, AFFO, and redevelopment progress, all of which will provide meaningful value for our portfolio in the current year and beyond. With the new macroeconomic pressures emerging, the REITs portfolio is well positioned to ensure long-term stable income. At the end of Q1, our anchor occupancy is 100% and our total occupancy is stable at just over 93%. In an inflationary environment, our real estate is even more valuable to grocers and their efforts to service the last mile of food logistics. With prices rising, consumers are likely to pull back on discretionary purchases and spend more on groceries and other essentials. This is likely to bolster revenue growth for our grocery tenants. But sustaining that level of demand makes logistics more costly for groceries. Our properties, which are located close to the end consumers, help to minimize grocers' last mile logistics costs. With prices rising, it also is becoming more costly for the grocer tenants to relocate let alone build from the ground up, making our tenancies even stickier. The REITs cost basis of $145 per square foot remains highly defensive, providing at least a 53% discount to the average cost for a new build of an estimated $275 per square foot, and we see that number increasing. Finally, 97% of our leases are net, meaning our tenants are responsible for utilities, taxes, insurance, all of which we think will see cost increases. This offers protection in an inflationary market and ensures long-term stability of our income. Moving forward, we remain focused on our efforts to grow the REIT organically and through quality acquisitions that are accretive to the portfolio. Our investment team continues to underwrite numerous opportunities in the United States, In March, the REIT established an at-the-market equity program to keep us financially nimble and to fund ongoing development and acquisition activities. Slate Grocery continues to benefit from the insights, deal flow, and resources of Slate Asset Management, which owns and operates over $3 billion of grocery assets worldwide. And in a fragmented market, we are well positioned to capitalize on a range of opportunities, both single asset and grocery portfolios. that will create value for all of our unit holders. On behalf of Slate Grocery and the board, I'd like to thank the investor community for their continued confidence and support.