Slate Grocery REIT

Good morning, ladies and gentlemen, and welcome to the Slate Grocery REIT First Quarter 2023 Financial Results Conference Call. At this time, all lines are in listen-only mode, and following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 4th, 2023. And I would now like to turn the conference call over to Mr. Paul Walansky. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to the Q1 2023 conference call for Slate Grocery. I'm joined this morning by Blair Welch, Chief Executive Officer, Andrew Agatep, Chief Financial Officer, Connor O'Brien, Managing Director, Alan Gordon, Senior Vice President, and Braden Lyons, Vice President. Before getting started, I would like to remind participants that our discussion 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 2023 investor update, which is now available. I will now hand over the call to Blair Welch for opening remarks.

Thanks, Paul. Our grocery-anchored real estate portfolio continues to demonstrate strong performance in today's high-interest rate and inflationary environment. Market fundamentals in the grocery-anchored real estate sector are favorable. The availability of neighborhood retail space is at historic lows in the U.S., and the cost of construction remains high. These conditions make our tenancies sticky. The cost for our tenants to relocate or build new is prohibitive. This dynamic also gives landlords leverage to increase asking rents. For Slate Grocery Rate, the weighted average rent across our portfolio is well below market at $12.24 per square foot. We are well positioned to grow through steady increases to our below market rents, which will, in turn, drive sustained valuation increases for our business. Our leasing performance in Q1 demonstrates the embedded growth in our portfolio. We completed 590,000 square feet of total leasing at attractive spreads that drove up occupancy and revenue growth. New deals were completed at a 17.1% above comparable average in-place rent and renewals at 8.4% above expiring rent. Our new leasing drove a 50 basis point occupancy gain from the 2022 year end. Occupancy at the close of the quarter was 93.7%. As a result of our strong leasing momentum, same property net operating income increased by 3% year over year. We also enhanced the REIT's financial flexibility and balance sheet to create liquidity for continued accretive growth. In Q1, the REIT closed a $56 million mortgage loan with a 2033 maturity. We use net proceeds from the loan to pay down the REIT's nearest term debt maturity in 2023. Post refinancing, the REIT has no remaining debt maturities in 2023. We have also repurchased over 240,000 units at a 30% discount to the REIT's net asset value, which provides the REIT with additional liquidity. We believe the disruption and dislocation we are seeing on the broader market will create attractive buying opportunities for the REIT. We continue to underwrite well-located grocery real estate anchored by strong grocers at below market rents. The REIT's partnership with Slate North American Essential Fund provides a source of private equity capital in addition to the REIT's public funding strategies. This allows us to be nimble in today's environment. We are well positioned for growth and we will continue to allocate capital strategically in ways that are accretive for the REIT. On behalf of Slate Grocery REIT team, and the board, I'd like to thank the investor community for their continued confidence and support. I will now hand it over for questions.