Slate Grocery REIT

Good morning, ladies and gentlemen, and welcome to the Slate Grocery REIT third quarter 2023 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll 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 Tuesday, November 7th, 2023. I would now like to turn the conference over to Paul Lansky, the Senior Vice President, National Sales and Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Q3 2023 conference call for Slate Grocery Reef. I'm joined this morning by Blair Welch, Chief Executive Officer, Joe Pulcatis, Chief Financial Officer, 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 disclosure including our Q3 2023 investor update, which is available now. I will now hand over the call to Blair Welch for opening remarks.

Thanks, Paul, and hello, everyone. I'm pleased to share our team's positive third quarter results, which highlight our portfolio's continued strong leasing fundamentals and rental spreads, driving occupancy and income growth. We've completed over 690,000 square feet of total leasing in the quarter. New deals were done at a 18.4% above comparable average in-place rent. Non-option renewal spreads were similarly strong at 14.8% above expiring rents. Our leasing momentum continues to support occupancy gains. We're up 90 basis points from the start of the year, bringing occupancy to over 94% at the close of the quarter. Our same property NOI continues to trend positively, increasing by 2% on a trailing 12-month basis after adjusting for completed redevelopments. In today's elevated interest rate environment, the REIT remains well-positioned. The majority of the REIT debt is fixed at a weighted average interest rate of 4.2%. Notably, there remains a positive leverage between our current cost of financing and the REIT's Q3 2023 IFRS value at a 7 cap. At $12.37 per square foot, the REIT's average in-place rent is well below market, providing significant runway for continued NOI growth and stability of cash flow. Despite the REIT's strong fundamentals and operational performance, the REIT's units are trading at a discount in net asset value, which we believe provides an attractive entry point for investors. The REIT's unit price at the close of the quarter indicates an implied cap rate of 8.5%, which represents a 41% discount to NAV. The REIT's NAV has been externally validated by private funds' investment of $180 million into the REIT at NAV last year. We believe our below-market in-place rents will continue to drive attractive renewal spreads, and new leasing will support strong NOI growth. Supply-demand dynamics in the grocery-anchored sector remains favorable, providing landlords with leverage to increase rents. and resilient consumer spending on essential goods and services is driving robust foot traffic for grocery-anchored centers. We believe in the value of our grocery-anchored real estate and are confident that our portfolio is positioned for continued stable growth. On behalf of the Slave Grocery 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.