Slate Grocery REIT

Good morning, ladies and gentlemen, and welcome to Slate Grocery REIT 4th Quarter 2023 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session, and if at any time during this call you require immediate assistance, please press star 0 for an operator. Also note that this call is being recorded on Wednesday, February 14, 2024. And I would like to turn the conference over to Jennifer Piper, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Q4 2023 conference call for Slate Grocery Reef. I am joined this morning by Blair Welch, Chief Executive Officer, Joe Placatus, Chief Financial Officer, Alan Gordon, Senior Vice President, and Brayden 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 Plate Grocery REIT's website to access all of the REIT's financial disclosure, including our Q4 2023 Investor Update, which is available now. I will now hand over the call to Blair for opening remarks.

Thank you, Jen, and hello, everyone. Slate Grocery REIT delivered a strong year of growth in 2023. Our team set a new record of 2.9 million square feet of total leasing in the year at some of our highest annual rental spreads. Of the 635,000 square feet of total leasing we did in the fourth quarter, new deals were done at 31% above comparable average in-place rents. Non-option renewal spreads were similarly strong at almost 16% above expiring rents. And our leasing momentum supported healthy occupancy gains. We are up 150 basis points from the start of the year, bringing occupancy to 94.7% at the close of the quarter, our highest level in nearly a decade. After adjusting for completed redevelopments, our same property NOI increased by 2 million on a trailing 12-month basis, and we expect our 2023 leasing to further drive NOI growth in the coming year. We have continued to prudently manage the REITs balance sheet to mitigate risk in the current interest rate environment. In November, we amended the terms of $137.5 million interest rate swap to look to a 2027 maturity and limit the REITs exposure to floating rate debt. Over 94% of the REITs debt is fixed at a weighted average interest rate of 4.4%. Our low-in-place rents provide additional protection. At $12.41 per square foot, we are well below the market average, meaning we have significant runway to increase our rents and in turn grow NOI. The grocery-anchored sector has displayed resilience in the face of broader market turbulence. Tenant demand for grocery anchored centers continues to accelerate, and essential goods and service providers want to be in our well-located centers in populated markets close to consumers. New supply has remained very limited. The amount of new retail space delivered in Q4 set an all-time quarterly low, and we expect elevated interest rates and high construction costs to continue to limit new supply into and throughout 2024. At the same time, our tenants are investing heavily into their stores, demonstrating continued conviction in their physical locations. Together, all these factors create a favorable dynamic for landlords, providing pricing power to increase rental rates. We believe Slate Grocery REIT is uniquely well positioned to unlock higher rents and grow net operating income over time. In our view, the REIT's current discounted unit price presents a compelling investment opportunity for investors. The REIT's unit price at year end indicates an implied cap rate of 7.9% on a trailing 12-month NOI, which represents a 33.5% discount to net asset value. Year to date, the REIT has purchased 1.2 million Class E units at a weighted average price of $9.61 per unit. This demonstrates management's belief that the underlying value of the REITs units are well above current public market pricing. On behalf of Slate Grocery REIT team and the board, I would like to thank the investor community for their continued confidence and support. I will now hand it over for questions.