Slate Office REIT

Good morning, ladies and gentlemen, and welcome to the Slate Grocery REIT Q2 2024 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 Thursday, August 8, 2024. And I would now like to turn the conference over to Shivi Agarwal, Manager of Finance. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Q2 2024 Conference Call for Slate Grocery Reef. I am joined this morning by Blair Welch, Chief Executive Officer, Joe Placatus, Chief Financial Officer, Connor O'Brien, Managing Director, Alan Gordon, Senior Vice President, and Brayden Lyons, Vice President. Before we get 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 Q2 2024 investor update, which is now available. I will now hand over the call to Blair Welch for opening remarks.

Thank you, Shibi. And hello, everyone. We are pleased to report a strong second quarter of growth for Slate Grocery Re. Our team completed over 700,000 square feet of total leasing in the quarter at attractive rental rate increases that drove healthy net operating income growth. Over 80,000 square feet of new deals were completed at 28% above comparable average in-place rent. And non-option renewals were completed at 12.8% above expiring rent. The impact of several consecutive quarters of strong leasing at high spreads is now materializing in net operating income growth. Same property net operating income increased by $1.4 million, or 3.5% year-over-year this quarter. Our average in-place rent of $12.56 per square foot remains well below market average of $23.38, providing runway for continued rent increases to drive net operating income growth. We continue to prudently manage our balance sheet to ensure the REIT remains protected in the current interest rate environment. Over 94% of the REIT's total debt remains fixed, with the weighted average interest rate of 4.5%, and we are actively managing near-term debt maturities with productive lender conversations ongoing. Despite our strong position, the REIT's unit continued to trade at a discount to net asset value, which we believe presents a compelling investment opportunity. In June, the REIT closed the sale of a stabilized non-grocery anchored property at a premium to IFRS book value, further validating our net asset value. And at the end of June 30, the REIT's unit price represents a 42.8% discount to net asset value. Even so, the REIT remains a top quartile performer compared to U.S. and Canadian retail REIT peers. We believe fundamentals in the grocery-anchored real estate sector point to continued stable performance. Over the past five years, retail has experienced the lowest amount of new supply amongst other property types, including office, apartment, and industrial. And today, high construction costs and elevated interest rates are continuing to keep new retail supply near record lows. Availability in the neighborhood, community, and strip center segment also remains at a 15-year low. giving landlords pricing power to increase rental rates. And grocery sales remain healthy, growing nearly 2% year over year at June 2024, the highest rate in the last three months. This backdrop, coupled with our well below market rents, positions Slate Grocery REIT to continue growing revenue and increasing value for all unit holders. On behalf of the 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.