SmartCentres Real Estate Investment Trust

Good day, ladies and gentlemen. Welcome to the Smart Center's REIT Q2 2023 conference call. I would like to introduce Mr. Peter Slam. Please go ahead.

Thank you and good afternoon and welcome to our second quarter 2023 results call. I am Peter Slan, Chief Financial Officer, and I'm joined on today's call by Mitch Goldhar, Smart Center's Executive Chair and Chief Executive Officer, and by Rudy Govan, our Executive Vice President of Portfolio Management and Investments. We will begin today's call with some comments from Mitch. Rudy will then cover some operational items, and I will review our financial results. We would then be pleased to take your questions. Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A materials. This also applies to comments that any of the speakers make this afternoon. Mitch, over to you.

Thank you, Peter. At Smart Centers, we have three basic pillars. We are an owner and operator of Walmart, Canadian Tire, Costco, Home Depot, Loblaws, and other grocery-anchored shopping centers strategically located across the country. Two, we are the owner of multi-res, storage, industrial, and seniors homes. And three, we are strategic real estate owners with 30 years of development expertise. Expertise we apply to the development of condos, multi-res, seniors, office, retail, storage. And we do all of that on our strategically owned real estate that we already own. In terms of the first category, existing and new retailers continue to be interested in more space, building on the momentum of last year and Q1, achieving a strong 98.2% occupancy level across our portfolio at the end of the quarter. Renewal rates are up 3.4%. Same property NOI for the three months ended June 30th, 2023 increased by 3.2% compared to the same period in 2022. Collections of approximately 98% as retailers are back stronger than ever with their improved omnichannel platform and are well capitalized for constant change and innovation necessary to succeed in retail. In fact, we are now seeing renewed interest for new-build groceries, grocers, and other sub-acre, mid-box retailers in the 20,000 to 40,000 square foot range, which Rudy will speak to shortly. Toronto and Montreal premium outlets remain fully leased, with 12 months rolling sales continuing to set new records. moving 2023 Ipita to record levels. Well-priced luxury brands continue to be in high demand with customers being bussed in from longer distances to take advantage of the great mix of designer names. Toronto Premium is quickly becoming one of the top three sales performers in Canada. With regard to the second and third categories, Non-retail income and our mixed-use development portfolios continue to grow and deliver strong results. Currently under construction, we have apartments, condos, industrial, self-storage, townhomes, and retirement in the GTA, Ottawa, and Montreal areas, and all scheduled for completion in the next 18 months or so, as you can see in our MD&A. Here are a few highlights. Construction of the Fourth and fifth transit city towers at SmartVMC comprising 45 and 50 stories respectively is on track and nearing full completion. 452 units closed in the quarter, generating $10.6 million in profits, which Peter will speak to more in a moment. Also within the SmartVMC, the Millway, our 36-story apartment building has completed has completed and turned over a number of units in the podiums of all three towers. Recall that some of the rental units are in the podiums of Transit City 4 and 5, and almost all of those are already fully leased. The release of the balance of the units will come over the next two quarters, and demand is expected to remain strong, given the housing supply and current interest rates. Our apartments in Mascouche, suburb of Montreal, which opened in Q3 2022 is 77% leased with high ongoing interest. Laval's first tower was 99% leased at the end of the quarter. And the second tower is scheduled for completion in Q3 of this year with over 70% already pre-leased. Construction of our first industrial new build a 229,000 square foot, 40 foot clear building on 16 acres of a 38 acre site on highway 407 in Pickering was completed in the quarter with half of the space turned over to the tenant and leasing interest strong on the balance. Construction of our new seniors residence department totaling 402 units at Ottawa Laurentian was temporarily delayed due to financial challenges of our JV partner on this project. That being said, during the quarter, we were successful in coming to an agreement with our partner for smart centers to take over development and construction management of this profitable project until its completion date, which is now expected to be Q1, Q2, 2025. Having completed earthworks and site servicing with our two partners, we commenced construction of our 174 unit Vaughan Northwest townhouse project shortly after the quarter end. With the recent opening of our eighth self-storage facility, 138,000 square foot project at Brampton Kings Point, just north of Brampton downtown, the trust reached a milestone of 1 million square feet of gross floor area with our partners, self-storage. Two storage facilities are under construction in Markham and Whitby and two more will commence construction in the next quarter. We intend to continue executing on this strategy as returns continue to exceed our expectations. Additionally, we continue to build on this stable and growing cash generating platform and continue to develop on the significant and varied mix use permissions already in place. On land use permissions so far this year, we achieved residential rezonings in four projects, totaling nearly 4 million additional square feet, three in Ontario and one in Quebec. We can continue to stay focused on getting further permissions while simultaneously getting ready to launch our next phase in the VMC consisting of two condo towers and potentially a small office building based on demand. Recall that in 2022, we achieved over 6.1 million square feet of new mixed use permissions in urban locations with high demand for housing So 2023 is off to a great start. Given that development is our long-term vision and strategy, we are committed on unlocking the tremendous value deeply embedded in the lands we already own, which, as a reminder, sits in the midst of highly populated communities in nearly every major market across Canada. From a capital recycling and risk management perspective, we are continuing discussions with potential partners and buyers of selected assets within the portfolio, which will assist in funding development, debt reduction, and diversification. While only a small part of the portfolio, we see this as an ongoing capital recycling program, which will not only strengthen our balance sheet, but de-risk future cash flow streams. On the financial side, Peter will provide a full update in a minute, but let me just emphasize a few of the more pertinent elements. Maintaining our conservative balance sheet remains a significant priority for us, along with maintaining a significant unencumbered pool of assets, which now sits at $8.8 billion. Our respectable debt level remains at 43.2%, even with the $300 million unsecured debentures issued in the quarter, demonstrating our significant liquidity and the strong support from our lenders and partners. As we have said before at Smart Centers, we take the long view. It's not just what we do, but it's what we don't do. For 30 years, we have been building better, more affordable communities across Canada through enhancing access to convenient, affordable retail options. From the beginning, that meant creating lasting value for the towns and cities in which we operate, for our tenants, our neighbors, and for our unit holders. It meant always doing the right thing in each community. In the coming weeks, we will be issuing our ESG report and you will get a firsthand look at the great number of initiatives that have been woven into the fabric of our organization in how we oversee our business, interact with our tenants, and engage our associates and communities. Our three-year action plan is now posted on our website and I invite you to visit it and see ESG principles applied throughout. They help shape our approach to building design, energy utilization, and social interaction with tenants and their customers. These principles apply to our core mission to facilitate cost savings and convenience to communities, all with the goal of helping Canadians live better lives. On a final note, I would like to once again offer my thanks and appreciation to our great team of associates, partners, and contractors for their commitment and dedication to delivering on our long-term vision. And with that, I will pass the call over to Rudy.