Good morning. Welcome to the Automotive Properties REIT 2023 first quarter financial results conference call and webcast. My name is Joanna, and I will be your conference operator today. At this time, all lines are in a listen-only mode. Following management's remarks, we will conduct a question-and-answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks and uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and Annual Information Form, which are available on SEDAR. Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on Friday, May 12th, 2023. I would now like to turn the conference over to Milton Lamb. Please go ahead, Mr. Lamb. That's great. Thank you, Joanna. Good morning, everyone, thank you for joining us today. On me on the call is Andrew Kalra, our Chief Financial Officer. Our positive momentum continued in the first quarter as acquisitions and contractual rent increases drove year-over-year growth in revenue, cash NOI, same-property cash NOI, and AFFO per unit. We made strong progress in our acquisition program so far this year. In early January, we completed the acquisition of six full-service automotive dealership properties in Quebec for approximately CAD 98.5 million. As I discussed in our last conference call. Yesterday, we announced an agreement to acquire an automotive dealership property in Brossard, Quebec from 1/3 party for approximately CAD 16.1 million. The property is under lease with Groupe Park Avenue for the Volvo and Jag Land Rover dealership and consists of 50,415 sq ft on approximately 3.4 acres of land. This lease is subject to annual adjustments linked to Quebec CPI. We expect to close the acquisition by the end of June and plan to fund the acquisition through draws on our credit facility and cash on hand. As a result of the Quebec property acquisitions completed in January, but excluding the Brossard property acquisition announced yesterday, a proportion of leases containing annual CPI-linked adjustments has increased. These leases represent approximately 26% of our full year base rent in 2023. This increased exposure to CPI-linked contracts increases contributed to our 2.4% same-property NOI growth in the quarter and further inflation-related growth going forward. While we like the CPI-linked leases for the benefits in actual results, IFRS accounting does not reflect these CPI increases in the AFFO straight-line adjustments. The fundamentals of the Canadian automotive sector remain strong. According to DesRosiers Automotive Consultants, Canadian new light vehicle sales increased 5.2% in Q1 of 2023 compared to the same period last year, reflecting a reduction in the supply-side constraints and continued consumer demand. Statistics Canada has reported that overall automotive industry retail sales totaled approximately CAD 188 billion in 2022, an increase of 6.8% from 2021. We believe these figures demonstrate the essential nature of the automotive retail industry. I'd now like to turn it over to Andrew Kalra to review our first quarter results and financial position in more detail. Andrew? Thanks, Milton. Good morning, everyone. Our property rental revenue for the fourth quarter totaled CAD 22.9 million, a 12% increase from Q1 a year ago, reflecting growth from properties acquired during and subsequent to Q1 last year and contractual rent increases. Total cash NOI and same-property cash NOI for the quarter totaled CAD 18.8 million and CAD 16.1 million respectively, representing increases of 11.2% and 2.4% respectively compared to Q1 a year ago. Growth in cash NOI was primarily attributable to acquisitions and contractual rent increases. Growth in same-property cash NOI primarily reflects contractual rent increases across our portfolio. For Q1 2023, interest expense and other financing charges were CAD 6.0 million, representing an increase of approximately CAD 1.9 million from Q1 2022. The increase was primarily due to additional debt incurred to acquire properties during and subsequent to Q1 2022, together with an increase in interest rates. Our G&A expense in the quarter were approximately CAD 1.4 million, up from CAD 1.3 million in Q1 last year. Net income was CAD 17 million in the quarter, compared to CAD 29.7 million in Q1 a year ago. The decrease was primarily due to non-cash fair value adjustments for interest rate swaps and investment properties partially offset by higher NOI and non-cash fair value adjustments for Class B LP units and unit-based compensation. FFO and AFFO for the quarter increased by 0.7% and 0.4% respectively, compared to Q1 2022. FFO per unit diluted was CAD 0.241 in the quarter compared to CAD 0.24 in Q1 2022. AFFO per unit diluted was CAD 0.229 compared to CAD 0.228 in Q1 a year ago. The increases were primarily due to the impact of properties acquired during and subsequent to Q1 last year and contractual rent increases. The REIT paid total distributions of CAD 9.86 million, or CAD 0.201 per unit in the quarter, representing an AFFO payout ratio of 87.8%. The AFFO payout ratio was lower in Q1 this year compared to 88.2% AFFO payout ratio in Q1 a year ago, primarily due to the impact of properties acquired during and subsequent to Q1 2022 and contractual rent increases. The capitalization rate applicable to the REIT's entire portfolio increased to 6.48% as at March 31, 2023, compared to 6.42% at year-end, 2022. The increase primarily reflects the addition of the Quebec properties we acquired in January 2023. In Q1 2023, there was a fair value loss of $3 million on the investment properties, primarily related to the write-off of acquisition costs in accordance with IFRS. We had $533 million of outstanding debt at quarter end, with an effective weighted average interest rate of 4.1%. We continue to have minimal exposure to floating or short-term interest rates, with 94% of our debt fixed through interest rate swaps and mortgages. We had a well balanced level of annual maturities with our weighted average interest rate swap and mortgage term was 5.5 years, with a weighted average maturity of debt of 3.6 years. Earlier this month, we converted CAD 25 million of outstanding revolving portion of debt in facility 1 to a non-revolving balance, which currently remains at floating rates. There were no changes to terms or credit spreads within this facility. We currently have approximately CAD 82 million of undrawn capacity under our revolving credit facilities and four unencumbered properties with an aggregate value of CAD 61.5 million. I'd like to turn the call back to Milton for closing remarks. Thank you very much. Thanks, Andrew. We continue to monitor the impact of the inflation environment and interest rates on our property portfolio in the overall real estate industry. We've strategically moved floating and short-term debt into fixed rate and/or long-term debt to further minimize any future interest rate increase impact. Fluctuations in the interest rate environment, inflation, and credit environment impact rental growth and capitalization rates overall in the real estate industry, and also may provide attractive buying opportunities. Looking ahead, we're well positioned to generate continued solid performance with our expanded property portfolio of essential retail, triple net lease structure, and embedded fixed and CPI adjusted rental growth. We're also well-insulated from potential interest rate increases through the measures we've taken to secure 94% of our debt at fixed rates at quarter end. This concludes our remarks, and I'd like to turn it over for questions. Joanna, please go ahead. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Frank Lu at BMO Capital Markets. Please go ahead. Good morning, everyone. Thanks for taking my questions. Good morning. Just want to touch on the acquisition of the Brossard property. It's pretty good to see the underlying leases are CPI linked. I wonder if this would be one of the key criteria you guys focus on when looking at potential acquisitions moving forward. Yeah. I mean, we've always said we look at location, covenant, and then brand. In this case, all three work. The hard corner it's on in Brossard is, we think it's a great corner, 3.6 acres on a hard corner. Groupe Park Avenue, very good operators. A number of dealerships up and down that Taschereau Boulevard. Certainly, you know, Land Rover, Volvo, electrification, all of that kind of world continues to do very well. Combine that with the embedded CPI adjustments. You know, this was from 1/3 party, so we acquired the property with a lease in place. But, we certainly like the CPI adjustments that were in the lease. It just kind of ticked a number of boxes. The cap rate was kind of right in the target zone that we have, and are able to achieve in 2023. That, as we've talked about before, we saw unrealistic expectations in 2021, and therefore did not reach into our pockets to stretch. Certainly like seeing the returns and the opportunities that we're looking at now. Perfect. Thanks for the color on that front. With respect to cap rate, I know you guys don't disclose the specific number, but I wonder if this transaction trending in the range of like the 6.5%-7.5% you touched on in last quarter call? Yeah, it's right in the heart of that range. Perfect. Then, as you mentioned about location, you have done, like, you know, seven assets so far this year, in the Quebec market. Is there anything in the Quebec market that pretty specific that APR is in favor? Or are you guys looking at the deals across Canada, these deals just came through? Yeah, I think it's kind of two layers. The first layer is what do we like as APR. We certainly like, you know, the major metropolitan markets that are experiencing growth, and Montreal is very high on that list. I think the real driver underneath our desire is the availability, and that availability we've always talked about tends to be on transactions. In this case, you know, it was a previous dealer that sold their dealership, kept the real estate, and we acquired it from the previous owner. The previous dealership owner, sorry. I mean, this is just an example on the back of, with a slight delay of M&A. We're seeing more M&A that's occurred in the Montreal, Quebec area over the last 18 months than we've seen in many other areas of the country. Part of it's going on the M&A, back to the M&A focus, and part of it's we just like the market. Perfect. One lastly. Given like, you know, the overall market start picking up, should we expect more to come for the remainder of 2023? On the acquisition side, you know, it kind of goes back to what we talked about in 2021, that we were competing with short-term money for dealers. Dealers, if they were looking at 90-day BAs, you know, we couldn't compete. They were 2.5%. Right now, your long-term versus short-term is inverted. Our money looks a lot more attractive. Therefore, we believe that we'll see a lot more opportunities. Perfect. Thanks, everyone. I'll turn it back. Have a great weekend, guys. Thank you very much. Thank you. The next question comes from Sairam Srinivas at Cormark Securities. Please go ahead. Thank you, Joanna. Good morning, Milton and Andrew. Thank you for your comments. Good day. Just going by the comments on a couple of quarters ago, Milton, I know we refer to dealerships still mulling around the thought process of getting to the deal table in terms of selling their properties. Has that conversation changed? Can you probably give some color on the conversations you're having with dealerships right now in terms of the motivations behind actually selling the properties now? I don't think the underlying motivations have changed. I do think when you're seeing your cost of capital across the board go up, you know, we tend to be more of a like for like comparison as opposed to when cost of capital, especially on kind of 30-day or 90-day money, was so cheap. We thought it was a bit euphoric in a moment in time in 2021, and therefore didn't stretch. What we're seeing now is it's coming back into what is historically being, you know, a trading range in the cap rate world. That's, you know, and certainly we've seen that with our underlying valuations. We did not push value up and cap rates down dramatically during 2021 because we thought that was, again, a bit euphoric and a bit of a blip, and it's ended up being just that. That's great color, Milton. Just probably focusing on the funding side of things, have bankers now started kind of being more optimistic on the space and how the conversations with lenders in terms of the funding availability for acquisitions? Yeah. I wouldn't say now, but I would certainly say, you know, the combination of the performance, especially in the States, of the public dealership groups, those public companies have been printing very good results, including during the heart of COVID. It really did allow people to kind of focus on, wait a sec, this isn't as cyclical because there's four engines that drive profits within the dealership segment. And it kinda got converted to cyclical to essential retail. Whether it's up in risk departments in banks or just investors overall, they've certainly kind of looked at this as an area that's a lot more secure and bulletproof than they would have originally thought before kind of being able to see the public results over the last five to 10 years. That certainly helped us. Awesome. Thanks for the comment, Milton. I'll turn it back. Thank you. The next question comes from Lorne Kalmar at Desjardins. Please go ahead. Thanks. Good morning. With you guys starting to see more on the acquisition side and leverage kind of being in the sort of mid-40s, maybe you can give some color on how you would approach funding, should, you know, a large portfolio become available? Yeah. I would still say we tend to see more deals at the end of the year than we do at the beginning. This was a delayed M&A. They sold the dealership well in advance, then they decided to sell the real estate more recently. That's kinda why you saw this in a non-normal seasonal trade. But to your question on larger portfolios, I mean, whether it's unit-based, that they take back some units or, excuse me, or it's just, you know... I hate to say it's math, but it is math. What's our cost of capital, what's our cost of debt, and what's our return? Those have to align. I still think there's demand there, but certainly that math has to work. Would you be, assuming the math works, and I'm not good at math, so I'll leave that to you, would you guys be okay taking the leverage up to, you know, kind of the 50% range if an opportunity was there that you guys really liked? Opportunistically, we could see doing that. We'd certainly have to, as I said, like the portfolio and like the math. Okay. Then, just on, flipping back to the acquisition, I think Groupe Park has, probably about 15 or so dealerships. Is there a future pipeline there, or was this kind of a one-off with the former dealership owner? I don't know that answer per se. I mean, we certainly know a lot of the larger dealership groups and know and like Park Avenue. Everyone has different motivations at different times. It's, it's hard to say. Yeah, to your point, this was not an acquisition from Park Avenue. Okay. Thank you very much for the color. I will turn it back. Thank you. Thank you. The next question comes from Jonathan Kelcher at TD Cowen. Please go ahead. Thanks. Good morning. Good day. first question, just on the Groupe Park acquisition, how long is the lease? It's kind of a midterm lease. You know, it's existing, We're not supposed to be talking about exact details, It's midterm. Does it materially change your lease maturity profile? No. I mean, it's. No. No. No. No. It's a CAD 16 million acquisition. No. No, I would not say it materially changes it. Okay. Fair enough. The CAD 25 million that you guys moved over post the quarter that's floating, was that floating before? There's no change in that or is there a change? Andrew? Jonathan, CAD 25 was on the revolver, so that was floating. Now we have the ability, we've put it into non-revolving. Now we have the ability to place, in that, utilizing our swap strategy. We haven't done that yet. We just converted it a week ago. It remains floating as of today. Okay. The, so by next quarter, we should see the fixed rate. Well, assuming not no more acquisitions, we should see fixed rate probably tick up a little bit. Yeah. I mean, we follow a strategy of putting in swaps. We'll see where the market goes. Okay. Lastly, just the G&A at CAD 1.4 million for the quarter, is that a good run rate for the rest of this year? I think similar to Q4, I mentioned we don't provide a lot of forecasts by line items, so we don't provide forecasts by line items. For your modeling, I think, it is a good run rate, with some increases for growth and inflation when you're modeling that. Okay. I'll, That works. I'll turn it back. Thanks. Okay. Thanks. Thank you. The next question comes from Himanshu Gupta at Scotiabank. Please go ahead. Thank you. Thank you, and good morning. Just on the acquisitions, is the pricing different for a dealership, with the midterm lease term versus like a long-term lease? Looks like, you know, the acquisition which you did, you mentioned it was a, like a existing midterm lease. Mm-hmm. Is the pricing different compared to, let's say, a traditional 10-15-year lease? Not dramatically. You know, we certainly like how the numbers are on this one, and we really like the corner. We think there's a lot of flexibility here, whether it's auto or whether it's other. That always plays very well in our acquisition criteria and considerations. It really does depend on the property and does depend on the covenant. Overlay, as you just talked about, the term. You know, in our world, there's not a lot of difference between mid and long term, as long as we really like the dirt. Okay. Fair enough. Sticking to, you know, the Caprate discussion, has Caprate stabilized now? You know, pricing in May, compared to December when you did the last transaction. Has sellers' expectations further changed since Christmas or, I mean, the reset has already happened what it had to happen? I would say kind of like gas prices. It's amazing how they go up very quickly, and then it takes a while to kind of pull back down. There are, you know, dealers that certainly like the pricing that it suddenly went to in 2021, but not a lot of trades happened because people were scratching their head on those, and those are moving back up to the norm, the historical norms. But that's taking a little time, and it depends on the vendor and if it's on the back of M&A and other considerations. But yeah, I mean, I think there's a quiet understanding that 2021 was a moment in time as opposed to kind of a regular industry situation. Okay. fair enough. last question is on the Quebec acquisitions which you completed in Q1. Mm-hmm. Would you say the rent on a CAD per foot basis is, like, significantly above the rents which you had on your earlier Quebec portfolio? You know, we touched on this, I think it was last quarter too. We're finding overall land prices and construction prices have gone up, so our historical portfolio is lower per square foot than we expect our acquisitions to be in the current market. That's just on the back of, you know, certainly along Chomedey and Laval. That's high quality land that's gonna be at a price per acre that's a lot more than it would have been, you know, seven, eight years ago when we did this acquisition. Anyone who's done a renovation or any construction recently absolutely understands what the difference is in pricing for construction. A number of those assets were new construction or recently updated. You know, we're not surprised at the pricing per square foot, but it is different than it would have been historically. All right. Because, you know, this is the first time you have disclosed your Q1 rent. Based on my calculation, your, you know, the acquisition Quebec portfolio, the rents are like double than what you had before. Maybe that's a function. The only other comment I would make there is our largest building in Quebec is as much service as it is distribution, and that's the Tesla facility. That, you know, naturally drags down the per foot net rent numbers. If you compare Quebec to Toronto, Vancouver, it's a lot more in line with the recent acquisitions on a net per square foot. There's a bit of an anomaly there because we know and like the Tesla distribution service deal, but it is a bit more, it's as much distribution as it is retail. Thank you, guys. I'll turn it back. Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star one. Next question from Brad Sturges at Raymond James. Please go ahead. Hey there. Hi, Brad. Just, I'm curious, you know, you've had a good start to the year and it's, pretty Quebec focused at the moment. Just curious if the acquisition pipeline, if there's something about Quebec specifically in the acquisition pipeline that's driving that or just happens to be the circumstances of the opportunities that you're, able to get across the line right now? It, it's a bit supply and a bit demand. We like the market and therefore, you know, certainly like to see opportunities there, and we're finding that there are more opportunities there. Certainly to achieve cap rates, we like Vancouver, but those cap rates that are very different level than you'd see in other markets, including Montreal. We like the underlying demographic growth. We like the economy within Quebec. You know, the auto, especially in EV world, Quebec provides subsidies, so that tends to be very strong. It's, it's a bit we like it, and then we're seeing opportunities in it. I think you talked about some of the catalysts or the drivers of why we might start to see more M&A activity. I'm just curious, you know, would we continue to see more activity through the summer months or do we still fall into more you know, kind of historical seasonal trends and it tends to be more activity kind of at the back half there or the end of the year? We tend to see more activity at the back of the year. I would say especially in 2023, because there is a bit of a buy-sell, because certainly 2021 and 2022, the dealership business was extremely strong. It's going to remain strong, but some of those multiples and some of the underlying earnings, there's a bit of a feeling out on what they're gonna be. There tends to be what I'm hearing is a bit of a buy-sell gap on the M&A, and quite often that buy-sell gap comes together a lot more at the end of the year, where vendors who are, you know, not just exploring the market, but interested in selling, come to meeting of the minds with purchasers. Over the summer, I find a lot of people enjoy their summers. Yeah. No notable change then, it sounds like from that, from the, I guess, the activity level perspective. We're not expecting to see a busy summer within the M&A world. I can't say that hard and fast. There may be something that pops its head up, but, you know, we're not expecting it. Yeah. Sounds good. I'll turn it back. Thanks. Thank you. The next question comes from Tal Woolley at National Bank Financial. Please go ahead. Tal, do we have you? Good morning, everyone. How are you? There you are. How are you doing? I'm good. At the risk of beating a dead horse on this Brossard deal, just the way it was phrased, are you acquiring the land only and not the building? Nope. No, no. Okay. It's both. It's both. Okay. Yeah. You know, if you go into the JLR, it's a very nice, it's a gorgeous facility. Yeah. We certainly... You know, if you do the Google Maps, it's a really nice hard corner on two major streets. Okay. That's always a good thing in real estate. Got it. I guess just thinking longer term, about sort of, you know, trying to future-proof, you know, the assets that you have, do you have dealers right now who are looking at either, you know, expanding buildings and maybe looking for capital to do that, or even expanding infrastructure and thinking like, you know, the charging infrastructure and stuff like that, where maybe APR can play a role in terms of providing capital there? Charging infrastructure is going to happen or has happened at a lot of these dealerships. It's just, it's the natural evolution of the industry. They're gonna have to have, or most brands, if not all, are gonna be both facilitating, internal combustion and EV. That we certainly will see. As far as expansions, you know, when the cost of money was 90-day money at very low, they were better off financing themselves. It'll be interesting to see what happens now that that short-term money is now at a rate that's a lot higher. We do find, and we've talked about it before, that because of the locations and the focus on metropolitan markets, that when you've got that radius clause of 8 km, it's very tough to relocate. Therefore, a lot of dealerships, it's also tough to get the zoning in most of those markets. A lot of those dealerships, as opposed to relocating, will expand on-site. You know, it'll be interesting to see how that unfolds, but we do expect at some point people will knock on our door, and then if we see that the numbers work well, we'd certainly like to work with them. Okay, it's not a situation where you're looking around your network right now and you're like, "Oh, we know that there's seven dealerships that are gonna have to do some significant work over the next three years," or something like that. A lot of it is brand by brand. You'll see certain brands go through re-imaging at the same time. We don't love, you know, in the right situation, I guess we would. We don't love just changing cosmetics. If they're expanding the building, then it adds value to the real estate. And certainly if they are doing a re-imaging and looking at a lease extension, then that can make sense as well. It really is case by case. And most of the dealerships or the dealership groups that we work with are large dealership groups. They tend to have an ongoing CapEx plan within their entire portfolio. Sometimes it works to do it with APR, and sometimes they'll just do it on their own book. Either way, we're pretty happy when we see things get expanded and/or renewed on the facility. Just looking out further, the bigger you guys get, you know, do you think about, like more or more traditional, I guess maybe is the way to phrase it, more traditional types of debt to use, like just doing straight up, term loans, you know, that kind of stuff. Is that, is that something, you know, you'd look to do? Because when I, when I sort of look at, you know, the way your debt's structured, it's, you know, a lot of different facilities, a lot of different hedging options. I never wondered if someone's ever come in and pitched you and say, "Hey, we could like, we could redo this whole piece of debt, you know, in one structure and maybe cost you a little bit less or? Yeah. I think, I mean, over the last little while, we've added mortgages, so we have diversified. You know, just the future of us, taking CAD 25 million from a revolver and into a non-revolver, of amortized payments that we had paid on that line, that flexibility allows us with considerable amount of ability to fund acquisitions and manage our debt. I mean, we've been very successful the last seven to eight years with the strategy of, extending and maturing, our debt within the three credit facilities. We've been adding mortgages, as we see fit on specific properties. I think it's working well for us at this point in time. Yeah. I'm gonna add to what Andrew said. I mean, I'd probably argue over the last seven years, we've been able to demonstrate both to the market and more or as importantly to ourselves, that the flexibility that this provides is valuable. If anything, it's more confirmational that our strategy, we like it still. The short answer is, as Andrew said, there will be opportunities for kind of the traditional mortgages, but we were fortunate enough when we created the REIT that we had the flexibility to put these credit facilities in place and therefore allow flexibility to work with the real estate and not be, you know, handcuffed by existing financing. That's worked out very well. Okay. All right. That's it for me. Thank you very much, gentlemen. Thank you. Thank you. Thank you. There are no further questions. I will now turn the call back over for closing comments. That's great. Thank you, everyone. We look forward to talking to you, in August. Enjoy the summer. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. We ask that you please disconnect your lines.