Good morning. My name is Joelle, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BTB Real Estate Investment Trust 2023 third quarter results conference call, for which management will discuss the quarter ended September 30, 2023. All lines have been placed on mute to prevent any background noise. Should you wish to follow the presentation in greater detail, management has made a presentation available on BTB's website at www.btbreit.com-investors-presentations-quarterly-meeting-presentation. After the speaker's remarks, there will be a question and answer period reserved exclusively for analysts. If you would like to ask a question during this time, please press star followed by the number one on your keypad. Before turning the meeting over to management, please be advised that some of the statements that may be made during this call may be forward-looking in nature. Such statements involve numerous factors and assumptions and are subject to inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, and projections, and other forward-looking statements will not be achieved. Several important factors could cause BTB Real Estate Investment Trust actual results to differ materially from expectations expressed or implied by such forward-looking statements. These risks, uncertainties and other factors that could influence actual results are described in BTB Real Estate Investment Trust management discussion and analysis, and in its annual information form, which were filed on SEDAR and on BTB's website at www.btbreit.com-investors-reports. I would like to remind everyone that this conference is being recorded. Thank you. I will now turn the conference over to Mr. Michel Léonard, President and Chief Executive Officer, and Mr. Mathieu Bolté, Executive Vice President and Chief Operating and Financial Officer. Mr. Léonard, you may begin the conference. Thank you, Joelle. Good morning, everybody. Glad to be here today to report on the results for the third quarter. As far as the highlights are concerned, for the third quarter, we stand at 6.1 million sq ft in our portfolio, and our leasing activity totaled 85,000 sq ft during the quarter. Our committed occupancy rate was 93.7%. The fair value of our investment properties was CAD 1.2 billion, and there was a subsequent event to the quarter where one of our tenants has exercised an option to purchase the property during the month of August 2023. Basically, committing the tenant to purchase the property at the end of the year 2025. As a result of this, the lease was reclassified as a finance lease, and therefore, there are certain implications in the overall results of BTB. In our portfolio, as a glimpse, as I mentioned, the leasing activity, we saw an increase in year-to-year average renewal rate of 7.1%. The densification aspect of our business, where one site on the island of Montreal is moving very well. We are positioned to see is that... We're hopeful, I should say, to see that the new zoning is going to be approved relatively soon. As far as our investment activity, we are focused on investing in industrial assets, and as you will see, the total fair value of our industrial assets has increased over time. The evolution of our portfolio, as I was just mentioning, in the industrial segment, the fair value increased by 37% as far as the portfolio is concerned. Our off-downtown office has gone down to 43%, and our necessity-based retail has gone up to 24% of the portfolio. So overall, we see that our migration to the industrial segment is moving in the right direction. As far as the real estate portfolio is concerned, our geographical diversification shows that Quebec City represents now 18% of our portfolio, 57% for Montreal, 14% for Ottawa, 4% for Saskatoon, and 7% for Edmonton. So we see over time an evolution of the portfolio, where, for instance, in Montreal, in Q3 2021, it represented 57%, so stable today. Quebec City in 2021 represented 26%, now down to 18%. Ottawa represented 15%, down to 14% as a result of the acquisitions in Saskatoon and Edmonton. Regarding our strong leasing and renewal activity, we have a total leasing activity of 544,000 sq ft to date this year, with an occupancy rate of 93.7%, as I mentioned earlier. What is important to note is the fact that, our off-core office properties are getting strong signals of leasing velocity. Regarding our lease renewals, we renewed 52% of the leases that were maturing during the quarter. So to date, we have also renewed 68,000 sq ft of leases that expired later in the year or in subsequent years. We also renewed a lease in Ottawa, a major lease in Ottawa, in an office property as a subsequent event, as disclosed in our results. Of the 47,000 sq ft that expired during the quarter and not renewed, there's a tenant that left us in Edmonton, and we replaced the tenant for 14,000 sq ft, and we didn't suffer any downtime regarding that property. New leases concluded, so for the cumulative nine months, leases representing 93,000 sq ft or almost 94,000 sq ft, or 43% of the leasing activity were concluded in the off downtown core office segment with new tenants. 83,000 sq ft, or 31% of the new leases, were concluded in the industrial segment, and 41,000 sq ft, or 18%, in the necessity-based retail segment. So the total activity was 217,000 sq ft for new leases, and that does not include an expansion that we concluded with one of our tenants in Ottawa, expanding their premises by 16,000 sq ft, and also doesn't include a lease that we concluded in Three Rivers for 26,000 sq ft with a well-known CPA firm operating in the province of Quebec. So this is a firm transaction where they are going to take occupancy for construction on January first of next year. So we achieved a cumulative increase of 7.1% in the net renewal rate, and for the year, 11.9%, which is a good performance. In the industrial segment, 16% increase, in the off-downtown core office, 6% increase, and necessity-based, 10% increase. As I mentioned, it is important to note that a property was reclassified as a result of the exercise of an option to purchase. So the total activity, as I mentioned earlier, year-to-date for renewals was, excluding these transactions that I spoke about, 327,000 sq ft for leases renewed this year, and 217,000 sq ft for new leases to date. So if we look at the track record for our leasing performance, Montreal now stands at 96% occupancy, which is close to, if not a record occupancy for the Montreal area. Ottawa stands at 98%, Edmonton 100%, Saskatoon 100%, and Quebec City 82%. If we add the CPA transaction, we would be at 84%. So we're seeing that, the only area where our occupancy rate is suffering is in the Quebec City area, and we have taken measures in order to improve the situation. And, as the transaction that we related to with the CPA shows that, we are getting better traction than in previous years. So, we talk about a little bit of the leasing dynamics, in the office segment. We concluded a 7-year extension with Intrado for the whole space that they occupied, on the island of Montreal, at almost a 9% increase in rate. The city of Quebec leases space, in Quebec City with us. We concluded a 10-year renewal for almost 60,000 sq ft. Excuse me, that's not the one. So the Quebec government, we concluded a 10-year renewal for almost 60,000 sq ft at a 52% rental rate increase on the renewal. In Quebec City, a 7.5-year renewal of almost 24,000 sq ft premises at a 41% increase. In Ottawa, 11-year renewal with TÜV for 23,000 sq ft at a 26.7% increase. Lundbeck, on the island of Montreal, a 6-year renewal at 18,000 sq ft at almost a 10% rental increase. All these transactions were concluded for the same amount of space that was leased before, and I continue. Giatec, a 5-year extension, almost 16,000 sq ft at a 7% increase. MNP, a 9-year extension of 13,000 sq ft, a new lease, June of this year. BPA, a 5-year extension of 21,000 sq ft. BPA is an engineering firm at a 13% increase on renewal. BGRS, a 2-year extension of 27,000 sq ft in Ottawa at a 3% increase. And WSP, a 5-year extension on almost 50,000 sq ft at a 3% increase in renewal rate. I wanted to give you some color regarding the activity that we are experiencing in our suburban office, as a result of it, given, basically, showing that, the stories that we hear about the, occupancy rate in the downtowns, whether downtown Canada, whether in Montreal, Toronto, or Calgary or Vancouver, are basically, not what's applicable or what's happening in the suburbs of Montreal, Quebec City, Ottawa, and so on. So, just briefly on a development opportunity, in Lévis, Quebec, we have excess land next to a Walmart, where we have an LOI in place, negotiating the lease, in order to build a 43,000 sq ft facility, a retail, facility, to a nationally recognized retailer on a long-term basis. This would be a 10-year term with multiple options to renew and no cancellation right. In Ottawa, on Queensview, I spoke about it during our last call. The city is moving well in the right direction in order to reclassify our excess land on this site, in order to basically go from a TOD to a hub, basically, allowing us or somebody else, or a developer, to build residential facilities onto this excess lands. So with this, I'd like Mathieu to take you through our financial results. Thanks, Michel. Good morning, everyone. ... So overall, the portfolio showed a stable result when we isolate some of the one-offs between last year and this year, and I'll go through it, as well as the consideration for the interest rate increase. Year-over-year rental revenue is up 9%, and the NOI is up almost 8%. Same property NOI decreased by 2% for the third quarter, but increased by 1.2% year-to-date. So one thing to keep in mind, last year, in the third quarter, we collected a CAD 200,000 penalty for the early departure of a tenant, and also this quarter, we had to record a CAD 100,000 charge for the insurance deductible related to a flood of one of our properties in Ottawa. So not a lot of damage for that property, but it was just a roof, but we had to pay that CAD 100,000 of insurance deductible. Those were compensated by the leasing efforts made during the previous quarters, resulting in an increase in the occupancy rate of 20 basis points compared to the same quarter last year, and the increase in the average lease renewal rates of 7.1% year-to-date that Michel mentioned. The FFO per unit was CAD 0.104. It's a decrease of CAD 0.011 compared to the same quarter last year. Again, just to talk about the impact of the one-off that I mentioned previously, those have an impact of CAD 0.01 for the quarter. As well, when we look at the increase in the interest rate year-over-year, so this has an impact of CAD 0.01, but this impact is almost fully offset with the leasing efforts and the renewal rates. So the one cent of the interest expense is offset by CAD 0.09 positively of the leasing effort. Year to date, the FFO per unit is up CAD 0.02 compared to last year. Also, we proactively appraised the fair values of a large part of our portfolio. As of the third quarter of this year, BTB have 57% of its portfolio externally appraised. It's a total value of CAD 687 million. The exercise resulted in net gain of CAD 6.4 million. So overall, the recommendation was to increase the cap rates for the office and retail segment between 25 and 50 basis points, so which showed CAD 3.5 million loss on fair value for the two segments. The loss in both segments was offset by the better performance of the industrial portfolio, for which 13 properties were appraised externally. So due to the increase in market rents, the appraisal resulted in a net gain of CAD 40 million. We also took into account, from the appraisers, the increase of cap rates for the industrial property between 25 and 50 basis points. So it's really driven by the cash flow, although we had a negative impact on the cap rates. The rest of the portfolio was also part of an internal review, considering the observations of our external appraisers. Year to date, the average cap rates for the industrial portfolio went up 25 basis points to 6%. For the off downtown core office, we see an average increase of 26 basis points to 7.02%, and for the necessity-based retail, we see an average increase of 19 basis points to 7.03%. Looking at the capital structure, BTB concluded the quarter with a total debt ratio of 58.4%. It's a 50 basis points improvement compared to the previous quarter, and 10 basis points improvement compared to the end of last year. The weighted average interest rate for mortgages currently is at 4.3%, so it's an increase of 70 basis points compared to last year. For the remaining of 2023, we still have CAD 30.5 million to refinance for two mortgages, for which we're just finalizing the documentation, but we already have the commitment letters. But we also work proactively with the lenders to refinance the 2024 properties, because some are due at the beginning of the year. But we've been proactive with the lenders, so we think we're in a good position to go through that. A lot of the refinancing that we have for next year is very small properties. So it's just a sum of a lot of small properties. So it's more work to do, but not a big exposure individually for each individual loan that we have to refinance. So this completes our presentation, and we'll move to the Q&A. This is the operator. At this time, I would like to remind everyone that analysts may now ask their questions by pressing star, followed by the one on your telephone keypad. Again, if you would like to ask a question, please press star and the number one. We'll now pause for just a moment to compile the Q&A roster. Your first question comes from Tom Callaghan with RBC Capital Markets. Please go ahead. Hey, good morning, guys. Thanks for taking my questions. Maybe just to start, Michel, you mentioned a bunch of strong kind of office leasing. Just curious, like, what are you guys hearing from tenants and prospective tenants on the office side as they look either to renew or potentially at new space? Well, I think that it depends on their sector of operation. What we're seeing is that professional firms are certainly expanding, witness the CPA transaction that I spoke about, and also MNP, a transaction, a tenant that we have in Laval, where they're looking also to expand. So it shows that professional firms, and same story for engineering firms. I didn't talk about in Quebec City, we have a tenant that is an engineering firm. We just signed a lease Friday. ... where they're currently leasing 13,000 sq ft, and they're going into premises of 20,000 sq ft. So an expansion of 7,000 sq ft. And that's what we're seeing from professional firms. National firms, as far as leasing is concerned, we're seeing, let's say, let's call it a decrease in the interest of national firms. It seems that they are concentrating their space taking or consolidating, I should say. It doesn't look to me that a study has been carefully laid out regarding their space taking, in the sense that what we hear from local operators is that they need the space, but then they get some kind of dictum from head office, where head office is basically saying, "You got to reduce your footprint." And then they have to build a case in order to stay the course. So that is what we hear constantly: "Head office wants this, but I need every square foot that I'm leasing." So there's a fight between the local operator and the national firm. That's what we're seeing constantly. And it seems, and I'm touching wood, it seems that the local person is winning the argument. So overall... I think that, as I mentioned earlier, Tom, the story in the suburbs is completely different than the stories that we hear in the downtowns. I think that it's sort of clear at this point that employees would like to work close to where they reside. Employees want to go back to work close to where they reside, and they don't wanna travel an hour, an hour and a half in the morning and at night in order to get to their office space. That's what's basically the theme. Based on the activity that we're experiencing and the level of activity that we're experiencing, I think that we're probably, as far as the suburban office segment, I think that we're probably a barometer of what's coming. And I hope we are, because of the activity that we have. And I remind everyone that, you know, our office properties are always close to public transit. They're well located on that front. They're close to, in Ottawa, to LRT stations, in Montreal, the new REM, and so on. So, to me, it shows that if you... Again, it's the old adage, if you're well located, then obviously, you're gonna lease first. So that's-- I think generally that's what we're experiencing. I think that it's-- I don't wanna call it solid, because I don't wanna eat my words eventually, but I think that regarding what's happening within our portfolio, I think that we can judge that there's a really good performance, especially with the numbers that we're reporting. Again, Quebec City is hurting us, for sure, but I think that we're gonna be in a position in order to increase the occupancy rate in Quebec City within the next six months. Got it. That's helpful, Color. Maybe switching gears just a bit. I know you mentioned last call the potential for some asset dispositions, and I think you had a few properties on the market. Just any update there or thoughts? Well, we put some properties on the market, and right now, the acquirers are basically bottom feeders. So they, there are purchasers out there, but they don't recognize the quality of the assets that we do own, and as a result, they treat the assets as common, the common properties. Obviously, they like to nitpick and so on. So, we did put some properties on the market. We were not successful in the sense that we didn't wanna, you know, basically sell at a huge discount, that a property that, you know, produces good income for us, good NOI. So why would we basically sacrifice a property in order to, you know, you know, use that money, redeploy the capital, but then incur a loss as a result of it or, a downgrade of our AFFO? So, I think that it's better to look carefully at the portfolio. If there are opportunities to sell at a decent price, we'll sell it, but if it's not the case, then we're not gonna sacrifice any of our assets on that front. Perfect. Makes sense. I'll, I'll turn it back. Thank you. Thank you, Tom. Your next question comes from Matt Kornack with National Bank. Please go ahead. Good morning, guys. Good morning. Just wanted to talk about the lease maturity profile. I think you mentioned in your opening remarks that you've dealt with 68% of maybe the 2023 maturities, although I think that may have included some future maturities as well. But can you speak to the almost 100,000 sq ft of office that you still have in 2023 and similar amount of space in retail? It looks like the retail rents are quite low, so I assume there's an opportunity there, but in general- Retail and industrial, if you, Matt, if you look at our average rent for industrial, you'll see that it's way below market as well. So, I think retail, we've been able to show a relatively good increase. Regarding 2023 renewals, like, we can't report obviously on the paper that's out there for tenants to sign. And, you know, there's two, three tenant transactions that I spoke about earlier in the presentation, basically closed right after the end of the quarter. But all the transactions that or all renewals that we have to conclude by year's end are all have all been addressed, and the paper is out, and we're waiting for the paper to come back. Okay, that makes sense. And then with regards to kind of your ninety, let's call it low 93%, in-place occupancy, do you think there's upside for that to move towards the committed level? Or should we expect kind of a given, given turnover and tenants what they ultimately decide, but for that figure to kind of stay stable through the balance of 2023? And if you could give any color on 2024 expectations, that would be great. When you look at our... I don't think we can do better in industrial. I don't think we could do. I think we could do a little bit better in retail because we're 98, and 98% is almost 100%, you know, as far as flexibility is concerned. And in the office in Montreal, our occupancy level is relatively high as well, and we still have demand and are in negotiation for vacant, vacant office space in the Montreal area. So. And there's good traction. So, you know, I'm sure you're gonna say surprisingly good, but good traction. I go back to Quebec City and Three Rivers, where Three Rivers is a property that was 60% occupied, and now with the CPA transaction, we jumped to 80% occupied. So, committed on the basis of it being committed. So it's going to allow us with some flexibility in Three Rivers, because we've been 4 years basically saying we have a problem in Three Rivers, and you know, we found a little bit of a solution. So Quebec City is not 81%, because we report Three Rivers with Quebec City. So Quebec City is really 82%, close to 83% occupied. And I think that, based on the traction that we have, we should be able to get to 85%-86% by year's end, and then even get to better numbers early 2024. So there is traction. We see the demand, we see the touring, and our people are busy with prospects, so it really shows well. Okay. So that, that's helpful. You guys have historically been able to keep CapEx as a percentage of NOI pretty low. Should we expect with this leasing, that there'll be some TIs and leasing costs that would be above normal, or are those kind of trending as they have in the past? I think it's gonna be relatively. You know, the higher our occupancy rate, the less we're gonna invest, right? It's the curse, if I can call it this way, when you're hit with departures and then you have to climb back to where you were prior to the departures, then obviously you got to invest a lot of money. But I think overall, next year should be, should remain stable as a result of the fact that we are gonna have less deals in Montreal, less deals in Ottawa, and yes, more deals in Quebec City. But I don't wanna say it, but Quebec City, to record a transaction as far as TIs or fit ups for tenants, it's a little bit less expensive than elsewhere. So I'm quite hopeful to keep it flat. Okay, thanks for that. And then the last one from me, for Mathieu, just with regards to appreciate the color with regards to the debt maturity profile on the mortgage front. The convert is towards the end of next year, so hopefully we'll be in a better environment by then. But with regards to those mortgage maturities, are they spread throughout the year pretty evenly, or how should we think about the cadence of the debt maturity? Yeah, it's. I'd say it's pretty well spread. It's just in terms of the mix, the ones that are due more at the end of the year and second semester of the year are more the industrial properties, and now we're attacking more the, the small office properties that we, some of them are already in January. Okay, and where would spreads be at this point, and I guess generically, and is there that big of a difference between industrial versus office at this point, or is it? Yeah. What we see is... Well, hopefully, we have a bit of help with the GOC. You know, we saw the GOC coming down 25, almost 25 basis points, last week. But, in terms of spread, for office, you know, between 250 and 300, and then, you know, industrial and retail between 200 and, and 250, depending on the property. Okay. That's, that's very helpful. In industrial, we saw even at below, below two, maybe at 1.80. We have some discussions at the moment where we can see even below 2. Okay, that's awesome. Thanks. Yeah. Your next question comes from Mark Rothschild with Canaccord. Please go ahead. Thanks, and good morning. Good morning. You announced, hey, you announced a lot of good leasing, and obviously there was some softness in this quarter. I'm just trying to figure out how to put it all together and what type of range of same property growth or recovery we could expect to see in 2024? ... I'd like Mathieu to answer that question. Look, in terms of what we see, we see the growth coming from leasing renewals, you know, but we see as well what I mentioned, the impact coming from the interest rate. We try to offset those, hopefully with the leasing that we can increase in Quebec City and the velocity that we have, we can more than offset that. So that's, that's the, the, that's what we expect. I mentioned a bit, the one-off that we have year-over-year, so that's, that's some small items. But other than that, I think we can expect a positive growth, even offsetting the, the interest rates. From an FFO standpoint. Okay, fine. And maybe just one more question. The DRIP is not a major factor, but there is some utilization. With the unit price where it is, are you happy to continue leaving that open? It does provide some cash flow and reduces your payout ratio. Would there be any thought to stopping that? We did reflect upon this, and it seems that, given the fact that the participation is still low, we have decided not to touch it for now. Okay. Thank you very much. Your next question comes from Gaurav Mathur, with Laurentian Bank. Please go ahead. Thank you, and good morning, everyone. Good morning. Morning. Given where we are on the rate curve, you know, from an acquisition perspective, are you seeing any opportunities that may begin to make sense as you're approaching 2024? There are numerous acquisitions that are on the market that would be very, very nice to add to our portfolio. But given our cost of capital, for now, we just have to sit on our hands. So we don't want to. You know, we're not betting the bank on these things, and we're not going to dig a hole. So I think that strategically, it's better to just wait. Obviously, if we're able to sell some office properties and redeploy the capital into industrial, there are tremendous opportunities out there in the industrial segment, as Mathieu mentioned. We recorded an increase in our cap rates for industrial as well. And you know, we proactively, our role was to do it on a proactive basis. I remind you, last year, we were one of the only REITs that looked and made adjustments to the value of the portfolio in the third quarter of 2022. So overall, we're being very careful. We don't know what to expect for next year. I'm very hopeful that things are going to turn. However, I think that we have to remain conservative and definitely not spend money where we don't have to. I think that we're calling to basically conserve our cash and see what would bode for us during the early parts of 2024. So I don't think that the economy is going to be so fantastic next year. On the, you know, on the other side of the page is the fact that, if the market were to support us with a higher unit price, then we could attack the market and really, really buy, you know, interesting industrial properties at decent cap rates. However, the market is not supporting it, so we just have to grin and bear it, and not bet the bank right now on anything. We just have to be very careful financially. Okay, great. And then, you know, when you're looking at, when you're looking at the balance sheet, and I apologize if I missed this earlier, but you have about CAD 30 million of mortgages maturing by the end of the year and another CAD 125 million next year. I'm just curious as to how you're thinking about the debt ladder going forward. Sorry, I missed that, Gaurav. What do you mean by the debt ladder? Just how you're, you know, staggering your mortgage maturities, you know, once the- Yeah. come up for renewal. Well, there are different options for, for, not for the remaining, for this year. A couple things we're looking at for next year as well, there's, you know, options to look for, for example. There is even swap. You know, what we see a bit more from the different lenders is the swap option as well. You could have a 5-year swap and refinance, fixed two years, for some of the properties, to improve at least the current rates that we can have. If it was a 5-year fixed would be a bit expensive, I believe. So there are really different options, but I think looking into different swap options can be something interesting for us, just to take advantage of some of the products that are out there. I think going long term, doing five years, seven years, wouldn't be very interesting, I think to do. Okay. Okay, great. And then just last question. You know, from a distribution perspective, how should we think about the payout ratio, going forward, given that it has been increasing, since the beginning of the year? Well, the payout ratio, you know, this quarter we're close to 85%. You know, I think in the low 80s, that's something we would target. Okay ... you know, in the long term. I think the 69-70 that we saw is probably a bit too low, and we have taken into account the impact of interest rates. But in the low 80, I think that's an objective for us. ... Fantastic. Thank you for the call, gentlemen. I'll turn it back to the operator. This is the conference operator. Again, if analysts would like to ask a question, please press Star and the number one. At this time, there are no further questions. Please go ahead, Mr. Léonard. Thank you. Thank you very much, Joel. The quarter again is showing, as we've talked about since the beginning of the year, that although we're being discounted because of the fact that we own office properties, we're seeing a lot of velocity from the leasing of our office properties, from the renewal of our office properties, and we're seeing an increase in net rent derived from the properties themselves, so. And I know that it's difficult to fathom, but it is what it is. And so it shows that, you know, our leasing team is doing the right thing in order to get our property leased, where we've secured also, we're dealing through brokers in Quebec City in order to increase our occupancy in Quebec City. So the eye on the ball that we have is leasing, leasing, leasing. And by being successful in leasing, we're gonna be successful in increasing NOI, and we're gonna be successful also in covering the interest costs, as Mathieu mentioned earlier. So overall, we are definitely positive on BTB's ability to conclude these transactions, whether renewals and new leases. And it goes with the agility of BTB in order to affect these transactions. The people that we deal with, whether outside brokers, tenants, and so on, they know that we could turn around fast, quickly in order to for a lease to materialize. And as a result of this, I think that we are more successful than than our competition in the market. So, thank you very much for joining us today, and we'll see you maybe before the Christmas holiday, and if not, then we'll see you during the next call for Q4 2023. Thank you very much. This concludes today's conference call. You may now disconnect.