Welcome to the Dream Residential REIT Third Quarter 2024 Results Conference Call on Thursday, November 7th, 2024. Please be advised that all participants are currently in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. During this call, management of Dream Residential REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Residential REIT's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Residential REIT's filings with security regulators, including its latest annual information form and MD&A. These filings are also available on Dream Residential REIT's website at www.dreamresidentialreit.ca. Your host for today will be Mr. Brian Pauls, CEO of Dream Residential REIT. Mr. Pauls, please proceed. Thank you. Good morning, everyone, and thank you for joining us today for Dream Residential REIT's Third Quarter 2024 Conference Call. Speaking with me today are Scott Schoeman, our Chief Operating Officer, and Derrick Lau, our Chief Financial Officer. The REIT delivered stable operating performance for the quarter. Comparative properties NOI growth was 2.5% year-over-year, primarily driven by higher rents and completed value-add renovations. Year-to-date, comparative NOI growth was 4.2%, within our 3%- 5% target for the year. Comparative properties NOI margin was 51.1% compared to 51.4% in the prior year comparative quarter. We remain focused on managing controllable costs as current operating conditions have impacted top-end revenue. FFO per unit was $0.18 and flat year-over-year. Occupancy at September 30th, 2024, was 93.3% and was flat year-over-year. This represents a 70 basis points decrease quarter over quarter as we advance rents late in the summer ahead of shifting towards seasonal stability beginning in the fourth quarter. Average in-place rent of $1,175 per suite represents growth of approximately 1% from Q2 2024 and 2.8% year-over-year. Blended lease tradeouts were 2.5%, an increase of 30 basis points from Q2 2024. The increase was driven by Oklahoma City, which experienced tradeouts of 4.1%, followed by Cincinnati and Dallas at increases of 2.3% and 1.2%, respectively. Renovations were completed on 42 suites across the portfolio and 140 suites year-to-date. We have 31 suites under construction as of the end of the quarter. For Q3 2024, average lease tradeouts on renovated suites were 6.9% compared to a decrease in classic suites at 1%. Overall, Q3 2024 was a stable quarter as we face uncertain operating conditions. We remain focused on operating and managing our assets and are pleased with the overall performance. I will now turn it over to Scott to provide an operations update for the quarter. Scott? Thank you, Brian. We are pleased to report $6.1 million quarterly net operating income. This represents 2.5% comparative property NOI growth from Q3 2023 and 4.2% comparative property NOI growth from nine months through September 2023. The multifamily environment has tightened as a result of high supply and a moderated economy, impacting leasing conditions and organic growth. Our controllable operating levers support the year-end target of 3%-5% comparative property NOI growth. Revenue growth flattened quarter to quarter but continued its positive comparative property trajectory year-over-year, up 3% quarter over quarter and up 4.4% year-to-date. Average daily occupancy dipped on value-add renovations of 42 suites and a seasonal rent push during the late summer. Blended lease tradeouts climbed to 2.5%, driving monthly in-place rents 0.7% higher than last quarter to $1,175. Our Dallas-Fort Worth properties posted positive blended tradeouts and rent growth amidst continued deliveries, and our communities in Ohio and Oklahoma delivered 1.4% and 1.3% quarterly rent growth, respectively. Cincinnati maintained its rank amongst the top rent growth leaders nationwide. On the expense side, our active cost controls and discipline to management have kept operating expenses in check. Absolute expenses ticked up 20 basis points from Q3 2023 and 3.6% on a comparative property basis. However, taxes and insurance aside, our controllable expense categories favorably decreased nearly 4% compared with last year. As Brian highlighted in his remarks, we remain focused on controlling costs as current operating conditions impact topside revenue. Dream Residential REIT construction teams completed 42 suite renovations during the third quarter and 140 thus far this year. Value-add tradeouts are averaging 6.9% year-to-date. We have adjusted the renovation program, stopping in Oklahoma and moderating in Dallas-Fort Worth until more favorable conditions return. In Cincinnati, we are encouraged by early reports achieving projected tradeouts and expect to sustain renovations on that front. Our property management teams are transitioning to the winter seasonal mindset, prioritizing resident renewals, occupancy, and stabilized operations, and we are actively assessing value-add renovation plans in advance of the spring 2026 leasing season, 2025 leasing season. It is my pleasure to turn things over to Derrick Lau, our Chief Financial Officer. Thank you, Scott, and good morning. For the third quarter, ended September 30th, 2024, diluted funds from operations was $0.176 per unit and compares to $0.175 in the prior year quarter. Net operating income was $6.1 million and NOI margin was 51.1%. On a comparative properties basis, NOI increased by 2.5% year-over-year with year-to-date NOI growth at 4.2%. Interest expense and G&A expenses for the quarter were $1.9 million and $840,000, respectively. Net total debt to net total assets was 32.7% and flat quarter over quarter with all debt being fixed rate. At the end of the quarter, our liquidity was $78 million, comprising approximately $8 million of cash on hand and full availability of our credit facility. IFRS NAV was flat quarter over quarter at $13.47 per unit. The IFRS values of our properties were $396.4 million, which was largely consistent quarter over quarter. IFRS cap rates increased slightly by 4 basis points from Q2 2024 to 5.79%. For 2024, we are maintaining our comparative property NOI guidance of 3%-5% and are targeting FFO per unit for the year to be in the low $0.70 range. Thank you, and I will now turn it back to Brian. Thank you, Derrick. We'd now like to open the call to questions. Thank you. We will now take questions from the telephone lines. If you have a question, please press star one. You may cancel your question at any time by pressing star two. So please press star one at this time if you have a question. There will be a brief pause while the participants register for the questions. Thank you for your patience. The first question is from Jonathan Kelcher from TD Cowen. Please go ahead. Your line is now open. Thanks. Good morning. First question, just on the slowdown in rental activity that you guys are doing this year that you're saying it's due to market conditions, is that a function of some new supply still being absorbed in, say, Oklahoma or Dallas, or is that more of just an affordability for tenant issue where you can't just get your—you're not getting the rents to justify the rentals? Good morning, Jonathan. This is Scott. I think you said two things there. One of them was supply, and the other one was sort of larger economic conditions. I think in the Sunbelt right now, we're seeing supply, the deliveries being drawn out, or the absorption of deliveries being drawn out. So that is one of the factors impacting the demand. And the second part is I think we're seeing some economic pressure on the Middle America, and we hear that from our communities and our residents. And I think that is also impacting the value-add renovations in the Sunbelt. Conversely, in Cincinnati, our renovations that have started there are hitting all of our metrics. We're pleased with that, but on a blended basis, it is challenging in the Sunbelt. Okay, and so if we look forward to next year, would 200 units be a good starting point to think about? I think next year we're looking at probably in the 180 to 200 range as a starting point. Okay. And then the second question, just your estimate of market rents was up just over 4% versus Q3 last year, with Dallas being a little bit of a laggard. Based on what you're seeing, how do you expect that to trend over the next two or three quarters? Market rent, I think market rent is probably going to remain consistent in comparison to our in-place rents right now. One of the things driving that, Jonathan, is that we do not want to reduce market rent and adversely impact our renewing residents. Right now, as we transition into Q4 and Q1, we're going to be prioritizing renewals. We'll probably be up towards the 58%-60% range of renewals in Q4 is what I would project. If we lower the market rent, then that can adversely impact a renewing resident. We're probably going to hold market rents in relation to in-place rents proportionately about the same. Okay. Thanks. I'll turn it back. Thank you. The next question is from David Pierce from Raymond James. Please go ahead. Good morning, David o n for Brad here. I know, right? I just want to circle back to something you spoke about a couple of quarters ago around initiatives you might put in place to improve. Unit liquidity. Is that still something you're looking at? And maybe talk about some of the things you might do there. So thanks. Yes, sure, David. We're getting some background noise a little bit, but Scott, I'll start, and liquidity and growth of our platform is certainly a priority for us, so we're working on JVs, looking at other ways to expand the company and increase liquidity. I would say we're finding that new deals, and they're sparse. Transactions are low. JVs are slow to put together, but we're looking to continue to expand the company, look for ways to improve liquidity and scale for the entire business. Thanks. And maybe just. Is that what you're getting at, David? Yeah. Perfect, and apologies about background noise here. My line is a bit messy, but just on the expenses, so you mentioned controllable expenses are down 4% being offset by items like insurance and taxes. On the non-controllable side, are you starting to see those costs sort of level off, or could they move higher again next year? David, this is Scott. Appreciate your—I would say this is aside from the municipal or the Texas tax legislation that occurred uniquely at the end of 2023 last year, aside from that, then I would expect property taxes to continue an upward trajectory, not necessarily in any abnormal path. On the insurance side, we had a fairly favorable premium adjustment in 2023 into this year, or I'm sorry, the beginning this year into next year. I don't think we're going to see reductions. So both of those are going to continue to go up, but I think they're both going to be in more of a measured, more of a predictable path of upward trajectory. That's great. Thank you. I'll turn it over. Thank you. Once again, please press star one on your telephone keypad for any question. The next question is from Sairam from Cormark Securities. Please go ahead. Your line is open. Thank you, operator. Good morning, guys. Just probably looking at the competition that you spoke about entering these markets, can you describe the nature of these competing assets? Are they essentially new builds coming in, or are they, let's say, Class A units that were on the higher end of the market earlier and now slowly coming down? What's the nature of the competition? Good morning, Scott. This is Scott. Thank you for your question. So I would describe it this way. When new supply, it's been our experience that when new supply first hits a market, that it will put pressure on the luxury end of the market. But when sustained supply continues to deliver into a market, then eventually that filters down to impact all of the asset classes across the multifamily environment. And what we're seeing today in high supply markets that have seen sustained deliveries over the past 18 months at a pretty historic level in the near term is that it's affecting all classes of properties. So you call it A, B, C, whatever you want to call it, there is pressure on all of those sides. We don't believe it's an oversupply. It's just a temporary high supply right now, and we expect that to change over the course of the next several years. All right. So maybe just kind of putting this in the context of construction costs and the cost of actually adding the supply into the market, I would assume that the implied rents required to make them economically feasible would be significantly higher than what the rents you guys would be offering. So is it that—I mean, are they kind of—so what I mean to get to is that are they kind of offering incentives to make these new supplies more compatible to your assets, or is it more of a longer-term competition that you foresee here? You called it. Incentives and concessions are what is driving the ability to attract residents up into higher or newer properties. I'll give you one example. We have a community in Fort Worth. That community is a 1970 vintage. We've done some. We continue to do very successful renovations there. We're excited about sort of the repositioning on that asset, and we have residents that are moving out and moving into a brand new build that's about two miles away. Our property teams are concerned about this because it's impacting them right now, but I'm very excited about it because what it's doing is it's a reflection of where people are moving into there, so they're moving into these new communities. They get two, three, in some cases, even more than three months of concessions. But the challenge is when they renew, Sy, they're not going to be able to afford that new residence. So they're going to move back into our community. And we've actually started to see that happen. So we're pleased about where we sit in our communities, our submarkets, and we believe that some of these high supply dynamics right now, they're not enduring. They're over the next, call it, 12 to 24 months, depending on how you want to measure it. And we like being in the middle of the middle. That makes sense, Scott. And maybe just looking at the transaction market, considering that we're coming off of a high-rate environment, are you seeing maybe smaller operators actually finally feel the distress? And are you seeing more of these one, one, these, two, these come into the market that you could probably think of consolidating? Yeah. Maybe I'll start, Scott. You can elaborate. We're seeing some transactions, maybe a slight pickup in transactions from last year, but still very, very limited transactions. There's very little kind of ownership or sector-wide distress. It's more the higher-levered guys who are needing to sell. And some of that, an example would be the Tides Fund that's very public, that had high leverage and went into significant distress. A lot of that's being handled at the debt level, not necessarily at the public transaction level where people are buying the properties. It's being taken over by the debt. So we're seeing few distressed owners. If they're not distressed, they're not choosing to sell at this time because of interest rates and cap rate pressure. So while we're seeing pockets of opportunity and we're watching these markets very, very closely, finding attractive transactions that are creative, that line up with our target markets are few, but I would not be surprised if we see more in the coming year as we settle into the environment of interest rates and values. Scott, would you add to that? Only thing I would add, Brian and Sy, is that we saw a few larger transactions begin to occur this year, but the 10-year volatility recently, again, over the past, call it, 60 days, that has just sort of stagnated the transaction market again. So I think if there's anything that was under contract, great, but if it's not under contract, I think we're going to see those transaction volume slow down in Q1 next year as a result of what's happening in interest rates still through this year. Right. And maybe, Brian, going back to your point on some of these assets being under distress and some of these receivership properties, considering how strong you are on the financial side, would those be something you'd probably be looking at in terms of good acquisition opportunities over there? Yeah. So we're really committed to a conservative financial policy strategy for our company. Our balance sheet has capacity to take advantage of opportunities if and when we find them. So the short answer is yes. We'd love to add quality properties that are in the target markets in our proximity, but we are not anxious to jump into anything. We feel no pressure to do a deal, but we are looking closely, and we've got balance sheet capacity to execute on something if and when we find it. That's it, guys. Thanks. I'll turn it back. Thank you. Once again, please press star one if you have a question. The next question is from Alexander Leon from Desjardins Capital Markets. Please go ahead. Hey, good morning, everyone. My first question here is on the renovation program. I think the target for this year was 200. I'm just wondering if you expect to meet that target for the year. Alexander, thank you for your question. We are not hitting 200. I don't expect to hit it this year. The 200 is an estimate over time. When we look at our renovation program sustained over since IPO, we're basically in line, but in this calendar year, we are not hitting that. Okay. Got it. Moving on to maybe some of the leasing trade-offs. So it's good to see the blended spreads continuing to accelerate in 2.5% this quarter. And that was with new leasing spreads kind of declining in Cincinnati and Dallas-Fort Worth. As it relates to Dallas, I'm just wondering how much of that deceleration in the new leasing spreads was a result of slowing the value-add program versus maybe just general weakness in market from the supply? I don't have right now a breakdown as to what would be the variance between a classic and a renovation in terms of the lease tradeout of the quarter. I would say that we are moderating in Dallas because of the lease tradeout circumstance there. So our decision to moderate is a proactive decision in response to, not a causation of. And I think we're going to see continued conditions in Dallas similar to what you see there from the third quarter. So we're moderating to a minimum footprint in Dallas until we can accelerate with more favorable conditions. Okay. Great. Thanks for that commentary. Maybe sticking with Dallas and seeing how, maybe if you can give us actually some commentary on where you see the supply pipeline right now, and from what I understand, I think peak supply is behind us and maybe what that may translate to in terms of rent growth moving forward over the next, call it, six to 12 months. So what we are seeing in Dallas is the construction has peaked, and that is behind us, as you note. The deliveries actually peaked, it looks like, depending on your source, in Q2 for the DFW area. And so I think what we're experiencing is just a drawn-out process of absorption. It is taking longer than anyone really projected to absorb these units. So I do not think in the next year that we're going to see normalized rent growth in Dallas. I think it's going to be pressurized for at least another year. Awesome. Thanks for that commentary. I'll turn it back. Thank you. The next question is from André Lafontaine. Please state your company name and proceed with your question. Your line is open. Hello. Thanks for taking my question, Nugget Capital Partners. In regards to the fire that you had, you cited there was a building that was damaged with fire, and then it was followed that there was a deductible of $300,000 per building. So I was wondering if there's more than one building and how will that impact your NOI going forward? Thank you. Right. Thank you. So most of our communities have multiple buildings, 18, 20 buildings. We had one building impacted by fire. So we require 100% of our residents to maintain liability coverage in the amount of $300,000. And that also positions us to use that to recover our deductible on a larger loss. So we're thankful that everyone was okay. We're very thankful that we were able to minimize that damage from that fire. And we're in the process of permitting that to rebuild that particular one building. Can you touch base on how that will impact the income, if at all, or? I think we're going to see income impacted in the fourth quarter to the tune of about $50,000. Okay. Thank you very much. Thank you. There are no further questions registered at this time. I will turn the call back to Mr. Pauls for closing remarks. Great. Great. Thank you, everyone, for participating in today's call. We look forward to speaking again soon. Take care. Thank you. The conference call has now ended. Please disconnect your lines at this time, and we thank you for your participation.