Good afternoon, ladies and gentlemen, and welcome to the Morguard North American Residential REIT fourth quarter 2021 results conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. As a reminder, this call is being recorded today, Thursday, February 17, 2022. I would now like to turn the conference over to Mr. Rai Sahi. Please go ahead, sir. Thank you. I'm gonna pass on to Chris. Chris, do you wanna do the introduction? Thank you, Rai. With me and on the phone as well are Paul Miatello, Beverley Flynn, Angela Sahi, and John Talano. As is customary, I'll provide comments on the REIT's financial position and performance. In terms of our financial position, the REIT completed the fourth quarter of 2021 with assets amounting to CAD 2.5 billion, higher compared to CAD 2.1 billion last year. This was a result of the fair value increase in the REIT's income-producing properties of approximately CAD 290 million. REIT finished the year with CAD 26.6 million of cash on hand and CAD 70 million against the Morguard Corporation under a CAD 100 million revolving credit facility, providing the REIT with CAD 170 million available under this facility. The REIT completed the year with CAD 1.3 billion of long-term obligations. During the quarter, the REIT completed the refinancing of four Canadian properties, providing gross mortgage proceeds of CAD 194.2 million at a weighted average interest rate of 2.72% and for a weighted average term of 10.5 years. Maturing mortgages associated with the refinanced properties had balances maturing of CAD 74.2 million at a weighted average interest rate of 3.97%, resulting in net proceeds of CAD 120 million before financing costs and any associated tax payable on the redemption of the Class C LP units. As at December 31, 2021, the REIT's overall weighted average terms of maturity was five years and an increase from 4.8 years at December 31, 2020. The weighted average interest rate decreased to 3.31% from 3.45% since December 31, 2020. The REIT's debt-to-gross book value ratio improved to 40.2% at December 31, 2021, down compared to 42.8% at December 31, 2020. The REIT's IFRS net asset value at CAD 31.80 at December 31, 2021 compared to the current market price at approximately CAD 19, reflecting inventory for the investors. Clients net income w as CAD 245 million for the year ended December 31, 2021, compared to CAD 166.8 million in 2020. The 78.2 million increase in net income was primarily due to a higher fair value gain on our real estate property of 216.4 million dollars relative to the gain recorded during 2020. Was partially offset by a decrease in fair value loss on Class C LP units of 74.1 million dollars, reflecting an increase in the REIT's unit price during the year. Also an increase in preferred income tax expense of 67.8 million, which correlated to an increase in the fair value of the REIT's U.S. properties. IFRS net operating income was CAD 129.5 million for the year ended December 31, 2021. A decrease of CAD 6 million or 4.5% compared to 2020. The change in foreign exchange rate amounts to CAD 4.8 million of the overall CAD 6 million variance to last year. On a same-property proportionate basis, NOI in Canada decreased by CAD 2.3 million or 6.1%, mainly due to higher vacancy, partly offset by growth in AMR. NOI in the U.S. increased by $0.8 million or 1.2% as an increase in revenue from AMR growth and lower vacancy, partly offset by higher operating expenses. The change in foreign exchange decreased NOI by CAD 5.3 million. Interest expense increased by CAD 3.6 million for the year ended December 31, 2021, compared to 2020, primarily due to a loss on tax liability on the redemption of Class C LP units of CAD 3.8 million and a decrease in the non-cash fair value gain on the convertible debentures conversion option of CAD 2.3 million. These are partially offset by a decrease in interest expense on mortgages of CAD 2.2 million, which was primarily due to change in FX as the strengthening of the Canadian dollar decreased interest expense on U.S. mortgages. The REIT's 2021 performance translated to basic FFO of CAD 64.8 million, a decrease of CAD 4.2 million or 6.1% when compared to 2020. On a per unit basis, FFO was CAD 1.15 per unit for the year ended December 31, 2021, a decrease of CAD 0.08 compared to CAD 1.23 per unit in 2020. The decrease in FFO per unit was due to the following. On a same property proportionate basis and in local currency, a decrease in NOI from increased vacancy, partly offset by a decrease in interest expense and trust expense, had a CAD 0.02 per unit negative impact, of which a successful property tax appeal in 2020 impacted FFO by CAD 0.01. A change in foreign exchange rate had a CAD 0.055 per unit negative impact. An increase from the contribution of the REIT's redevelopment property, 1643 Josephine, which reached stabilized occupancy during the fourth quarter, had a half cent per unit positive impact. A decrease in other income gained from a wage subsidy received during 2020, as well as a decrease in interest income on the Morguard facility, which was partially offset by a non-recurring write-off during the prior year, had a one cent per unit negative impact. The REIT's FFO payout ratio is 60.8% from year-end of December 31, 2021. A very conservative level, which allows for significant cash retention. Operationally, the REIT's average monthly rent in Canada increased to CAD 1,535 or 2.3% compared to 2020, reflecting the quality of our Canadian portfolio. During the year, the Canadian portfolio turned over 14.9% of total suites and achieved 12.3% AMR growth on suite turnover. While in the U.S., same property AMR increased by 6.4% compared to 2020, having an average monthly rent of $1,519 at the end of December 2021. The REIT's occupancy in Canada finished the fourth quarter of 2021 at 93.6% compared to 94.9% a year earlier. Occupancy decreased in Canada due to prolonged stay-at-home restrictions throughout 2020 and in the first half of 2021, which disrupted normal leasing patterns. As the administration of vaccinations continues to progress across the country and as restrictions are lifted, we began to see increased leasing activity and the number of suites leased during the third and fourth quarter of 2021. Same property occupancy in the U.S. of 96.3% at December 31, 2021 was higher compared to 93.6% at December 31, 2020. Continuing the positive momentum experienced earlier in the year, as most of the REIT's U.S. submarkets are outperforming pre-pandemic levels. In addition, the REIT's redevelopment property, 1643 Josephine, located in New Orleans, Louisiana, reached stabilized occupancy during the fourth quarter. The repositioned asset further improves the overall quality of the portfolio, having an AMR of $1,842. During the year, the REIT's total CapEx amounted to CAD 30 million, having included exterior buildings and revenue-enhancing in-suite improvements. We continue to ensure we maintain the structural and overall safety of our properties. Currently, collections remain strong as the REIT collected 98.8% of fourth quarter rental income and approximately 97.4% of January's rental income, which is materially in line with historical collection rates. At this time, I'll turn the call back over to the moderator for any questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press the star followed by the one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. As a reminder, if you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Lorne Kalmar of TD Securities. Please go ahead. Thanks. Good afternoon, everyone. Just on the distribution, I know you guys had a pretty regular track record of increasing it year-over-year, but things have largely stabilized. How are you thinking about distribution increases going forward? Yeah. Ray, do you wanna touch upon the distribution? Yeah. I think at this stage we are being kind of careful. Typically, we do increase the div. I think right now we'll continue to think about that, but I think we don't have any plan to increase at this stage. We might consider next quarter, but we'll see how things flow. Fair enough. You guys, it looks like you now have quite a bit of cash on hand. What are you thinking about in terms of deploying that capital? Look to an acquisition, debt reduction? What are your thoughts on that? I think we're looking at more acquisitions. We're looking at more in the U.S. There's really nothing available at the price that we would like to buy or to keep usually. We continue to look in the U.S. and see if something comes up, we will acquisition. What is it fair to say that the acquisition environment's gotten tough? I mean, not as bad as it is in Canada or as high as in Canada, but certainly not tougher in the U.S.? It's tougher in Canada. U.S., there's still some availability. There's a lot more availability in the U.S. than in Canada. Canada prices have gone crazy. Yeah, sorry. I just meant, I mean, I know it's not as bad as Canada, but I was wondering if you saw it trending that way given some of the pricing that AssetLink's transacting at. Paul, do you have any comment on that if I asked about that? Yeah. It's Paul. Yeah, we're definitely seeing an uptick in pricing in major U.S. markets without a doubt. I think it's more. You know, there. Like Ray said, there's more product available, but there's a scarcity of product relative to how much money is chasing apartment product now. We are seeing, as you could see from our results here, rent increases, which I think is bringing in some non-traditional buyers. In addition to that, I think we continue to see some U.S. institutions recycling out of different asset classes and into multi-res and industrial in the U.S., so that's also, s ort of compounding the problem. Yeah, we are observing higher pricing per unit than we have historically. Yes. Okay. Just last one from me and, whatever you can give would be great. Have you heard anything in terms of, considerations of additional regulations from any of the, potential Ontario government platforms with your election coming up? Well, you know, governments are going to do what they're gonna do. We still have rent control. I don't know what more they can do. We'll just continue to watch. There's not much you can do. I mean, elections are coming. When we observe under reflection, we're also concerned about municipalities probably, because of the economy, going to have a challenge. Yeah. There would certainly be some pressure on increasing the property taxes, which will negatively impact us. Okay. Nothing as of yet, I guess. No, nothing. Okay, great. Thanks so much, guys. I really appreciate it. Yeah. Thank you. Your next question comes from Jimmy Shan of RBC Capital Markets. Please go ahead. Good afternoon. If I could just push you a little bit on that. On the U.S. pricing that we're seeing, it seems like we're seeing these quite aggressive bids on some assets in particular. So I was curious as to whether you actually are getting any bids on your assets? Are you looking more on the path of being a seller here? Maybe some color to your thoughts. Yes. Paul here. We are seeing unsolicited bids. It's not an unusual thing in the U.S., especially with, you know, what's referred to as the 1031 exchange. You know, guys, you know, institutions will sell properties and then, you know, they wanna buy something so they can fulfill the requirements of the tax deferral. It's a common thing. We are seeing more unsolicited sort of interest come in. That's another indication. Yes, we are on sort of track there. We are looking at perhaps, you know, pruning assets in one or two front top markets. That's just something we're considering right now. Okay. The unsolicited bids that you're seeing, are those pricing? I mean, clearly the fact that you're contemplating perhaps pulling the trigger on a few is suggesting either the pricing is quite attractive, perhaps even more attractive than what your margin of investment is on the books. It's attractive. I'm reading you, but. Yeah, but you know, we never really have a sense of who the buyer is, right? You're just getting- Yeah. You know, sort of stuff emailed, and you don't know, you know, what's real and what's not real. I wouldn't really comment on that at all. Okay. All right. On the Mississauga and Thorncliffe assets, these used to be operating at, you know, almost 100% occupancy. What do you think it takes for those assets to, you know, come back to that level? Is it really just immigration and return to work, right? I'm wondering if you have any, maybe a bit of detail on what do you think some of the drivers would be to get back to that level again? I can take that one. It's Angela. We're actually, if we take the average of the Mississauga portfolio, we're already at 96% occupancy in Mississauga and we're at 95% in Toronto, so including Thorncliffe Park. We're approaching, you know, we're making progress and all of it. I think you, as you stated, immigration is gonna be the major thing that's gonna impact the occupancy. Really it's the one-bedroom suites that we're finding more difficult. They're the ones that have the vacancy. Our two bedrooms, we're actually even able to increase rents on our two beds. It's really those one beds and it's the young professionals, not so much families at this point. We're waiting for the immigration really, and just offices and things being back to normal. Okay. What about? Are there any concessions still in the marketplace when it comes to one beds? There are some incentives in the marketplace still. I mean, you know, the variant was just, you know, recently with another lockdown and so, yeah, the market is still offering incentives right now. We're doing the same. Okay. What's each line? Is it about the same as it was about a year ago? Actually less. I think we pulled back. Okay. Sorry, last one for me just on the U.S. I didn't see the leasing spread on renewals from new leases in the quarter. I'm gonna miss that, but if you have that handy, that'd be great. John, do we have that available or... I don't have it on hand. Are you speaking specifically of the turnover on new leases? Yeah, turnover on new leases and also what you're getting on renewals. Yeah. Our turnover in the quarter on the new leases, and again, this is just a snapshot of what happened to turnover, was north of 12%. On renewals? Well, the renewals on average, we're well above pre-pandemic levels. Depending on the location, Chicago was basically flat. Chicago and D.C. are basically flat. Many of our markets, Florida was up 15%. Atlanta was up 13%. You know, most every of our markets are up double digits. We are also being cognizant of our exposure and making sure that we keep our occupancy up with our renewals. We're very careful about that and focused on occupancy specifically through the winter. Again, those things slow down. Folks don't move out as often in the winter months. You know, right now we're pushing 96% occupancy and 98% lease, so we're in a very good position. Okay. Let's move on. Your next question comes from John Shi, private investor. Please go ahead. Hello, everybody. Thank you for taking my call. You recorded an impressive share of value gain for the quarter and for the year. In recent months, there have been several acquisitions of U.S. multi-family REITs. Could you share your perspective on how your current IFRS property valuation compares to the valuations inspired by these buyouts? Yeah. Like overall, you know, our approach to per share value, we you know we have at Morguard every appraisal prepared internally each year every quarter. Our appraisals are externally performed on a cycle of three years on the U.S. portfolio. So we're well covered when it comes to you know the share value changes from quarter to quarter. I don't know, Paul, is there anything to add on you know with respect to kind of you know where the market is compared to you know coinciding with our actual IFRS values where we stand today? This is part of John's question. Yeah. I mean, I wouldn't add too much else. You know, every privatization or acquisition of a REIT, you know, is gonna be a different blend of geos, you know, different locations, different geographies. You know, our weighted average cap rate on the U.S. assets is about 4.8. And that's obviously a blend of everything from urban Chicago, you know, to Texas to Florida, et cetera. You know, as asked, you know, or what was suggested earlier, you know, we are seeing some premium bidding right now based on relative scarcity of product compared to how much money is chasing multi-res products. I don't know how long that lasts for, but it's certainly, you know, peaking right now. You know, I think we're roughly comfortable with our 4.8% cap rate, you know, based on what we're seeing in the market for the stable assets. Thank you for those comments. I don't have any other questions. Your next question comes from Tenzing Lama, Private Investor. Please go ahead. Thank you for taking my question. I was just wondering, in the rising rate environment that we all expect now, how are you sort of preparing for it? If you could give us a sense of, let's say you get something like about 150 basis points increase in interest rates by the end of the year, how does that affect your adjusted funds flow in 2023, let's say? How much does it go down by? Thank you. Thank you. We don't have a large amount of maturities upcoming. In 2022 it's roughly about $66 million of principal maturing. That's in the U.S. at an average rate of about 3.75%. We, you know, relative to that, you know, interest rates in the U.S. probably are, you know, between, you know, 2.5% right now. We don't expect a large impact on any refinancings upcoming. Even in, you know, looking ahead two years as well, Canada, very small maturity coming up in the U.S. There is a little bit $120 million, but again, the weighted average interest rate is about 3.6% there. The impact from an interest rate change may not be as severe. I think if we're taking on additional proceeds or refinancing, you know, the use of those proceeds likely will offset any kind of higher interest on principal amounts. Thank you. Your next question comes from Dean Wilkinson of CIBC. Please go ahead. Thanks. Afternoon, everyone. Probably a question for Paul. Have you guys taken a look at what the cost and/or the benefit would be of potentially hedging the FX as far as residual cash flow after debt service from the United States, just to maybe take some of the foreign currency translation off the table? Or would it just cost too much? Yeah, we look at that regularly, Dean. I think, you know, I know you're a longtime follower of all of Morguard companies. You know. Mm-hmm. You're probably aware that, you know, the hedge book has been closed for some time at Morguard. Yeah. As a policy. You know, the overall exposure and obviously we've got the U.S. dollar mortgages, which are the natural hedge and the overall exposure on the U.S. equities, you know, not that large. You know, we've seen things go both ways where, you know, you can hedge your interest rates. But, you know, things go the other way. You can, you know, you can get burned. You know, it's been our policy to keep the hedge book closed. You know, we all know the biases for rates to go up, like we get that. But at the same time, you know, it's very volatile and things are changing very quickly in this new world, right? We do analyze it regularly, so we'll continue to do that. Great. That's it. All right. Thanks, guys. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one now. Gentlemen, there are no further questions. I will turn the conference back over to you for closing remarks. Okay, Chris, do you wanna add any closing comments? No. Thank you everyone. It's been a good year, so we'll look forward to talking to everyone next quarter. Thank you. Thank you. Thank you, everyone. Bye. Ladies and gentlemen, this concludes your conference call for today. We'd like to thank you for participating. As such, please disconnect your lines.