Good afternoon, ladies and gentlemen, and welcome to the Morguard North American Residential REIT second quarter conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, July 28th, 2022. I would now like to turn the conference over to Paul Miatello. Please go ahead. Thank you very much, and thanks, everybody, for joining us today for the second quarter results conference call from Morguard North American Residential REIT. Again, I'm Paul Miatello, Senior Vice President of the REIT. With us on the call today, we've got Rai Sahi, Chairman and Chief Executive Officer, Chris Neumann, our Chief Financial Officer, John Tolano, Senior Vice President, U.S., Angela Sahi, Executive Vice President for Canada, and Beverly Slinn, Senior Vice President and General Counsel. So with those quick introductions out of the way, I will turn it over to Chris to give us a brief overview of the results, and then we'll turn it back to the operator for a Q&A session. Chris. Okay. Thank you, Paul. As is customary, I'll provide some comments on the REIT's financial position and performance. In terms of our financial position, the REIT completed the second quarter of 2022 with total assets amounting to CAD 3.9 billion, higher compared to CAD 3.5 billion as at December 31st, 2021. This resulted from a fair value increase on the REIT's income-producing properties of approximately CAD 355 million. The value increase is a result of cap rate compression realized on most of our U.S. portfolio during the first quarter, as well as an increase in underwritten NOI in both the U.S. and Canadian properties. During the second quarter, the REIT sold a property located in Atlanta, Georgia, comprising 292 suites for net proceeds of CAD 66.6 million after closing costs and the repayment of mortgages payable secured by the property. In addition, the REIT entered into agreements to sell two properties, one located in Louisiana and the other located in Florida, expected to provide additional net proceeds of CAD 114.9 million after the repayment of mortgages payable secured by the properties. The REIT expects to close the sale of these properties during the third quarter. Subsequent to quarter end, the REIT announced that it's entered into a binding agreement to acquire a multi-suite residential property comprising 350 suites located in Chicago, Illinois, for a purchase price of CAD 171.4 million. The acquisition is expected to close during the third quarter of 2022. The dispositions are consistent with management's strategy to dispose of certain assets where values are benefiting from strong market demand and to focus on opportunities to acquire properties located in urban centers and major suburban markets in Canada and the United States. To add, the REIT is pursuing a tax-deferred exchange under Internal Revenue Code Section 1031 in connection with its US property disposition. Under a 1031 exchange, subject to certain conditions, the REIT will be able to defer tax payable upon the acquisition of a replacement property. The REIT finished the second quarter with CAD 40.9 million of cash on hand and CAD 60 million advanced to Morguard Corporation under its CAD 100 million revolving credit facility, providing the REIT with CAD 160 million available under the credit facility. The REIT completed the second quarter with $1.1 billion of long-term debt obligations. During the quarter, the REIT completed the refinancing of a property located in West Palm Beach, Florida, in the amount of $19.5 million at an interest rate of 3.89% for a term of 10 years. The maturing mortgage amounted to $11.7 million, was open and pre-payable at no penalty before its scheduled maturity on August 1, 2022, which had an interest rate of 3.96%. As at June 30th, 2022, the REIT's overall weighted average term to maturity was 4.6 years, a decrease from five years at December 31st, 2021, and the weighted average interest rate remained unchanged at 3.31%. The REIT's debt to gross book value ratio improved to 35.6% at June 30th, 2022, down compared to 40.2% at December 31st, 2021. Turning to the income statement. Net income was CAD 166.5 million for the three months ended June 30th, 2022, compared to CAD 20.3 million in 2021. This CAD 146.2 million increase in net income was primarily due to a higher fair value gain on real estate property of CAD 77.1 million relative to the gain recorded during 2021. A higher fair value gain on Class B LP units of CAD 76.8 million, reflecting a decrease in the REIT's unit price during the second quarter, and was partly offset by an increase in deferred income tax expense of CAD 18.6 million, correlating with the increase in fair value on the REIT's U.S. property. IFRS net operating income was CAD 42.5 million for the second quarter of 2022, an increase of CAD 5.1 million or 13.6% compared to 2021. The change in foreign exchange rate increased NOI by CAD 1.7 million of the overall CAD 5.1 million variance to last year. On the same property proportionate basis, NOI in the U.S. increased by $2.5 million or 16% as an increase in revenue from AMR growth net of higher vacancy and an increase in ancillary revenue, partially offset by higher operating expenses. NOI in Canada increased by CAD 0.7 million or 5.4%, mainly due to AMR growth and lower vacancy, partly offset by higher operating expenses, and the change in foreign exchange increased NOI by CAD 1.4 million. Interest expense decreased by CAD 3.1 million for the second quarter of 2022 compared to 2021, primarily due to an increase in non-cash fair value gain on the convertible debentures conversion option of CAD 3.9 million, partially offset by an increase in interest on mortgages of CAD 0.7 million, mainly resulting from additional net mortgage proceeds on the completion of the REIT's refinancing during the fourth quarter of 2021. The REIT's second quarter performance translated into basic FFO of CAD 19.8 million, an increase of CAD 3.7 million or 23% compared to 2021. On a per unit basis, FFO was CAD 0.35 per unit for the three months ended June thirtieth, 2022, an increase of CAD 0.06 compared to CAD 0.29 per unit in 2021. The increase in FFO per unit was due to the following. On the same property proportionate basis in local currency, an increase in NOI from higher AMR growth and lower vacancy, partially offset by an increase in interest expense and trust expenses, had a CAD 0.03 per unit positive impact, and the change in foreign exchange had a CAD 0.02 per unit positive impact, primarily resulting from an increase in FFO generated from US properties. As well, an increase from the contribution of the REIT's development property, which reached stabilization during October 2021, had a CAD 0.01 per unit positive impact, and a disposal of a property during the second quarter of this year had a CAD 0.01 per unit negative impact. As well, an increase in other income, primarily from an increase in interest income on the mortgage facility, had a CAD 0.01 per unit positive impact. The REIT's FFO payout ratio was 49.7% for the three months ended June 30th, 2022, a very conservative level, which allows for significant cash retention. Operationally, the REIT's average monthly rent in Canada increased to CAD 1,565 or 3% compared to 2021, reflecting the quality of our Canadian portfolio. During the second quarter, the Canadian portfolio turned over 8.3% of total suites and achieved 15.1% AMR growth on suite turnover. While in the U.S., same property AMR increased by 13% compared to 2021, having an average monthly rent of $1,631 at the end of June 2022 as the REIT continues its strong performance, benefiting from strong market fundamentals across many regions. The REIT's overall occupancy in Canada finished the second quarter of 2022 at 95.2% compared to 91.8% at June 30th, 2021. Overall, occupancy has increased across the portfolio and it's anticipated it will continue to improve to the end of the year. Leasing activity significantly increased as COVID restrictions were lifted, economic conditions improved, and as people returned to their normal routines. Same property occupancy in the U.S. of 96.5% at June 30th, 2022 was slightly lower compared to 96.8% at June 30th, 2021, maintaining optimum levels. During the six months ended June 30th, 2022, the REIT's total CapEx amounted to CAD 10.8 million. That included revenue enhancing in-suite improvements, common area and exterior building improvements, as we also continue to ensure we maintain the structural and overall safety of our properties. The REIT's collections of rental income during the six months ended June 30th, 2022 continues to be 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. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a tone acknowledging the request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Lorne Kalmar at TD. Please go ahead. Thanks. Good afternoon, everybody. On the acquisition side of things, I think even with the Chicago asset you guys announced, there's still some proceeds to be utilized. Where are you sort of looking? I'm assuming it's in the US, but are there any markets specifically in the US you're targeting? What are you sort of seeing in terms of cap rates? Yeah. Lorne, it's Paul here. I mean, by and large, we're looking to stick within the existing footprint, you know, so all the, you know, states and municipalities that we're generally in now, we're not straying too much farther afield. You know, we'd rather build in the markets that we're in and where we have management capabilities now. So that's kind of the, I guess, the first priority or the first filter for acquisitions. Obviously, you know, it's the U.S., so, you know, there's a lot available that's on the screen, but that's kind of where we're prioritizing the efforts. In terms of cap rates, yeah, I mean, you know, the boil obviously has come off interest rates, you know, put a damper on things. You know, there's a little less transaction volume out there. You know, things are being pulled, you know, while vendors sort of wait and see. You know, I would say, you know, you're seeing, you know, pricing adjustments that maybe translate into, you know, 25 basis points, you know, 5%-10% of purchase price. You're seeing some adjustments now. You know, you're seeing good suburban Three-story kind of walk-up product. You know, depending on age and quality of course, but you know, 4.5%-5%. You're seeing more of the urban stuff, you know, still at, you know, 4.25%-4.75%. That's generally the range where we're seeing stuff. Okay. No, no huge distress or anything at this point. Yeah. You know, we are, you know, there, you know, there's a few broken deals and, you know, financing rates are kind of backing up. You know, we're not seeing huge price adjustments at this point. Is there any sort of like, is the, I guess, decreasing or now maybe even inverted delta between interest rates and cap rates sort of impact? Or how does, I guess, that impact the acquisition program for you guys? Yeah. I mean, like, we've taken our foot off the gas pedal. You know, we're very happy with the Chicago property. Obviously, you know, MRG.UN and the Morguard group in general, we've got a good sized footprint in Chicago, so we're very happy to have that one tied up. The way I would characterize it, we're taking our foot off the gas pedal and just sort of waiting to see how things play out. Like I said, there's no doubt pricing has changed, but vendor volumes have changed as well. We're just, you know, keeping a close eye on all the markets we wanna be in. You know, it's impacting the timing with which we wanna move forward and we're just sort of waiting, you know, for some of the dust to settle a little bit. Fair enough. You know, the Chicago I think was about CAD 490,000 a door or in that range, so obviously on the higher end, probably newer. Is that sort of what you're looking at going forward or are you guys more agnostic in terms of age and quality? I mean, I would say that we're looking to buy newer product. You know, we're taking the opportunity here to dispose of some properties that are a little bit older, you know, 20-25 years old and, you know, wood frame kind of product, you know, with some CapEx, you know, coming down the pipe and looking to trade up in the sense that we're looking for newer product. You know, urban versus suburban, you know, we've got a good mix, so we're a little more agnostic, you know, and we don't have huge exposure except for Chicago, you know, to the really dense, you know, downtown type environments. You know, we've got good management capabilities on you know, kind of both sides of this. You know, we'll continue to screen for properties you know, that are consistent you know, kind of with the existing portfolio. Then the one thing I just wanna like, check you on. You said $480 a unit. I mean, like at this one in Chicago it's like $380 a unit. U.S. dollars. In US, yeah, $380. Oh, sorry. Yeah, it is in Canadian dollars. You're right. You're absolutely right. Yeah, yeah. Fair enough. As long as you give us credit for the rent in Canadian dollars then. I know you guys have a, you know, a pretty decent presence in Chicago and Morguard Corporation does as well. You get some synergies there. You know, what are you guys really seeing in that market? Are they getting sort of that similar bump that we've seen in the New York, San Francisco, and Toronto in the recent months? Yeah. Maybe I'll turn that one over to John Tolano to talk about Chicago. Sure. Are you talking about rent specifically? Yeah. Because I think all their team have been holding them pretty well. Yeah. I would say Chicago lagged the southern portfolio, but we're absolutely getting those rents now. In Chicago in general, at the properties, we're seeing rental increases between 12% and 18%, and we're getting them. Oh, wow. It's definitely coming back strong. Okay. Maybe one last one while I have you here, John. What have you been seeing sort of post Q2 in terms of, you know, rent increases in the States? Um. Any slowdowns or. Well, I would say. Yeah. I would say in the southern markets, you know, the Atlantas and Floridas, I think where we pushed really aggressively. In those markets we're seeing a slowing of the growth. We are not seeing anything negative by any stretch of the imagination. It's just I think we've peaked in terms of velocity of growth. It is slowing down, but we're also cognizant of our community and our residents, and we are trying to make sure that we're thoughtful about, you know, the folks that are in our buildings and who we're trying to keep. We are definitely not as aggressive as some US landlords out there, but I think, you know, they're pushing people out and pushing people to a point where they can't afford rent. We're trying to be very cognizant and thoughtful about that. We are still increasing, but I would say those major increases are starting to slow, but our renewals are already out 90 days, and those are coming in strong as well. It all looks good. Okay, great. Thank you, everyone, so much. Thank you. Thank you. Next question comes from Matt Assali, an investor. Please go ahead. Hi there. One for the CFO. I just wonder what's the IFRS NAV at the end of the quarter? The IFRS NAV is just approximately CAD 37. It's slightly up over last quarter due to our fair value gain increase. Sure. Do you guys ever think of what would make the public units trade close to that NAV? Yeah. We think of it all the time. Definitely. It's you know you know it's part of it is you know our structure of our entity here and you know there's not a lot of you know I guess a lot of the analysts you know we don't get full credit for our relationship with Morguard but definitely there is room to grow and you know management's thinking of all the different things we can do in promoting the units. I don't know anything else to add, Paul. Yeah. I mean, you know, obviously the discount's large. You know, for the most part, you know, we're doing what we can. You know, we tend to focus on doing the right things for the business and the assets and, you know, as the NAV growth comes, you know, we leave it up to the investors to, you know, who are buying and selling the stock to, you know, to get the trades up. You know, like Chris said, we're doing what we can and, you know, by and large, taking care of the asset base. Thank you. Angela, are you there, Ang? Yeah. Rai, we can hear you. Yeah. Angela, do you wanna comment on the Canadian, multi-family assets? Yeah, I can say that, you know, occupancy as of today's date is definitely trending upwards, just even in the last month since Q2. The occupancy has actually been very strong in Mississauga. We're almost approaching 99% already. And really it's the two properties, the student-based properties that have been hindering that back to pre-pandemic occupancy, which are The Square and 150 Chapel. But even since the quarter, we're seeing some leases come up for the next couple of months. Like we have 40 in each of those properties because it is a full return back to school in Ottawa and Edmonton. Once we absorb that vacancy, I think our portfolio in Canada will revert to pre-pandemic levels. In terms of just commenting on that and, you know, I'm sure people are curious. Then even on the expense side, we're back to the expenses that we had prior to the pandemic. These last couple of years we've been low just due to closures and pandemic and things like that. We've had to defer some of those things and that's why we're kind of picking that back up now. In terms of expenses being higher than the last couple years, but back to pre-pandemic. Okay. Thank you. Okay, Paul, no more questions? The next question is. Sorry. Go ahead, operator. Thank you. The next question comes from Jimmy Shan at RBC Capital Markets. Please go ahead. Thanks. Maybe just to follow up on the GTA comment. What are you seeing on the rent side of things? Angela, do you wanna comment? Yeah. We're seeing 15% rent growth on turnover, so 15.1%. That was for the quarter. We're actually, since then, we're finding that we're able to increase by CAD 25-CAD 50 a month, especially since we've absorbed so much of the vacancy. I missed that. Did Did you say 25 to- CAD 50. CAD 25-CAD 50 per month. Oh, okay. Above and beyond the 15% that we're at. I see. Okay. Okay. Maybe just to circle back on the Chicago and, you know, maybe the thesis of swapping Florida, Atlanta for Chicago. So it sounds like is this about high grading the asset quality? I guess if it is, then kinda why not high grade within the Sun Belt markets? Maybe just kinda your view on, you know, why you chose to allocate, you know, to Chicago as opposed to kind of the, you know, what's historically been doing quite well in the Sun Belt. Maybe some thoughts around that. If you could just, I don't know if you could share what the Chicago asset actually is, and the cap rate that you're able to get. John. Sure. Yeah. John Talano, do you wanna comment on that? Sure. Well, I would say that the southern properties that we are putting up for disposition are definitely on the older side. You know, these are actually the two that we are disposing of now in Atlanta and in North Carolina are 80s vintage. This is wood frame stuff that is older that has lots of CapEx that is coming. They also have 8-foot ceiling, popcorn, you know, galley kitchens with old oak cabinets. A lot of upgrades needed to make them relevant compared to all the new supply. On top of that, you know, we've pushed rent so aggressively that we're really topping out in those markets, right? What we're looking for when we're looking at Chicago, for instance, is not only just the management synergies with the team that I have up there, but the build quality, you know, in downtown Chicago concrete asset with, you know, 9-foot ceiling is vastly different. At the same time, the rents hadn't moved nearly as much in Chicago, so there's a lot more room for growth there than I believe we have in the southern markets. We also have a tenant base there that is much more sophisticated and educated, and incomes are much higher. The quality of residents is also significantly improved. On top of that, Chicago has just such an amazing business and industry base, comparatively to, you know, the markets that we're selling. Well, Atlanta, actually, you know, even compared to Atlanta, but definitely compared to Florida and Louisiana. Does that help? Yeah, so if I hear correctly, it's you all acquired the better demos, more diversified. I guess the question is, what about on the pricing side? Are you getting better pricing in Chicago for what you would otherwise get in Atlanta or Florida? Yes. I would say the cap rates are higher. We're acquiring at a higher cap rate in Chicago, and we're selling absolutely at a lower cap rate in place in the southern markets. Would that be in that kinda 4% range or higher? The in-place cap rates of the properties that are sold, I can't remember exactly, but they were very close to 3% in place. We're in the 4.5% range in Chicago. Okay. Okay. Thank you. That makes sense. Thank you. As a reminder, if you have any questions, please press star one now. No further questions. You may proceed. Well, again, thank you, everybody, for joining us, and we look forward to speaking to you next quarter. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.