Good afternoon, ladies and gentlemen, and welcome to the Morguard North American Residential REIT third 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 require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 26 October 2023. I would now like to turn over the call to Paul Miatello, yeah, I'm sorry, Senior Vice President. Please go ahead. Thanks very much, and hello to everybody. Thanks for joining us today on the REIT's Q3 2023 analyst and results call. It's Paul Miatello here, Senior Vice President. We've got the entire senior management team here, so I'll just do a quick roll call for everybody. We've got Rai Sahi, Chairman and Chief Executive Officer; Beverley Flynn, Senior Vice President, General Counsel; Angela Sahi, Senior Vice President in charge of Canadian Operations; John Talano, Senior Vice President in charge of U.S. Operations; Patrick Stevens, Business Development; and our Chief Financial Officer, Chris Newman. So I'll turn it over to Chris now for some initial comments, and then we'll open up for questions after that. Okay. Chris? Yep. Thank you, Paul. 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 third quarter of 2023, with total assets amounting to CAD 4.2 billion, higher compared to CAD 3.9 billion as of 31 December 2022, due to acquisitions completed during the first quarter and from a fair value increase on the REIT's income-producing properties. The REIT finished the third quarter with approximately CAD 20 million of cash on hand and CAD 7.9 million advanced through Morguard Corporation under its CAD 100 million revolving credit facility, providing the REIT with a total of CAD 107.9 million of availability under the facility. During the quarter, the REIT completed a refinancing of two U.S. residential properties at an interest rate of 5.66% for terms of eight years, providing the REIT with additional net proceeds of $11.5 million. Year to date, the REIT was active under its NCIB, purchasing over 1.2 million units at an average unit price of CAD 16.68 per unit. The REIT's IFRS net asset value per unit is CAD 38.40, making the NCIB plan an appealing use of capital. In addition, the REIT is pleased to announce an increase in its annual cash distribution of CAD 0.02 per unit, an increase of 2.78%. This will bring the distribution to CAD 0.74 per unit on an annualized basis from the current level of CAD 0.72 per unit. The REIT completed the third quarter with CAD 1.4 billion of long-term debt obligations. As of 30 September, 2023, the REIT's overall weighted average term to maturity was 5.1 years, an increase from 4.9 years at December thirty-first, 2022, and the weighted average interest rate increased to 3.72% from 3.5% at December thirty-first, 2022. The REIT's debt to gross book value ratio was 38.7% at 30 September, 2023, an increase compared to 30% as of 31 December 2022. Turning to the income statement, net income was CAD 39.2 million for the third quarter, compared to CAD 81.2 million in 2022. The CAD 42 million decrease in net income was primarily due to the following non-cash items: a decrease in fair value gain on real estate properties of CAD 84.8 million, which was partially offset by an increase in fair value gain on Class B LP Units of CAD 16.7 million, and a decrease in deferred income taxes of CAD 29.3 million. IFRS net operating income was CAD 52.4 million for the third quarter of 2023, an increase of CAD 7.5 million or 16.8% compared to 2022. The change in foreign exchange rate increased NOI by CAD 2.1 million over the overall variance for last year. On a same-property proportionate basis, NOI increased by CAD 1.7 million or 12.1%, mainly due to AMR growth and lower vacancy. NOI in the U.S. increased by $0.1 million, or 0.3%, as AMR growth was mainly offset by higher vacancy and an increase in operating expenses. The change in foreign exchange increased same property proportionate NOI by $0.6 million. Interest expense increased by $1.9 million for the third quarter of 2023 compared to 2022, primarily due to an increase in interest on mortgages of $2.6 million from a higher principal, and interest payments on the completion of the REIT's refinancings and the net impact of acquisitions and dispositions. As well, a higher non-cash fair value gain of $0.9 million on the convertible debenture conversion option offset the increase in mortgage interest expense. The REIT's third quarter performance translated into basic FFO of CAD 21.9 million, an increase of CAD 0.8 million or 3.8% when compared to 2022. On a per-unit basis, FFO was CAD 0.40 per unit for the three months ended 30 September 2023, an increase of CAD 0.02 compared to CAD 0.38 per unit in 2022. The increase in FFO per unit was due to the following: On a same-property proportionate basis in local currency, an increase in NOI, partially offset by an increase in interest expense and trust expenses, had a CAD 0.01 per unit positive impact, and the change in foreign exchange rate had no impact during the quarter. The impact of acquisitions net of dispositions of properties had a CAD 0.02 per unit positive impact. A decrease in other income come primarily from the decrease in interest income on the revolving facility had a CAD 0.02 per unit negative impact. The impact from units repurchased under the REIT's NCIB had a CAD 0.01 per unit positive impact. The REIT's FFO payout ratio declined to 45.5% in the three months ended 30 September 2023 compared to 2022, a very conservative level, which allows for significant cash retention. Operationally, the REIT's average monthly rent in Canada increased to CAD 1,655 at 30 September 2023, a 5.2% increase compared to 2022, reflecting the quality of our Canadian portfolio. During the third quarter, the Canadian portfolio turned over 9.1% of total suites and achieved AMR growth on suite turnover of 21.6%. While in the U.S., same property AMR increased by 6% compared to 2022, having an average monthly rent of $1,844 at the end of September 2023, as the REIT continued its strong performance, benefiting from solid market fundamentals across many regions. The REIT's occupancy in Canada finished the third quarter of 2023 at 98.9%, compared to 98.3% at 30 September 2022. Rental market conditions remain strong and stable as housing demand continues to outpace supply. Same property occupancy in the U.S. of 93.7% at 30 September 2023, were lower compared to 95.9% at 30 September 2022. Management expects occupancy to be stable throughout the winter months, with reduced leasing activity as well as fewer suite turnovers in the majority of its markets. During the nine months ended 30 September, 2023, the REIT's total CapEx amounted to CAD 24 million. That included revenue-enhancing in-suite improvements, common area, external building projects, mechanical, plumbing, and electrical, as well as garage renovations. At this time, I'll turn the call back over to the moderator to answer any questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have any questions, please press star followed by the number one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you request to decline the polling process, please press star followed by the number two. If you are on a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Your first question comes from Jonathan Kelcher from TD Cowen. Your line is now open. Thanks, good afternoon. First question, just on the U.S. portfolio, the same property operating costs were pretty elevated in the quarter. How much of that would you guys call one time in nature versus continuing? And can you maybe give us a sort of best guess on how you see cost growth going forward? No problem. I'm gonna pass this on to John, if he can assist. Sure. I would say we have a few things that were driving costs. One, of course, the inflationary items in both materials and labor. In the quarter, we did have a much higher number of move-in and move-outs than we've had in previous years. That kind of added fuel to that fire. Working through really the majority of the pandemic-related evic John, do we have you there? I think we lost you. Operator, do we still have you? Uh, yes. Okay, while we get John back on the phone, you know, I think John was speaking to the bad debt expense and, there's a lot of pandemic-related evictions and, you know, turnaround on, on timing of that, and that would be classified as temporary. So once we make our way through that, we don't expect that debt to be elevated too much. And John mentioned earlier about the make-ready expenses. You know, typically, with a higher turnover, we have an elevated amount of expenses associated with turnover that don't meet the capitalization criteria. So those are the two, you know, reasons why, you know, typically in the U.S., expenses are elevated. But there is a backdrop of higher inflation and, you know, contracts are more expensive, salaries more expensive, so there is that element as well. Okay. Hey, guys, sorry. Sorry about that. We just lost internet here. I'm back. And what- Go ahead, John. Yeah. Well, I'm not sure what you guys heard of what I was saying. I didn't even notice I got cut off right away. But I was talking about some of our bad debt expense as well, which is tied to the COVID-related evictions that we couldn't process up until now, and that was a big piece of it as well. We have much slower turnover in the coming months, specifically in Chicago, which is one of our larger markets. And we expect, you know, turnover costs to come down significantly. A big portion of our expense increase was insurance. That's definitely not going away. But we are working on identifying paths forward there that can help out in future years. And then also property taxes. You know, our values went up, so we were hit with some property tax increases. Those were not huge. We've had some really good success with our negotiations on our property taxes as well. But you know, that's something that affected us in the quarter. Okay. And if you, if you look ahead to next year, do you think, your cost growth will be sort of in line with inflation, maybe a little bit above or a little bit below? How should we, how should we think about that? I'm feeling good about it now. Things were absolutely crazy in terms of labor and getting folks to come, not only to work at our properties as employees, but the trades and the subcontractors. That has definitely slowed down. We have seen some slowing of construction, obviously, with interest rates, whether it's multifamily or single-family homes in most of the southern markets. So, you know, all of Florida, Texas, Georgia, and those prices are definitely normalizing. I would say coming down off their peaks. So I don't expect those to increase. I expect those to normalize or y ou know, they're not gonna come down a lot. The most of a reduction we've ever seen, even on the construction side, was a decrease of a max of 10%. But, I don't see that growing significantly in future years. I think it's stabilizing and probably coming down a bit. Okay. That's helpful. And then just secondly, on the occupancy was probably a little bit lower than we expected. Is that a function of the new supply, or have you seen a drop in demand? And are you starting to use more incentives to try and maintain or increase it going into the slower winter leasing season? Yeah. So Chicago specifically, we are actively managing well, actually all of our markets, but Chicago, in our northern markets, like Chicago and D.C., we're actively managing our move-outs to where we have very, very few in the winter months. We can't do that with our new properties, Xavier, but the other ones are all at a point where we have very few move-outs between now and March, and that will help us significantly. I mentioned the evictions before. That actually is giving us a dip as well. That's a one-time dip. You know, we're finally able to move out some of the non-payers that have been chronic for the last several years that are finally being processed by the sheriff's department. So that is a dip that you're seeing now. That will go away. And this has been really related to our markets that have grown the most, the quickest. They, the rents rose so aggressively in places like Tampa and New Orleans, and you're talking about 35% growth over a few years, that those have normalized. We were pushing rents really hard in those markets for a long time, and I think that has peaked. I think that those are normalizing now, and we've adjusted in those few markets. We've had to offer a few incentives here and there, but those are related to specific units that might sit vacant. It's not all of the units that would have incentives. But again, I think we just got ahead of ourselves, and that rent growth over the last several years was awesome. And it's just catching up with us so that we've had to normalize it a bit. But we're still, you know, in great shape and in a place where our rent growth has been excellent over the last several years. Okay. That's helpful. I'll t hanks, John. I'll turn it back. Your next question comes from Jimmy Shan of RBC Capital Markets. Your line is now open. Thank you. Maybe just following up on the U.S. portfolio. The eviction you spoke about, which markets were those again? Were they Chicago? Were they the Sunbelt markets? No, they're mostly, mostly, southern markets, so Atlanta, some in Florida, Louisiana, Dallas. I see. Okay. And that would be if you were to aggregate that in terms of occupancy slippage in the quarter, what would that look like? 100 basis points or, or less? Yeah, I would say it would be less than that. We're sitting at a good spot now. We're right at about 94% occupied and almost 96% leased. Overall, I think we're in a strong position. I think part of it was related to us getting ahead of ourselves on rent in those markets that were moving so quickly. We, you know, we've made those adjustments, and we are having activity for sure. Move-in and move-outs are absolutely stable so far. Okay. You mentioned that rents in those markets, the Sunbelt markets, where rents are normalizing, is it your expectation that the lease spreads, the new lease spreads, will turn negative at some point? Some of your peers are starting to report in, you know, in the Atlantas of the world and some of the Florida markets, new lease, new lease rent spreads being negative and continue to be negative. Is that also your expectation? Well, there's a significant gap between our in-place rents and market. We have been very conservative compared to my peers in the U.S. in terms of pushing our rents aggressively, you know, and I w hen I say that, at the peaks, we were talking about 8%, 10%, 12% increases, all at one time. We are in a much better position than most of our peers, and we were doing that thoughtfully. You know, ours is built on residents that we have in place. We've approached it from a moderate level, and I believe that we will be in good shape. Yes, we have, you know, we do have some rents that if someone rented at the peak, that might be a little lower, but we still have a good population of folks that we're moving up towards market, if that makes sense. Okay. And then maybe just in general, if you, if you guys can talk about what you're seeing in the, in acquisition investment market, you know, on both sides of the border. You know, if you're seeing a little bit more transaction pickup and, and sort of what pricing, you're seeing or what pricing trends are you seeing there? You want to start, John, and then we'll maybe have a couple comments from Patrick? Okay, maybe we'll start with Patrick and we'll go John. Oh, sorry. Go ahead, John. John, go ahead. Well, I would say again, in those markets where rents were, rents were skyrocketing, I think you have some folks that are interested in selling, but the number of actual transactions we're seeing, especially in the South, is much lower. We are seeing expectations in price come down, but with interest rates rising, I'm seeing very few transactions that are actually happening. In Florida, specifically, folks are getting, well, lots of deals are the looking for. It's certainly been slower than in the past years. Patrick? Just a couple quick comments. What we can see is a move from yield focus to dollar-per-pound focus. On that front, we're seeing some increased attraction to quality assets. On those fronts, in Chicago specifically, there have been two very notable luxury deals that have occurred over the past six months. The Zara enterprise, the private fund that is capitalized by the owner of Zara, has acquired the highest luxury building in Chicago since Related did their $600,000 unit deal some six, seven years ago. They've done a transaction in excess of $475,000 on Michigan Avenue. And one of John's favorite companies from Chicago, Providence Enterprise, has bought condo quality at $430,000 a unit in the core. So these numbers are actually quite solid against these dire expectations and moving interest rates and so forth. What you see is people who have taken tremendous risk, moving rates, and with little equity, are suffering. And where we've recapitalized, that is on our books, that will offer little opportunity for us since we are really a stable asset entity. But we will have opportunities to move our quality up in this environment and are looking to do so. How about, how about here in Canada? Hi, it's Angela. So here in Canada, there's very little activity, I would say, in terms of any kind of new residential deals for GTA. And the things that we are seeing are anywhere, like Patrick said, in this is kind of like a CAD 400,000-CAD 500,000 a door. At that point, like, you know, it's about CAD 580,000 a door to, to construct. So we're not really looking at a lot of opportunities here right now, to be honest cap rates are still pretty low. They're still sub-four, but Moving up. Moving up a bit. Yeah. Still, still tight and negative leverage. Also, I think coming out of Montreal, we see NCV deals. So NCV deals just come up in Toronto the other day. So stuff that we haven't seen in a while coming up now. It's older, older product. Older, yeah. Sure. Absolutely. Okay. Thank you. Your next question comes from Dean, Dean Wilkinson from CIBC. Your line is now open. Thanks. Afternoon, everyone. I guess just following on Jimmy's question there then, given that your units are trading at an implied cap rate, something north of 8%, I'm assuming your preference would be continue to be active on the share buyback as opposed to really out in the market looking for real property at this point? Yeah, it's been a good use of proceeds. You know, right now we're bumping up on the annual allowance, but, you know, it come the change of the calendar year, we can re-up that another 5%, or 1.4 million units. So it's definitely something we are looking at. You know, it just depends on our what kind of use of capital we want to deploy. Right. And I guess dovetailing that into your CapEx spend, you know, is this sort of CAD 10 million a quarter number something that you're comfortable with, or there might be opportunities in there for maybe some revenue-enhancing stuff? And can you just remind me what the increased spend on the garage in Canada was? Was that just a catch up on maintenance, or was something bigger there? Just quickly on the garage, that was at We had two garage projects, and that's actually repairs. Okay. Yeah. And sorry, the CapEx is CAD 10 million in the quarter. I think during the summer, the CapEx hit its height with, you know, activity and spending. Right. So, you know, the year-to-date number of about CAD 40 million, you know, Canadian currency is where we're typically landing at this rate. So, yeah, Q3 will still be quite high, but Q1 and Q2 are really where we don't spend too much. Got it. And I'm assuming it might be a little too early to have any meaningful discussions on the 2024 debt roll for the Canadian properties. And is that back half of the year, front half of the year? Yeah, there's five. There's three on 1 July and 2 in December, so there's still quite a bit of time, relatively speaking. But, you know, we have these things moving along. You know, you know, they're, you know, CMHC is an option for us, so we have them moving down that track, and, we're just, you know, putting a little bit of time on our side, but we're gonna get all our ducks lined up, and we'll, we'll see what the rate environment is then, as we head into the spring. Yeah, that's anyone's guess at this point. Hard to peg. That's it for me. Thanks, guys. Thanks. Ladies and gentlemen, as a reminder, should you have any questions, please press star, followed by the number one on your keypad. Looks like there are no more questions. There are no further questions at this time. Mr. Chris Newman, please proceed. Okay, thank you, for attending the Q3 call. We'll hope to see you next time. Bye. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.