Ladies and gentlemen, and welcome to the Morguard Real Estate Investment Trust 2025 First Quarter Results 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, May 1, 2025. I would now like to turn the conference over to Andrew Tamlin. Sir, please go ahead. Thank you, and good afternoon, everyone. My name is Andrew Tamlin, Chief Financial Officer of Morguard Real Estate Investment Trust. Welcome to Morguard Real Estate Investment Trust's First Quarter 2025 Earnings Conference Call. I am joined this afternoon by John Ginis, Vice President of Retail Asset Management; Tom Johnston, Senior Vice President of Western Asset Management; along with Todd Febbo, Vice President of Eastern Office Management. Thank you all for taking the time to join the call. Before we jump into the call, I would like to point out that our comments will mostly refer to the First Quarter 2025 MD&A and financial statements, which have been posted to our website. I'll refer you specifically to the cautionary language at the front of the MD&A, which would also apply to any comments that we make on this call. To start with, we knew that 2025 was going to be a challenging year with the market rate resets on the Penn West Plaza space. This was part of the previous head lease expiration on February 1, 2025. However, our Q1 results have also been impacted by some retail failures, which I will provide some comments on later on in the call. Our total net operating income for the quarter declined from CAD 30.9 million last year to CAD 25.7 million in 2025. Approximately CAD 3 million of this CAD 5 million difference is due to the Penn West Plaza lease reset, while CAD 1 million is due to increased bad debt expense, and a further CAD 700,000 decline comes from the sale of Heritage Town Center in Q2 2024, which is not an asset of the trust this year. The decline in income from Penn West Plaza is due to the expiration of the Obsidian head lease on February 1, 2025. This has resulted in a reset of rents for both Penn West Plaza tenants and subtenants to current market rates. The current occupancy of Penn West Plaza is 73% today, but is 80% when factoring in future commitments. Significant inducements of opening free rent and free operating costs to secure tenancies are also impacting the Penn West Plaza results for 2025. Our estimate is that there will be a downturn of approximately CAD 15 million in net operating income for this asset in 2025, with some bounce back to this number in 2026 after these inducements burn off and other lease commitments kick in. We are pleased with the 80% occupancy level of this building after coming off the single-tenant head lease in a market which has seen the lowest occupancy across Canada in recent years. On Friday, March 7, 2025, The Bay filed for creditor protection under the Companies' Creditors Arrangement Act, or CCAA. The Trust has two Bay locations, one at Cambridge Centre and one at St. Laurent in Ottawa. Currently, The Bay is conducting liquidation sales at all locations, which are expected to conclude in June or July. Based on current feedback and interest, the Trust expects both leases to be disclaimed and to be returned to the landlord. There is approximately CAD 1.5 million in gross income at risk from this tenancy. The Trust will be assessing options for these two locations but does not expect to announce any plans this year. Notwithstanding the loss in income, there are a number of positives about the situation, including the relinquishment of their site control, in particular at St. Laurent. On January 7, 2025, the Comarch Group of Brands, which includes Ricky's, Bootlegger, and Clio, announced that they had commenced proceedings under CCAA. The trust has 15 of these locations and was able to keep the tenancies of the vast majority of them. However, the trust has estimated that this will result in a decline in net operating income of approximately CAD 850,000 on an annual basis from this filing. Lastly, on January 27, 2025, PV announced that it had commenced proceedings under CCAA as well. The trust has one PV location in Airdrie, Alberta, earning approximately CAD 600,000 in gross income. There has been strong interest shown in this space, and the trust is considering options for this asset. It is expected that something new will be announced here later this year. Notwithstanding these three situations, we are pleased with the rest of the retail portfolio. Our community strip centers are essentially full at 99% occupancy and enjoyed a 7% same-asset increase in net operating income for the first quarter. Our enclosed malls are still in very healthy shape, enjoying positive leasing spreads for the quarter, and have earned a three-year average annual same-asset net operating income growth of 6.5%. Sales and traffic numbers also continue to be strong. The Trust's interest expense declined almost CAD 900,000 for the quarter due to a decline in gross debt of CAD 28 million on a year-over-year basis, along with a decline in interest rates, primarily short-term or variable rates. Turning to financing and liquidity, the trust is CAD 87 million in liquidity at the end of the quarter, which is up from CAD 81 million at the end of the year. I should also note that our parent, Morguard Corporation, has advised the trust of its intention to receive its distributions in units rather than cash for 2025. As mentioned in previous quarters, the trust's operating capital reserve increased from CAD 25 million annually to CAD 35 million in 2025 to account for both higher repair costs as well as leasing costs. This represents CAD 8,750,000 per quarter. Actual spending was approximately CAD 9.5 million, which included necessary leasing capital for tenancies at Place Innovation in Quebec and 111 Dunsmuir in Vancouver. During the quarter, the trust renewed or extended three mortgages totaling CAD 63 million, lowering the interest rate from an average of 6.5% on these mortgages to an average of 5.15%. The Trust has approximately 17% of its debt as variable at the end of the quarter, which has increased slightly from 15% at the end of the year. The Trust continues to focus on paying down its debt, which has declined by more than CAD 100 million over the last four years. Looking at our accounting for real estate properties during the quarter, we had CAD 21 million in fair value losses due primarily to some increases in regional office cap rates and fair value adjustments in our enclosed malls due to the pending Bay failure. Our overall occupancy level of 87.7% at the end of the quarter has decreased from 91.2% at the end of the year due to the increased vacancy at Penn West Plaza resulting from the expiration of the Obsidian head lease on the 1st of February. As previously mentioned, we are now embarking on a strategic merchandising program for St. Laurent, which will see the addition of two nationally recognized brand names being added to the tenant roster, along with expansion plans for other tenants on the existing rent roll. The current budgeted capital commitment is CAD 6.4 million and includes tenants such as Sephora and H&M, which are all expected to be open before Christmas. We are anticipating some future phasing beyond this spend as we look to ensure a stable, sustainable, and traffic-generating mix of tenants to this asset. Management has had continued ongoing discussions with the provincial government tenant at Petroleum Plaza in Edmonton, which came up for renewal on December 31, 2020, and is still in overhold. While we had recently had some better back-and-forth discussions, this is still going slowly, and at this point, there is still no resolution to report. Wrapping up, we recognize that 2025 has and will continue to be a tough year, but we are expecting the downturn to be short. We are especially pleased with the leasing efforts at Penn West Plaza to be able to have our most impactful office asset committed to an occupancy of 80% in this tough marketplace. Also, we believe that both The Bay and PV retail failures will have a positive outcome for the long term. We are looking forward to continued positive leasing conversations for all of our assets. Most of our enclosed malls remain dominant in their geographical area, and our strip malls, which are largely grocery-anchored, have performed steady. Beyond our retail assets, we have high-quality office buildings in Canada's largest markets with a high degree of government office tenants. We continue to be positive about our business and the objective of building value for our unit holders. We look forward to continuing to execute our strategy, and thank you for your continued support. We will now open the floor to questions. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, you can press star then the number two. If you're using a speakerphone, please make sure you lift your handset before pressing any keys. Your first question comes from the line of Jonathan Kelcher from TD Cowen. Your line is now open. Thanks, Seth. Good afternoon. First question, just I guess I'll start at the St. Laurent Center. As you said, you guys have started in on a remerchandising program. Does The Bay closing and you guys eventually getting that space back change any of your near-term plans there? Jonathan and John Ginis responding to your question. Our merchandising plan was approved a year and a half ago at a board level, and we've had ongoing discussions since then culminating into transactions that now we're under construction. As Andrew said in his comments, we hope to have some of these tenants operational before Christmas. The direct answer is no. The Bay's closure does not affect that program. We are looking to add phasing to our merchandising program based on conversations we're continuing to have that the situation with The Bay, our hope is, will not have an implication on those discussions, but the first phase of our program should not be implicated at all. Okay. Can maybe getting The Bay site back and them not having any and you guys getting the site control back, would that maybe help the subsequent phases as we go forward over the next few years? Right. Getting a Bay store back, particularly St. Laurent, that's over 160,000 sq ft on two levels, as Andrew said in his opening remarks, it's more than simply just the income being generated from the box. It's the site controls, as you know, Jonathan, that create more longer-term opportunities of what we can do with the site in aggregate. That is more of a question that we'll figure out over time. In the short term, I think what we want to do is to kind of mitigate our exposure, find ways and means to generate income out of the space. We are obviously starting a longer-term operational thought process of what we do with the box, but also what we do with our site, given the fact that these leasehold constraints are now gone. Okay. What are your sort of near-term and medium-term thoughts on the Cambridge site for The Bay? The situation in Cambridge is a little bit different from the one in Ottawa insofar as smaller mall, but that Bay store has pretty good frontage on Hespeler Road, which is a major commercial corridor for that city. Older box, so would require some more material reinvestment. I think in the short term, we'd like to mitigate our income exposure so that there's not as so we mix our co-tenancy implications associated with their vacancy. That would be the short-term impact. Longer term, looking at a redevelopment of the space, do we get full utility out of it? Probably not, because that box is 134,000 sq ft on two levels, and it's a single-level mall. Longer term, it requires a bigger thought process in terms of what we do with the excess real estate. Might you just demolish that? That'd be a thought. Quite possibly, but it's got great frontage fronting Hespeler Road, as I said earlier. You need an anchor to do something on that end of the shopping center notwithstanding. You also have covenants in some of the other leases whereby you simply just can't have that as a vacant parcel. Is demolition in the cards? Perhaps, but something that we'll evaluate in the coming months in terms of options consideration. Yeah, certainly. Still early days. Just switching to Penn West, 80% occupancy, that's very good. How do the rents compare to the previous rents? Do you want me to take that, Andrew? Yeah, sure. Hi, Jonathan. It's Tom Johnston in Vancouver. Obviously, basically, the Obsidian rents were in the low 30s. We're coming off those market-high rents in Calgary. Now, more or less, the deals that we're doing, some of them on the, call it sub-leasehold over and new deals, we're more or less seeing rents now in that CAD 16-20 range. Some we're seeing now, a couple of smaller deals that we've done are pushing CAD 21. We've seen good growth in the rental rates in the past 18 months. If you even turn the clock back 18 months or so to some of the first sub-lease renewals extensions we were doing, they were more in that CAD 14-15 range. I would say now CAD 16-17, as high as CAD 21. Nice. What sort of term? How long? All over the board. We have new tenants coming in that are five- to ten-year deals on the extensions for shorter term. They're literally all over the board. Okay. Do you think you have to put any capital into that property to sort of add amenities and stuff like that? I would argue that's one of the tricks why we've done so well. We have really state-of-the-art amenities. We put a little bit of money into the fitness facility lately with new equipment and some cosmetic upgrades to that. We have a fantastic conference facility that we improved about a year ago. Our basic tenant amenities are excellent and in really good shape. Okay. That's it for me. I'll turn it back. Thanks, guys. I would just highlight before you go, Jonathan, that the net effective rents at Penn West Plaza are more in the $5-$10 range. After you consider some of the pre-rent inducements that I mentioned, I just did not want to lose that aspect of it. Ladies and gentlemen, as a reminder, if you would like to ask a question, you can press star one on your touchstone phone. If you wish to decline from the polling process, you can press star then the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your next question is from the line of Steve Miken, private investor. Please go ahead. Hi, there. Good afternoon. I just had a question about the development that's at Coquitlam and also St. Laurent and where those are standing right now. I can make a couple of comments on that, Steve. For Coquitlam, we started that process back in 2021. It's been a very arduous process for us. There's been a number of resubmissions. There are a few parcels of land right at that site that we're sorting out from a permission standpoint. Notwithstanding you think this would be easy to do, there's just a lot of friction at the council level. You've got some councilors that have their own agenda as well. We are getting close. We've had some in-person meetings there. We've expressed our frustrations. We've got another in-person meeting coming up, and we expect to have this resolved for this year. In relation to St. Laurent, it's ongoing as well. There was a site plan submission that was made back in November of 2024. There was a resubmission made just about a few weeks ago. At this point, we're just working with the staff on any comments, and we're kind of expecting approval there for early next year. Would that, the St. Laurent property, would that represent that kind of or maybe the most prioritized property to maybe add value, build value in the REIT, or are there other things? No, those would be two of the premier sites to add value, certainly from a residential standpoint. Okay. The other question I had was around the debt ratio, and it seems to be going above your, I think your preferred rate is 55%. I'm just wondering what strategies you have. It sounds like the parent has foregone dividend payments and has taken a trip, but is there any other strategy to try and get that down? It's a little bit high, but it's not outside of the range that is alarming. We are just being mindful of developments that we are looking at and approving and potentially looking at some options of asset sales down the road as well. There are various options on the table for that. Yeah. I mean, you would have to use these options if, for example, you wanted to develop at St. Laurent, potentially sell some property. Potentially, yeah. Or find a partner as well. There'd be that option. Okay. Perfect. Thanks very much. Okay. Thank you. Bye. There are no further questions at this time. I'd like to turn the call over to Andrew Tamlin for closing comments. Sir, please go ahead. Thank you, everybody, for joining the call, and we'll look forward to talking to everybody next time. Thank you and have a good day. This concludes today's conference call. Thank you very much for your participation. You may now disconnect.