Good morning, ladies and gentlemen, and welcome to the Slate Office REIT Second Quarter 2022 Financial 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 the call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 4, 2022. I would now like to turn the conference over to Paul Wolanski, Senior Vice President, National Sales and Investor Relations. Please go ahead. Thank you, operator, and good morning, everyone. Welcome to the Q2 2022 Conference Call for Slate Office REIT. I am joined this morning by Steve Hodgson, Chief Executive Officer, Lindsay Stiles, Chief Operating Officer, and Charles Peach, Chief Financial Officer. Before getting started, I would like to remind participants that our discussion today may contain forward-looking statements, and therefore we ask you to review the disclaimers regarding forward-looking statements as well as non-IFRS measures, both of which can be found in management's discussion and analysis. You can visit Slate Office REIT 's website to access all of the REIT's financial disclosure, including our Q2 2022 investor update, which is available now. I will now hand over the call to Steve Hodgson for opening remarks. Thank you, Paul, and good morning, everyone. Recent global macroeconomic pressures have challenged the performance of public equity markets, with real estate securities being no exception. Across the board, REIT trading prices have significantly diverged from their underlying real estate values. However, even against this backdrop, Slate Office REIT 's operational performance continues to trend positively. Our core operations remain stable, and we've seen positive leasing momentum and AFFO growth. Our conviction in the office sector remains strong. We know that physical workspaces enable collaboration, culture, and innovation. The tenants we are focused on recognize this as well. This quarter, we completed approximately 240,000 sq ft of leasing at a rental rate spread of 25.2%. This positive rental rate spread demonstrates that well-operated, well-located, and high-quality real estate remains in demand, and tenants who recognize the value of the office are willing to pay for it. We are well- positioned to capitalize on mispriced investment opportunities arising from this market, and we will continue to position the portfolio to provide stable income and value creation to our unitholders. I will now hand it over to Charles for some additional highlights. Thank you, Steve. In the second quarter of 2022, the REIT paid a distribution yield of 8.6%, and over the first six months of the year has provided an AFFO payout ratio of 78.9%. Loan-to-value was reduced to 59%, while FFO, core FFO, and AFFO per unit all increased from the first quarter. The REIT had a full three months of income from the 23-asset Irish portfolio that was acquired in the first quarter of this year. The acquisition was enhanced by the completion and letting of a life sciences development facility in Athlone and the extension of the Irish portfolio's financing facility to five years. There are further investment opportunities being evaluated for addition to this portfolio. I will now hand over for 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 three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. First question comes from Sairam Srinivas from Cormark Securities. Please go ahead. Thank you, operator. Good morning, guys and Lindsay. Congratulations on a good quarter. These are fantastic leasing numbers. Just looking through that and just from a modeling point of view, when can we expect this to actually reflect on earnings? Pardon me, affect the earnings. Is that what you said, Sai? I think in 2023, we'll start to see some of that traction. A lot of the leasing that we do at this stage in the year it's in advance of when the rent starts commencing, because there's fixed-rent periods and stuff for the balance of the year. In addition as we disclosed, SNC-Lavalin vacating 195 the West Mall sort of offsets some of the gains that we'd made. W hen you look at the quarter actually, although we declined slightly in occupancy, if you remove the one-time event of SNC-Lavalin vacating, we're actually ahead in occupancy everywhere else in the portfolio. We've been quite pleased with the gains that we've made in Atlantic Canada and the strength of the oil and gas sector there driving demand in Newfoundland and hopefully soon to be New Brunswick as well. Thanks for the color, Steve. Actually that's a great segue to my next question, and that's basically the occupancy drop in the GTA. I know you guys mentioned SNC during the last quarter's call, but were there any other tenants that dropped out as well? I think there's some volatility in Steeltown East as well. So nothing of note over the last quarter, Sai. I'll just remind you that there's an airline/transit tenant at 191, the West Mall, that we had collected a termination fee from. I wanna say about six months ago. They still have some term, but we're actively trying to lease that space as well. That makes sense. Thanks, Steve. Finally, my last question is on the financing front. Can you give some color on the refinancing activity for the upcoming maturities? T hanks for that. We keep a close eye on the upcoming maturities, and one of the keys that we look for is we look to ensure that we have a spread that's appropriate over time and over lenders of what we face in front of us. If I think about this year, we've already had a refinancing of 11% of the portfolio, which was the extension of the Irish facility, which was done over the past quarter. For the remainder of this year, we have 13%, I believe, of our debt to refinance. Though that's on two separate facilities. It gives us the opportunity to take one of those facilities, which is on a floating rate, and potentially convert that to a fixed rate, which helps us from an interest rate risk perspective too. As we are in discussions with lenders on both of those, I won't go into any further commercial details on those. For 2023, we have maturities as well within the portfolio. Of those maturities on the mortgage side, we have five which are spread throughout the year from April to December, and at the same time, they're spread between a number of lenders. I mentioned beforehand, we look to have a spread of maturities and lenders as well, so we have three separate lenders on those. I think we have the revolver is due for maturity next year as well, and we obviously keep a close eye on where we stand with that and with the syndicate that provide that at the same time too. We're in negotiations on our two debt facilities that are due to mature this year at the moment, and we are well aware of the maturities that we have coming up next year. I would say throughout this, our aim is to ensure we have an appropriate mix of lenders and at the same time, timings of maturities going forward. Thanks for that, Charles. Just I know I said the last question, but I think there's another thing that just popped into my head, and that's basically with the ECB raising rates and just this morning as well. Are you guys seeing any activity or any impact of that on the transaction activity in Ireland? Not from where we have seen, no. I mean, ECB has raised rates from what is a pretty low level to a slightly higher level at the moment. There is an expectation of future raising of rates. We're not susceptible to the Bank of England changing their rates, which they did by 50 basis points earlier today, as we don't currently borrow in sterling. The Euro facility we have at the moment is a three-month floater off EURIBOR. That historically has been negative since 2015, and that recently went slightly positive as well. That's one of the exposures that we might look to hedge. Awesome. Thanks for that, Charles, and thanks, Steve. I'll turn it back. Thank you. The next question comes from Scott Fromson of CIBC. Please go ahead. Thanks. Good morning, folks. Most of my questions were answered in Sai's suite of questions. Just wondering, can you provide a little bit more color on the leasing spreads, particularly on the new leases? F or sure. I think the extension of the building in Athlone, Ireland, with the life science tenant was a big driver of the increase in rental spreads on new leasing. If you remove the impact of that, we're still overall from a leasing spreads perspective in the high single digits. That did have a pretty big impact. At the same time, it'll have an immediate impact to our earnings as well. We're quite pleased that it's a long-term lease with a life science tenant. Thanks, Steve. Just as a follow-up question or a different question, I guess, on capital recycling, do you have any planned dispositions to augment your capital position? As we messaged at the time of the Ireland acquisition, we have been working on CAD 100 million of dispositions in Canada. We've made great progress on that and I expect that to occur in the third quarter. Great. Thanks, Steve. I'll turn it over. Thank you. The next question comes from Jenny Ma of BMO Capital Markets. Please go ahead. Thanks, and good morning. Morning. Steve, you mentioned the potential dispositions in Canada for Q3. I'm just wondering from your vantage point, you had talked about some opportunities to acquire assets at pretty good values. How do you think about those opportunities, where they might be and whether or not buying back stock is in the mix in terms of capital allocation? Absolutely. I mean, that's the question we discuss with our board quite often. I think from my overall statement, maybe I'll step back for a second first is on the acquisition front, we don't expect in the markets in which we operate, we don't expect a lot of transaction volume for the balance of the year, just given, I think groups are still in price discovery mode and, you know, there's some volatility. Where we see some opportunities is just some smaller bolt-on acquisitions that are complementary to our existing portfolio, whether that be, you know, an asset that might be in one of the business parks that we hold assets in in Ireland or, you know, something in the life science sort of space elsewhere. So that's kind of what we're focused on. It would be a recycling of capital. I think what we're working through with our board is the pros and cons of those kind of small strategic acquisitions versus buying back our own stock, which we agree is cheap right now. You know, we don't view that as a strategy, we view that as a tactic. I think our ultimate strategy is growth 'cause it has many benefits in terms of diversification and getting to a lower cost of capital. We do see the value when the stock's trading at such a discount. Great. I just wanna turn back to the debt stack. What kind of indicative rates are you seeing for some of the near term mortgage maturities? Could you comment on what the loan to values would be for the 2022 and 2023 maturities on the mortgages? Thanks, Jenny. I think what we'd be looking to do is be looking to keep the loan-to-value broadly similar on those particular loans to where it stands at the moment. Depending, they are different assets, but I think one of the key to remember is that the assets that we are looking to refinance over the next couple of years are assets which are backed by the solid cash flows from the solid tenants who've continued to support those throughout the pandemic and so on as well. So they are supportive. As to the absolute rate, I'd rather not answer that question given we are in negotiations on some of our facilities at the moment. I think post that I'd be happy to talk more on number. Maybe just a bit of color on, you know, the two assets that are the two mortgages that are refinancing this year. One is in Chicago with our building that's anchored on a long-term lease with CIBC. The other is anchored by a 10-year lease with the federal government in Toronto. We feel pretty confident. We've demonstrated, you know, throughout the pandemic where we've done considerable amount of refinancing, that the banks are very supportive of us as a sponsor, not only as SOT, but also as Slate Asset Management. We do, quite frankly, expect that there'll be some rate impacts given the current environment and the benchmark rates moving. We think we'll be on, you know, on a relatively good stand. Okay. Would you say the LTVs would be similar to sort of that 60% level where the portfolio leverage metric is? Correct. Great. How are you thinking about the floating rate debt exposure? Because I think at this point, this is a broad comment for everyone, not just for Slate Office REIT, but perhaps fixing it today is not necessarily worthwhile. With the kind of floating exposure you have, is it just something you're going to, I guess, navigate through until we maybe get through a more favorable environment? Or is it something you're still considering taking down just given the interest rate uncertainty going forward? I think we consider we always have to consider whether we would take it down really at any point. It's whether we actually execute on that. If I look at our unhedged floating rate at the moment, it's split broadly 50/50 between exposure to Canadian floating rates and to euro floating rates. If I look at the exposures that we have on Canadian floating rates, it's essentially across a number of different assets. Part of that might be driven by what our plan is for those particular assets from a refinancing perspective for what work we might have to do there. I think on the European side of things, considering we have a single facility there, which we've recently extended out to 5 years, and that's backed by a solid group of income- producing assets. I think if we were to look to hedge out some of our interest rate risk, that would be the more favorable direction for us to go. It's something we look at frequently from a pricing perspective and also to see how it fits in with the REIT strategy as well. For example, however, though, if we were to take the European facility and were to hedge that in its entirety, that would change us from being, I believe, 79.9% fixed or hedged to fixed to 90%. Okay, great. Last question from me. It says, in your MD&A that the parking revenue was up about CAD 200,000 year-over-year, which is nice to see. I'm just wondering how parking revenue is tracking below full potential. Meaning if we get back to, let's say, pre-pandemic levels, like how much room there might be on the parking revenue front. Good question. Jenny, we don't know the answer off the top of our head. We'd have to get back to you on a subsequent call. Sure. I'd appreciate that. That's all for me. Thank you. Thank you. Once again, ladies and gentlemen, if you do have a question, please press star one at this time. The next question comes from Jaz Cumberbatch of TD. Please go ahead. Hi. Morning. Jaz on for Jonathan Kelcher. Most of my question has been answered, but I just have a couple here. Just firstly, the asset that you have for sale in Toronto, I don't know if you have any color on the timing and the cap rate for the asset that you have for sale. Like as we said in the last quarter call it's just shy of CAD 100 million of assets, kind of in the mid-6% cap rate range. W hen we're buying in Ireland at north of 7% of assets that are longer- term leases with better credit, with less capital required in the buildings, and overall less sort of tenant risk, that's the trade we're making. Sorry if I maybe missed this, got cut off earlier, but we do expect occupancy to be by the end of the year. I would say pretty flat at this point. Any new leasing that we do would not probably materialize until the following year. Lastly, I know you said, transactions in the market are obviously very limited right now, but, of the transactions that you've seen, have you seen any movement in cap rates or what's the general sentiment out there? T hat's the thing. There's just not a lot of data points. W e made the decision to keep our IFRS values essentially where they were last quarter. I n conjunction with our audit team and our board, we felt that was prudent. We just haven't seen data points, as I mentioned. I think it's an interesting market now. Everyone's sort of waiting to see what happens in terms of things trading. Of course, we always have the view that, you know, IFRS value should be a willing seller, willing buyer, so we're not going to focus on, you know, distressed situations. We just haven't seen a lot of willing seller, willing buyer situations to point to. Okay. Thanks. That's it for me. I'll turn it back. Thank you. The next question comes from Greg Hung of Raymond James. Please go ahead. Good morning, team, and thank you for taking the question. I want to dig in a bit on what exactly drove the lease termination income in the Chicago portfolio. Any color there you could provide would be very helpful. That was just a tenant that elected to terminate their space, in which we had notice. We've already got an adjacent tenant that is looking to take that space over. You know, we collect the termination income in advance of when it's when they give notice, which is typically 6-12 months out. Then we have time to lease the space to someone else. In this case, it was a, you know, a change in ownership for that tenant. They decided to consolidate, and it just so happened the adjacent tenant wanted to take over that space. It's kind of a good situation. Thanks for that. My follow-up would be, a question on net effective rent growth and your expectations for the rest of the year. What's your expectation in terms of being able to capture the 7% gap between your current in-place rents and the market rents? That gap is for the entire portfolio. Over the next 12 months, I believe the expiries are about 6% below market. That would be our expectation. I think we have opportunities to overachieve that in certain areas. F or those of the analysts that attended our property tours in Ireland, you would have seen where we get space back on rollover of tenants, and we're able to reposition those suites into a higher category of energy rating. This is actually a market where there's a direct quantifiable benefit to ESG initiatives, because there's an energy rating in which if you can get to a higher level, it directly garners a higher rent. We're doing that in two instances in our Gateway assets in Ireland on the East Wall, as well as our Citywest Business Park buildings. That's where we'll outperform that number by a considerable amount in certain cases. Thanks for that. Just one final one from me. You touched on Atlantic Canada, and the recovery the economy is seeing there. Is there any more granularity you can provide on occupancy recovery from the current about 75% level, absent any planned dispositions? Yeah. Like, the leasing that we did in the quarter, you know, we did 38,000 sq ft of new leasing in Atlantic Canada. The bulk of that was in Newfoundland, and one fairly large deal in Saint John, New Brunswick. That's really nice to see because those have, quite frankly, been somewhat stagnant with the way the oil and gas sector was performing. But there's projects kicking off, offshore drilling projects. Obviously, the commodity price is helpful to support those projects. You know, it's a clean way of driving energy. It's priced off a different index. You know, things are really picking up there. It doesn't take, you know, it's not like we have hundreds of thousands of square feet. We can make, you know, we can do small deals every quarter and make quite a bit of ground. I'm optimistic that, you know, by the end of next year, we'll be kind of getting above 80% in that Newfoundland portfolio and you know start to see the recovery in rents as well as a result. Fantastic. That's all from me today. I'll turn it back. Thank you. The next question comes from Anthony Bogdan of National Bank. Hey, guys. To get back to the leasing spreads in Ireland, are you expecting future leasing deals to continue to yield higher spreads, or will they be closer to the rest of the portfolio? Well, I think what we were saying was that the expiries that we have over the next 12 months, we've calculated to be about 6% below market, but that's on a current state basis. What I was saying is that there are opportunities for those that were on the tour in Ireland would have seen directly some of these opportunities where we're repositioning buildings or units to a higher standard of energy rating and as a result of a higher quality. As we know, tenants are looking for quality right now and willing to pay for it. That's where we can outperform that rental growth projection in Ireland. Gotcha. Thanks. Just one more from me. Have you seen any change in office utilization or foot traffic in Q2? I would say specific to the GTA, we saw tenants like TD and CIBC formally implement their back-to-the-office strategies. That certainly increased, you know, occupancy just generally. For our portfolio specifically, you know, ex summer vacations, certainly, you know, occupancy or utilization more specifically was up, consistent to the increases we've seen in prior quarters, so Q1 versus Q2. As I think we've messaged previously, we expect a more significant increase in September. A lot of companies are holding off on their official back-to-the-office launch until September when kids are back in school. Great. Thanks. Thank you. Thank you. There are no further questions at this time. Please continue. Thank you everyone for joining the Q2 2022 Conference Call for Slate Office REIT. Have a great day. Thank you, ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation.