AGM 2021

Jun 17, 2021

Slides

Ladies and gentlemen, welcome to the Annual Meeting of Inter Rent REIT. Please note the meeting will be recorded. I would like to introduce Mr. Paul Amaro, Chair of today's meeting. Mr. Amaro, of yours. Thank you, and good morning. It is now 11 A. M. My name is Paul Amaro, Chair and Trustee of Inter Rent REIT, and I will chair today's meeting. On behalf of the Board of Trustees, All of whom are in attendance today virtually, I welcome you to the annual meeting of unitholders of Interrent Real Estate Investment Trust. We are pleased to host the meeting through this virtual platform, accessible to all our unitholders regardless of physical location to participate, submit questions and There will be a presentation and Q and A session after the formal portion of the meeting has terminated. As the meeting is being held online via live webcast, it is appropriate to set out a few rules for online participants for the orderly conduct of this meeting. Number 1, registered unitholders and proxy appointees who have questions in respect of a motion can submit their questions using the instant messaging feature Provided within the online interface. Please refer to the Ask a Question tab that's in the upper left corner of your screen. Please note there might be a slight delay in the publication of the communications received. Number 2, Please feel free to submit your questions in respect of any motion at any time until polls are closed. In the interest of time, we will proceed with the reading of all resolutions And address your questions at the end after all the resolutions have been read. Number 3, for the purposes of the meeting today, Voting on all matters will be conducted by electronic ballot. Voting will be open sorry, voting will open upon commencement of the formal portion of the meeting and remain open for you to vote at any time until the polls are closed. You may choose to vote on each resolution immediately or wait until the conclusion of Any discussion on all resolutions prior to casting your vote? Number 4, when you are asked to vote, you will receive a message within the online interface requesting you to register your votes. You will only have a requesting you to register your votes. You will only have a certain amount of time to do so when the polls are open. Number 5, and lastly, If you are a registered unitholder and you have already voted by proxy prior to the proxy cut up time and do not wish to change or revoke your previous vote, Okay. I would like to call the meeting to order, and I will ask Michael Clancy to act as Secretary of the meeting. And I appoint Laurie Winchester of TSX Trust Company to act as scrutiny of the meeting. In order to facilitate the procedural aspects of the meeting, We have asked certain unitholders to move and second the various motions that will arise. As noted previously, voting on all matters will be conducted by electronic ballot. Only registered unitholders who held shares in their name as of May 7, 2021, The record date of this meeting, whether validly appointed proxy holders are entitled to vote at the meeting. The notice calling this annual meeting of unitholders and the management information circular dated May 7, 2021 describing the matters To be considered today were filed on SEDAR and posted on the REIT's website on May 17, 2021. The required forum for the meeting is 2 unitholders present, either holding personally or representing as proxies not less than 25% of the votes attaching to all units. I have the preliminary report on attendance from the scrutineer and I can declare the requisite quorum to be present. The Secretary will annex the scrutineers report on attendance to the meetings of To the minutes of the meeting. Notice having been served in accordance with the declaration of trust and a quorum being present, I declare that this meeting is duly constituted for the transaction of The business set out in the notice of meeting. To the effect of all resolutions require an affirmative vote of the majority of votes cast, We will conduct the votes on the matters before us by a poll. On a poll, every unitholder entitled to vote on the matter has one vote in respect of each unit entitled to be voted on the matter and held by that unitholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until conclusion or discussion on all resolutions prior to casting your vote. We will run through each of the items on the agenda in turn and respond to questions, if any, with respect to the resolutions at the end before voting is closed. Once discussion on all items of business has concluded, I will give you time to enter your votes and declare the voting closed on all resolutions. The results of the meeting will be publicly released and available on our website. The financial statements were previously mailed to unitholders that had requested them by completing a request for financial statements form. Copies of these financial statements are available for review on SEDAR. I now place before the meeting the financial statements of the REIT for the year ended December 31, 2020 in the auditor's report to the unitholders. I would now like to ask the scrutineer to open the polls. The next item of business is the election of trustees. The following persons have been nominated by management for election as trustees, Each of whom has agreed to act as a trustee and meets the qualifications set out in the declaration of trust to serve as a trustee. They are Paul Amaro, Paul Buzanas, John Jessup, Ronald Leslie, Mike McGann and Cheryl Pangborn. As the trustees have not received notice in accordance with the declaration of trust of any other nominations, we declare the nominations closed. Based on the proxies received, I can confirm that each of the trustees individually received well over a majority of the votes cast for him or her. To streamline the voting process, we will elect each individual trustee through 1 omnibus resolution. The number of trustees to be elected at the meeting is 6. I now call for a resolution that each of the 6 individual nominees whose name has been read and And is hereby elected as a trustee of the REIT to hold office until the next annual meeting or until his or her respective successor is appointed. Will someone so move? I move, Brian O'Neill. Will someone please second the motion? I will now turn to the voting on the motion. If you haven't done so already, Please feel free to cast your vote now or wait until the conclusion of the discussion on all resolutions prior to casting your vote. We will now proceed to the election of trustees and directors for 2 of the REIT subsidiary entities. The following persons have been nominated for election as trustees of Interrent Trust, Each of whom has agreed to act as a trustee and meets the qualifications set out in the declaration of trust to serve as a trustee. Paul Amaro, Paul Bozanis, John Jessup, Ronald Leslie, Mike McGann and Cheryl Pangborn. The number of trustees of Interrent Trust to be elected is 6. I now call for a resolution that the trustees of the REIT Be directed to vote the units of Inter Rent Trust so that the nominees whose names have been read and are elected trustees of the Inter Rent REIT sorry, Trustees of Inter Rent Trust to hold office until the next annual meeting or until their respective successors are duly appointed. Will someone so move? Brian Harty. So move. Will someone please second the motion? Curt Miller, I second the motion. Thank you. Turning now to the other subsidiary entity. The following persons have been nominated for election as Directors of Interrent Holdings General Partner Limited, each of whom has agreed to act as a Director and meets the qualification set out in the Ontario Business Corporations Act to serve as a director, Paul Bozanis, Brad Cutze, Mike McGann and Curt Miller. The number of directors of Interrent Holdings General Partner Limited is 4. I now call for a resolution that the trustees of the REIT be directed to vote the shares of Interrent Holdings General Partner Limited, so that the nominees whose names have been read are elected as directors of Interrent Holdings General Partner Limited to hold office until the Next annual meeting or until their respective successors are duly appointed. Will someone so move? Brian Murray. So moved. Someone please second the motion. Curt Miller, second the motion. Again, as previously noted, if you haven't done so already, Please feel free to cast your votes on these motions now or wait until the conclusion of the discussion on all resolutions prior to casting your vote. The next item of business is the appointment of the auditors. RSM Canada LLP, Chartered Professional Accountants, The current auditor of the REIT is proposed as auditor of the REIT to hold office until the next annual meeting of unitholders. May I have a motion? Brian, are you someone? Will someone please second the motion? Curt Miller, I second the motion. With this, all the motions have been read. We will now proceed to address questions, if any, with respect to these motions. Brian, are there any questions? There are none. Seeing that there are no questions, this concludes all discussions on the resolutions. I will now turn to the voting on the motions. I will be closing the poll shortly. For those of you who have not yet voted on all the resolutions, please do so now. It is now 11:0:9 a. M. I will close the polls on all resolutions at 11:10 a. M. To allow online views to catch up. The polls are now closed. Based on the preliminary report I received from the scrutineer, I declare all resolutions carried. Thank you to all for participating. This concludes the formal business of the meeting. May I have a motion for termination of the business portion of the meeting? Will someone please second the motion? Kurt Biller, second the motion. I declare the motion carried and the meeting is terminated. As the formal business part of the meeting is over, I will now turn the meeting over to Mr. McGann, Mr. Cutse and Mr. Miller for a brief presentation. Thank you. Hello, everybody. I'd just like to welcome you to our June 17, 2021, AGM. Unfortunately, this is being done online And not in person. We're looking forward to stopping this and getting back to our usual Occurrences with everybody in person and hopefully this will be the last year that we do it. I have here with me Brad Petsey, the President of Inter Rent REIT and also Kurt Miller, our CFO. And as we start clicking through the slides, I will be passing it over to Kurt, I believe, at First point or maybe it's Brad, we'll guess we'll find out. And we'll be at the end of the our slide deck, we'll be open Anyways, the first part, the first slide we have here, we have to obviously go over forward looking statements. I'm not going to go read it to everybody. Hopefully, you can see it online. And if you don't see it online, you can always look at on our website. We'll have the whole presentation posted. And as we go on and click on the new slides, you'll see that the next slide just talks about the we're going to show you our agenda. We'll talk about the REIT, what we've done with COVID and our actions and outlook from COVID, value creation strategy of the REIT, Financial performance and looking forward. So first, I'm going to talk to you about the REIT in general. So the REIT has grown tremendously since I've I've been involved with it and my whole most of the management team has been with us for a long, long time. We've had a few people retired, mostly in actually this Last year because of, I guess, the COVID kind of, as I'm sure everybody feels, it's almost felt like 5 years Or maybe 7 years depending on your outlook of what this last year has been. But we've done tremendously well. I think we went from a market cap of about $36,000,000 $38,000,000 Now I believe we're up around $2,200,000,000 or $2,300,000,000 market cap, Done really well. And this has been everybody's effort in working together as a team. And what we always strive for, these are 5 of our real pillars. It's we always want to Provide great quality service and our products to our customers. We always operate in the highest integrity and Really try to impact that in all the younger people in the organization. You should be as hard as it is to Do it today and we still obviously want to make sure that we have good paperwork with all of our anything that we get involved in. But I'll tell you like your word and your integrity means everything. It's your reputation. People will go the extra mile When they know that you have that sense of integrity and it's I want that to be through the whole DNA of the organization. It's very important to me And very important to our whole management team. We also have very strong teams and communities. Again, we respect each other and that's the whole the basis of working as a team and getting the most from each other. And I guess the whole the individual parts makes the sum of a much better team than us individually. So everybody understands that. And we strive for giving excellent service to our customers. They're what it's all about all the time. So the next slide kind of goes over where our properties are situated. As you can see, we're really in Four core markets, we're really exceedingly happy that we're in these markets. They're high growth markets. I think we're going to see Some great growth here as we get through the COVID. They've been pretty resilient as far as collection wise. And we've got some this is great for efficiency and relationships and even starting to develop our We've just got some very, very good operational relationships and relationships with the transactional So we're really happy with it. As you can see, we're in the GTA, National Capital Region. So that's really Ottawa and I I guess you can count Catno, Elmer is one of our big property there. It's done exceedingly well here during this whole pandemic. Greater Montreal, We're really primarily Cote St. Luke. We're a lot of the downtown core and the plateau, Bill Ray, what we've done really good on the outskirts during the pandemic. We've been hurt in the more of the downtown core just with predominantly Young professionals and universities there that unfortunately, they haven't had in person classes. It's been online. So that's hurt us. And we were really lucky to transact out in Vancouver. We got preeminent locations. I'm so happy about it. We got It's so hard to get scale there and to get into that market. We were so lucky to be in there. So we're And I'll tell you, what we're seeing in the rental take up and the kind of rents we're potentially hitting as we go through this, We think we've done extremely well on that transaction. So the next slide is Slide 7, and you can see it kind of goes over our history. Again, I told you about Where we've gone in market cap, you can see we've had, I think, pretty good. You look at The distribution increases have been very consistent over the years. And just like our total return and again, we were actually in the top 10 best performing TSX Companies from 2010 to 20 decade. Very proud of that and I'm very proud of our team. They all worked extremely hard. And we are looking forward to Trying to repeat that in this decade and it's a tall order. Obviously, with COVID, we had a really rough year last year. But again, I think we're going to see that we're coming out with a lot of resilience and a lot of opportunity. And I think we're going to we're setting ourselves up for a good run. So next I'm going to talk about are just the actions and going through COVID and And a little bit of our outlook. So again, our team did fantastic during COVID, like nobody planned for COVID. But they really like they knocked it out of the park. We conducted over 10,000 wellness calls. I bet you it's probably closer to 15,000 or probably more. We were calling everybody checking on them. Our residents really appreciate it, especially if we're really checking On the seniors and the vulnerable people, making sure that they have the ability to get groceries or if they had to get some prescription drugs or things of that nature, we were Organizing to get it for them and making sure that they all felt safe and secure. We obviously we went and got some great PPE for all of our valued employees and team members and just keep them safe. Really, they were unbelievable keeping the buildings clean. It was like and I actually we actually had a doctor Who made a comment that it was in one of the buildings, and I'll tell you, it's consistent to the portfolio, that it was cleaner in the building Then it was in the hospital a lot of times. So I mean, I was very proud of that. And you can see as we go through the whole this whole slide is that that we where our residents responded fantastic too. Like we barely had Any issues with collection, the people that did, we gave some rent deferrals. But really, like everybody, like in the community, In our community, that's really what it is. It's almost like these are almost like little cities. Everybody stuck together. Everybody was responsible. Everybody helped each other. And it's like you really find out a lot about people when you go through these stressful times. Also, our team, we donated over $100,000 of PPE. We also did some We encouraged a lot of our team members to get involved with local merchants and that's what another $100,000 went into that And I'll tell you from the management committee over and above it was easy $200,000 more and that we donated to a variety of different Small businesses, the food banks, boys and girls clubs, women's shelters, actually not even counting that. We gave some apartments to some of the women's shelters like I'm just really proud of our whole organization and how they reacted And really stood up for our community at large. So another thing we did is and this is Slide 10, as we know the clean and Pure program, lot as I said, lot of fabulous comments back. I like I'll tell you, in the property management side, You usually only hear from your residents and I'm not going to say we're any better, but we don't usually email stores and tell them how much they are, how happy we are. You want to start with somebody with the Gong Bub and Beyond. So it's pretty consistent, but I'll tell you, we got A tremendous amount of e mails and phone calls thanking our team members for what they're doing and just they're going above and Beyond and there's so much positive feedback, it made me extremely proud. So I'm just going to talk about the financial side. I mean, let Kurt and Brad dig into it a little bit more. But we made a call that we weren't going to Just trying to get occupancy and lower our rents. And it was a tough call and it was a very well, I guess a very debated call internally and got heated actually at some points, but I think it was Totally incorrect call. And at the end of the day, we all agreed with it. We all step forward with it. And it has the pandemic has gone on A lot longer than any of us anticipated, but I think we're going to see that we're going to this is the totally the right play. Now we're starting to see traffic come Our way, and it's just really assist the domestic students and some of the professionals now with the vaccination program, the vaccination program has Taken off and I think Canada is going to end up being one of the leaders, if not the leader, I bet you on the total vaccination percentage of any Country in the world and so it's going very positively. So once with the having domestic students, having some of the young professionals back And then hopefully down the road, in short order, we'll start seeing international students and immigration pickup. Now we know that they won't really hit probably in Full force in the bill of 2022, but we're still seeing some good rental traffic, and we think we're totally the right course of action And instead of giving all that growth away. So we're extremely happy that we made that move. So on the next slide, I guess This is really Slide 12. I mean, it's just kind of we're just again kind of all the different points I talked about really, really feel that this was the right move. I think all of our unitholders are going to be very happy with the that we've chosen strategy. It was painful. It was hard. We're lucky, I'll tell you right now that we were built for it. We're very lowly levered and we knew that during Good times don't last forever. Never call the pandemic as part of the different scenarios that may come after us, but we really believe it's an excellent strategy. And again, we'll all enjoy the fruits of its labor as we go forward. At this point, I'm going to pass it on to Brad Kaczino, President. Thanks, Mike. For those of you who know us well, this slide will be familiar. Our team has a proven track record of creating value through repositioning rental properties, And we embrace the core philosophy of continuous improvement across the business, from day to day operation through to capital investments and everything in between. Despite a competitive market, our acquisition criteria remain unchanged. We typically target properties that have been undermanaged We look for regions with healthy economic growth and population growth, The history of rental growth and favorable supply demand conditions. Our after class proved to be resilient through the pandemic And you can see this from the chart on the right that the transaction volume for multifamily asset last year was more than double the average seen through the period 2010 to 2014. What's more telling is that our sector is firmly on the radar of institutional investors We have no doubt seeing this defensiveness in action, but may who may also be shifting away from some commercial holdings like office and retail and are experiencing structural changes. This narrowed a bit of a double edged sword for us. Increased volume in the competition is driving down cap rates, It provides welfare property appraisal values, but also makes it tougher to get deals done at pricing we're willing to accept. However, it also opens up opportunities for us Partner with new investors who like the asset class but don't have an operational platform as was the case with our recent expansion in the Vancouver Group at Crest Point. A quick snapshot of our external growth track record. You can see we continue to source deals in 2020 despite challenges with the lockdowns, And we have already closed and transacted more than 1100 suites so far in 2021 and don't see this trend stopping anytime soon. As I mentioned, the deal flow we're seeing right now is incredible and our acquisition team is working extremely hard. We recently welcomed a new VP of Acquisitions, Asad Nalip to the team and we're excited to have him. We're currently sitting with firepower of just over $300,000,000 so that we can act quickly when opportunities arise. As you know, repositioning is the name of our game and we're expanding all aspects of the property from exterior to the common areas to suite upgrades. We wanted to draw your attention to some key metrics to illustrate the upside we see as our repositioning work continues. Clearly, as we work through our non repositioned portfolio, We expect to see improvements in average rent and occupancy, which will have a direct impact on our NOI margin. At the same time, our intent is to continue to backfill our non reposition pipeline with acquisitions, so that value creation cycle can continue. Before I hand it over to Kurt, I want to touch base on the development activities as these projects are another important source of value creation in our business. We have 4 development projects in Ontario at various stages. With the Office of Residential Cabernet at 473 Albert Street in Ottawa, being the first of the gate. These projects are another example of how we can bring in partners to tap and take exciting opportunities to create future value. I'll now turn it over to Kirk. Thanks, Brad. Although 2020 is starting to feel like a long time ago, We wanted to highlight a few key financial metrics. In a challenging year, we were able to deliver net operating income growth Of 6.2% for our total portfolio. As Mike mentioned earlier, the increase in vacancy and rebates for the year compared to 2019 Impacted NOI and therefore FFO. Also, as mentioned, our strategy in 2020 was to hold rents And accept the short term vacancy increase. Looking at the bottom charts on Slide 23, with year over year average rent growth across All regions in our total and same property portfolios, we are confident that we made the right call and we are extremely proud of the effort put forward by our team members in Moving to Slide 24, Brad spoke to the upside we see in our non repositioned portfolio And this slide provides a bit more color. You can see that the vacancy in this part of our business offers significant potential for future growth as we complete the repositioning efforts and increase occupancy at current market rents. Moving to Slide 25, We don't believe in growing for the sake of growing. This chart and the one that follows on the next slide Sure that our portfolio growth has been aligned with derisking the balance sheet, FFO per unit growth and growth in our distributions. Depending on the timing and quantum of acquisitions and the corresponding repositioning efforts, FFO per unit growth may at times lag, But I believe that the long term view of this chart demonstrates the results of our business model. We will continue to be diligent stewards of your capital. Before we move to the next slide, I think it's worth mentioning that in 2020, the combined impact from vacancy and COVID related costs On FFO per unit was $0.047 on a per weighted average unit diluted basis. You can infer from that What we see in the underlying growth of our business, which continues to be very solid. Moving to Slide 27, We can see that over the last few years, the team has worked diligently at not only growing, but also strengthening our balance sheet. We commenced 2020 with $2,700,000,000 in investment properties. We acquired properties for approximately $230,000,000 during the year, Invested a further $55,000,000 into our portfolio and recognized a fair market value gain of 70,000,000 To end the year with a portfolio valued at $3,100,000,000 our debt to GBV at December 31 was 31.1%. The increased value of our portfolio combined with the $230,000,000 in net proceeds from an equity raise last June Has positioned the REIT well to be able to stick with its rent growth strategy, which should lead to strong NOI growth as we emerge from the pandemic. I would like to pass things back over to Mike for our look forward. Thank you, Kurt. I appreciate that. I'm going to just give a little bit of a look forward to everybody here. And I'm going to talk about our company just like what we've done in Building a sustainable foundation, recently we participated in the CREB's real estate assessment that we've done that we're going to be doing for the 2nd time. And to be quite frank with you, like we've been doing all this stuff for a long time. It's just good business and it's When I look at things like the environmental side, we've been doing that water saving fixtures and Energy efficient lighting for a long time and probably one of the first real estate companies, not just privately, but privately We've been all over that stuff trying to it just makes good sense to try to make your costs go down and get good returns. So So we've been doing that all the way through. On the social side, we always know it's really important to have a strong team. We've been Totally developing our team and I'll tell you, it came through. It came it was very strong through this whole pandemic. How many people that were We relied on each other. We cared about each other and cared about their community. And we've quantified it now. We've done some of the surveys And that and just really kind of found out more about ourselves. There's obviously things that we need to improve and we're working on that as we go forward. It will always Be the same case as we go forward. You can never stop trying to get better. On the government side, we've always like we've very Everybody is accountable. We hold ourselves in high integrity. We do that internally, externally. We try to we look at how do we improve. We always just try to get the best people. And I think that we've Really carried ourselves very well as a company along the way. And I know there's room for improvement, and I'll give it Again to Kurt's really pushed this and so is Brad and we're lucky enough that we actually have somebody Overseeing this for us is Sandy Rose. So she's our new Director of Investor Relations And ESG. So really, really pleased with that. And I think it's going to be it's really going to help our company get Better and better. So the next slide is, again, I'm going to give Kurt and Brad full measure of compliments here. They've really been On top of trying to get ahead on the digitization of our business, our business is predominantly, we're dinosaurs. Everybody has been so far behind, but I really tell you that we have rapidly moved ourselves forward. I think it's paid off in Big time here as we went through the pandemic, probably pulled ourselves 3 to 5 years ahead. And we've done so much in the last little while like even through work orders and Just on the whole payment side and just the relationship side with our residents and tracking that And tracking the inflow on the analytics with our applications And prospects, so I'm just really, really pleased with how that's gone. So in summary, I just have to say that I feel We've done great going through the whole pandemic. As far as I mean, as best as As the company gets old, we're very lucky that we're very lowly levered, very conservative, flexible balance sheets. We've even been able to Keep purchasing and actually purchasing at a fairly good clip through this whole thing. Probably one of our best years as far as New purchases in that and you can see we're also I think we've set ourselves up as I talked about not You're worried about occupancy, knowing that people will come back, traffic will come back and demand is going to be, We believe huge as we go forward here and we're going to see some great rental growth. So we see it internally, So organically and external mile growth and we've also had some great joint ventures and partnerships that we've developed. We just see there's we think there's going to be a lot more of that coming down the road. Also as we go into this year, we currently have like 3,001 And our suites and repositioning portfolio. So again, talking about that growth prospects, we've got great growth prospects there. We've talked we've told everybody here numerous times, and I think everybody knows about some of the great Development sites we have, so there's going to be great potential there and on greenfield development and some intensification. So we have a lot of levers to push. And I can see some great couple of years here and great more than a couple of years with the REIT. And I think there's just a lot of potential for us as we go forward. Now we may look at new markets, But really what we want to do is stay true to our core. We got 4 great core markets that I really believe we'll spend this solid year concentrating on There's a lot of growth opportunity, a lot of consultation opportunity there. So thank you, everybody. I really hope Everybody is doing well, and I appreciate everybody taking the time. And at this point of time, we're hoping to take questions. And again, thank you. So we're going to check on the questions, and I don't think we have any. I can confirm we have no questions, Paul. So with that, no further questions. We're going to bring the informal Meaning also to a close, I'd like to thank everybody for attending. Have a great day, and we all hope that we'll see each other in person next year. Thank you very much. Ladies and gentlemen, thank you for joining today's meeting. You may now disconnect.