Good day. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Artis Real Estate Investment Trust 2022 annual results conference call. All lines are being placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then one on your telephone keypad. If you would like to withdraw your question, please press the star then two. Thank you. Heather Nikkel, you may begin your conference.
Thank you, operator. Good afternoon and welcome everyone. Thank you for joining us for Artis REIT's fourth quarter and year-end 2022 results conference call. Our results were disseminated yesterday and are available on SEDAR and on our website. With me on today's call is Artis's President and CEO, Samir Manji, CFO Jaclyn Koenig, COO Kim Riley, and Executive Vice President, U.S. Region, Philip Martens. A replay of this call will be available until Friday, March 31st and can be accessed by using the telephone numbers and passcode that were provided in yesterday's press release. A recording will also be made available on our website. I'd like to remind you that today's discussion may include forward-looking statements that involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today.
We have identified such factors in our public filings with the securities regulators and suggest that you review those filings. In addition, we may refer to non-GAAP and supplementary financial measures that are not defined under IFRS and are not intended to represent financial performance, financial position, or cash flows for the period, nor should these measures be viewed as an alternative to net income, cash flow from operations or other measures of financial performance calculated in accordance with IFRS. Lastly, as we discuss our performance, please keep in mind that all figures are in Canadian dollars unless otherwise noted. I will now turn the call over to Samir.
Thank you, Heather. Good morning, those in the West, and good afternoon to those in the East. Thank you for joining us for our fourth quarter and year-end results conference call. In keeping with what we have done in previous quarters, I plan to keep my remarks brief and will focus on the progress we've made in the execution of our business transformation plan, both during the year and since the announcement of the new strategy in March 2021. 2022 presented both opportunities and challenges for Artis. Macroeconomic factors had a significant impact on the broader real estate sector. These external factors have influenced our business decisions over the past year and have been considered in our planning for 2023 as we focus on managing key areas of our business, including credit and borrowing costs.
We will continue to concentrate on things that are within our control, including executing our business transformation plan, which will ultimately generate long-term value for our owners. We've categorized our business transformation plan into three pillars. The first pillar of the strategy is strengthening the balance sheet through accretive property transactions, unit purchases, and debt reduction. Since the announcement of the business transformation plan, we have been unlocking value through the monetization of certain assets within the portfolio, which to date has included the sale of most of our industrial assets in the Greater Toronto Area and the Twin Cities Area, and all of our remaining office properties in Calgary, Alberta. Since March 2021, we have sold 65 assets, of which 45 were Canadian assets, sold for $953 million and 20 were US assets, sold for $311 million.
We made good progress with our disposition plan during the first half of 2022. The second half of the year witnessed significant change in the transaction landscape due primarily to the higher interest rate environment. This caused a delay in completing some dispositions in 2022, which contributed to ending the year with overall leverage of 48.5% versus our desired maximum target of 45%. We remain committed to reducing leverage in 2023 and are confident we will achieve this. This, in turn, will also improve overall liquidity, which will provide us with greater financial flexibility going forward. As of today, we have a portfolio of six industrial properties located in the Twin Cities area and one office property in Saskatoon under unconditional sale agreements. We have also been working diligently on managing our various debt maturities.
During the fourth quarter, we renewed the first tranche of the revolving facilities in the amount of CAD 400 million, and subsequent to end of year, we renewed the second tranche of the revolving facilities in the amount of CAD 280 million. In terms of the non-revolving credit facilities, we will repay the CAD 50 million facility maturing in April 2023. Subsequent to the end of the year, we extended both the CAD 100 million and CAD 150 million non-revolving credit facilities, each for a one-year term. In aggregate, over the past three months, we have addressed almost CAD 1 billion of near-term debt maturities.
We appreciate the strong relationships we have with our various lenders and are grateful for their continued commitment to Artis. In terms of mortgages, we have approximately $540 million of mortgage debt maturing within the next 12 months. We have extensions in place for 28% of these maturities. 22% of the debt is expected to be paid down upon disposition of the property or maturity of the loan, and we anticipate no difficulty in managing the remaining 50% of maturities in normal course. We will continue to manage our various debt maturities and look forward to providing further updates on a quarterly basis. Given the disconnect between our trading price and our net asset value, we view our normal course issuer bid as an effective tool to enhance unitholder value.
During the term of the normal course issuer bids that expired at the end of 2021 and 2022, we purchased the maximum number of trust units permitted at weighted average prices that were significantly below our internal net asset value. The next pillar of our strategy is driving organic growth by identifying operational efficiencies, increasing occupancy and in-place rents, and the completion of new developments. We are pleased to report that leasing activity remained strong throughout 2022. There continues to be heightened activity in terms of foot traffic across our portfolio, as well as strong leasing interest, especially at our new industrial development projects. This is reflected in our occupancy, including commitments, which increased to 92.3% at December 31st, 2022, compared to 91.5% at December 31st, 2021.
In 2022, 3,690,415 sq ft of new leases and renewals were negotiated and signed. Some of these lease deals were at properties that are held in joint venture arrangements, properties that are currently under development, and properties that were subsequently sold as part of our disposition plan. Not all of this will translate to our portfolio occupancy metrics, but speaks to how busy our leasing teams have been and the volume of activity we have been experiencing. With respect to deals that commenced during the year, 982,778 sq ft of new leases and 1,456,537 sq ft of renewals started in 2022. These renewals were negotiated at a weighted average increase of 4.9% over expiring rates.
In Q4, the weighted average increase in renewal rents was 6.9%. This marks the eighth consecutive quarter of growth in weighted average rental rates on renewals. We also reported positive same property NOI growth year-over-year in Canadian dollars of 1.8%. In addition to driving growth in our existing portfolio, we have a pipeline of industrial developments underway that we expect will be worth much more upon completion than what they cost us to build. Going into 2022, we had four development projects underway: Park 8Ninety, Blaine 35 I, Park Lucero East, and 300 Main. Park 8Ninety is the fifth and final phase of an industrial development project located in the Houston area in Texas. Construction of phase five, in which we have a 95% ownership interest, was completed in 2022.
The entire project totals approximately 1.8 million sq ft of best-in-class, well-located industrial real estate. Also in 2022, we completed the first phase of Blaine 35, a two-phase industrial project located in the Minneapolis area in Minnesota. Blaine 35 will total approximately 317,000 sq ft, and the second phase is expected to be completed in 2023. Park Lucero East is an industrial development project located in the Phoenix area in Arizona, in which we have a 10% ownership interest and a development management contract in place. This project, which is nearing completion, will comprise approximately 561,000 sq ft and is 100% pre-leased. We anticipate exiting this investment in 2023 and plan to monetize both our equity and carried interest in the project.
Lastly, we continue to make progress on the development of 300 Main, a 40-story residential and commercial project in Winnipeg, Manitoba. In 2022, Earls Restaurant opened on the main floor of the building. Pre-leasing interest in the apartment suites continues to be strong and we look forward to welcoming our first residential tenants to the property this year. The third pillar of our strategy is focusing on value investing by allocating capital to investments that are undervalued with potential to produce above average risk-adjusted returns over the medium to long term. During the year, Artis participated in an investor group to privatize Cominar REIT. In 2022, we also announced that Artis, together with its joint actor, has acquired a 14% ownership interest in Dream Office REIT and a 9% ownership interest in First Capital REIT.
We are confident that each of these investments will deliver strong returns to Artis' unitholders based on the intrinsic value of each being materially higher than the cost of our investment. External factors have made the past year difficult, but we continue to focus on the big picture and our fundamental goal of maximizing value for our unitholders. We expect the economic headwinds we faced in 2022 to carry into 2023. While we will continue to monitor interest rate trends and forecasts and work to manage our risk exposure, the impact that rising interest rates has had on public markets has also presented compelling opportunities that align with our strategy and that have the potential to generate meaningful net asset value per unit growth for our owners. It has been almost two years since we announced our new vision and strategy for Artis.
We remain confident that as we continue to execute our plan, we will be able to increase net asset value per unit. We will also do everything we can to narrow the gap between NAV per unit and the trading price for our units so that ultimately our owners will be rewarded. With that, I'll turn it back over to the operator to moderate the question and answer session.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before entering any keys. One moment please for your first question. First question comes from Jonathan Kelcher of TD Securities. Please go ahead.
Thanks. Good afternoon. First, just on the, I guess on the business transformation plan. You guys are, as you said, two years into it. I looked back this morning at, when you put out the press release, it said it would take two to three years to implement, so we're sort of at the beginning stage there. How are you doing versus your expectations of, two years ago? How does the board measure that?
Thanks, Jonathan. I think, you know, the point around the timeline with respect to what we announced in March 2021, is something that we are very mindful of, both the board and the management team. We will be speaking to that in our annual letter that we will be issuing in the coming weeks to our unitholders. What I'll say here, Jonathan, is there remains a commitment on the part of the board and the senior management to ensure that ultimately we fulfill the commitment that we made to unitholders. And insofar as how it's going so far, certainly, to call a spade a spade, if you look at the trading price of our units, it's obviously a cause for concern.
On the other hand, if you look at net asset value per unit, where we were when we began, and I'll use December 31, 2020 as a reference point, our net asset value per unit on an IFRS basis since that time has grown 15%. I think that would put us amongst the top performers in the broader REIT landscape. Unfortunately, our unit price doesn't reflect that. We will, over the course of the coming months and quarters as we, as you mentioned, as we are into the latter part of that 2-3 year timeline, be evaluating and exploring, you know, what other options are available to us and look forward to speaking further to that in time.
Okay. That's helpful. If I look at your, and it happened in Q3 and Q4, you did sell some equity securities. How should we think about that? Like I would have thought or under the impression that you guys were investing in stocks that you thought over time you could sort of help drive value in and it there'd sort of be a one-off liquidity event. Did I have that wrong, or is there more of a trading component to what you guys are doing?
What I would say, Jonathan, is, as it relates to decisions that the board and the investment committee of the board make, related to managing our investment in equity securities, this will always form part of the broader capital allocation decision-making process. A lot changed in 2022. So for us, in looking at a range of factors that can contribute to everything from driving net asset value per unit, to managing our leverage and our leverage ratios, to other opportunities available to us from a capital allocation standpoint, including on the development side, you know, these are all gonna be taken into consideration.
If that results from time to time in the decision to either exit an investment that we have, in light of what the board and management view as better opportunities to allocate capital on behalf of unitholders, then that's something that will always remain the available to the board and management to be able to exercise.
last one for me is how many different equities did you own on December 31st ? Was it just the Dream and First Capital, or is there more?
On December 31st, we would have owned three different names.
Okay, thanks. I'll turn it back.
Okay. Thank you.
Thank you. The next question comes from Jimmy Shan of RBC Capital Markets. Please go ahead.
Thanks. Maybe if I could ask Jon's question a bit of a different way on the, on the transformation plan. Like, when you put together the plan two years ago, obviously circumstances were a lot different. Today, as you pointed out, rates are a lot higher, a lot more volatile. When I think about the strategy of kinda our public and private market, that's resulted in a very high variable debt exposure. We're in a market where private market values are very unclear and you're having to look into selling into that market balance sheet. I guess my question is really, like, given the change in circumstances, why wouldn't the board and management be rethinking the plan, and you are kind of how are you thinking about that?
I think, Jimmy, I've already addressed the question. My hope that between that response and what we will publish in our year-end letter to unit holders, that that'll give the owners of the REIT the visibility that they would want to have.
Maybe my second question would be on the Cominar portfolio. I think this quarter you've marked it at CAD 146 million, which is still above your cost basis, but it's certainly have come down quite a bit from early 2022. I wondered if you could provide us an update on what's going on there in terms of asset sale or the strategy there to realize on that value.
The strategy on Cominar has not changed. The pipeline of dispositions that we have previously spoken to continues to be in the process of being executed upon. We have, as is the case, I think, across the entire real estate spectrum, we've seen the impact of the current interest rate environment. There, the two main comments I would offer, number one, that as many know, institutional investors are currently largely pens down, and that is anticipated to remain the case over the near term, and that will impact the timing of any sales of larger assets, and I would say in particular, assets like Gare Centrale and Place Alexis Nihon.
The flip side of that, and where we continue to see, very healthy progress is in the universe of private buyers. They continue to be active, whether they are strategic buyers, whether they are private firms that look at syndicating real estate, et cetera. So there, you know, there continues to be activity, albeit, transactions are taking longer to get to the finish line, again, in light of the current environment. You know, I think, I think that's what will likely be the picture for 2023. On the Cominar front, there will continue to be a lot of activity with some of the smaller and medium-sized assets that are part of our disposition plan.
Okay. Thank you.
Thank you. The next question comes from Matt Kornack of National Bank Financial. Please go ahead.
Hey, guys. Just quickly on the lending front, you have a fair bit of US office assets. The market for lending on a secured basis, I think, is a bit challenging in that segment. Can you give a sense, A, as to what you carry in terms of secured debt against, maybe the office portfolio in the States? And also kind of how negotiations are going and pricing on debt financing on both a secured and unsecured basis.
Maybe. Thanks, Matt. I'll start off and then I'll pass it over to Jackie. In terms of some of the exact ratios you're looking for, we may have to do a follow-up on that. What I would say is that, you know, we have very good relationships on both sides of the border with our various lenders. We also have, fortunately, we have lots of optionality. If there are instances where we want to, because of the cost of financing or other factors, we want to look at not putting a secured debt on a maturity of a certain asset, whether it's in Canada or the U.S., because we can get more attractive pricing by using other avenues of financing, then we're gonna capitalize on that flexibility.
Again, you know, your point is well taken around the lending environment for office. Fortunately for us, you know, we have lots of options available. Jackie, anything you wanna add?
We've already started working on some of the 2023 maturities, and we're in conversations with lenders regarding a few of the office properties as well. I can circle back to the fact that the U.S. secured debt percentages you're looking for.
Okay, fair enough. No, appreciate that. On the amend and extends, which I think are positive, was there any cost associated with that outside of maybe just the interest? I don't think the spreads changed that materially.
Spreads are the BA + 1.7 now. Certain of them were 1.6 last year.
Okay. When you look at your equity positions and kind of the liquidity of those positions, do you have a sense as to how long you'd think it would be to trade out of them if you needed to get at that liquidity? Or if you view it in that way. Are any of them at this point pledged against any of your facilities or are they kind of free and clear?
I'll answer the second part of the question first. These are unencumbered. They are free and clear on our balance sheet. On the first part of your question, generally speaking, well I'll speak to the two names that are publicly disclosed. On First Capital, it's a very liquid name. There's, you know, there's liquidity on both our ability to buy more units or sell units if that ever is something that we choose to do. Dream Office would be less liquid, but, you know, it has demonstrated historically on higher volume days large numbers of, certainly volumes of block trades.
Mm-hmm.
On a retail trading basis, it would be less liquid than First Capital.
Okay. Appreciate that. Thanks.
Thanks, Matt.
Thank you. Once again, ladies and gentlemen, if you do have a question, please press star one at this time. There are no further questions at this time. I will turn the call over to Heather Nikkel for closing remarks.
Thank you, operator. Sorry.
A question just came up if you wanna take it.
Sure.
The next question comes from David Devereux of Kirk Enterprises. Please go ahead.
Yes. thanks for taking this call. I've been an investor from day one, my concern is on a positive basis, other than you've generalized, what are you gonna be doing in 2023 regarding a few issues like the one year value is down about a third. Today's value is down about 4%. I checked the TSX with a huge volume. The Dream REIT or the Dream units that you got during the year is down about 30%. 50% value the TSX to your net asset value. You know, that's concerning me as an investor. I'm going nowhere fast. The other question I have, this is the final one part of this or comment, is regarding a negativism that's out there regarding Sandpiper.
Looking at what I saw yesterday regarding Business Wire, it's indicated that Sandpiper has a history of value destruction. You know, I see nothing positive about here, so I hope you can address all these issues.
Thank you very much, David.
Thank you.
We, we will not comment on Sandpiper here. This call is really geared towards Artis, but appreciate your point and happy to have a discussion with you offline anytime, on that point. I think on the first three points, David, that you've raised, we have touched on this earlier, and I will reiterate that across the board, there is a commitment on behalf of the board and management to ensure that we're taking every step possible to maximize value.
There are a lot of metrics you can look at, and yes, calling a spade a spade, the trading price of our units is one of those, and it's the most important one when it comes to our unitholders because they see that every day, and it represents the value that they can either buy units at or sell units at on a day-to-day basis. You know, from a value creation standpoint, again, as I touched on earlier, what we have been able to do with respect to growing net asset value per unit over the course of the last couple of years, we feel pretty good about. We now have the task of reconciling that with the trading price.
As I conveyed earlier, that's something that is very much top of mind for us, and we look forward to providing further updates on as we keep going into 2023.
Okay. I thank you and look forward to the upside. Thank you.
Thank you very much, David.
Yep.
Thank you. Ms. Nikkel, please continue with closing remarks.
Thank you, operator. That wraps up our 2022 results call. We appreciate you taking the time to join us today. Enjoy the rest of your week.
Ladies and gentlemen, this does conclude the conference call for today.