Okay. I think we’ll get started.

Thank you all for joining us, and welcome to Artis’ Third Quarter 2021 Results Webcast. My name is Heather Nikkel.

I'm Vice President of Investor Relations at Artis. With me today is Artis' President and CEO, Samir Manji; CFO, Jaclyn Koenig; COO, Kim Riley, and Executive Vice President, U.S.

region, Phil Martens. In a few minutes, I'll be turning the floor over to Samir for opening remarks, after which there will be a question-and-answer session.

[Operator Instructions] Our third quarter 2021 results were disseminated yesterday and are available on SEDAR and on Artis' website. Before we get started, please be reminded that today's discussion may include forward-looking statements.

Such statements 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 refer to those filings.

As we discuss our performance, please keep in mind that all figures are in Canadian dollars unless otherwise noted. I would also like to note that today's webcast is being recorded, and a replay will be available on our website later this afternoon until Wednesday, March 9, 2022.

With that, I will turn the discussion over to Samir.

Thank you, Heather. Good morning to those in the West and good afternoon to those of you in the East here from sunny beautiful Winnipeg.

Welcome and thank you for joining us for our third quarter 2021 results webcast. As we’ve done in previous quarters and in being mindful of your time, I’m going to keep my comments today brief before transitioning to our Q&A session.

It’s been a busy few months for us here at Artis. During the quarter, we closed the sale of 32 properties for $761 million in aggregate.

This includes the sale of our GTA industrial portfolio, which was a significant milestone in the implementation of our business transformation plan, in which we feel demonstrates the significant value that exists within Artis’ diversified portfolio. The remainder of the assets sold during the quarter were considered to be non-core to the REIT and to our long-term strategy.

We were able to achieve attractive cap rates on the dispositions by taking a measured and patient approach, which we feel validates that there is continued demand for quality, commercial real assets, despite the current pandemic environment that we still find ourselves in. These asset sales, along with the sales we’ve completed, since the announcement of our business transformation plan have been calculated and integral in providing Artis with the financial flexibility it has today to meaningfully reduce our debt to gross book value to 44% and to increase our net asset value per unit to $17.45 at September 30.

They have also provided us with a healthy level of liquidity as we focus on our return of capital and value investing strategies including our October 24 announcement related to our participation in the investor group to acquire Cominar REIT. Before I move on, I should note that as mentioned last quarter, the sale of the GTA industrial portfolio will generate an increase to our taxable income for 2021.

So we expect to make a special distribution to unitholders, which may be in the form of or a combination of cash or common units. The special distribution will be declared later in the year and will be based on the amount that the reach taxable income is expected to exceed its regular annual distributions in 2021.

In terms of our day-to-day operations, we continue to identify and improve operational efficiencies and are making strong progress in advancing our ESG program. And in our commitment to creating an ESG minded culture at Artis.

This initiative is very important to our Board of Trustees and our management team. And we look forward to providing updates on this in the quarters to come, and in our upcoming 2021 ESG report.

To conclude, our business transformation plan has progressed nicely to date. We are pleased with what we’ve accomplished so far and our confidence that if we continue to stay focused on our strategy with the same diligence and discipline, our owners will be rewarded with net asset value per unit growth and long-term value creation in the quarters ahead.

I will now turn it back to Heather to moderate our Q&A session.

Thank you, Samir. [Operator Instructions] Our first question is from Jonathan Kelcher from TD Securities.

Thanks. Good afternoon.

Hey Jonathan.

First question, just on the Cominar deal, what percent will you guys own of the JV with Canderel?

Thanks Jonathan. We at this point are not going to be providing any further color on the details of the transaction.

We will wait for the unitholder vote slated for late December for Cominar’s unitholders. And then either just before or post completion of the transaction subject of again, of to a positive vote, we’ll be happy to provide certainly more color and details, including answering the question you just asked.

Suffice it to say we’ve made a significant capital commitment. And we look forward to working with our partners in the consortium following a successful vote and completion of the transaction.

Okay. Fair enough, I guess.

So I guess then switching gears, the special distribution you talked about, I know the amounts obviously not set yet. But can you maybe give us a ballpark, maybe a range of what it might be?

I can take that Samir. I think just based on the information that we still have to put through in order to determine our taxable income, we’re not in a position right now where we’re able to kind of give a range on the special distribution.

Okay. So I’m over for two on questions so far.

So I’ll one more I guess just on operations and I guess this one’s maybe for you, Phil, the U.S. same property NOI was weak in the quarter.

Can you maybe give us some color on that and then your near-term expectations for it?

Hey, Jonathan. Yes, the hard thing was measuring by quarter is that you get a little snapshot and yet what we’re seeing generally was the decrease in the NOI came from an asset in North Scottsdale and that’s temporary.

We had two tenants in this particular asset. One went to another one of ours, the other one left yet before they even left, we had resigned the entire building.

And so this particular new turn, [ph] which is a credit tenant will be taking the entire building, but that’s only until June of 2022. So, we have – that asset handled.

Another asset is in Minneapolis and I can’t yet report, but I would like to at least make a comment about the quality of our leasing team in Minneapolis, both office and industrial, as well as Madison office and Phoenix office. We’ve got a really great team and I’m looking forward to sharing some good news in the upcoming quarters on how some of those vacancies are being handled.

Suffice to say, despite the concerns of the pandemic and how it impacts our office users. We’re seeing that some of the bigger users are coming off the sidelines and starting to make decisions.

And we’re quite pleased. I’m quite pleased right now on how our assets are performing in that environment.

Okay. That is so timing related, I guess, on the Phoenix one and then okay.

That’s helpful. Thanks.

I’ll turn it back.

Hey, our next question is from Matt Logan from RBC Capital Markets.

Thank you, and good morning. In terms of your investment in Cominar, or at least the continuing entity, well, you can’t provide any details.

Could you maybe speak to the type of assets that are in the continuing portfolio and some sort of general range on what sort of leverage the consortium plans to employ?

We – I’m not going to comment on financial metrics at this point Matt. But again as I had mentioned to John, we will be happy to provide more details post transaction as it relates to the portfolio as has been disclosed.

The industrial portfolio is being forward sold, a portion of the office and retail have been committed and that leaves us with still a sizable portfolio of office assets that are – in our views, a good quality assets that we look forward to only stewarding with our consortium partners.

So would these be principally enclose malls with some value add on the office side, or how should we be thinking about kind of the operating strategy for this entity?

Well, if you, if one knows the details of the Cominar portfolio, Matt, you can just go on mute, just while I’m answering, they'll be helpful, I think for sound purposes. Thank you.

If you look at the overall portfolio of 310 assets, it’s already been noted that the industrial had been over sold and that will reduce your asset base to just south of 120, and then a portion of those 120 are being sold to group mock. And that leaves still a sizeable portfolio, which includes everything from a value add retail which could include enclosed malls to office assets.

It’s a sizable portfolio, including the key portfolio at the back end of the transaction that includes a mix of assets.

And on a go forward basis, what sort of percentage do you think private investment such as this could make up perhaps as a percentage of your balance sheet?

I think it’s difficult to say at this point, Matt it’s early days we haven’t even hit the one year mark of our business transformation plan announcement, and we feel alongside our board of trustees, we feel very good, as the management team with what we’ve been able to achieve to date from an implementation and execution standpoint. And the fact that we enjoy today, the level of financial flexibility we have on our balance sheet will allow us on behalf of our owners, the unitholders to be opportunistic as we have been with the Cominar transaction, to be able to pursue opportunities of varying degrees.

We announced in our quarter the development in Blaine, which is a suburb of Minneapolis. We were there a few weeks ago, the entire executive with Phil and these are opportunities and initiatives that we are both excited about but also confident are going to create and add significant value for our unitholders.

And with respect to the Cominar investment, is that a transaction that will result in fees paid to Sandpiper. And if so, what role did Sandpiper have in underwriting that investment?

There are no fees that Artis will be paying to Sandpiper. The details of, again, the transaction Artis’ ownership position, Sandpiper’s ownership position, we will be happy to provide those details on the other side of the transaction and suffice it to say that together Artis and Sandpiper will have a meaningful ownership position in the new entity that will own Cominar.

And alongside that ownership will have a meaningful role to play in the governance of the private entity, again, alongside our consortium partners at Canderel and FrontFour.

And last question for me, just on the disposition front, how should investors be thinking about the cadence of potential asset sales in Q4 and over the coming year?

As we conveyed in the last quarter call, at this point we anticipate that further dispositions in the near term including Q4 will be at a single asset level opportunistic. There’s no near-term intention to undertake a sizeable portfolio disposition, similar to what we did in the GTA with our industrial assets.

Okay. I appreciate the commentary.

Thank you very much. I’ll turn it back.

Thanks, Matt.

Okay. Our next question is from Sumayya Syed from CIBC Capital Markets.

Thanks, good morning. Not sure I’ll get far, but just wanted to ask about the Cominar transaction.

Wanted to just get more color on your broader, I guess, investment framework and philosophy. And if you can pinpoint where you see the biggest value creation opportunity and any thoughts so far on returns and the whole period?

Thanks, Sumayya, and good afternoon. I think you prefaced your question appropriately.

We’re not going to comment at this point on those sorts of details, but look forward to sharing some thoughts and context around those specifics and others that have been raised by your colleagues in the analyst community post transaction.

Okay. And then just to search over to your current portfolio, and I guess on the remaining industrial, you do have some decent footprint in Winnipeg, Twin Cities and Houston, and just given the demand what you think are the prospects for selling more industrial and the timeline for that?

Again, we’re very pleased with the progress we’re making operationally on both sides of the border across the portfolio within each of our three asset classes. And Sumayya you’re right.

Our industrial in particular, as we know in the broader industry context is where we are seeing the strongest demand and commensurate results operationally and financially. At this point, again, there’s no near-term intention to do anything of a substantive nature on the M&A side with respect to disposing of industrial assets.

Okay. And then, can you give us an update on how the Calgary office sales are progressing?

We’ve been added for a couple of months now with respect to our five remaining Calgary office properties. And while we’ve seen interest this is a market and an asset class within that market, more specifically that we all know continues to face significant headwinds.

And so we are navigating that accordingly and anticipate that we should be able to have some transactions under our belt in Q4 otherwise that the balance will we expect complete in Q1 2022.

And how is the pricing measured up against your expectations of value?

Again, it’s a market that has faced significant challenges. Fortunately, these five assets represent a very small proportion of our overall asset based in fact, less than 2% of our IFRS real estate portfolio is represented by these five properties.

And so whether we hit our IFRS value or not will not move the needle in any significant way when it comes to the completion of these transactions.

Makes sense. Thank you.

Thanks, Sumayya.

Okay. The next question is from Mario Saric from Scotia Capital.

Hi, good afternoon. Can you hear me, okay?

Yes. Hi, Mario.

Right. I promise I will not ask a question on Cominar.

I wanted to focus a bit more initially coming back to the office market and kind of Philip, you kind of highlighted the transitional nature of some of the weakness there in the U.S. The occupancy in Canada also came down by a similar amount quarter-to-quarter.

Can you maybe talk to what you’re seeing in the Canadian office market with respect to your portfolio, and when we can see those occupancy levels tick back up again?

I can take that one, Mario. So for the Canadian portfolio, it was really related to one property similar to the U.S, it was just two.

In Canada, it was just one. So we saw a tenant vacate in Q3 for one office building that we own in Edmonton.

Subsequent to that we’ve been able to release around 25% of it to occupy before the end of the year. So I would say, as we come through the summer and the pandemic keeps dragging on, activity is picking up, but it is slow and we’re working hard to lease the vacancy as best we can as indicated by the leasing that we did in this property.

So continue to working market by market, picking up the leasing where can, and hopefully it’ll pick up throughout the balance of the year. As people get back to the office, we’re starting to see activity pick up in Winnipeg in terms of occupancy in the space.

So we’re optimistic that by early 2022 activity, we’ll start to pick up and we’ll start to see some of those vacancies improve.

Okay. From a capital allocation perspective, what are your kind of higher level holistic thoughts on office going forward, coming out of the pandemic – coming out of work from home hopefully in 2022, is that an asset class where you see yourself adding capital given valuations, or is it an asset class where you’d like to reduce exposure over time?

Thanks for the question, Mario. We post our GTA industrial portfolio sale, did see as one can do the math on an uptick in the representation office has in so far as overall proportion of our GLA within our roughly 20 million square feet of operating assets.

And that is a ratio that we would like to see be brought down to where we were pre the GTA sale and if not even a bit lower relative to our industrial and our retail assets. And so we certainly aren’t going to see that ratio grow in the near term from a capital allocation standpoint.

That’s not our plan, but on the contrary that we should see that reduce over the next few quarters.

Okay. And then just maybe an associated broader question with the GTA industrial portfolio, you showed a willingness to kind of sell something that’s in very strong demand achieving a very good price.

The equity securities balances inching up quarter-to-quarter consistent with your business transformation plan. When you sit back without giving away any of your secret sauce maybe, when you look at asset classes, where do you see that this best risk adjusted return today from a value perspective?

Well, Mario, I think we could ask you the same question along with your contemporaries, but that’s not for today. We’ll save that for an offline conversation, but look, I think we all know that industrial pure plays as it relates to the public security side in particular are seeing incredible momentum and very strong tailwinds as is multifamily right behind that.

Whereas the diversified and then other pure play asset classes are not seeing that same level of momentum. And hence, that’s generally speaking where one probably could identify opportunities that could represent meaningful value plays or investment opportunities.

And then outside of that public securities bucket, I would say that at least in so far as our own experience as a management team and a board at Artis where we see very compelling opportunities are in the development bucket. And again, particularly as it relates to industrial we have a strong team in the U.S.

We were there visiting multiple markets last month. And in three of those markets, as you know, we’ve got sizable developments underway in greater Minneapolis, in Houston, and in Scottsdale.

And we will continue to evaluate development opportunities, particularly as it relates to industrial from a capital allocation standpoint.

Thank you for that. And the question wasn’t necessarily solely confined to the public markets.

Just more so in terms of asset classes, whether it’s public or private, if there’s anything that sticks out in terms of looking pretty good. And then maybe just as a follow-up geographically, you can go anywhere and do anything.

Is there anything that sticks out geographically for the team that’s more of a focus today than it was six months ago in terms of opportunities?

Well, Quebec certainly is as and we beyond that, we’re not looking to venture as it relates to our direct property investments and developments. We’re not looking to venture into any new markets, but instead to harness the boots on the ground presence we have in existing markets and again where opportunity surface that.

Our team has underwritten and believes, represents an attractive opportunity from a capital location standpoint. We will continue to present those to our investment committee and our Board for consideration.

Okay. My last question just comes back to operations with the budgeting process, I’m sure well underway for 2022, is there a target organic same property and wide growth that you’re looking to achieve within the existing portfolio for 2022?

I’ll pass that over to Kim and Jackie.

I can, jump in first. So yes, we are completing the 2022 budgets right now.

We’re kind of just getting through the end of that process. So evaluating and we’ll probably have more to report by the end of next quarter.

I don’t if Jackie has anything to add?

No, I think that’s a good representation of where we’re at right now.

Okay. Thanks for your time.

Thanks, Mario.

Hey, our next question is from Kyle Leeson [ph].

Hey guys. How’s going.

Can everyone hear me?

Yes, we can. Hi, Kyle.

Thanks for taking my question. So I buy Artis along with a number of other retail investors.

Now we’ve been following you here for quite some time. We know pre-pandemic, we’re making certain purchases through Sandpiper and obviously we’re consulting with Sandpiper on Artis in a number of purchases on the public market.

And you had mentioned that there were two companies in particular that haven’t been declared. So we presume that those purchases haven’t exceeded 10% of the total value those companies.

So I guess the question is knowing that you just said, you’re trying to lower the ratio of office to the other retail or sorry, other asset classes. Are you continuing to purchase those companies on the open market?

We have one in mind that I won’t say here, but you’ve been – you’ve had an interview in which you had said the NAV was considerably higher than it is trading it now. So we’re wondering if purchases will exceed that 10% because you had said in the past that the idea is to close that gap to net asset value.

And knowing that these, that there are a few companies out there that are still trading at a significant discount is that still the game plan? Will you guys exceed that 10% threshold?

Are you willing to disclose that information or is that stuff that you’re keeping pretty close to the chest?

Thanks, Kyle. I’ll keep my comments limited to what we are focusing on at Artis.

From a strategic standpoint, as it relates to our public securities investing. We continue to evaluate opportunities with our investment committee and our Board and where we believe it makes sense and represents an attractive and compelling situation or opportunity for our unitholders.

Again with the support and approval and direction of our investment committee and board of trustees, we will look to allocate capital accordingly. It could be to own ownership position in an entity sub 10% and where we cross the 10% we will disclose it accordingly at that time?

There’s no at this stage clear position where we will, or we will not look at owning greater than 10%. It really will be case by case, and again in conjunction with the direction of our board of trustees.

Thank you.

Hey, our next question is for Mike Markidis from Desjardins.

Hi, there. Thanks for taking my question.

I apologies if I missed this, but Samir, I think you mentioned earlier that your intention was to get your office exposure back down to where it was the industrial sale. And I’m just curious if, when you think about your asset allocation in that manner, are the investments in securities and subsequent I guess ownership structures, if it gets to that point viewed holistically in that light, or are you simply referring to things where you have a direct asset ownership interest?

Thanks, Mike. It’s a very important question.

The commentary that we provided earlier was related to the 100% own GLA within our portfolio and hopefully that helps clarify.

Yes, that does. Thank you very much.

There are no further questions at this time. So we will conclude today’s webcast.

If you have any further questions after the call, please don’t hesitate to reach out to me or Samir. And thank you all for joining us.

We wish you have a wonderful rest of your day.