Thank you, operator, and good morning, everyone. Welcome to the first quarter 2020 conference call for Slate Office REIT.

I'm joined this morning by Scott Antoniak, Chief Executive Officer; Steve Hodgson, Chief Operating Officer; and Michael Sheehan, Chief Financial Officer. Before getting started, I'd like to remind participants that our discussion today may contain forward-looking statements, and therefore we ask you to familiarize yourself with the disclaimers regarding forward-looking statements as well as non-IFRS financial 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. I will now hand over the call to Scott Antoniak.

Thank you, Brandon. Good morning, everyone, and thank you for joining the call.

Before speaking to our quarterly results, I first like to comment briefly on COVID-19. There's no doubt that the emergence of this global pandemic has had a profound impacts on all aspects of our lives, including our business.

However, our portfolio provides quality assets, office assets and tenants was assembled to provide stability in challenging times like these and its resilience has never been more apparent. We're pleased to have collected and accepted 97% of April rents in cash, a testament to the quality of our assets, credit worthiness of our tenants, and the hard work of our team.

We expect May collections to be similarly strong. While the office sector as a whole has faired well in relation to other asset classes with average April rent collections of 92% Slate Office REIT is in most of the sector's top performers.

The disciplined and consistent approach to acquiring quality real estate assets at a discount or replacement costs, and proactively manage these assets to create value has resulted in a highly resilient portfolio. Approximately 61% of lease income generated by government and credit rating tendencies.

The REIT's largest industry concentrations by tendency are to government and financial services at 14% and 10%, respectively, with less than 2% exposure to the energy sector. Going forward, our priority will continue to be the safety and wellbeing of our team, tenants and partners.

Our asset management team has been in daily contact with our tenants, property management and leasing teams and onsite service providers. As the focus begins to shift towards a responsible and carefully managed reintegration, we will continue to employ best practices at every level.

So just a few comments in the first quarter of 2020. The REITs delivered solid results and our business was not materially impacted by COVID-19.

The REIT completed over 340,000 square feet of total leasing at an average rent increase of 28.6%. New lease transactions comprise approximately 109,000 square feet and a 21.5% increase for renewals accounted for approximately 196,000 square feet and an average increase of 33.4%.

The REIT's weighted average term to lease maturity is 5.5 years with in place rents on average 10% below market, providing continued opportunity to increase rent. We refinanced the Maritime Centre located in Halifax, Nova Scotia, as an applied value increase of $49 million.

In total, the transaction provides the REIT with $28.8 million of proceeds bolstering the overall liquidity of the REIT. We sold the value ratio continues to improve ending the quarter at 58.3%.

And we expect this trend to continue until we reach our objective of maintaining leverage in the mid-30s percentage range. In many ways COVID-19 is subjecting our industry to the ultimate stress test.

We are incredibly proud of the performance of both our team and our portfolio. Well, it's hard to know for certain when we will get back to normal or even with a new normal might look like.

What we do know for certain is that there will be an other size. Our commitment to unitholders is that we will continue to work hard building on the strength of our existing portfolio of assets while remaining ready to uncover the continued opportunities that will inevitably arise.

On behalf of the entire Slate Office REIT team we wish you good health and we thank you for your continued support. I'll now open the call to questions.

So I just had -- I have a couple of questions. So maybe I'll get back in line after a few.

So anyway. As you -- I'm just wondering, if you have any -- if you had any discussions with some of your tenants about their footprint post-COVID, whether they are looking to make your rent more space to increase that social distancing or decrease or footprint due to employees working remotely.

So thanks Stephan. I mean we have on going interaction and conversations with our tenants with always in the past, and especially in the current circumstances.

I would say that nobody has made any kind of definitive decisions or views of what this might look like going forward. I think no one knows for certain what the future of office is going to look like.

We think, there'll be certain groups businesses, others who might consider work at home as a viable alternative. We think that there's a significant number of tendencies who will be looking at increased space supplies, or space requirements for individual people working.

So there's probably some doubts in there. I think it's early days for folks to make a decision, as you know, I mean leasing is a long-term decision.

So it's very difficult to make changes on the fly so to speak. I think the jury's out a little bit as to what the ultimate future will look like.

We're very pleased with the portfolio we have with the location of our assets and the type of assets that we have. And I think, to a certain extent, I think the ability with some of our suburban assets to be able to drive your own car parked in your own spot and go to your own office with a door is attractive versus some of the more highly concentrated situations you'd find in the downtown Toronto or Vancouver and cities like that.

Okay. Thank you.

And can you tell us, what rent collection is so far for the month of May? I may have missed it, but I think it was just the month of April in the MD&A.

Yes, we have not disclosed its tracking on a similar trajectory to April.

Okay. And do you have any default results for the month of May?

Did you say did they default?

No, any rent deferrals?

Yes, very, very minimal, which would be consistent with April representing about 1% of the total collections.

Okay. And how does it work exactly?

Is it paid over a number of months? Or before year end or how does it work?

Or is it on a case-by-case basis?

It's on a case by case basis. But it's generally paid back in the short term.

Okay. Alright.

I may have missed it, but can you tell us what the same store NOI growth was for the quarter year-on-year excluding the hotel?

The decrease that was mentioned, that hotel was close to half of that. So you'd get into both, say $400,000 a year-over-year decrease in it.

And that's just due to vacancies across a couple of different areas in the portfolio.

Okay. So roughly what 1.5% roughly.

Yes.

So I guess at the beginning of the year you guys were targeting 90% occupancy by year. Is that still something you think you can achieve?

Hey, Jonathan. So we had a really good start to the year with over 300,000 square feet of leasing and a spread of 28% in Q1.

Of that a 100,000 was new leasing. We did have a slight occupancy decrease on a same property basis by about 68,000 square feet that will be offset by the 91,000 square feet of leasing that has already been completed but has not yet commenced.

So, we're slightly ahead of it if all else was the same. Having said that, the 90% is where we view this portfolio stabilizing.

I don't envision the same amounts of new leasing for the balance of the year and thus far we pushed out that projection into probably mid or late 2021 as to when we would have achieved those stabilized number.

Okay. Are you seeing more renewal discussions?

Or is there anybody that you thought might be leaving us now talking about renewals?

I mean, the first quarter, while we achieved good leasing results, it was really wasn't a full quarter. It was two and a half months because there hasn't been a lot of leasing activities since the onset of pandemic, having said that tenants that were already in discussions without expanding their existing space, particularly if they're government tenants or other sectors that haven't been as impacted by the pandemic.

Those discussions continue. In addition to the renewal discussions that were happening already are continuing, and will there be a trend to more renewals?

I think so. Because difficult for tenants to invest the incremental dollars required to move space right now and then optically and logistically, it's also a challenge from touring perspective and from actually physically moving perspective.

Okay, and then just secondly. You said that you walked away from the Florida acquisition.

Can you maybe give a little color as to why and would you expect to get the deposit back on that?

So, certain closing conditions were fulfilled. And with that fact that we're not proceeding with the transaction.

And at this point we have no further comment.

Any comments on the deposit?

No.

Looks like leasing spreads pretty strong during the quarter and for the rest of 2020. I guess you're seeing there about 25% below market rents.

I'm just curious in terms of maybe which areas of portfolio these renewables or maturities are kind of located or concentrated in given kind of the wide mark-to-market spreads there.

Yes, thank you. So the leasing spreads we achieved in Q1 were compelling.

It's primarily driven by strong leasing spread in the new leasing that we did in Chicago, as well as a renewal that was well ahead of existing rents in Winnipeg. For the balance of the year the renewals that we have are pretty well spread throughout the portfolio, Brandon.

Atlantic, Canada, Chicago and Toronto. The 25% is where they are relative to market rents.

It's not to say that we'll get all the way to 25%, but it's directionally a positive sign that we will be able to increase rents.

Okay, that's good. And then just last question quickly for me.

And I know the hotel is probably a small amount of the portfolio, but just given kind of where occupancy levels are across the sector. Can you just remind us again, maybe what percentage of NOI that hotel might represent on an normalized basis.

Yes, we generally had been projecting approximately $800,000 of contribution. We previously messaged the seasonality of that as well.

So I don't have in front of me at the moment but can follow up. And I would expect that to be almost entirely -- almost entirely taken away for the balance of the year.

On a run-rate basis Brandon, it would be less than 1% in a typical year.

Okay, right. So it's pretty, pretty small.

Okay perfect.

I mean there are some -- I would add just there are some positive signs in new Brunswick. They've now reopened retail and our hotel continues to be open and servicing frontline workers and others.

And so we do see that, probably be a quicker recovery in some of those secondary markets where there's a strong sort of drive to demand from our customers.

With regards to capital allocation, in light of the announcements on the acquisition and just generally with regards to CapEx, can you give us a sense as to how COVID changes your outlook?

Yes, I think maybe the guys can speak to specifics, but before like at a high level of anatomy that the focus is liquidity and capital preservation. And I think you'd probably hear a similar answer from anybody in the industry.

I think that's our focus. We enter Q2 with a solid position with respect to liquidity.

We completed the financing, which enhances that, we're not proceeding the Florida transaction. We've been able to pair back capital, we're down to essential life safety type either then and another smaller Maritime Centre being an example of whether it's direct measurable enhances to sometime as a result of that CapEx spend but that’s been reduced.

So that's where our focus really is. And as you know, we'll continue to be opportunistic in the future as opportunities present themselves.

But for right now it's very much focused on liquidity and capital preservation.

Okay. That makes sense.

And as margins wise, I mean, I assume leases are not, but are there any potential savings that you're passing onto your tenants or maybe occurring to yourself as a result of less maintenance or cost or otherwise or vice versa?

Absolutely. Without getting into too many specifics, Matt, there's been deferral programs through property tax and utilities in all the jurisdictions and we've taken advantage of those.

There have been fewer costs and some aspects there's been higher costs on cleaning, et cetera, and waste management. But overall there have been fewer costs because of less people being in the workforce.

And we've also as Scott noted, pared back our capital plans which to the extent that was recoverable from the tenants will provide some savings to the tenants.

And I understand that 90% is the aspirational figure, but given where you're sitting on an basis and we're spread too of being, I'm excluding the hotel, but do you expect the trajectory from same property, NOI, growth, all things being equal, assuming there's mess, bankruptcies and deferrals, et cetera, to trend in the positive direction for the remainder of the year?

With respect to occupancy, as I noted, we do still have 91,000 square feet of leasing that has been completed but not yet commenced for the balance of 2020. And then on average, we complete -- historic average we complete 214,000 square feet of new leasing between quarters Q2 and Q4.

So while that might be muted because of the pandemic, we do think that there's still opportunity to grow occupancy through the balance of the year. And that would have a direct impact on our same property NOI growth.

Thank you everyone for joining the first quarter of 2020 conference call for Slate Office REIT. Have a great day.