Canadian Net Real Estate Investment Trust (NETUN) Earnings Call Transcript & Summary

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2021 was full of milestones for the REIT. We once again demonstrated our ability to raise capital and deploy it efficiently to achieve best-in-class per unit FFO growth. We continue to find opportunities that fall within our niche to grow the portfolio, diversify the tenant base, grow our free cash flow and deliver unitholder returns. At this point, we can safely say that the effects of COVID-19 pandemic have not impacted the REIT in a material manner, and we have showcased the resilience of the portfolio, which is comprised of essential retailers who have prospered over the course of the last 2 years. I believe that 2021 will be remembered as a year of opportunity and discipline. We witnessed record cap rate compression across all asset classes and increased investor demand for essential service retail properties. However, during a record low interest rate environment, the spreads between cap rates and interest rates remain compelling. Our strategy has always been to invest in properties backed by solid real estate fundamentals while conservatively pairing the assets with long-term debt in order to minimize the volatility of our cash flows. During 2021, we took advantage of approximately $30 million of new mortgages at an average rate of 3.55% and an average term to maturity of 8 years. Year-over-year, the trust recorded a per unit increase in our recurring FFO of 20%. This is the result of the growth we have achieved by deploying our capital into accretive acquisitions and developments. This allowed us to once again raise distributions headed into 2022 by 13% per unit, all while continuing to maintain 1 of the most conservative payout ratios among our peers. On a nominal basis, our NOI has increased by 45% and the value of our investment properties by 35%. Our occupancy rate remains above 99%, and our lean overhead has allowed us to continuously achieve a sub-1% management expense ratio. In 2021, our first ever bought deal offering of our units for gross proceeds of $21.1 million was completed. This offering was well received by institutional and retail investors alike. And once again, our insiders subscribed for a generous amount. These fully subscribed offerings allowed us to partly complete 17 acquisitions in 2021 and another 8 in early 2022. It is clear that the capital raises were done on an accretive basis given that we put the money to work quickly. I would like to highlight the additions to our tenant roster during 2021. We added the Food Basics banner to the portfolio this year, which is a subsidiary of Metro in Ontario. In addition, we continue to partner alongside one of our tenants with the purchase of 7 parts of the land for development of Benny&Co. locations. Finally, in December 2021, we completed our largest single property acquisition to date, the acquisition of a $23.4 million Walmart in Collingwood, Ontario. Crossing over in 2022, as mentioned earlier, we continue to add some of the regulars to the portfolio and find opportunities with properties that continue to fit the mold and which will deliver unitholder returns. With this, from 1,000 feet up to date, our portfolio consists of 99 properties across 3 provinces and various growing and stable markets. I would now like to open the line to any questions.

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