TD COMMENYS ON ARTIS ERArtis REIT (AX.UN-T) C$5.61 Q4/23 First Look: Results in Line; +9.2% SPNOI Growth Jonathan Kelcher, CFA Golden Nguyen-Halfyard, (Associate) Event Q4/23 Results. Conference call at 1:00 PM ET today (416-764-8688). Impact: NEUTRAL Our take: Artis' portfolio continues to produce solid results, highlighted by strong 9.2% SPNOI growth in Q4 and 7.6% in 2023. Management continued to make good progress on dispositions, having sold/announced nearly $500mm in assets since the commencement of its strategic review in August, including $222mm announced in December (link). While the strategic review remains ongoing, management does not anticipate a sale of the entire REIT, but does expect to continue to sell individual assets (focused on industrial/retail). FFO/unit (f.d.) of $0.251 was -18% y/y and largely in line with our $0.256 estimate (consensus: $0.267). AFFO/unit (our calculation) of $0.14 was -5% versus our estimate. Operating Highlights Q4/23 Portfolio SPNOI was +9.2% (Q3/23: +6.0%) and +9.0% in functional currency. Canada was +9.0%, while the U.S. increased +9.1% (+9.4% in CAD). Office was +4.3%, Industrial +17.6% (+350bps in y/y occupancy gains), and Retail +12.4%. In-place occupancy increased 20bps q/q to 90.1% with increases in Industrial (+70bps to 97.7%) and Retail (+20bps to 87.3%) partially offset by a decline in Office (-30bps to 83.9%). Renewal rental rates were healthy at +5.8% (Q3/23: +3.5%) on 261,889sf, marking the twelfth consecutive quarter of positive renewal spreads. Acquisitions/Dispositions Post Q4, closed on the sale of three Winnipeg assets (one industrial, office, and retail) for $38mm, and acquired the remaining 5% interest in Park 8Ninety V for US$9mm. Equity securities. Post Q4, sold ~$27mm in equity securities and purchased $1.7mm. 2023 and YTD 2024 sales total ~$152mm. Balance Sheet De-consolidated leverage (D/GBV) increased 120bps q/q to 56.7% (our calc), largely on IFRS write-downs. We expect Artis to remain active on the disposition front, with the goal of reducing leverage. Artis recorded a $120mm (excluding JVs) IFRS FV loss in Q4 largely on q/q increases in cap rates. Industrial was +13bps to 6.32%, Office was +29bps to 7.67% and Retail was +9bps at 6.96%. IFRS NAV/unit fell 8.5% q/q to $13.96 (Q3/23: $15.26). Artis completed its NCIB in Q4 and subsequently renewed the program in December.