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1、2024TSX:AX.UNARTIS REAL ESTATE INVESTMENT TRUSTANNUAL REPORTLetter To Unitholders.2Artis At A Glance.9Vision and Strategy.10Portfolio and operational performance.12Balance sheet and Financial performance.16Capital allocation.18Environmental,Social and governance.21outlook.24corporate information.24
2、Managements discussion&analysis.27consolidated financial statements.67DISCLAIMER AND FORWARD-LOOKING STATEMENTS All figures are presented in Canadian dollars unless otherwise noted.The information in this Annual Report should be read in conjunction with Artis Real Estate Investment Trusts(“Artis”or
3、the“REIT”)audited annual consolidated financial statements for the years ended December 31,2024,2023 and 2022 and the REITs annual Managements Discussion and Analysis(“MD&A”)for 2024,2023 and 2022.These documents are available on SEDAR+at www.sedarplus.ca or on Artiss website at .Certain statements
4、contained in this Annual Report are“forward-looking statements”within the meaning of applicable securities laws.Forward-looking statements reflect managements expectations regarding the future growth,results of operations,performance,prospects and opportunities of Artis.Without limiting the foregoin
5、g,the words“expects”,“anticipates”,“intends”,“estimates”,“projects”,and similar expressions are intended to identify forward-looking statements.Readers are cautioned not to place undue reliance on forward-looking statements.All statements other than statements of historical fact contained or incorpo
6、rated by reference herein may be deemed to be forward-looking statements including,without limitation,statements regarding the timing and amount of distributions and the future financial position,business strategy,potential acquisitions and dispositions,plans and objectives of Artis.Such forward-loo
7、king statements reflect managements current beliefs and are based on information currently available to management.Artis cannot assure investors that actual results will be consistent with any forward-looking statements and,other than as required by applicable law,Artis assumes no obligation to upda
8、te or revise such forward-looking statements to reflect actual events or new circumstances.All forward-looking statements contained in this Annual Report are qualified by this cautionary statement.Forward-looking statements may involve significant risks and uncertainties.A number of factors could ca
9、use actual results to differ materially from the results expressed or implied in forward-looking statements including risks relating to the REITs strategy,real property ownership,geographic concentration,current economic conditions,strategic initiatives,pandemics and other public health events,debt
10、financing,interest rate fluctuations,foreign currency,tenants,specified investment flow-through(“SIFT”)rules,other tax-related factors,illiquidity,competition,reliance on key personnel,future property transactions,general uninsured losses,dependence on information technology systems,cyber security,e
11、nvironmental matters and climate change,public market,market price of units,changes in legislation and investment eligibility,availability of cash flow,fluctuations in cash distributions,the nature of trust units,legal rights attaching to trust units,preferred units,debentures,dilution,unitholder li
12、ability,failure to obtain additional financing,developments,and trustees.Refer to the section entitled“Risks and Uncertainties”in the REITs 2024 Annual MD&A and the section entitled“Risk Factors”in the REITs Annual Information Form dated March 6,2025,for additional information regarding risks and un
13、certainties.NOTICE WITH RESPECT TO NON-GAAP&SUPPLEMENTARY FINANCIAL MEASURES DISCLOSUREIn addition to reported International Financial Reporting Standards(“IFRS”)measures,certain non-GAAP and supplementary financial measures are commonly used by Canadian real estate investment trusts as an indicator
14、 of financial performance.“GAAP”means the generally accepted accounting principles described by the CPA Canada Handbook-Accounting,which are applicable as at the date on which any calculation using GAAP is to be made.Artis applies IFRS,which is the section of GAAP applicable to publicly accountable
15、enterprises.Non-GAAP measures and ratios include Same Property Net Operating Income(“Same Property NOI”),Funds From Operations(“FFO”),Adjusted Funds from Operations(“AFFO”),FFO per Unit,AFFO per Unit,FFO Payout Ratio,AFFO Payout Ratio,Net Asset Value(“NAV”),NAV per Unit,Gross Book Value(“GBV”),Total
16、 Debt to GBV,Adjusted Earnings Before Interest,Taxes,Depreciation and Amortization(“Adjusted EBITDA”),Adjusted EBITDA Interest Coverage Ratio and Total Debt to Adjusted EBITDA.Management believes that these measures are helpful to investors because they are widely recognized measures of Artiss perfo
17、rmance and provide a relevant basis for comparison among real estate entities.These non-GAAP and supplementary financial measures are not defined under IFRS and are not intended to represent financial performance,financial position or cash flows for the period,nor should any of these measures be vie
18、wed as an alternative to net income,cash flow from operations or other measures of financial performance calculated in accordance with IFRS.For a full description of these measures and a reconciliation to the most directly comparable measure calculated in accordance with IFRS,please refer to the“Not
19、ice with Respect to Non-GAAP and Supplementary Financial Measures Disclosure”section in the REITs 2024 Annual MD&A.EQUITY ACCOUNTED INVESTMENTSAt December 31,2024,the REITs portfolio was comprised of 88 commercial properties totalling approximately 10.0 million square feet of gross leasable area.The
20、 REIT also owns one commercial/residential property,300 Main,and has joint ownership interest in nine investment properties,one parcel of development land and properties acquired as part of the acquisition of Cominar Real Estate Investment Trust(the“Cominar Transaction”),which have been excluded fro
21、m financial and operating metrics throughout this Annual Report,unless otherwise noted.Refer to the Residential Portfolio and Equity Accounted Investments sections of the 2024 Annual MD&A for further information.ON THE COVER:300 MAIN Winnipeg,Manitobatable of contents300 MAIN Winnipeg,Manitoba 2024
22、Annual Report|3 2|Artis Real Estate Investment TrustSAMIR MANJI President&Chief Executive OfficerLetter to UnitholdersLetter to UnitholdersFellow Unitholders:The current geopolitical and economic climate has us living in interesting,yet challenging and uncertain times.It also has us feeling both ple
23、ased and relieved with what we achieved in 2024 a year of monumental change for Artis.Despite the significant headwinds we faced,the quality and resilience of Artiss portfolio enabled us to monetize nearly$1.0 billion of real estate,thereby materially reducing leverage and strengthening our balance
24、sheet.As we reflect on the past year,we cannot overlook the evolving commercial real estate market and key trends and developments that have influenced our strategic decisions and impacted our performance.Heading into 2024,external factors continued to impact the broader real estate sector,including
25、 Artis.Economic uncertainty,speculation about an impending recession,persistent inflation levels,and rising interest rates created a challenging environment to navigate.Interest rates have been a focal point of economic policy and market sentiment over the last several years,and 2024 was no exceptio
26、n.After just over two years of rising interest rates with Canadas central banks overnight lending rate peaking at 5.0%,the Bank of Canada announced the first key rate cut on June 5,2024.Since then,the key rate has been cut significantly to 2.75%.The correlation between interest rates and inflation h
27、as been an important factor in shaping market dynamics,sentiment,and investment strategies.The 2024 Canadian commercial real estate market has shown resilience amidst a backdrop of economic challenges and evolving monetary policies.We continue to see a flight to quality within the office sector as c
28、ompanies review their space requirements with the intention of rightsizing to suit their current needs.We believe that the office sector will stabilize over time.Industrial real estate remains robust,while retail markets,particularly open-air service-oriented retail,are steady,as they have historica
29、lly been.Operationally,our portfolio demonstrated stability throughout 2024.During the year,454,256 square feet of new leases and 740,424 square feet of renewals commenced,with weighted-average renewal rents negotiated at a 2.6%increase above expiring rents.We ended the year with occupancy(including
30、 commitments)of 89.2%.Mindful of macroeconomic factors and Artiss debt profile,our primary objective over the last several years has been to strengthen the balance sheet,reduce leverage,enhance liquidity,and grow net asset value(“NAV”)per unit.We focused on the things within our control in order to
31、achieve our fundamental goal of maximizing value for unitholders.In August 2023,Artis announced that its Board of Trustees(the“Board”)had established a special committee to conduct a strategic review(the“Strategic Review”)to consider and evaluate strategic alternatives that may be available to unloc
32、k value for unitholders.During the Strategic Review,Artis made substantial progress with its disposition strategy,strengthened its balance sheet,and improved its risk profile related to upcoming debt obligations.In addition to the dispositions noted above,we finalized terms on new,three-year,senior
33、secured credit facilities in an aggregate amount of$520.0 million,including a$350.0 million revolving credit facility and a$170.0 million non-revolving credit facility.With the interest rate environment beginning to improve in the latter half of the year,the Board decided to conclude the Strategic R
34、eview in December 2024,believing it was in the best interest of Artis and its unitholders to continue to pursue the existing business strategy.Ultimately,2024 was a challenging year full of change and evolution,but also progress.We had many successes in the year and in this annual letter,I will prov
35、ide an update on our key accomplishments in 2024 and share my expectations and aspirations for the road ahead.YEAR IN REVIEWFor several years,we have focused on strengthening our balance sheet by reducing leverage and enhancing liquidity.Our ultimate objective is to narrow,and over time eliminate,th
36、e gap between the intrinsic value of our units and their trading price.Below is a summary of our significant capital allocation initiatives in 2024.Disposition StrategyIn 2024,we sold 15 properties,two parking lots,and a parcel of development land in Canada,and 17 properties in the US for a total of
37、 almost$1.0 billion.The sale prices were,on balance,in line with the IFRS fair values most recently reported in the quarter prior to the respective disposition.Also,during the year,we sold our ownership interest in Park Lucero East,an industrial development in the Greater Phoenix Area,Arizona.Artis
38、had a 10%ownership interest and a development management contract in place for this project.The development was highly successful and,upon achieving 100%occupancy,we elected to monetize the asset to pursue other strategic capital allocation initiatives.The structure of the development contract also
39、generated one-time income recorded in 2024.We continue to see healthy demand for quality,well-performing,well-located real estate.The quality of our real estate portfolio,and the ongoing demand for attractive and well-located real estate,is affirmed by the success of our disposition strategy and the
40、 pricing we have been able to achieve.Our disposition strategy is an important component of our overall business plan.The liquidity generated from asset sales provides flexibility to pursue capital allocation initiatives that support our objectives and our commitment to unitholders.Equity Securities
41、 InvestmentsAn equally important aspect of Artiss value-investing strategy is our investment in equity securities of other publicly traded companies or real estate investment trusts.Specifically,our focus is on investing in public securities of companies that we believe to be undervalued because of
42、a disconnect between the companys or trusts trading price and the actual NAV per share or unit that the company or trust is worth.This provides an attractive opportunity to acquire an ownership percentage of companies or trusts that have exceptional properties in attractive,well-performing markets a
43、t what is often a significant discount to what it would ultimately cost to buy these properties directly.Considering the evolving economic environment and the significant impact it has had on the real estate industry,we continuously review our existing equity investments and potential investments.In
44、 doing so,we aim to strike the right balance,from a capital allocation standpoint,between achieving our objectives of enhancing liquidity and strengthening our balance sheet and pursuing opportunities that we believe position us for future growth.At December 31,2024,our equity securities investments
45、 carried an aggregate fair value of$84.8 million,compared to$152.0 million at December 31,2023.During the year,to achieve our liquidity objectives,we monetized certain securities and crystallized the gains on these securities in order to position Artis to pursue other capital allocation initiatives,
46、including paying down debt and utilizing our normal course issuer bid(“NCIB”).The year-over-year decrease in the total fair value of equity securities is primarily due to the sale of equity securities,partially offset by equity securities purchases and fair value gains.In 2022,as part of our value-i
47、nvesting strategy,Artis and a consortium of partners acquired and privatized Cominar Real Estate Investment Trust(“Cominar”).At the time,we saw this as an opportunity to acquire quality,well-located real estate for much less than its true value.This investment has been significantly impacted by the
48、interest rate environment over the past three years.We are actively engaged in addressing the structural challenges that the investor group is facing and anticipate resolving this matter in the near term.Until then,we have followed accounting principles to book an expected credit loss that we believ
49、e reflects a conservative estimate related to our preferred investment.Since December 2024,there have been discussions with interested parties to acquire either a portion or the entire portfolio of investment properties,with a resolution to settle the outstanding senior and junior preferred units.Th
50、e settlement may include a discount to the senior and junior preferred units.As more information becomes available,Artis will adjust the allowance in future reporting periods,as appropriate.4|Artis Real Estate Investment TrustNormal Course Issuer BidOur NCIB is one of the most effective tools availa
51、ble to enhance unitholder value.During the last four NCIB terms,we acquired the maximum number of common units allowable.With our units continuing to trade on the market significantly below our NAV per unit,utilizing our NCIB is a low-risk use of capital that increases both intrinsic value and our i
52、nvestors effective ownership interest in Artis.Under the most recent NCIB term that expired on December 18,2024,we acquired 7,021,296 units at a weighted-average price of$7.03 per unit,which is a significant discount to our NAV per unit of$13.75 at December 31,2024.We also acquired 311,500 Series E
53、preferred units at a weighted-average price of$17.74 per unit and 342,084 Series I units at a weighted-average price of$18.69 per unit.We expect to continue allocating capital to buy back units using our NCIB throughout the year to further enhance unitholder value.Real Estate HoldingsIn 2024,we sold
54、 properties to help achieve our balance sheet and liquidity goals.Through this active disposition exercise,we materially reduced leverage and de-risked Artiss balance sheet.Continuing on the path of reducing leverage and enhancing liquidity will provide us with greater flexibility to consider alloca
55、ting capital to opportunities that we believe provide us with above-average,risk-adjusted returns.From a capital allocation standpoint,we remain committed to maintaining a meaningful allocation of our capital to direct ownership of income-producing real estate assets.Balance Sheet and LiquidityWe en
56、ded 2024 with liquidity of$297.8 million(compared to$164.2 million at December 31,2023).This included$32.8 million of cash on hand and$265.0 million available to be drawn on the secured revolving term credit facility,which Artis plans on utilizing to repay the$200.0 million Series E debenture maturi
57、ng in April 2025.During the year,we repaid mortgages in the amount of$20.3 million,repaid mortgages related to property dispositions in the amount of$257.1 million,and received new mortgage financing in the amount of$24.3 million.We ended the year with total debt of$1.1 billion,compared to$1.9 billi
58、on at December 31,2023.With proceeds from property sales used primary to reduce debt,we materially improved debt to gross book value(“GBV”)from 50.9%at December 31,2023,to 40.2%at December 31,2024.At December 31,2024,NAV per unit was$13.75,compared to$13.96 at December 31,2023.This change is primari
59、ly due to distributions made to unitholders,interest expense,expected credit loss on preferred investments,fair value loss on investment properties,and corporate expenses,partially offset by net operating income,the impact of foreign exchange,units purchased under the NCIB,interest and other income,
60、the fair value gain on financial instruments,and distribution income from equity securities.THE ROAD AHEADI am very pleased with the progress we have made over the last year towards reducing leverage and de-risking our balance sheet,given the headwinds we faced and the new factors that have surfaced
61、 in 2025 that are creating an uncertain and volatile economic climate.At a macro level,the interest rate environment has improved significantly in recent months as reflected in government bond yields,with the Government of Canada five-year yield now well below 3%.With the tides turning on interest r
62、ates and a stronger balance sheet and improved liquidity,we are better positioned to pursue opportunities that we believe will produce above-average,risk-adjusted returns for our unitholders.Despite our healthier balance sheet and lower leverage,our units continue to trade at a significant discount
63、to NAV.We remain committed to our pursuit of narrowing this gap.Volatility in global markets has returned to levels last seen during the 2020 global pandemic,so we will focus on what is within our control our business as further detailed below.Key Performance IndicatorsOur key performance indicators
64、 are NAV per unit,adjusted funds from operations(“AFFO”)per unit,AFFO payout ratio,debt to GBV,and distributions per unit.As we have conveyed in the past,given the nature of our strategy,we expect FFO and AFFO to be lumpy from quarter to quarter.In 2025,we are committed to further strengthening our
65、balance sheet and increasing liquidity.This will enable us to pursue opportunities and allocate capital to initiatives that we believe will achieve the highest possible return over time,with an ultimate goal of growing NAV per unit.Drive Organic GrowthOrganic growth continues to be an important comp
66、onent of our strategy.In the near term,our two main objectives for driving organic growth are:1)managing our existing portfolio to achieve optimal efficiency;and 2)improving our portfolios income profile by extracting the maximum value from each individual asset.Establishing strong relationships wit
67、h our tenants is critical to the success of Artiss organic growth goals.Ensuring that our tenants space is aligned with and complimentary to their business strategies and overall needs is a high priority.Tenant engagement is fostered through various communication channels,including Artiss company we
68、bsite and LinkedIn profile.The Artis property management team also utilizes various tools and methods to meet and engage with tenants.In 2024,we conducted our third annual tenant satisfaction survey.The results from this annual survey provide us with valuable feedback and allow us to ensure that we
69、are providing the best possible service to our tenants.We look forward to sharing more information about the survey results in our upcoming ESG Report.Normal Course Issuer BidEffective December 19,2024,we renewed our NCIB.Under the terms of this bid,we can acquire up to 4,975,917 common units,291,56
70、0 Series E preferred units,and 421,775 Series I preferred units.On December 19,2024,we entered into an Automatic Purchase Plan,allowing us to purchase common and preferred units under the NCIB at times when we would otherwise not be in the market due to company-imposed trading blackout periods.Our N
71、CIB continues to be one of the most effective tools available to enhance unitholder value.With our units continuing to trade on the market at a price that is significantly below our NAV per unit,utilizing our NCIB is beneficial to our unitholders and is a low-risk use of capital.We expect to continu
72、e using our NCIB to buy back our units,so long as a discount to NAV of this magnitude persists.Letter to Unitholders1903 TURVEY ROAD Regina,Saskatchewan2024 Annual Report|7Environmental,Social and GovernanceArtis is committed to conducting its business in a sustainable manner,with a focus on continu
73、ous and measurable improvement and transparency in all areas of its environmental,social,and governance(“ESG”)performance.In addition to operational efficiencies that can be achieved by implementing sustainability initiatives,analysis of environmental risks(including both physical and transitional c
74、limate risks)allows us to be proactive in our allocation of capital,with a focus on ensuring our properties are best positioned to produce long-term sustainable growth for our unitholders.Our commitment to sustainability extends to all aspects of overall ESG.Across our organization,we are committed
75、to making ESG a focal point and establishing a company-wide ESG-minded culture at Artis.Over the last several years we have made significant progress towards our goal of ensuring Artiss sustainability program and initiatives are aligned with best practices,and 2024 was no exception.We are pleased wi
76、th the progress we have made so far and we acknowledge that there will always be opportunities to improve in this ever-evolving area.We look forward to providing a more fulsome update on the progress made over the last year in our 2024 ESG Report,to be published in the coming months.FINAL THOUGHTS A
77、ND OUR ANNUAL GENERAL MEETINGNeedless to say,2024 was a very busy and productive year at Artis.It was highlighted by the successful completion of a very ambitious disposition and debt reduction plan that we established for the year and the end of the“higher-for-longer”interest rate stance taken by t
78、he Bank of Canada.Last year,we said that success in executing our disposition plan will provide greater flexibility and will put us in a position where we can move from defence to offence.I believe that is where we are today as we approach the end of the first quarter of 2025.The Board and managemen
79、t team understand that Artiss unit price continues to trade at a significant discount to its NAV per unit.None of us are pleased with this and we remain committed to considering and exploring all options and opportunities available to address this issue.I believe the positive evolution in the intere
80、st rate environment will be a catalyst for M&A activity to pick up in the public real estate space.Lower interest rates typically translate into lower cap rates on the transaction front,yet we see public REITs and real estate operating companies(“REOCs”)continuing to trade at significant discounts.T
81、his will inevitably either lead to a correction in the public markets or serve as serious motivation to private capital allocators to arbitrage the massive disconnect by pursuing privatization of public entities.I firmly believe this is not an“if”,but a“when”.Nobody can predict the exact timing,but
82、I believe we will see this materialize and,when it does,the unitholders/shareholders of any REIT/REOC that becomes the target of a privatization exercise will benefit from this.In the meantime,they will enjoy the distribution/dividend they receive and will therefore be in the always enviable positio
83、n of getting paid while they wait!As quoted in my letter last year,Warren Buffett once said that“its far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.Today,the REIT/REOC universe is filled with“wonderful”REITs/REOCs.Even at what Warren Buffett refers to
84、 as a“fair price”,these companies would sell for meaningful premiums to their current trading prices.As I said last year,there is no guarantee this will happen;however,I do believe that the longer the disconnect in trading values to NAV persists,the greater the likelihood we will begin to see“wonder
85、ful”REITs/REOCs getting cherry-picked through“go private”exercises.Lower interest rates combined with the substantial dry powder currently on the sidelines and ready to go to work will make these privatizations almost a certainty,in my view.When we announced a new vision and strategy for Artis four
86、years ago,some people were excited about our unconventional plan while others were hesitant,if not outright opposed.We knew we would have to earn peoples trust through successful execution and results.External factors have made the past three years very difficult,but history has demonstrated that th
87、ere will always be ebbs and flows,periods of time when the economy provides tailwinds for our business and periods when it creates headwinds.We will continue to focus on the big picture.This means focusing on the value of our units,not the price of our units.We are confident that with the right plan
88、 and its effective execution,we will be able to narrow the gap between the value and price of our units,and our owners will be rewarded in the long term.We will continue to stay true to the commitment we presented to our owners in March 2021.This will require patience,a fundamental criteria of value
89、 investing.We know this patience is not easy to maintain,but I believe we will see the benefit on the other side as interest rates continue to decrease and real estate values begin to increase.Most importantly,thank you for trusting us with your capital.While we still have a lot of work ahead of us,
90、we look forward to a successful 2025 with even greater determination and resolve to work hard for our unitholders and to close the gap between Artiss trading price and the intrinsic value of our units.In closing,on behalf of the Board and management,I would like to extend an invitation to all our st
91、akeholders to join us at our next annual general meeting,to be held at the Hilton Toronto hotel in downtown Toronto,Ontario,at 2:00 pm ET on May 27,2025.I look forward to seeing you there.Letter to UnitholdersSamir A.Manji President&Chief Executive Officer1212 DEMING WAY Madison,Wisconsin40.2%total
92、debt to gbv$300Mrevenue$I3.75NAV PER UNIT$0.65AFFO per unit$1.05FFO per unit92.3%affo payout ratio57.1%ffo payout ratio$2.8Btotal assetsAnnualDistributionGrossLeasable area$0.60Per Common Unit$0.60Per Common Unit88Total Number88Total Number10.0Million Sq.Ft.PropertiesFOR THE THREE MONTHSENDED DECEMB
93、ER 31,2024NETOPERATINGINCOME BYCOUNTRYU.S.54.5%Canada45.5%AS AT DECEMBER 31,2024GROSS LEASABLE AREA BY COUNTRYU.S.50.5%Canada49.5%2024 Annual Report|9Artis at a Glance300 MAIN360 MAIN330 MAINArtis Real Estate Investment Trust is a diversified commercial real estate investment trust and is an unincor
94、porated closed-end real estate investment trust created under,and governed by,the laws of the Province of Manitoba.The REIT was created pursuant to the Declaration of Trust dated November 8,2004,as most recently amended and restated on December 19,2021.Artiss common units trade on the Toronto Stock
95、Exchange(“TSX”)under the symbol AX.UN and the REITs preferred units trade under the symbols AX.PR.E and AX.PR.I.Artiss common units also trade in the United States on the OTCQX Best Market(“OTCQX”)under the symbol ARESF.Artis owns a portfolio of industrial,office and retail properties in Canada and
96、the United States.At December 31,2024,the REITs portfolio comprised 88 commercial properties totalling approximately 10.0 million square feet of gross leasable area.Artis at A Glance key financial metricsAs at or for the year ended December 31,2024300&360 MAIN Winnipeg,Manitoba 10|Artis Real Estate
97、Investment TrustVision and StrategyVISIONArtiss vision is to become a best-in-class real estate asset management and investment platform focused on value investing.BUSINESS STRATEGYArtiss strategy is to generate meaningful long-term growth in NAV per unit by strengthening its balance sheet,driving o
98、rganic growth and value investing.As part of this strategy,Artis will concentrate its ownership in the highest and best risk adjusted return opportunities in an effort to maximize long-term value for unitholders.STRATEGIC REVIEWOn August 2,2023,the Board established a Special Committee to initiate a
99、 strategic review process(the“Strategic Review”)to consider and evaluate alternatives that may be available to the REIT to unlock and maximize value for unitholders.On December 12,2024,the Board announced that the strategic review process had concluded.During the Strategic Review,Artis made substant
100、ial progress with its disposition strategy,strengthening its balance sheet and improving its risk profile related to upcoming debt obligations.At a macro level,the interest rate environment improved significantly in the months leading up to the announcement of the conclusion of the Strategic Review.
101、In light of these factors,in connection with the conclusion of the Strategic Review,the Board announced that it believes it is in the best interest of Artis and its unitholders to continue to pursue the REITs existing business strategy.Further details regarding the progress that was achieved during
102、the Strategic Review are highlighted throughout this report.Vision and StrategyMAX AT KIERLAND Scottsdale,ArizonaARIZONA5 properties0.9 million sq.ft.BRITISH COLUMBIA2 properties0.2 million sq.ft.ALBERTA24 properties1.6 million sq.ft.SASKATCHEWAN5 properties0.5 million sq.ft.MANITOBA30 properties2.7
103、 million sq.ft.WISCONSIN14 properties1.7 million sq.ft.MINNESOTA7 properties1.9 million sq.ft.TEXAS1 property0.5 million sq.ft.by state/province by ASSET CLASSOffice53.2%Industrial34.1%Retail12.7%Manitoba26.6%Minnesota18.5%Wisconsin17.4%Texas5.2%Arizona9.4%Alberta15.6%Saskatchewan4.9%British Columbi
104、a2.4%2024 Annual Report|13 12|Artis Real Estate Investment TrustOn December 31,2024,Artiss portfolio comprised 88 properties totalling 10.0 million square feet of gross leasable area.The REITs portfolio includes industrial,office and retail properties located across four provinces and four states in
105、 Canada and the United States(“U.S.”).At December 31,2024,Canadian assets account for 49.5%of the portfolio by gross leasable area,while 50.5%of the portfolio by gross leasable area is located in the U.S.By asset class,Artiss office portfolio accounts for 53.2%of the REITs gross leasable area,while
106、industrial assets represent 34.1%and retail assets represent 12.7%.The REIT also owns one commercial/residential property,300 Main,and has joint ownership interest in nine investment properties,one parcel of development land and properties acquired as part of the Cominar Transaction.These have been
107、excluded from financial and operating metrics throughout this Annual Report,unless otherwise noted.Portfolio and Operational PerformanceIn 2024,Artiss portfolio continued to maintain a healthy occupancy level of nearly 90%(including commitments)throughout the year.At December 31,2024,occupancy inclu
108、ding commitments was 89.2%.During the year,approximately 1.2 million square feet of lease transactions(including new leases and renewals)commenced.The weighted-average increase in rental rates achieved on renewals that commenced during the year was 2.6%.A manageable 12.3%of Artiss gross leasable are
109、a(excluding properties held for redevelopment)expires in 2025,24.7%of which was renewed or committed to new leases at the end of 2024.Maximizing tenant retention is a key area of focus in order to ensure consistent income stream and reduce turnover cost.To promote retention,Artiss property managers
110、work closely with tenants,fostering long lasting relationships while ensuring their space is aligned with their business strategy and overall needs.Portfolio and Operational PerformancePortfolio and Operational PerformancePortfolioBy Gross Leasable Area as at December 31,20240.00.10.20.30.40.550%40%
111、30%20%10%20252026202720282029+60%Total PortfolioRetailOfficeIndustrial2024 Annual Report|15 14|Artis Real Estate Investment TrustArtis has 706 tenant leases in its portfolio with a weighted-average term to maturity of 5.1 years.The properties have a diverse tenant base,with the top 20 tenants repres
112、enting 37.6%of the REITs total gross revenue(in Canadian and U.S.dollars)and 31.9%of the total gross leaseable area of the portfolio.The weighted-average remaining lease term of the REITs top 20 tenants is 6.4 years.As part of Artiss strategy to build a best-in-class asset management and investment
113、platform focused on growing net asset value per unit for investors through value investing,Artis will classify certain assets as core long-term real estate holdings while identifying opportunities within the portfolio to unlock value through the monetization of non-core assets.The objective of asset
114、 sales is to optimize the portfolio to align with the strategy while providing the resources to reduce debt and the flexibility to execute Artiss value-investing strategies.Core long-term real estate holdings are expected to:(i)generate strong income and cash flow for Artis and its owners,(ii)produc
115、e healthy rental rate growth and corresponding bottom line performance,and(iii)continue to perform well.With respect to capital allocation,Artis is committed to maintaining a meaningful allocation of its capital to direct ownership of income-producing real estate.During 2024,Artis sold seven office
116、properties,seven retail properties,one industrial property,two parkades,and a parcel of development land located in Canada and 14 industrial properties and three office properties located in the United States for an aggregate sale price of$972.9 million.At December 31,2024,the REIT had two industria
117、l properties and two retail properties located in Canada under unconditional sale agreements for an aggregate sale price of$70.2 million.These dispositions closed in January 2025.For further information about asset sales in 2024,see the Capital Allocation section of this Annual Report.Top 10 Tenants
118、lease expiries by yearBy Gross Leasable Area(1)In Canadian and U.S.dollarsTenant%of Total Gross Revenue(1)Weighted-Average Lease Term in YearsGOVERNMENT5.6%6.33.9%5.53.2%9.82.5%11.62.2%7.92.1%2.01.9%6.91.9%5.01.6%4.71.6%8.6726 HEARTLAND TRAIL Madison,WisconsinPortfolio and Operational PerformanceNET
119、 OPERATING INCOMEFOR THE THREE MONTHS ENDED DECEMBER 31,2024Retail/Residential17.0%Industrial23.8%Office59.2%Senior UnsecuredDebentures7.4%Unitholders Equity58.3%Mortgages25.1%Credit Facilities9.2%TOTAL CAPITALIZATIONAS AT DECEMBER 31,20242024 Annual Report|17 16|Artis Real Estate Investment Trustse
120、lected financial information000S,EXCEPT PER UNIT AMOUNTS(AS AT DECEMBER 31)202420232022Total assets$2,803,161$3,735,030$4,553,913Total non-current financial liabilities636,5031,047,231974,063NAV per unit(1)13.7513.9617.38Secured debt to GBV(1)33.1%24.3%18.9%Total debt to GBV(1)40.2%50.9%48.5%(1)Incl
121、udes the special distribution declared in December 2022.(2)Represents a non-GAAP measure or non-GAAP ratio.Refer to the Notice with Respect to Non-GAAP&Supplementary Measures Disclosure section of the 2024 Annual MD&A.(1)Represents a non-GAAP measure,non-GAAP ratio or supplementary financial measure
122、.Refer to the Notice with Respect to Non-GAAP&Supplementary Measures Disclosure section of the 2024 Annual MD&A.Balance Sheet and Financial PerformanceBalance Sheet and Financial Performance000S,EXCEPT PER UNIT AMOUNTS(YEAR ENDED DECEMBER 31)202420232022Revenue$300,369$335,837$372,512Net operating i
123、ncome163,231184,017209,980Net loss(47,414)(332,068)(5,294)Total comprehensive income(loss)32,182(364,399)105,537Basic loss income per common unit(0.57)(3.10)(0.18)Diluted loss income per common unit(0.57)(3.10)(0.19)Distributions per unitCommon units(1)$0.60$0.60$0.76Preferred unitsSeries A-1.06Pref
124、erred unitsSeries E1.801.481.37Preferred unitsSeries I1.751.671.50FFO(2)$111,417$99,856$164,791FFO per unit-diluted(2)1.050.891.39FFO payout ratio(2)57.1%67.4%43.2%AFFO(2)$68,461$49,315$112,552AFFO per unit-diluted(2)0.650.440.95AFFO payout ratio(2)92.3%136.4%63.2%Same Property NOI growth(2)0.8%7.6%
125、1.8%Adjusted EBITDA interest coverage ratio(2)2.152.082.98Balance Sheet and Financial PerformanceA critical component of Artiss strategy is the strengthening of the REITs balance sheet to provide liquidity and flexibility to navigate the current environment and to capitalize on opportunities that al
126、ign with Artiss overall strategy.In line with the REITs objectives,in 2024,Artis sold seven office properties,seven retail properties,one industrial property,two parkades and a parcel of development land located in Canada and 14 industrial properties and three office properties located in the United
127、 States for an aggregate sale price of$972.9 million.At December 31,2024,the REIT also had two industrial properties and two retail properties located in Canada under unconditional sale agreements for an aggregate sale price of$70.2 million which closed in January 2025.Under the NCIB that expired on
128、 December 18,2024,Artis purchased 7,021,296 common units at a weighted-average price of$7.03.The REIT renewed the NCIB effective December 19,2024 and,under the terms of the NCIB,the REIT may purchase a maximum of 4,975,917 common units,291,560 Series E preferred units and 421,775 Series I preferred
129、units.As at December 31,2024,the REIT had purchased 206,703 common units at a weighted-average price of$7.26 under the current term.The common units were purchased at a significant discount to NAV per unit of$13.75 at December 31,2024.In December 2024,Artis entered into a secured credit facility agr
130、eement in the aggregate amount of$520.0 million which included a$350.0 million revolving credit facility and a$170.0 million non-revolving credit facility.The REIT drew$85.0 million on the revolving credit facility and$170.0 million on the non-revolving credit facility and used the proceeds to repay
131、 the outstanding unsecured non-revolving credit facilities.During the year,Artis repaid mortgages in the amount of$20.3 million,repaid mortgages related to property dispositions in the amount of$257.1 million and received new mortgage financing in the amount of$24.3 million.Artis reported total debt
132、 to GBV of 40.2%at December 31,2024,improved from 50.9%at December 31,2023.At December 31,2024,Artiss liquidity included$32.8 million of cash on hand and$265.0 million available to be drawn on the REITs secured revolving credit facility,which Artis plans on utilizing to repay the$200.0 million Serie
133、s E debenture maturing in April 2025.Artiss primary objective is to generate meaningful and long-term growth in NAV per unit.In accordance with this objective,NAV is a critical area of focus and an important key performance indicator for Artis.At December 31,2024,Artiss NAV per unit was$13.75,compar
134、ed to$13.96 at December 31,2023.The change is primarily due to distributions made to unitholders,interest expense,expected credit loss on preferred investments,fair value loss on investment properties and corporate expenses,partially offset by net operating income,the impact of foreign exchange,unit
135、s purchased under the NCIB,interest and other income,the fair value gain on financial instruments,and distribution income from equity securities.In the real estate industry,other common key performance indicators include funds from operations(“FFO”)and adjusted funds from operations(“AFFO”).FFO in 2
136、024 was primarily impacted by decreased net operating income due to dispositions completed in 2023 and 2024,decreased interest and other income,decreased net operating income due to dispositions completed in 2023 and 2024 and decreased distributions from equity securities due to sales during the yea
137、r,partially offset by decreased interest expense.FFO and AFFO per unit results are also impacted by the decrease in the weighted-average number of units outstanding,primarily due to units repurchased under the NCIB.In 2024,FFO was$111.4 million,compared to$99.9 million in 2023.On a per unit basis,FF
138、O was$1.05,compared to$0.89 year over year.AFFO was$68.5 million in 2024,compared to$49.3 million in 2023.This translates to a per unit AFFO of$0.65 in 2024,compared to$0.44 in 2023.The REIT reported FFO and AFFO payout ratios of 57.1%and 92.3%,respectively,for 2024.Please refer to the FFO and AFFO
139、section of the 2024 Annual MD&A for further information.Artis continues to maintain its investment grade credit rating from Morningstar DBRS.This rating is highly respected in the real estate industry,where only select real estate investment trusts and real estate operating companies have been award
140、ed an investment grade credit rating.As at December 31,2024,Morningstar DBRS assigned a rating of BBB(low)to the REITs senior unsecured debentures and Pfd-3(low)to Artiss Preferred Units,both with negative trends.18|Artis Real Estate Investment TrustCapital AllocationCapital AllocationEffective capi
141、tal allocation is a fundamental component of Artiss vision and strategy.Artiss strategy is to generate meaningful long-term growth in NAV per unit by strengthening the balance sheet,driving organic growth and value investing.On August 2,2023,Artis announced that its Board had established a Special C
142、ommittee to initiate a Strategic Review to consider and evaluate alternatives available to the REIT to unlock and maximize value for unitholders.As part of the strategic review,the Special Committee considered external macroeconomic factors,including rising interest rates,combined with Artiss near-t
143、erm debt profile.A key area of focus during this time was improving the REITs balance sheet and enhancing liquidity.During 2024,Artis sold seven office properties,seven retail properties,one industrial property,two parkades,and a parcel of development land located in Canada and 14 industrial propert
144、ies and three office properties located in the United States for an aggregate sale price of$972.9 million.At December 31,2024,the REIT had two industrial properties and two retail properties located in Canada under unconditional sale agreements for an aggregate sale price of$70.2 million.These dispo
145、sitions closed in January 2025.Artis continues to view its Normal Course Issuer Bid(“NCIB”)as a valuable tool to enhance unitholder value.Under the NCIB that expired on December 18,2024,Artis purchased 7,021,296 common units at a weighted-average price of$7.03.The REIT renewed the NCIB effective Dec
146、ember 19,2024 and,under the terms of the NCIB,the REIT may purchase a maximum of 4,975,917 common units,291,560 Series E preferred units and 421,775 Series I preferred units.As at December 31,2024,the REIT had purchased 206,703 common units at a weighted-average price of$7.26 under the current term.
147、The common units were purchased at a significant discount to NAV per unit of$13.75 at December 31,2024.dispositionsDISPOSITION DATEASSET CLASSPROPERTY NAMELOCATIONJanuary 5,2024RetailPembina Village Shopping CentreWinnipeg,MBJanuary 11,2024Industrial500 Berry StreetWinnipeg,MBFebruary 16,2024OfficeC
148、DI College BuildingWinnipeg,MBApril 1,2024Office8309&8313 Greenway BoulevardMadison,WIApril 8,2024OfficeRecipe Unlimited BuildingGreater Toronto Area,ONApril 9,2024OfficePoco PlaceGreater Vancouver Area,BCApril 12,2024OfficeJohnston TerminalWinnipeg,MBMay 30,2024RetailSunridge PointeCalgary,ABJune 1
149、4,2024Retail2190 McGillivray BoulevardWinnipeg,MBJune 17,2024RetailCrowfoot CornerCalgary,ABJune 19,2024RetailShoppes of St.VitalWinnipeg,MBJune 24,2024RetailLinden Ridge Shopping Centre I&IIWinnipeg,MBJuly 11,2024IndustrialPark 8Ninety I,II,III,IV&VGreater Houston Area,TXAugust 9,2024IndustrialBlai
150、ne 35 I,II&IIITwin Cities Area,MNAugust 9,2024IndustrialPark Lucero I,II,III&IVGreater Phoenix Area,AZAugust 9,2024IndustrialRossevelt CommonsGreater Phoenix Area,AZAugust 9,2024IndustrialSuperstition SpringsGreater Phoenix Area,AZSeptember 30,2024OfficeHudsons Bay CentreDenver,COSeptember 30,2024Of
151、ficeBellMTS Building I&II&Pioneer Parking LotWinnipeg,MBDecember 16,2024Office220 Portage Avenue&Garry Street ParkadeWinnipeg,MB1595 BUFFALO PLACE Winnipeg,Manitoba2024 Annual Report|21Environmental,Social and GovernanceEnvironmental,Social and GovernanceAt Artis,environmental,social and governance(
152、“ESG”)matters are of the upmost importance to the REIT and ensuring that Artis conducts its business in a sustainable manner is fundamental to the success of the company.Artis continues to implement positive changes that reinforce ESG as a focal point in day-to-day operations while maintaining a com
153、pany-wide ESG-minded culture.The following outlines Artiss commitment to ESG best practices and the progress the REIT has made in each of these areas.ENVIRONMENTALA commitment to environmental responsibility is embedded in the REITs operations,activities,and organizational culture and is reinforced
154、and demonstrated through the implementation and management of internal policies and goals that support this objective.Artis strives to continuously improve the efficiency of its operations by lowering undesirable impacts associated with the REITs activities and contributing positively to the transit
155、ion to a low carbon economy by using energy efficient and environmentally friendly systems,fixtures and products in its buildings as well as reducing excessive waste generation and reusing materials where possible.Many of Artiss continuous improvement initiatives focus on sustainability and energy r
156、eduction strategies to ensure buildings are operating at their peak efficiency.Artiss commitment to environmental best practices is summarized below:Prioritize sustainable practices:Practice dedication and commitment to a high standard of environmental responsibility as it relates to the acquisition
157、 of assets,development and redevelopment projects and the ongoing management of the portfolio;Conserve energy and water and reduce waste:Measure,monitor and continuously make efficiency improvements while working with tenants to improve energy,water and waste conservation in a way that will reduce t
158、he buildings environmental footprint over the long term;Promote comfort and safety:Implement systems to ensure the comfort and safety of tenants and visitors of our properties and provide a clean environment and attentive building management at all properties,while maintaining engagement and communi
159、cation to ensure this is being achieved;Be transparent:Establish objectives and measure results to provide clear and transparent communication to all stakeholders;and Strive to improve:Perform continuous review and analysis of building efficiency to assess and adopt best practices,policies and proce
160、dures while seeking opportunities to modernize building systems to achieve optimal efficiency.SOCIAL Artis has a dynamic culture,which fosters collaboration,inspires creativity and encourages strategic thinking.Artis recognizes that effective employee engagement and rewarding productivity inspires t
161、eam members to put their best foot forward,ultimately attracting and retaining talented people whose determination,innovation,and ability to build strong relationships with tenants,investment partners and the broader community is fundamental to Artiss growth and continued success.Artiss impact reach
162、es beyond real estate and extends to company policies on important topics such as diversity,equity and inclusion and belonging,community involvement,volunteerism and charitable giving,sustainability and environmental protection and awareness,professional development and work life balance,among other
163、 things.With a total of 143 employees,(of which 114 are based in Canada and 29 are based in the U.S.),the REIT depends on a diverse,productive and engaged workforce and culture to achieve its business objectives.The REIT strives to create an environment that promotes sustainability at all of its off
164、ices and properties.Artiss commitment to social best practices is summarized below:Foster a positive work environment:Create a culture that values diversity(in all aspects),equity and inclusion and promotes respect and equal opportunities for all;Prioritize safety and well-being:Provide the tools an
165、d resources and strive to ensure the well-being and safety of all employees,tenants and visitors of our properties;Active community involvement:Support charitable organizations and initiatives and be an active member of,with a goal of having a lasting positive impact on,the communities in which we o
166、perate;and Encourage engagement:To create and foster an environment that values and encourages engagement with all stakeholders.GOVERNANCEArtiss commitment to excellence and strong corporate governance practices is critical to the companys reputation,workplace culture,operations,and strong results.A
167、rtis integrates these practices into its broader risk management approach,and comprehensive policies,aiming to exceed its stakeholder expectations.Artiss Board of Trustees are committed to upholding sound governance practices and are responsible for the stewardship of Artis and for overseeing the co
168、nduct of business of Artis and the activities of management.The Governance,Nominating and Compensation Committee is responsible for providing leadership in shaping the governance policies and practices of the REIT,including the environmental and social governance of Artis.In 2024,Artis welcomed Jacq
169、ueline Moss to the Board,who has extensive experience in strategy development,corporate governance,legal and human resources matters and skills in ESG and climate,financial literacy,and risk management.Transparency,communication and accessibility are the foundation of Artiss stakeholder engagement s
170、trategy.This includes a commitment to continuously strengthen relationships with employees,the investment community,tenants,suppliers and other partners and stakeholders.8401 GREENWAY BOULEVARD Middleton,Wisconsin 22|Artis Real Estate Investment TrustEnvironmental,Social and GovernanceStrong and eff
171、ective governance practices are instilled in Artiss organizational culture.This includes robust internal process and procedures that minimize risks,continuous enhancement of human resource policies and procedures,a strong cyber security strategy,promoting efficiency,and fostering an owners mentality
172、.In 2021,the Board established a Board Diversity and Renewal Policy communicating its commitment to diversity targets on the Board.At December 31,2024,the Board exceeded its diversity targets,with 50%female representation and 33%Black,Indigenous and People of Colour representation.Artiss commitment
173、to governance best practices is summarized below:Become a leader:Strive to establish Artis as a leader in governance best practices;Continuous improvement:Continuously seek opportunities for improvement in all areas of governance and establish measurable performance targets wherever possible;Fulsome
174、 disclosure:To be transparent in disclosure,providing regular comprehensive updates on performance,achievements and goals,and providing stakeholders with disclosure that is accurate and accessible;and ESG excellence:To ensure ESG priorities are considered in strategic decision making and goal settin
175、g.Since the significant transformation of Artiss ESG program throughout 2022 and 2023,the REITs commitment to ESG best practices continues to evolve and expand.Some accomplishments include the following:ESG Committee,comprised of senior level employees across all offices continued to meet monthly to
176、 discuss,implement and collaborate on ESG best practices;Continued to utilize Yardi Pulse to complement its reporting tools and provide sustainability-focused,property-level reporting functionality;Continued to incorporate reporting principles of the Global Reporting Initiative(“GRI”)and the United
177、Nations Sustainable Development Goals;Continued to report in alignment with the Sustainable Accounting Standards Board(SASB”)and the Task Force on Climate-related Financial Disclosures(“TCFD”);Submitted to GRESB for the third consecutive year;Introduced green lease language;Conducted the third annua
178、l tenant satisfaction survey;Conducted the third annual employee engagement and diversity,equity and inclusion survey;Provided leadership training to all employees;The Diversity,Equity,Inclusion and Belonging committee continued to meet regularly and promote advancement of various DIEB initiatives;a
179、nd Reviewed and improved all Board mandates,charters,policies and position descriptions,including incorporating enhancements to include applicable responsibility for ESG matters in the mandate and all charters.These are only a few examples of the immense work that has gone in to elevating Artiss ESG
180、 program and fulfilling the REITs commitment to unitholders.Artis looks forward to publishing its 2024 ESG Report in the coming months,providing a comprehensive update on the progress that has been made over the last year.preferred environmental programsArtis is committed to mitigating the impact of
181、 its operations on the environment,minimizing its carbon footprint and promoting the use of energy efficient practices in its buildings.Artis values energy certification and considers it an asset,both with respect to the REITs existing portfolio and when acquiring new properties.At December 31,2024,
182、the REIT had three properties with a Leadership in Energy and Environmental Design(“LEED”)certification,one property with a Building Owners and Managers Association(“BOMA”)Building Environmental Standards(“BEST”)certification and six properties with an Energy Star certification.BOMA or the Building
183、Owners and Managers Association promotes energy efficiency and sustainability for new and existing buildings by assigning certification levels based on achievement of energy targets.Energy Star is a voluntary U.S.Environmental Protection Agency(EPA)program that certifies buildings for superior energ
184、y performance.LEED or Leadership in Energy&Environmental Design is a green building tool that addresses the entire building lifecycle,recognizing best-in-class building strategies.The three major property certifications Artis pursues are:CANADIAN PACIFIC PLAZA Minneapolis,MinnesotaHead Office:220 Po
185、rtage Avenue,Suite 600,Winnipeg,Manitoba Investor Inquiries:,+1 800 941 4751 Transfer Agent:Odyssey Trust Company Indenture Trustee:BNY Trust Company of Canada Auditors:Deloitte LLP Legal Counsel:Norton Rose Fulbright Canada LLPToronto Stock Exchange Listings(Symbol and 2024 Distribution):Trust Unit
186、s AX.UN$0.05 per trust unit per month Preferred Unit Series E AX.PR.E$0.449875 per unit per quarter Preferred Unit Series I AX.PR.I$0.4370625 per unit per quarterAnnual General Meeting:May 27,2025,at 2:00 pm ET Hilton Toronto,145 Richmond Street West,Toronto,Ontario2024 Annual Report|25 24|Artis Rea
187、l Estate Investment TrustBoard of TrusteesBoard of TrusteesOutlookexecutive managementOutlookThe work that was undertaken during the Strategic Review enabled Artis to properly assess the current environment and options available to the REIT to create and maximize value for unitholders.Going forward,
188、Artis is committed to further strengthening its balance sheet and,more specifically,reducing debt and increasing liquidity through its disposition strategy.Artis continues to see strong value in the industrial,office,and retail asset classes.Artis also continues to view the NCIB as a compelling tool
189、 to enhance unitholder value and,when permitted,will focus on buying back units using the NCIB so long as Artiss units continue to trade at a material discount to its NAV per unit.Under the current NCIB term that extends until December 18,2025,Artis can acquire up to a maximum of 4,975,917 common un
190、its,291,560 Series E preferred units and 421,775 Series I preferred units.ESG has been and will remain a key area of focus for the REIT.Over the last several years,Artis has built a strong foundation of sound governance practices and policies and has strived to conduct its business in a sustainable
191、manner.Artiss objective is to build a corporate culture that prioritizes ESG as it relates to all aspects of its business and day-to-day operations,with a focus on continuous and measurable improvement and transparency in all areas of the REITs ESG performance.Going forward,Artis will continue to fo
192、cus on increasing liquidity and improving its balance sheet while pursuing strategic capital allocation initiatives that the REIT believes will produce above average risk adjusted returns for unitholders.These initiatives may include investing in undervalued publicly traded real estate securities an
193、d accretive real estate acquisitions or developments.With the REITs near-term debt maturities satisfied,a healthy level of liquidity,and the tides turning on interest rates,Artis is well positioned to pursue opportunities that are aligned with the REITs long-term goal of growing net asset value per
194、unit.corporate informationArtiss Trustees are proven business leaders with a significant breadth of experience in the areas of real estate,corporate governance,finance,accounting,strategic planning and risk management.Collectively they have extensive public company board experience.Artiss Trustees b
195、elieve that sound governance practices are essential to the long-term interests of Artis and the enhancement of value for all of its unitholders.Trustees are elected annually by majority vote of the holders of Trust Units entitled to vote thereon.Trustees elected at an annual meeting will be elected
196、 for a term expiring at the subsequent annual meeting and will be eligible for re-election.The Trustees have the power to increase the number of Trustees(to a maximum of 10)and to appoint additional Trustees to serve as Trustees until the next annual meeting of holders of Trust Units entitled to vot
197、e at such meeting.The Declaration of Trust provides that the investment policies and operations of Artis are the responsibility of its Trustees,of which as at December 31,2024,there were six.The Board of Trustees recognizes that proper and effective corporate governance is a high priority for Artiss
198、 stakeholders.The Board of Trustees has two standing committees which,at December 31,2024,were structured as follows:the Audit Committee(chaired by Mike Shaikh)and the Governance,Nominating and Compensation Committee(chaired by Lis Wigmore).All members of the standing committees are independent of m
199、anagement.Ben Rodney is the Chair of the Board.Additional information about Artiss Board,Trustees and Committees,as well as key governance documents such as the Code of Conduct,Whistleblower Policy,Board Mandate,Declaration of Trust and Committee Charters can be downloaded from Artiss website at of
200、the Governance,Nominating&Compensation Committee,Member of the Audit CommitteeHeather-Anne IrwinChair of the BoardBen RodneyPresident&Chief Executive OfficerSamir ManjiPresident&Chief Executive OfficerSamir ManjiChief Financial OfficerJaclyn KoenigChief Operating OfficerKim RileyChair of the Audit C
201、ommittee,Member of the Governance,Nominating&Compensation CommitteeMike ShaikhMember of the Governance,Nominating&Compensation CommitteeJacqueline MossChair of the Governance,Nominating&Compensation Committee,Member of the Audit CommitteeLis Wigmore2024 Annual Report|27Managements Discussion&Analysi
202、s 26|Artis Real Estate Investment TrustTSX:AX.UN AX.PR.E AX.PR.I OTCQX:ARESFmanagements discussion&analysis 2024 annualYears ended December 31,2024 and 2023(in thousands of Canadian dollars,except unit and per unit amounts)2024 Annual Report|29 28|Artis Real Estate Investment TrustManagements Discus
203、sion&AnalysisManagements Discussion&AnalysisThe following managements discussion and analysis(MD&A)of the financial condition and results of operations of Artis Real Estate Investment Trust should be read in conjunction with the REITs audited annual consolidation financial statements for years ended
204、 December 31,2024 and 2023,and the notes thereto.Unless otherwise noted,all amounts in this MD&A are based on the consolidated financial statements prepared in accordance with International Financial Reporting Standards(IFRS Accounting Standards),as issued by the International Accounting Standards B
205、oard(IASB).Additionally,Artis,and the REIT,refers to Artis Real Estate Investment Trust and its consolidated operations.This MD&A has been prepared taking into account material transactions and events up to and including March 6,2025.Additional information,including the REITs most recent Annual Info
206、rmation Form,has been filed with applicable Canadian securities regulatory authorities and is available on Artiss website at or SEDAR+at www.sedarplus.ca.FORWARD-LOOKING DISCLAIMER This MD&A contains certain statements which are forward-looking statements within the meaning of applicable securities
207、laws.All statements other than statements of historical fact contained or incorporated by reference herein may be deemed to be forward-looking statements including,without limitation,statements regarding the timing and amount of distributions and the future financial position,business strategy,poten
208、tial acquisitions and dispositions,plans and objectives of Artis.Forward-looking statements reflect managements expectations regarding future growth,results of operations,performance,prospects and opportunities of Artis.Without limiting the foregoing,the words“expects”,“anticipates”,“intends”,“estim
209、ates”,“projects”,and similar expressions or variations of such words and phrases are intended to identify forward-looking statements.Readers are cautioned not to place undue reliance on forward-looking statements.Such forward-looking statements reflect managements current beliefs and are based on in
210、formation currently available to management.Artis cannot assure investors that the actual results will be consistent with any forward-looking statements and,other than as required by applicable law,Artis assumes no obligation to update or revise such forward-looking statements to reflect actual even
211、ts or new circumstances.All forward-looking statements contained in this MD&A are qualified by this cautionary statement.Forward-looking statements may involve significant risks and uncertainties.A number of factors could cause actual results to differ materially from the results expressed or implie
212、d in forward-looking statements including risks relating to the strategy,real property ownership,overall investment portfolio,geographic concentration,current economic conditions,strategic initiatives,pandemics and other public health events,debt financing,interest rate fluctuations,foreign currency
213、,tenants,specified investment flow-through(SIFT)rules,other tax-related factors,illiquidity,competition,reliance on key personnel,future property transactions,general uninsured losses,dependence on information technology systems,cyber security,environmental matters and climate change,land and air ri
214、ghts leases,public market,market price of common units,changes in legislation and investment eligibility,availability of cash flow,fluctuations in cash distributions,nature of units and legal rights attaching to units,preferred units,debentures,dilution,unitholder liability,failure to obtain additio
215、nal financing,potential conflicts of interest,developments,and trustees.In particular,any proposed acquisitions and dispositions described herein or in documents incorporated by reference herein are,in certain cases,subject to conditions that may not be satisfied and there can be no assurance that s
216、uch acquisitions and dispositions will be completed.In addition,with respect to the strategic review process undertaken by the Board and Special Committee(as described herein),there can be no assurance that the REITs chosen strategy following the completion of such strategic review process will lead
217、 to the results anticipated by the REIT,or that the REIT will be able to avail itself of opportunities to grow net asset value per unit.The Tax Act contains the SIFT Rules,which are applicable to SIFTs and investors in SIFTs,but do not apply to trusts that satisfy the REIT Exception.As at the date o
218、f this MD&A,Artis satisfies the REIT Exception and intends to continue to satisfy the REIT Exception so that the SIFT Rules will not apply to Artis.Should this not occur,certain statements contained in this MD&A relating to the SIFT Rules and the REIT Exception relating to Artis and its holders of c
219、ommon units would no longer be applicable.For more information on the risks,uncertainties and assumptions that could cause the Artiss actual results to materially differ from current expectations,refer to the section entitled“Risk Factors”of Artiss Annual Information Form for the year ended December
220、 31,2024 as well as Artiss other public filings,available on SEDAR+at www.sedarplus.ca.NOTICE WITH RESPECT TO NON-GAAP&SUPPLEMENTARY FINANCIAL MEASURES DISCLOSUREIn addition to reported IFRS Accounting Standards measures,certain non-GAAP and supplementary financial measures are commonly used by Cana
221、dian real estate investment trusts as an indicator of financial performance.GAAP means the generally accepted accounting principles described by the CPA Canada Handbook-Accounting,which are applicable as at the date on which any calculation using GAAP is to be made.Artis applies IFRS Accounting Stan
222、dards,which is the section of GAAP applicable to publicly accountable enterprises.Non-GAAP measures and ratios include Same Property Net Operating Income(Same Property NOI),Funds From Operations(FFO),Adjusted Funds from Operations(AFFO),FFO per Unit,AFFO per Unit,FFO Payout Ratio,AFFO Payout Ratio,N
223、et Asset Value(NAV),NAV per Unit,Gross Book Value(GBV),Secured Debt to GBV,Total Debt to GBV,Adjusted Earnings Before Interest,Taxes,Depreciation and Amortization(Adjusted EBITDA),Adjusted EBITDA Interest Coverage Ratio and Total Debt to Adjusted EBITDA.Supplementary financial measures include perce
224、ntage of unhedged variable rate mortgage debt,excess(shortfall)of cash flow from operations over distributions declared and excess(shortfall)of net income over distributions declared.Management believes that these measures are helpful to investors because they are widely recognized measures of Artis
225、s performance and provide a relevant basis for comparison among real estate entities.These non-GAAP and supplementary financial measures are not defined under IFRS Accounting Standards and are not intended to represent financial performance,financial position or cash flows for the period,nor should
226、any of 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 Accounting Standards.A description of the composition and a reconciliation to each of these measures to the nearest IFRS Accounting
227、Standards measure can be found in the MD&A sections as outlined below:Non-GAAP/Supplementary Financial MeasureMD&A SectionSame Property NOISame Property NOI AnalysisFFO,AFFO,FFO per Unit,AFFO per Unit,FFO Payout Ratio,AFFO Payout RatioFFO&AFFONAV Per UnitOther Financial MeasuresGBV,Secured Debt to G
228、BV,Total Debt to GBVOther Financial MeasuresAdjusted EBITDA,Adjusted EBITDA Interest Coverage Ratio&Debt to Adjusted EBITDAOther Financial MeasuresPercentage of unhedged variable rate mortgage debtLiabilitiesExcess(shortfall)of cash flow from operations over distributions declared,excess(shortfall)o
229、f net income over distributions declaredLiquidity&Capital ResourcesThe above measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of Artis.Readers should be further cautioned that the above measures as calculated by Artis m
230、ay not be comparable to similar measures presented by other issuers.BUSINESS OVERVIEW Artis is a diversified commercial real estate investment trust and is an unincorporated closed-end real estate investment trust,created under,and governed by,the laws of the Province of Manitoba.The REIT was create
231、d pursuant to the Declaration of Trust dated November 8,2004,as most recently amended and restated on December 19,2021(the Declaration of Trust).Certain of the REITs securities are listed on the Toronto Stock Exchange(TSX).The REITs common units trade under the symbol AX.UN and the REITs preferred u
232、nits trade under the symbols AX.PR.E and AX.PR.I.The REITs common units also trade in the United States(U.S.)on the OTCQX Best Market(OTCQX),under the symbol ARESF.As at March 6,2025,there were 99,439,627 common units,7,237,865 preferred units,457,904 restricted units and 493,245 deferred units of A
233、rtis outstanding(refer to the Outstanding Unit Data section of this MD&A for further details).VISIONArtiss vision is to become a best-in-class real estate asset management and investment platform focused on value investing.BUSINESS STRATEGYArtiss strategy is to generate meaningful long-term growth i
234、n net asset value per unit by strengthening its balance sheet,driving organic growth and value investing.As part of this strategy,Artis will concentrate its ownership in the highest and best risk adjusted return opportunities in an effort to maximize long-term value for unitholders.Business Strategy
235、 UpdateDispositionsThe REIT has been unlocking value through the monetization of certain assets.During 2024,Artis sold seven office properties,seven retail properties,one industrial property,two parkades and a parcel of development land located in Canada and 14 industrial properties and three office
236、 properties located in the United States for an aggregate sale price of$972,870.At December 31,2024,the REIT had two industrial properties and two retail properties located in Canada under unconditional sale agreements for an aggregate sale price of$70,230.These dispositions closed in January 2025.T
237、he REIT will continue to evaluate the sale of a portion of its industrial,office and retail assets in an opportunistic and disciplined manner,with the goal of selling assets at or above IFRS Accounting Standards values and maximizing value on a tax-efficient basis.Normal Course Issuer BidArtis conti
238、nues to view its Normal Course Issuer Bid(NCIB)as a valuable tool to enhance unitholder value.Under the NCIB that expired on December 18,2024,Artis purchased 7,021,296 common units at a weighted-average price of$7.03.The REIT renewed the NCIB effective December 19,2024 and,under the terms of the NCI
239、B,the REIT may purchase a maximum of 4,975,917 common units,291,560 Series E preferred units and 421,775 Series I preferred units.As at December 31,2024,the REIT had purchased 206,703 common units at a weighted-average price of$7.26 under the current term.The common units were purchased at a signifi
240、cant discount to NAV per unit of$13.75 at December 31,2024.Operations and Developments Organic growth is an important element of Artiss strategy.Artiss management is focused on identifying operational efficiencies,increasing occupancy and in-place rents,and the completion of new development projects
241、.Occupancy at December 31,2024,was stable at 88.2%(89.2%including commitments),compared to 90.1%at December 31,2023.In 2024,454,256 square feet of new leases and 740,424 square feet of renewals commenced.These renewals were negotiated at a weighted-average rental increase when compared to expiring r
242、ents of 2.6%.2024 Annual Report|31 30|Artis Real Estate Investment TrustManagements Discussion&AnalysisManagements Discussion&AnalysisStrategic Value InvestmentsDuring 2022,Artis participated in an investor group to acquire Cominar Real Estate Investment Trust(Cominar).Refer to the Investment in Com
243、inar,Equity Accounted Investments and Preferred Investments sections of this MD&A for further information.At December 31,2024,Artis held equity securities with an aggregate fair value of$84,841.DBRS Credit RatingThe REITs senior unsecured debentures have a Morningstar DBRS(DBRS)rating of BBB(low)and
244、 the REITs preferred trust units have a DBRS rating at Pfd-3(low),both with Negative trends,as confirmed in DBRSs Rating Report dated December 24,2024.The successful execution of Artiss strategy requires suitable opportunities,careful timing,patience and business judgment,as well as sufficient resou
245、rces to make investments and restructure them,if required.There can be no assurance that the REIT will be able to execute its strategy or to identify suitable or sufficient opportunities to monetize or maximize the value of its existing portfolio of assets or to make investments that satisfy its inv
246、estment criteria at attractive prices,in either case,in a timely manner,or at all.STRATEGIC REVIEWOn August 2,2023,Artiss Board of Trustees(the Board)established a special committee(the Special Committee)to initiate a strategic review process to consider and evaluate alternatives that may be availab
247、le to the REIT to unlock and maximize value for unitholders.On September 11,2023,the Board announced that the Special Committee retained BMO Nesbitt Burns Inc.to provide financial advisory services to the REIT and Special Committee in connection with the strategic review process.On December 12,2024,
248、the Board announced that the strategic review process had concluded.As part of the strategic review,the Special Committee considered external macroeconomic factors,including rising interest rates,combined with Artiss near-term debt profile.A key area of focus during this time was improving the REITs
249、 balance sheet and enhancing liquidity.During the strategic review process,Artis sold$1,087,956 of assets at sale prices in line with the REITs IFRS Accounting Standards values and used the proceeds from these dispositions primarily to reduce debt.As a result,Artis has significantly improved its bal
250、ance sheet and reported total debt to GBV had decreased to 39.8%at September 30,2024,compared to 47.2%at June 30,2023.Further,as part of the strategic review,the Special Committee considered Artiss upcoming debt obligations.To refinance debt and improve the REITs risk profile,Artis finalized terms o
251、n new three-year senior secured credit facilities in an aggregate amount of$520,000(the“Secured Credit Facilities”),which include a$350,000 revolving credit facility and a$170,000 non-revolving credit facility.The Secured Credit Facilities bear interest at rates which depend on the ratio of consolid
252、ated indebtedness to consolidated gross book value.At December 31,2024,the interest rate on Canadian dollar advances was adjusted CORRA+2.10%or prime+1.10%,and the interest rate on US dollar advances was adjusted SOFR+2.10%or US base rate+1.10%.The Secured Credit Facilities replaced the REITs previo
253、usly existing senior unsecured revolving and non-revolving credit facilities.The Secured Credit Facilities can be utilized for general corporate purposes,including the acquisition or development of additional income producing properties and can be drawn in Canadian or US dollars.Since the announceme
254、nt of the strategic review,Artis has made substantial progress with its disposition strategy,strengthening its balance sheet and improving its risk profile related to upcoming debt obligations.At a macro level,the interest rate environment has improved significantly in recent months.In light of thes
255、e factors,the Board believes it is in the best interests of Artis and its unitholders to continue to pursue the REITs existing business strategy.With the REITs near-term debt maturities satisfied,Artis is well positioned to pursue opportunities that are aligned with the REITs long-term goal of growi
256、ng net asset value per unit.INVESTMENT IN COMINARDuring 2022,Artis participated in an investor group to acquire Cominar.The REITs contribution to this transaction was$112,000 to acquire approximately 32.64%of Iris Acquisition II LP(Iris),an entity formed to acquire the outstanding units of Cominar,a
257、nd$100,000 of junior preferred units which carry a distribution rate of 18.0%per annum.As at December 31,2024,the REITs cumulative share of losses of Iris exceeded the REITs net investment in the common equity units and the REIT recorded an expected credit loss on preferred investments in the amount
258、 of$31,316.In addition,the REIT did not recognize the interest income(in the form of in-kind additional units)on the preferred investment in the amount of$7,652 for Q4-24.As at December 31,2024,the carrying value of the junior preferred units was$139,881,which reflects interest income received in th
259、e form of additional junior preferred units since initial investment,net of the allowance for expected credit loss.The REIT has assessed there has been a significant increase in credit risk since initial investment and the investment in the junior preferred units is credit-impaired.Since December 20
260、24,there have been discussions with interested parties to acquire a portion or the entire portfolio of the investment properties of Iris with a solution to settle the outstanding senior and junior preferred units of Iris and the settlement may include a discount to the senior and junior preferred un
261、its.These discussions are ongoing,and management expects that an agreement for a transaction may be reached within the next few months with terms that could result in the REIT recovering an amount in excess of the carrying value of the junior preferred units at December 31,2024.As more information b
262、ecomes available,the REIT will adjust the allowance for expected credit loss as appropriate in future reporting periods.The REITs estimate is dependent on the ability of Iris to execute its plans and the possible results of a transaction with the unitholders of Iris.Because these estimates are made
263、at a specific point in time and are inherently subject to judgement and measurement uncertainty,such estimates could differ from actual results.BUSINESS ENVIRONMENT AND OUTLOOKOccupancy including commitments was 89.2%at December 31,2024,compared to 90.9%at December 31,2023.With respect to new leases
264、 and renewals that commenced during the year,454,256 square feet of new leases and 740,424 square feet of renewals began.The renewals that commenced in 2024 were negotiated at a weighted-average increase of 2.6%over expiring rates.The fourth quarter marked the sixteenth consecutive quarter of growth
265、 in weighted-average rental rates on renewals.Year-over-year Same Property NOI growth for the year ended December 31,2024,was 0.8%.The increase in weighted-average renewal rents and Same Property NOI growth are important indicators of the stability and growth profile of the REITs portfolio.During 20
266、24,Artis sold seven office properties,seven retail properties,one industrial property,two parking lots,and a parcel of development land located in Canada and 14 industrial properties and three office properties located in the United States for an aggregate sale price of$972,870.Subsequent to Decembe
267、r 31,2024,the REIT had two industrial properties and two retail properties located in Canada under unconditional sale agreements for an aggregate sale price of$70,230.Going forward,Artis is committed to continuing to strengthen its balance sheet and,more specifically,reducing debt and increasing liq
268、uidity through its disposition strategy.The REIT renewed the NCIB effective December 19,2024 and,under the terms of the NCIB,the REIT may purchase a maximum of 4,975,917 common units,291,560 Series E preferred units and 421,775 Series I preferred units.As at December 31,2024,the REIT purchased 206,7
269、03 common units at a weighted-average price of$7.26 under the current term.These units were purchased at a significant discount to NAV per unit of$13.75 at December 31,2024.Artis continues to view the NCIB as a compelling tool to enhance unitholder value and,when permitted,will continue to focus on
270、buying back units using the NCIB so long as Artiss units continue to trade at a material discount to its NAV per unit.Further,the Board may consider additional mechanisms that are available to the REIT for returning capital to unitholders,including,subject to market and other conditions,other unit r
271、epurchases.ENVIRONMENTAL,SOCIAL AND GOVERNANCE(ESG)UPDATEAs part of Artiss vision to become a best-in-class real estate asset management and investment platform focused on value investing,the REIT is committed to ensuring that excellence in ESG practices is an integral part of its business model and
272、 is a core component of its corporate culture.As part of this commitment,Artis is dedicated to conducting its business in a sustainable manner,with a focus on continuous and measurable improvement and transparency in all areas of its ESG performance.The REIT has established environmental,social and
273、governance objectives that are outlined in the ESG Policy adopted on February 28,2023.A copy of the policy is available on Artiss website at .The Governance,Nominating,and Compensation Committee oversees the REITs ESG program and regularly reports to the Board on related ESG matters.The REIT also ha
274、s an internal ESG Committee,comprised of members from various offices and departments who share a passion for ESG.The ESG Committee meets monthly and reports to the Governance,Nominating and Compensation Committee of the Board.Ongoing ESG initiatives include,but are not limited to:Publishing an annu
275、al ESG Report,incorporating the principles of the Sustainability Accounting Standards Board(SASB)Real Estate Sustainability Accounting Standard,Global Reporting Initiative(GRI)2021 Universal Standards and the United Nations Sustainable Development Goals;Disclosing climate-related risk management act
276、ivities in accordance with the Task Force on Climate-Related Financial Disclosures(TCFD);Ongoing review of all environmental,social and governance policies to ensure their alignment with industry best practices;Conducting annual employee engagement and tenant satisfaction surveys;Providing ongoing p
277、rofessional development opportunities for the Board,management and employees;Achieving or exceeding diversity targets related to the Board,senior leadership and the overall workforce,as defined in the Board Diversity and Renewal Policy and the Diversity,Equity and Inclusion Policy;and,Measuring,moni
278、toring and improving environmental efficiency across the portfolio while working with tenants to conserve energy,water and waste in a way that will reduce the REITs environmental footprint over the long term.Additional information about Artiss comprehensive corporate sustainability program,including
279、 a copy of Artiss most recent ESG Report can be accessed on the REITs website at .2024 OVERVIEW SELECTED FINANCIAL INFORMATIONYear ended Year endedDecember 31,%December 31,000s,except per unit amounts20242023ChangeChange2022Revenue$300,369$335,837$(35,468)(10.6)%$372,512 Net operating income 163,231
280、 184,017 (20,786)(11.3)%209,980 Net loss(47,414)(332,068)284,654 (85.7)%(5,294)Total comprehensive income(loss)32,182 (364,399)396,581 (108.8)%105,537 Basic loss per common unit(0.57)(3.10)2.53 (81.6)%(0.18)Diluted loss per common unit (0.57)(3.10)2.53 (81.6)%(0.19)Distributions per unit:Common unit
281、s$0.60$0.60$%$0.76 Preferred units-Series A%1.06 Preferred units-Series E 1.80 1.48 0.32 21.6%1.37 Preferred units-Series I 1.75 1.67 0.08 4.8%1.50 FFO(1)$111,417$99,856$11,561 11.6%$164,791 FFO per unit-diluted(1)1.05 0.89 0.16 18.0%1.39 FFO payout ratio(1)57.1%67.4%(10.3)%43.2%AFFO(1)$68,461$49,31
282、5$19,146 38.8%$112,552 AFFO per unit-diluted(1)0.65 0.44 0.21 47.7%0.95 AFFO payout ratio(1)92.3%136.4%(44.1)%63.2%Same Property NOI growth(1)0.8%7.6%(6.8)%1.8%Adjusted EBITDA interest coverage ratio(1)2.15 2.08 0.07 3.4%2.98(1)Represents a non-GAAP measure or non-GAAP ratio.Refer to the Notice with
283、 Respect to Non-GAAP&Supplementary Measures Disclosure section of this MD&A.2024 Annual Report|33 32|Artis Real Estate Investment TrustManagements Discussion&AnalysisManagements Discussion&AnalysisDecember 31,December 31,%December 31,000s,except per unit amounts20242023Change2022Total assets$2,803,1
284、61$3,735,030 (24.9)%$4,553,913 Total non-current financial liabilities 636,503 1,047,231 (39.2)%974,063 NAV per unit(1)13.75 13.96 (1.5)%17.38 Secured debt to GBV(1)33.1%24.3%8.8%18.9%Total debt to GBV(1)40.2%50.9%(10.7)%48.5%(1)Represents a non-GAAP measure,non-GAAP ratio or supplementary financial
285、 measure.Refer to the Notice with Respect to Non-GAAP&Supplementary Measures Disclosure section in this MD&A.Financial and Operational ResultsRevenue and net operating income were primarily impacted by property dispositions throughout 2023 and 2024,partially offset by development fee income during 2
286、024.Artis reported portfolio occupancy of 88.2%(89.2%including commitments)at December 31,2024,compared to 90.1%at December 31,2023.During the year,454,256 square feet of new leases and 740,424 square feet of lease renewals commenced.The weighted-average increase in renewal rents compared to expirin
287、g rents on renewals that began during the year was 2.6%.Net loss was impacted by the fair value change on investment properties(loss of$14,935 in 2024,compared to a loss of$344,286 in 2023),the fair value change on financial instruments(gain of$4,558 in 2024,compared to a loss of$41,730 in 2023),int
288、erest expense($105,624 in 2024,compared to$121,876 in 2023),and equity securities expenses($595 in 2024,compared to$878 in 2023).Partially offsetting the above decreases to net loss was the expected credit loss on preferred investments($31,316 in 2024,compared to$nil in 2023),net loss from equity ac
289、counted investments($86,595 in 2024 compared to$57,385 in 2023),distribution income from equity securities($6,436 in 2024,compared to$12,365 in 2023),income tax(recovery of$2,287 in 2024,compared to a recovery of$5,605 in 2023),corporate expenses($9,138 in 2024,compared to$6,984 in 2023),interest an
290、d other income($30,913 in 2024,compared to$32,359 in 2023),and strategic review expenses($1,492 in 2024,compared to$207 in 2023).Foreign exchange had an impact on Artiss financial results,due to a higher US dollar to Canadian dollar average exchange rate of 1.3700 in 2024,compared to 1.3495 in 2023.
291、FFO per unit(diluted)for 2024 was$1.05,compared to$0.89 for 2023,while AFFO per unit(diluted)for 2024 was$0.65,compared to$0.44 for 2023.FFO in 2024 was primarily impacted by decreased interest and other income,decreased net operating income due to dispositions completed in 2023 and 2024 and decreas
292、ed distributions from equity securities due to sales during the year,partially offset by decreased interest expense.Refer to FFO and AFFO section of this MD&A for further details.FFO and AFFO per unit results are also impacted by the decrease in the weighted-average number of units outstanding,prima
293、rily due to units repurchased under the NCIB.The REIT reported FFO and AFFO payout ratios of 57.1%and 92.3%,respectively,for 2024.Balance Sheet and LiquidityOn December 11,2024,Artis entered into a secured credit facility agreement in the aggregate amount of$520,000 which included a$350,000 revolvin
294、g credit facility and a$170,000 non-revolving credit facility.On December 12,2024,the REIT drew$85,000 on the secured revolving facility and$170,000 on the secured non-revolving facility and used the proceeds to repay the outstanding unsecured non-revolving credit facilities in the aggregate amount
295、of$250,000.Artis reported total debt to GBV of 40.2%at December 31,2024,improved from 50.9%at December 31,2023.In 2024,Artis utilized the NCIB to purchase 7,227,999 common units for an aggregate market price of$50,834,and 312,200 Series E and 342,084 Series I preferred units for an aggregate market
296、price of$11,934.At December 31,2024,NAV per unit was$13.75,compared to$13.96 at December 31,2023.The change is primarily due to distributions made to unitholders,interest expense,expected credit loss on preferred investments,fair value loss on investment properties and corporate expenses,partially o
297、ffset by net operating income,the impact of foreign exchange,units purchased under the NCIB,interest and other income,the fair value gain on financial instruments,and distribution income from equity securities.DistributionsIn 2024,Artis declared distributions of$75,699 to unitholders,which included
298、distributions to preferred unitholders in the amount of$12,990.PORTFOLIO ACTIVITYIndustrialOfficeRetailTotalPropertycountS.F.(000s)PropertycountS.F.(000s)PropertycountS.F.(000s)PropertycountS.F.(000s)Portfolio properties,December 31,2023 52 5,703 39 6,224 28 1,802 119 13,729 Acquisitions 1 674 84 1
299、758 Dispositions(15)(2,973)(10)(1,008)(7)(535)(32)(4,516)Portfolio properties,December 31,2024 38 3,404 29 5,300 21 1,267 88 9,971 In addition,Artis owns one commercial/residential property which comprises 395 residential units and 18,481 square feet of leasable commercial space.AcquisitionsOn Febru
300、ary 22,2024,the REIT acquired the remaining 5%interest in Park 8Ninety V,an industrial property located in the Greater Houston Area,Texas,for total consideration of US$4,004.The REIT subsequently sold this property.On June 20,2024,the REIT acquired the remaining 50%interest in Kincaid Building,an of
301、fice property located in the Greater Vancouver Area,British Columbia,for total consideration of$22,500.The REIT now owns 100%of the property.DispositionsDuring 2024,Artis sold seven office properties,seven retail properties,one industrial property,two parking lots,and a parcel of development land lo
302、cated in Canada and 14 industrial properties and three office properties located in the United States for an aggregate sale price of$972,870.The sale proceeds,net of costs of$16,674,related debt of$257,051 and the issuance of a note receivable of$5,000 were$694,145.PROPERTY PORTFOLIOAt December 31,2
303、024,the REITs portfolio was comprised of 88 commercial properties totalling approximately 10.0 million square feet(S.F.)of gross leasable area(GLA).In addition,Artis owns one commercial/residential property,300 Main,and has joint ownership interest in nine investment properties,one parcel of develop
304、ment land and properties acquired as part of the Cominar Transaction,which have been excluded from financial and operating metrics throughout this MD&A,unless otherwise noted.Refer to the Residential Portfolio and Equity Accounted Investments sections of this MD&A for further information.Diversifica
305、tion by Geographical Region GLACanada 49.5%U.S.50.5%Net Operating Income(Q4-24)Canada 45.5%U.S.54.5%Diversification by Asset Class GLAIndustrial 34.1%Office 53.2%Retail 12.7%Net Operating Income(Q4-24)Industrial 23.8%Office 59.2%Retail/residential 17.0%2024 Annual Report|35 34|Artis Real Estate Inve
306、stment TrustManagements Discussion&AnalysisManagements Discussion&AnalysisPortfolio by Asset Class(1)Asset classCityProvince/StatePropertycountOwned shareof GLA(000s S.F.)%ofportfolioGLA%Occupied%Committed(2)Canadian portfolio:IndustrialCalgaryAB 4 319 3.2%97.3%97.3%Greater Edmonton AreaAB 2 94 0.9%
307、100.0%100.0%Greater Vancouver AreaBC 1 73 0.7%100.0%100.0%Red DeerAB 1 126 1.3%79.3%79.3%SaskatoonSK 2 269 2.7%100.0%100.0%WinnipegMB 25 1,650 16.5%97.8%99.7%Industrial total 35 2,531 25.3%97.2%98.4%OfficeGreater Vancouver AreaBC 1 168 1.7%88.3%96.4%WinnipegMB 4 970 9.8%81.2%81.3%Office total 5 1,13
308、8 11.5%82.3%83.6%RetailCalgaryAB 2 192 1.9%95.1%96.5%Fort McMurrayAB 8 187 1.9%82.6%84.7%Grande PrairieAB 3 187 1.9%74.0%78.5%Greater Edmonton AreaAB 3 331 3.3%96.5%96.9%SaskatoonSK 3 219 2.2%97.0%97.0%WinnipegMB 1 27 0.3%94.3%94.3%Retail total 20 1,143 11.5%90.4%91.8%Total Canadian portfolio 60 4,8
309、12 48.3%92.1%93.3%U.S.portfolio:IndustrialGreater Phoenix AreaAZ199 1.0%100.0%100.0%Twin Cities Area MN1255 2.6%68.5%68.5%Greater Houston AreaTX1519 5.2%100.0%100.0%Industrial total3873 8.8%90.8%90.8%OfficeGreater Phoenix AreaAZ4834 8.3%93.9%96.2%MadisonWI141,735 17.4%76.9%78.0%Twin Cities AreaMN61,
310、593 16.0%84.1%84.7%Office total244,162 41.7%83.1%84.2%Total U.S.portfolio275,035 50.5%84.4%85.3%Total Canadian and U.S.portfolio879,847 98.8%88.2%89.2%(1)Information is as at December 31,2024,and excludes properties held in equity accounted investments,properties held for redevelopment and Artiss co
311、mmercial/residential property(300 Main).(2)Percentage committed is based on occupancy at December 31,2024,plus commitments on vacant space.Property Held for RedevelopmentAsset classCityProvince/StateProperty CountOwned share of GLA(000s of S.F.)%ofportfolioGLA Property%Committed(1)RetailGrande Prair
312、ieAB 1 124 1.2%Prairie Ridge Centre 8.3%Total property held for redevelopment 1 124 1.2%8.3%(1)Percentage committed is based on occupancy at December 31,2024,plus commitments on vacant space.Prairie Ridge Centre,a retail property in Grande Prairie,Alberta,was vacated by a large tenant,providing Arti
313、s with an opportunity to redevelop and reconfigure this older generation space to accommodate multiple tenants.Redevelopment work is substantially complete and efforts to lease the property are under way.Residential PortfolioArtiss residential portfolio is comprised of one property,300 Main,located
314、in Winnipeg,Manitoba.300 Main is a 580,000 square foot commercial and residential/multi-family development project in Winnipeg,Manitoba.300 Main is connected to 330 Main,a state-of-the-art multi-tenant retail property constructed in 2020.The properties are located at the iconic intersection of Porta
315、ge and Main in downtown Winnipeg,Manitoba,and span nearly one city block.The sites are located above the Shops of Winnipeg Square retail concourse and Winnipeg Square Parkade,and adjacent to 360 Main,a 30-storey Class A office tower,all of which are owned by Artis.300 Main is a best-in-class amenity
316、-rich apartment building with main floor commercial space.Of the total building GLA,18,481 square feet is commercial space.During 2022,Earls Kitchen&Bar,occupying 7,397 square feet,moved into their space on the main floor of the building.Residential tenants began moving into the building on July 1,2
317、023,and leasing of the remaining apartment units is currently underway.PORTFOLIO OCCUPANCYOccupancy levels impact the REITs revenues and net operating income.Occupancy and commitments at December 31,2024,and the previous four quarterly periods,were as follows:Occupancy Report by Country and Asset Cl
318、ass(1)Q4-24%Committed(2)Q4-24Q3-24Q2-24Q1-24Q4-23Canada:Industrial 98.4%97.2%94.4%95.1%95.5%95.8%Office 83.6%82.3%82.0%77.8%80.8%84.1%Retail 91.8%90.4%90.6%89.8%91.3%87.3%Total Canada 93.3%92.1%90.3%88.7%89.9%89.8%U.S.:Industrial 90.8%90.8%90.8%97.9%97.2%99.2%Office 84.2%83.1%83.1%82.9%82.1%83.8%Tot
319、al U.S.85.3%84.4%84.4%90.0%89.2%90.3%Total portfolio 89.2%88.2%87.3%89.5%89.5%90.1%(1)Information is as at December 31,2024,and excludes properties held in equity accounted investments,properties held for redevelopment,and Artiss commercial/residential property(300 Main).Refer to the Property Portfo
320、lio section of this MD&A.(2)Percentage committed is based on occupancy at December 31,2024,plus commitments on vacant space.PORTFOLIO LEASING ACTIVITY AND LEASE EXPIRIESRenewal Summary(1)Q4-24Q3-24Q2-24Q1-24Q4-23Leasable area renewed(in S.F.)204,564146,979100,365288,517261,889Increase in weighted-av
321、erage rental rate 3.3%2.5%3.1%2.2%5.8%(1)Based on owned share of GLA of properties and excludes properties held in equity accounted investments,properties held for redevelopment,and Artiss commercial/residential property(300 Main).Refer to the Property Portfolio section of this MD&A.In 2024,740,424
322、square feet were renewed at an increase in the weighted-average rental rate of 2.6%,compared to 1,024,276 square feet renewed at an increase in the weighted-average rental rate of 4.8%in 2023.The percentage change on renewal activity is calculated by comparing the rental rate in place at the end of
323、the expiring term to the rental rate in place at the commencement of the new term.In many cases,leases are negotiated or renewed such that there are contractual rent escalations over the course of the new lease term.In these cases,the average rent over the new term will be higher than the rate at co
324、mmencement,which is not reflected in the above table results.Lease Maturities and Rental RatesIn-place rental rates reflect the weighted-average net annual rental rate per square foot as at December 31,2024,for the leasable area expiring in the year indicated.In-place rents do not reflect either the
325、 average rate over the term of the lease or the rate in place in the year of expiry.Market rents are estimates and are shown as a net annual rate per square foot.Artis reviews market rents across the portfolio on an on-going basis.These estimates are based on managements best estimate for each leasa
326、ble space and may take into consideration the property managers revenue budget,recent leasing activity,current prospects,future commitments or publicly available market information.Rates applied in future expiry years do not allow for the impact of inflation,nor do they attempt to factor in anticipa
327、ted higher(or lower)than normal periods of demand or market rent inflation due to specific market conditions.Refer to the Risks and Uncertainties section of this MD&A for further information.The following tables contain information on lease maturities and rental rates and are based on owned share of
328、 GLA of properties included in the Portfolio by Asset Class table in the Property Portfolio section of this MD&A.Monthly tenants includes holdovers and renewals where term has not been negotiated.2024 Annual Report|37 36|Artis Real Estate Investment TrustManagements Discussion&AnalysisManagements Di
329、scussion&AnalysisSquare Feet Expiring%of GLAWeighted-Average In-Place Rental RateWeighted-Average Market Rental RateCanadian portfolioIndustrial:Current vacancy 70,476 0.7%N/AN/AMonthly tenants 0.0%N/AN/A2025 374,699 3.8%$9.21$9.762026 467,866 4.8%$8.76$9.352027 323,456 3.3%$8.51$8.822028 534,427 5.
330、5%$10.82$9.582029+760,535 7.7%$13.45$12.58 2,531,459 25.8%$10.69$10.39Office:Current vacancy 201,559 2.0%N/AN/AMonthly tenants 10,265 0.1%N/AN/A2025 188,373 1.9%$15.76$14.332026 122,984 1.2%$17.44$15.872027 46,862 0.5%$20.24$18.272028 30,122 0.3%$20.64$15.842029+537,588 5.6%$17.92$17.44 1,137,753 11
331、.6%$17.62$16.59Retail:Current vacancy 110,096 1.1%N/AN/AMonthly tenants 15,308 0.2%N/AN/A2025 181,433 1.8%$21.15$21.992026 176,117 1.8%$23.75$23.872027 148,946 1.5%$26.18$25.982028 224,780 2.3%$25.38$24.452029+286,754 2.9%$28.17$27.30 1,143,434 11.6%$25.25$24.94U.S.portfolioIndustrial:Current vacanc
332、y 80,600 0.8%N/AN/AMonthly tenants 0.0%N/AN/A2025 98,555 1.0%$19.38$19.502026 0.0%N/AN/A2027 0.0%N/AN/A2028 0.0%N/AN/A2029+693,841 7.0%$5.15$5.23 872,996 8.8%$6.92$7.00Office:Current vacancy 703,818 7.1%N/AN/AMonthly tenants 4,886 0.0%N/AN/A2025 378,328 3.8%$23.09$20.582026 529,324 5.4%$21.99$19.752
333、027 347,332 3.5%$18.99$17.982028 212,302 2.2%$19.81$19.182029+1,985,571 20.2%$20.83$19.58 4,161,561 42.2%$21.01$19.53Total portfolioCurrent vacancy 1,166,549 11.7%N/AN/AMonthly tenants 30,459 0.3%N/AN/A2025 1,221,388 12.3%$17.12$16.422026 1,296,291 13.2%$17.02$16.192027 866,596 8.8%$16.38$15.952028 1,001,631 10.3%$16.29$15.142029+4,264,289 43.4%$17.09$16.24 9,847,203 100.0%$16.92$16.10LARGEST MARK
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