Q3 2019 Earnings Call
All participants you thinking is ready to begin ladies and gentlemen, thank you for standing by welcome to the first couple of Realty Q3, 2019 results conference call. During the presentation. All participants will be no listen only mode. Afterwards, we will conduct a question answer session.
That's fine if you have a question. Please press star one on your telephone keypad.
I would now like to turn the conference over to Allison. Please proceed with your presentation.
Thank you good afternoon, everyone.
In discussing our financial and operating performance and in responding to your questions. During today's conference call. We may make forward looking statements.
These statements are based on our current estimates and assumptions many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward looking statements.
Summary of these underlying statements risks and uncertainties is contained in our various securities filings, including or Mdna for the year ended December 31st 2018, and our current <unk>, which are available on SEDAR and on our website.
These forward looking statements are made as of today's date and except as required by <unk> Securities Law, we undertake no obligation to publicly update or revise any such statements.
During today's call. We will also be referencing certain financial measures that are non I FRS measures.
Yes, do not have standardized meanings prescribed.
And should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with <unk>.
Management provides these measures as a complement <unk> for us measures to aid in assessing the company's performance.
<unk> non <unk> for US measures are further defined and discussed in our mdna, which should be read in conjunction with this call.
I'll now turn it over time.
Okay. Thank you very much outlets and good afternoon, everyone and thank you for joining us today.
In addition to also we have a number of other executives with us today.
And our CFO .
Jordi Robbins, our COO conference.
And George <unk>.
Hello.
I'm pleased to report that as a result of our teams exceptionally hard work. We continue to me it's important progress across all of our strategic objectives.
Unquestionably most important strategic objective for long term success is the advancement of our Super urban real estate strategy.
I'll start with dispositions, because it's important to not only enhance our portfolio, but also to provide capital to de lever the balance sheet. Following our recent share buyback.
Year to date.
We've now closed on the disposition of $550 million of properties all in line with our real estate strategy.
These include the sale over 50% non managing interest in stable growing properties.
Most recent sale closed a few days ago $177 million.
The transaction is what the compatible life insurance partner and includes our beacons field Kirkland and seem to be or properties in Montreal.
As well as our spread her crossing Loblaws closet eagleson properties.
These are good properties was stable rolling in Hawaii, and fit nicely into our strategy for joint ventures.
I would point out that all of our auto what investments are now held in partnerships, reducing our exposure to non super urban markets, while allowing fcr to maintain an important presence and our nation's capital.
Our completed dispositions also include the sale of 100% interest in October of your property or assets in the Nymex and one in Victoria among others.
In addition to the $550 million of dispositions closed year to date.
We also have an additional $180 million of sales that are subject to typical closing conditions were standard due diligence conditions have been weve, including our entire Qubec city portfolio.
Just 163.8 million dollar transaction comprises 1 million square feet of space. It is 93% leased well below last years average occupancy.
These properties that comprise the $730 million have completed or committed property sales I'm very little or no incremental densification opportunities over the foreseeable future.
They also have an average five kilometer population density of 142000 people well below our current level of 280000 people and our target of 300000.
Our dispositions are backend loaded this year.
Approximately 360 million or nearly half of the total I discussed.
Scheduled to close or has closed in Q4.
The proceeds from these Q4 sales are targeted to definitely team.
And in addition to these were making progress on several other dispositions as well.
Our real estate strategy extends beyond selling properties that no longer.
We're also selectively investing in Super urban properties were significant value add opportunities exist.
I want to highlight the word selectively, especially in the context.
We're acquisition volume in Q3, as we spend a great deal of our time balancing future growth prospects with our desire to de lever our balance sheet.
This year substantially all of our $450 million development and acquisition investments have been in Toronto.
The five kilometer population density for these investments average is 534000 people.
Some of these acquisitions have near term income producing expectancy as well and all have meaningful near term value creation expectations.
Good example is our King Highline project in downtown Toronto Liberty village.
As always plan, we exercise our option.
Fired our partner's interest in Q3.
We now own 100% of 155000 square foot retail component anchored by long those who are scheduled to open their grocery store later this month.
Canadian tire scheduled to open early next year.
Shoppers drug Mart and kids and co daycare, who are both now open and winners who opened very strong last week.
We also now own a two thirds interest in the 506 residential rental units in this project with cap rates are one third partner handling residential leasing.
Mixed use properties of this caliber our generational assets that are near impossible to acquire.
The completion of the Super Urban development will elevate our entire Liberty village portfolio, you get another new level.
166 million dollar acquisition costs for our additional interest in King highlight was mostly funded with the repayment of project loans, we previously made to our partner and not from disposition proceeds.
Importantly, we expect the entire property to be income producing next year.
Last quarter I discussed the acquisition of 140, Yorkville, which also included.
Our Q3 investments.
We expect this redevelopment to be very successful on its own.
We also expected to have a positive impact on the value of our vast holdings and Yorkville, especially our Jason Yorkville village Mall and Hazelton Hotel.
And lastly, we acquired one of our partner's interest in the remaining main and main properties specific we gone dassanayake when a mixed use residential rental in retail property well under construction adjacent to the Kipling transit hub with TCC, including subway and go service, which is both training.
Yes.
It also includes an additional interest in or younger Roselawn Assembly.
400, King Street in King West all in Toronto.
Yeah aggregate impact of our year to date investment and disposition activities has resulted in over a billion dollar shift towards our super urban portfolio targets.
A small portion of our investments Werent Predevelopment work as part of our plan to surface value in our density pipeline.
The return on this invested capital is amongst the most compelling opportunities we have given the significant value upside to these projects. Once we serve secure expected zoning over the next year or two.
Our say the 400 King Street and trials King West neighborhoods. Another. Good example, where city Council approved the settlement in L. pot of our proposed development in Q3.
This triggered a 35% increase to the I first value of the property with a healthy profit margin on the project still expected aside from the value increase.
One of the targets, we set at the beginning of the year, what's the submit applications on seven and a half million square feet of density Fcr share during 2019.
With our recent submission of our Christy Cookie site in Toronto at 7 million square feet or for the purposes of our target three and a half million square feet that fcr share as well as several others. We've now achieved our target with further submission still planned by year end.
Roughly 75% of the total is located in Toronto with the balance split between Vancouver.
Atrial and auto.
Finally, the conversion to a read it was also moving along very well with several milestones achieved in the quarter.
We continue to be on track for conversion by year end with our shareholders vote now scheduled for December the time.
The fundamentals of our properties and accordingly are operational metrics remain strong.
We previously mentioned that there'll be some choppiness to some of our metrics as we execute our plan.
Selling higher yielding non super urban property.
Oh, the short term cost operational metrics, such as F. a phone in Hawaii.
The reality is as we're all aware these properties have more limited long term upside and more downside potential and our super urban properties.
In the near term and he will be the most important metric to assess the future earnings potential of Fcr.
And then they'd be is expected to continue its upward trend and will take more prominence as we execute our strategy.
So it continues to be very active at first capital.
We're making meaningful progress across all fronts and the business continues to perform well as we execute on these strategic priorities.
I would like to once again acknowledge the fcr team whose commitment.
Passion and exceptional effort is the reason behind the progress we continue to me as we execute our plant.
I'll now pass things over to K to discuss our quarter in more detail.
Thank you Adam good afternoon, everyone and thank you for joining us on our call today.
As Adam mentioned it was a very active quarter at a CR with a number of strategic transactions as we continue to execute on her super urban strategy.
And our de leveraging objectives post acute to share repurchase transactions.
I would like to update you want a couple of items.
Then take you through the quarterly results in more detail.
As we previously communicated whatever key strategic objectives for 2019 is converting from a corporation.
Into a real estate investment trusts are right.
We continue to make very good progress on this objective during the quarter.
On October seven upon receipt of a fairness opinion the board unanimously approved the conversion to a read.
On November 1st our information circular was mailed to shareholders and posted on CR.
Especially meeting of the shareholders will be held on December 10th to approve the reconversion.
We expect again, we continue to expect the conversion to occur on or about December thirtyth. This year.
The conversion will result in a taxable deemed disposition for all shareholders, who receive read units.
Exchange for their SCR common shares.
Further information regarding the conversion and the tax implications for shareholders can be found in the information circular which is available on SEDAR and on our website <unk> under investors and shareholder meetings.
The tax election package for anyone who is electing to take class B LP units is also available on our website <unk> under investors.
In tax election.
As Adam mentioned, we closed on a number of strategic acquisitions in the quarter, which support our Super urban strategy and our goal to build larger positions in targeted high growth neighborhoods.
He's actually acquisitions included a partial interest in a property in New York, Phil adjacent to our York filled village mall for 60 million.
Motor partner's interest in her King Highline project and Liberty village for 166 million, which has been land for several years and was timed to coincide with our sale of the partial interest on the residential component to cap rate.
And increasing our ownership.
In the four remaining assets main and main urban Realty for 98 million at our interest.
All of these assets are located in dense urban neighborhoods in Toronto.
The acquisition of our partner's interest in King highlight funded primarily through the repayment of loans, we had extended to our partner and by closing on the sale of a partial interest in the residential portion of the property to caffrey.
At the ended the quarter, we owned 70% of the residential component, which decreased to 67% in October when we completed the final closing with cap rate.
As a result of our increased ownership and main and main urban real T., We now control center tea and have moved from equity accounting to full consolidation.
The assets liabilities revenue and expenses in our financial statements.
Subject to the Noncontrolling interest of our partner of approximately 20%.
The level of acquisition activity in the quarter made this quarter atypical looking forward, we're not expecting any significant acquisitions and the remainder of 2019 or in 2020, and we expect the fourth quarter to be the highest quarter for disposition activity in 2019 as Adam mentioned.
We're pleased to advise the S&P published a report yesterday assigning a public rating of triple B minus two or unsecured debentures.
This is equivalent to the be Athree rating currently assigned by Moody's.
Going forward, we intend to continue to carry to credit ratings as we've done so for the past several years.
As such we expect to discontinue our Moody's rating.
Given the Investor feedback we received earlier this year when Moody's change their criteria to return to our prior credit rating E 82.
The criteria that was previously needed or be a one.
We felt staying with Moody's would send a message that was inconsistent with how our credit has been viewed since 2012, and our desire to return to our higher credit rating.
Now turning to the quarterly results.
On slide six of our conference call deck, which is available on our website in the Investor section under conference calls.
We show the factors driving the change in SFL.
During the third quarter EPS all per share grew 14% or four cents per share over the prior year.
The growth was primarily attributed it to a lower share count following the share repurchase.
An increase in interest and other income of 2.8 million related to fee income earned as a result of value creation and our main and main portfolio.
As well as higher loans outstanding.
Oh, so there was a year over year increase and other gains of 4.6 million, which I will touch on shortly.
Our same property NOI increased by 1.5% for the quarter and 2.9% for the nine months ended September Thirtyth 2019, driven by rent Escalations and higher occupancy levels, which is highlighted on slide seven.
Our same property NOI growth rates for the quarter was impacted by the closure of a Walmart location, which we have discussed on prior calls.
Space has been backfield was temporary tenants, allowing us time to select the best value creation opportunities for this property.
Year to date, we have recognized above average lease termination fees, which means we have more space in transition that it's typical and a number of new tenants that are not yet paying cash rent.
We will see the benefits of these new tenants reflected in same property NOI when they begin to pay cash rent.
On slide eight we present, our lease renewal activity for the quarter.
Q3 total portfolio lease renewal lift was quite strong at 10.4%.
On 546000 square feet of renewals when comparing the rental rate in the last year I think expiring term the first year the renewal term.
And even stronger at 11.8% when comparing the rental rate in the last year to expiring term.
Average rental rate in the renewal term.
For the nine month ended September Thirtyth, our total portfolio lease renewal lift was also very strong at 10.9%.
On 1.7 million square feet of renewals and at 12.8% when comparing the rental rate and the last year. The expiring term average rental rate in the renewal term.
Moving to slide nine.
Our average net rental rate grew a healthy 2.5% or 51 cents over the prior year to $20.65 per square foot.
This growth was primarily due to renewal lists rent escalation development completions as well as our year to date disposition activity.
During the nine months ended September Thirtyth, we transferred 178000 square feet, New commercial jelly and 199 residential units from development to income producing property.
The completions were primarily in our King Highline project in Toronto.
On slide 10, our total portfolio occupancy rate increased by 20 basis points of the same prior year period to 96.7%.
Slide 11 highlights our five largest developments that accounted for the majority of the 47 million in development and redevelopment spend in the quarter.
Investments are all in Super urban neighborhoods.
During the quarter. Our density pipeline grew by 800000 square feet to 23.9 million square feet, which now exceeds the size of our existing portfolio.
Currently 5.2 million square feet or 21.8% of this density.
Up from 14.7% last quarter is included in our NAV.
Zero point Sixmillion is included as part of active development and the remaining 4.6 million square feet is valued at 434 million or 90 formal or $94 per square foot.
This is an increase of 227 million over the prior quarter due to the acquisitions I mentioned earlier as well as entitlements received on a property located in Toronto.
Slide 12 shows the factors impacting SSL and the related movements over the prior year period, which I've already discussed.
Slide 13 touches on our other gains losses and expenses, which are included in if that's all.
The third quarter, we recognized other gains of 3.6 million, primarily due to a 4 million dollar gain on a prop tech investment we made in May of 2018 as the company. We invested in was acquired during the quarter.
Additionally, we received 700000, which represents the final proceeds related to the closure to target stores in our portfolio in 2015.
Gains were partially offset by reconversion cost of 1.2 million.
Slide 14 summarizes our CFO metric our year to date adjusted cash flow from operations declined over the prior year, primarily due to lower cash flow from operating activities. As a result of higher interest expense related to the share repurchase share repurchase transactions.
Slide 15 summarizes our year to date financing activities during the quarter. We completed the issuance of 200 million 7.5 years senior unsecured debentures with an effective interest rate of 3.5%.
The proceeds were used to repay 150 million of maturing debentures with a much higher effective interest rate of 5.6%.
Slide 16 summarizes the size of our operating credit facilities, and our unencumbered asset pool as well as our key financial ratios at quarter end 7.1 billion EUR, 67% of our assets were unencumbered.
Slide 17 shows our term debt ladder during the quarter, our weighted average interest rate remained consistent at 4% and our weighted average term to maturity increased to 5.4 years.
Looking for it to the fourth quarter, we expect our AFFO per share to be lower than Q3 and lower than it was in the fourth quarter of 2018.
Due to a number of factors, including increased dispositions inline with our evolve strategy and our deleveraging targets.
Additionally, we do not expect the Q3 other games I touched on earlier to report to repeat in the fourth quarter.
And as indicated in our financial statements our loan receivable balance declined by approximately 221 million during the third quarter. This year.
This helps to support our de leveraging objectives, but will reduce our forecasted interest income going forward.
Proximately 131 million of the reduction in the loan receivables relates to the early repayment of the loan on one third west on August 31st.
Which has generated at very attractive historical returns.
And 90 million relates to loans repaid by a former partner <unk> our by out of their interest in the King Highline project, which I mentioned earlier.
We also continue to incur REIT conversion costs and expect these costs will be higher in the fourth quarter than they were in the third quarter of 2019 and in the fourth quarter of 2018.
As we are executing all of the necessary documents and steps to complete the plan of arrangement.
I would like to recognize the tremendous efforts of our conversion team, including the SCR finance.
Tax legal and I T teams as well as our consultants and legal and tax advisors that had been working with us on this project.
This time, we would be happy to answer any questions you have.
Operator, please open the call for questions.
Thank you. Please press star one at this time, if you have a question.
They'll be a beef costs, while the participants register for question.
And the first question is from Joe on the Rodriguez. Please go ahead.
[noise] Hey, Adam could you, maybe just talk about with fee by our differentials would be and maybe even the cap rate differentials on.
Some of the non core stuff, you're selling for stuff you're keeping.
Like maybe even within those those markets like auto one month show, where you're kind of selling some assets.
Obviously, it's a market where are you keeping a book to.
Yeah, IR as a bit trickier, but but.
But on cap rate I mean, one way to look at it is because it's actually last geographic specific and more asset specific so.
Well, we own certain assets in Montreal for example at Griffin town.
Probably carries a similar cap rate whether that asset is located in Montreal or Toronto, but if you look at our overall portfolio our average cap rate is somewhere around 5.2%.
So that's obviously a blend or we were very deliberate in our disposition properties, saying, we are going to sell off of.
Block of a better word the bottom of our portfolio not not to give it a negative connotation because.
And I think given the progress and the pricing it demonstrates user still very good properties, but my Fcr standards. They are.
In that bucket towards the bottom of our own portfolio.
We've been in and around a 6% cap rate on average and this 700, some odd million dollars that we sold so far so I gives you.
General idea of of the cap rate and not a bottom category.
Okay. So maybe if you.
You fires trickier than than maybe same property NOI growth like what would you kind of expect.
Spread to be you know over a.
Say five year period.
Roughly 100 basis points.
Okay.
And just expanding audio and so that's that's obviously one of the important factors in our analysis when we evaluated the portfolio, where we've made the most money where we expect to make the most money long term.
But it's not isolated to just the growth rate of the asset its current condition, it's the opportunity to.
Really enhance the value by doing something more material to it like a redevelopment or intensification and so when we look at the assets that are targeted to keep not only do they have a higher in term growth rate in their current form. We also expect that there's a more near term and more significant value accretion opportunity.
That though we believe we can realize over pay on the property short medium or long term. So so it's really both elements that I think are important to consider.
Thats kind of way asked for the differential and <unk> are you.
You kind of expect.
Yeah, and again wise, it's tricky is.
Some assets the exact same asset the five year ire, our can be dramatically different than the tenure IR, depending on when certain tenant lease rates expire that allows us to trigger that redevelopment.
Right Okay.
And then.
Can you maybe refresh our memories, so what would be next in the pipeline in terms of.
Completions for rental residential buildings.
Yeah, Oh I'll start I mean, though don't go over most focused on.
Right now is King high line, which.
You know were part way through lease up we started leasing up a few months ago.
We've got about 216 units or at least today out of.
Roughly 506.
So so that's that's the more near term one in terms of ones that are in the pipeline all that Jody speak to those.
<unk>.
Thanks, Adam a good afternoon, Johan so just to add to touch on that so as Adam mentioned, obviously the focus is our king Highline project and others that we submitted for a this past year that Oh, we expect to be a potentially a purpose built rental which includes certainly a portion of our Christy cookie submission that we've just made as well as that Midtown.
Toronto, a young and rose one and then here in Liberty village that we have another property addresses 10, 71, king kind of Kitty corner too keen highline. Another purpose built rental project in the future.
And finally, either at the southeast corner of I Leslie In York Mills, We made an application, which we expect a portion of that also could be purpose. It was I've done dassanayake when that's under construction right now coming off the ground. So that'll be the next one that we start leasing up we're in the process of securing our partner who's been identified now.
For a phase two and our welder 10 projects. So we're we're going to build a little over 200 units there with construction starting as soon as phase one is done which is relatively imminent.
There was a bit of a sense.
Okay, Okay, great I'll turn it back.
Thank you very much.
Thank you and then that's next question is some Putney beer. Please go ahead.
[noise], Thanks, and good afternoon.
Just maybe coming back to your comments on the on Q4 being sort of the largest quarter four for disposition so should that.
That include of course, you know more trailing auto that has close to and I guess, the convexity portfolios, but is there more beyond that that used to close in Q4.
There is part of <unk>.
But there they're generally.
I haven't reached a point that there's other properties that are under conditional agreement and so buyers are going through due diligence and.
Our expectation is that.
Some if not all of those will materialize or the question is given we're sitting here in mid November .
You know because I'd end up closing in December as it leads into January we're not overly fast either way.
As long as they get done so we certainly do expect more.
And I would say, there's a strong likelihood that some of it does end up Q closing in Q4 beyond convexity and a transaction that just closed a few days ago.
And then I guess with all that says so where do you sort of see leverage for a ending by a let's say by year end.
Hi, Tommy S.K.. So as we stated in the past our objective regarding leverage is to return to similar metrics as that you're in December 2018.
Within two years of the share repurchase transaction.
And given the significant dispositions plan for Q4, we do expect that we'll have a meaningful positive impact on our year end metrics for 2019 and that we remain on track for our overall to your targets.
Okay.
And then maybe just a I guess thinking about the balance of the program you're sounds like you're you should be at least let's call. It halfway through by the end of this year towards maybe that billion and I've target.
What else can you talk about in terms of the pipeline and how that's shaping up for a crops for 2020.
Well I think we're taking a similar approach in the sense that we expect to sell certain properties outright.
And certain properties into Jvs so.
So the composition of that that Ah I expect to remain consistent.
If we get done what we think will get done in 29 team.
We'll be up will be a little over halfway through the billion five objective.
And we think the likelihood is that the alert the balance largely if not entirely gets done in 2020.
You know assuming current market conditions persist and remains constructive as they have been so far.
Okay. That's helpful.
Maybe just switching to the Christy Cookie site.
Just curious if you have a bit off hand, what the IRS value of that site is currently and perhaps if it were sold today or if it was entitled today, what that value spread would be.
So so we don't break out our I personally by property well, we have made clear on Christy cookie similar to many other.
Development projects is that.
At this stage, we continue to each area at our invested cost.
So our acquisition price.
His is public information since then we've incurred some cost in terms of capitalized interest obviously planning consultants. We've we've done a lot of work the last three years, but I wouldn't describe it as overly material costs.
The value if you.
Look at significant but we're cognizant of the fact that we're in a a process with a number of stakeholders, including community residents city the transit authorities.
And you know, we're looking to create something very special that Scott longevity here, where we're expecting to have a meaningful investment here forever to different approach and so we're prepared to do things and contribute things.
To make this vision become a reality, but.
We're going to stay away from putting numbers on the expected value creation right now until we have a little more clarity on details and more importantly to respect the sensitivity of the ongoing process that's underway.
Got it thanks very much on thank you I'll turn it back okay. Thanks, Thank you Bobby.
Thank you.
Once again, please press star one on your telephone keypad, if you'd have a question.
The next question is from some of them. Yes. Please go ahead.
Thanks, Good afternoon.
Just wondering if you could tell us a you know what sort of tenants or categories or you're most excited about in terms of absorption of of retail space today, and that's really what's the types of tenants are our most worrisome.
Specifically thinking of the short term as we head into traditional bankruptcy season in the early part of every year.
Yeah. Thanks. Thank you very much Sam I mean look I I would we actually haven't seen a you know notwithstanding there's a lot of headlines about different things going on in retail as you know our our businesses focused on a very specific sub sector a retail.
And the health of the demand and the operators in our space I I got to tell you has not changed materially over the last little while so our current tenant roster and they use isn't that tenant roster and all our current expand on it because he is he's obviously on the ground.
Dealing directly with some day to day.
But those categories continued to be healthy they continue to be the same categories that we've looked to to shelf space and you know improved merchandising mix and things like that again when you look at categories of concern you know we're fortunate we don't we don't have goals in our portfolio you know apparel department stores those are.
Clearly the ones that are going through the biggest transition in terms of their sector in industry, where we don't own properties that have those types of tenants.
And so when we look at concern you know our concern is.
Certain tenants that you know take a very large single storey spaces. In these you know urban or suburban neighborhoods large parking fields.
No. It's at various forms of rights, whether it's no builds or use restrictions and they're in properties that have a significantly higher and more valuable use and so our concern is how do we how do we get get those rights to those properties back prior to the potential contractual terms, that's actually where we spend a lot of arc.
I'm on what I would call you know concerning tenants. So it's more boat, taking advantage and expediting those opportunities more so than bankruptcies.
But so going back your first point arm, maybe we can talk to Sam, but where you're seeing strongest demand what type of categories.
Sure Hi, Sam you know our urban portfolio still attracting strong interest from several categories, including that stores coffee shops, the cares health and wellness dollar stores sit down restaurants specialty food stores up price fashion and numerous quick service retail or were also.
Encouraged by a trend we're starting to see in some of the food stores are becoming more active and investing in their premises through renovation programs early days, but it's still a good sign to see when they invest.
Because there are big tenant of ours.
Thank you I noticed a nearby the Christy could you say, let's put up a a like a click <unk> pick up saying is that something you're saying that's likely to to expand dramatically.
Term by law, but other retailers.
<unk> certainly it's been slow slower to unfold than many expected and.
Look I I think psychologically, there's still a meaningful elements across consumers mentality that for certain categories of products. There's an attraction to picking their own properties are making more regular trips to the grocery stores and smaller basket size, that's a and superbly neighborhoods. That's that's a trend that.
But unfolding for awhile and so we see in our 133 grocery stores in general smaller basket size is higher component of the basket in organic foods prepared foods produce a meets things like that and higher volume of total baskets sales in a typical days so.
So we look at even you know it with the Amazon walkers and whole Foods and York Phil.
There are less utilized than I think some would expect now whether that trend changes remains to be seeing a we view kick click and collect as a beneficial thing for from a retail landlord perspective, because it's still driving traffic into the center, it's making the shop.
For those consumers that use it more convenient it does not negatively impact the size or space requirements of of the food store operators and so.
It from what we believe it actually can drive even more cross shopping benefit by making that the grocery shop more efficient and then having people.
In the center you know whether its lineup dropping our child off of the data are picking up a coffee or a bottle of wine or.
One of the Doctor dentists are doing a workout or are things like that you know we assemble mix of uses that are facilitated to try and.
Be the one stop shop for a for people in those specific neighborhoods.
Thank you very much.
Okay. Thank you.
Thank you once again, please press star one on your telephone keypad. If you have a question.
[noise] there no further questions for just at this time.
Okay, well, that's great I felt like a shorter queuing they periods a normal so we're getting more efficient, but [laughter] I I'd like to once again, thank everyone for their time. This afternoon. Their continued interest in first capital.
We look forward to speaking with you soon thank you very much.
[noise]. Thank you. The conference has now ended please disconnect your lines at this time and thank you for participation [noise].
[noise].
This conference is no longer being recorded.
No as you put modest coffeehouse it does that won't be.
Uh huh.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay, that's because it had been.
Yes.
Okay, that's associated with funding.
[noise].