Q3 2019 Earnings Call

November 6, 2019

Good afternoon, My name is Wendy and I will be or conference. Operator today at this time I would like to welcome everyone to the Killam apartment <unk> third quarter 2019 financial results Conference call.

Operator: Good afternoon. My name is Lindsay, and I will be your conference operator today. At this time, I would like to welcome everyone to the Killam Apartment REIT Q3 2019 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by two. Thank you. Mr. Philip Fraser, President and CEO, you may begin your conference.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If he would like to ask a question. During this time.

Simply press Star then the number one on your telephone keypad.

If you would like to withdraw your question. Please press the star followed by too.

Thank you.

Mr thought Fraser President and CEO you May begin your conference.

Philip Fraser: Thank you. Hello, and thank you for joining Killam Apartment REIT's Q3 2019 Conference Call. I am here today with Robert Richardson, Executive Vice President, Dale Noseworthy, Chief Financial Officer, Erin Cleveland, Vice President of Finance, and Nancy Alexander, Senior Director of Investor Relations. Slides to accompany today's call are available on the investor relations section of our website under Events and Presentations. I will now ask Nancy to read our cautionary statement.

Thank you Hello, and thank you for joining killing apartment Reits Q3, 2019 conference call.

I'm here today with Robert Richardson.

Executive Vice President.

They'll noseworthy Chief Financial Officer.

Aaron Cleveland.

President of finance.

Nancy Alexander Senior director of Investor Relations.

Slides to accompany today's calls are available on the Investor Relations section of our website under events and presentations.

I will now ask Nancy to read our cautionary statement think sell this presentation contains forward looking statements with respect to kill apartment retail operation strategies financial performance and condition. The actual results and performance of killing apartment rate could differ materially from those expressed or implied in such statements.

Nancy Alexander: Thanks, Phil. This presentation contains forward-looking statements with respect to Killam Apartment REIT's operations, strategies, financial performance, and conditions. The actual results and performance of Killam Apartment REIT could differ materially from those expressed or implied in such statements. These statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from those expressed include, among other things, general economic and market factors, competition, changes in government regulations, and factors described in the Risk Factors section of Killam's Annual Information Form and other securities and regulatory filings. This cautionary statement qualifies all forward-looking statements attributable to Killam and the persons acting on its behalf. Unless otherwise stated, all forward-looking statements are as of the date of this presentation, and the parties have no obligation to update such statements.

These statements are qualified in their entirety, buddy inherent risks and uncertainties surrounding future expectations.

Important factors that could cause actual results could differ materially from those expressed include among other things general economic and market factors competition changes in government regulations and factors described in the risk factor section of <unk> annual information form and other securities and regulatory filings.

This cautionary statement qualifies all forward looking statements attributable to kill them and the persons acting on his behalf unless otherwise stated all forward looking statements are as of the date of this presentation and the parties have no obligation to update such statements.

Thank you Nancy.

Philip Fraser: Thank you, Nancy. I am pleased to report another very strong quarter for Killam. We achieved net income of CAD 46.8 million compared to CAD 27.1 million in Q3 2018, and earned funds from operations of CAD 0.27 per unit, a 3.8% increase from Q3 in 2018. We are focused on our strategic priorities and continue to execute on our targets for the year, as summarized on slide 4. Performance from our same property assets has been strong, and we are on track to meet our same property NOI growth target. We have completed CAD 149 million of acquisitions so far this year, growing the portfolio to CAD 3.1 billion.

I'm pleased to report another very strong quarter for kill him.

We achieved net income of $46.8 million compared to $27.1 million in Q3 2018.

Earned funds from operations of 27 cents per unit.

A 3.8% increase from Q3 in 2018.

We are focused on their strategic priorities and continue to execute on our targets for the year as summarized on slide four.

Performance from our same property assets has been strong and we're on track to meet our same property NOI growth target.

We had completed $149 million that acquisition, so far this year growing the portfolio to $3.1 billion.

We will meet our target or 2019 target due to earn at least 30% over 2019 in Hawaii from outside Atlantic Canada.

Philip Fraser: We will meet our 2019 target to earn at least 30% of our 2019 NOI from outside Atlantic Canada. Our development plans are on track, including The Kay in Mississauga, which is now officially underway. We are maintaining a strong balance sheet with conservative debt metrics. On Monday, we completed a CAD 100 million equity raise. This raise sets us up for continued growth in the year ahead. Approximately half the funds raised have already been applied to our line of credit, and the remainder is expected to be used to fund acquisitions and developments. Following the close of this equity raise, our debt levels have improved by approximately 110 basis points, down to 46%, and our acquisition capacity has increased to approximately CAD 300 million.

Our development plans are on track, including the K in Mississauga, which is now officially underway.

And we are maintaining a strong balance sheet with conservative debt metrics.

[noise] on Monday, we completed a 100 million dollar equity raise this raise sets us up for continued growth in the year ahead.

Approximately half the funds raised has already been applied to our line of credit.

And the remainder is expected to be used to fund acquisitions and development.

Following the close of this equity raise our debt levels have improved by approximately 110 basis points down to 46%.

And our acquisition capacity has increased to approximately 300 million.

Philip Fraser: I will now ask Dale to recap our financial results.

I'll now ask Dale to recap our financial results [noise].

Dale Noseworthy: Thanks, Phil. Slide 5 highlights our Q3 and year-to-date financial results. Killam generated FFO per unit of CAD 0.27, 3.8% higher than Q3 2018. Year-to-date, we generated CAD 0.73 in FFO per unit, up 2.8% from last year. This growth is attributable to accretive acquisitions, developments, and solid performance from our existing portfolio. Same property revenue and NOI growth were both strong in the quarter. The trend of high occupancy and rental rate growth continues, as illustrated on slide 6. Rents were up 3.4% in Q3, 90 basis points ahead of a year ago, and our highest average rental rate increase in 7 years.

Thanks, Phil.

Slide five highlights our Q3 and year to date financial results, killing generated FFO per unit of 27 cents, 3.8% higher than Q3 2018.

Year to date, we generated 73 cents an F O per unit up 2.8% from last year.

Its growth is attributable to accretive acquisitions and development and solid performance from our existing portfolio same property revenue and I know I growth, where both strong in the quarter.

Trend of high occupancy and rental rate growth continues as illustrated on slide six rents were up 3.4% in Q3 90 basis points ahead of a year ago, and our highest average rental rate increase in seven years.

Dale Noseworthy: Strong fundamentals paired with our revenue enhancing programs are driving higher rents, improved occupancy, and low incentive offerings. We remain focused on expense management. As shown in slide 7, same-property operating expenses were up 2.1% in Q3. Energy consumption savings realized from LED lighting retrofits, and other efficiency investments were partially offset by higher water and natural gas rates, as well as inflationary increases and timing differences in general operating expenses. Property taxes were also up, increasing 2.5% quarter over quarter due to rising property assessments. In total, Killam same-property NOI margin increased by a healthy 60 basis points in the quarter and 40 basis points year-to-date. We continue to manage our balance sheet conservatively, as highlighted on slide 8. Debt as a percentage of total assets was 47.2% at the end of the quarter.

Strong fund fundamentals paired with our revenue enhancing programs are driving higher rent improved occupancy and low incentive offerings.

We remain focused on expense management as shown in slide seven same property operating expenses were up 2.1% in Q3.

Energy consumption savings realized from LCD lighting, retrofits and other efficiency investments were partially offset by higher water and natural gas rates as well as inflationary increases and timing differences and general operating expenses.

Property taxes were also up increasing 2.5% quarter over quarter due to rising property assessments.

In total kellum same property NOI margin increased by a healthy 60 basis points in the quarter and 40 basis points year to date.

We continue to manage our balance sheet conservatively as highlighted on slide eight that as a percentage of total assets was 47.2% at the end of the corridor.

Dale Noseworthy: Following the close of the recent equity raise and the subsequent repayment of the balance outstanding on our line of credit, our debt metrics have improved, which are expected to be seen with our Q4 results. In addition to a stronger balance sheet, Killam's acquisition capacity has increased substantially. Slide 9 highlights our debt maturity profile, including average apartment mortgage rates by year versus CMHC insured rates. Based on current market conditions, we expect to refinance maturing debt throughout the remainder of this year and over the next three years at relatively flat rates. As shown on Slide 10, Killam's real estate portfolio has grown to CAD 3.1 billion in value. We are acquiring and developing new high-quality assets in prime locations, and investing in value-enhancing capital upgrades at our existing assets. Same property NOI growth has contributed to fair value gains across the portfolio.

Following the close at the recent equity raise and the subsequent repayment of the balance outstanding on our line of credit our debt metrics have improved which are expected to be seen with our Q4 results.

In addition to a stronger balance sheet.

Account acquisition capacity has increased substantially.

Slide nine highlights our debt maturity profile, including average apartment mortgage rates by year versus the makes the insured rates based on current market conditions, we expect to refinance bench refinance maturing that throughout the remainder of this year and over the next three years at relatively flat rates.

As shown on slide 10 kilns real estate portfolio has grown to 3.1 billion in value.

We are acquiring and developing new high quality assets in prime locations and investing in value enhancing capital upgrades at our existing assets.

Same property NOI growth has contributed to fair value gains across the portfolio.

Dale Noseworthy: In addition, we have continued to see cap rate compression this year, including a 16 basis point tightening in our apartment portfolio and a 113-point compression in the MHC portfolio. Year-to-date, we've recognized CAD 134 million in fair value gains, including CAD 36 million in Q3. A highlight this past quarter was cap rate compression in the Halifax market. We've seen an increase in the amount of demand for apartment product in Halifax from both local and institutional investors. CBRE highlighted this cap rate compression in its Q3 report, the second quarter in a row they've highlighted valuation increases in the Halifax market. Investors are attracted to the city's solid apartment fundamentals, including strong population growth, rising rents, and low vacancy. I'll now turn the call over to Robert, who will provide details on our operating performance this quarter.

In addition, we've continued to see cap rate compression this year, including a 16 basis point tightening in our apartment portfolio and 113 point compression in the MHC portfolio.

Year to date, we recognized 134 million in fair value gains, including 36 million in Q3.

I highlight this past quarter with cap rate compression in the Halifax market, we've seen an increasing amount of demands for apartment product and Halifax from both local and institutional investors CB Ari highlighted this cap rate compression and its Q3 report the second quarter in a row, they've highlighted valuation increases in the Halifax market.

Investors are attracted to the city's solid apartment fundamentals, including strong population growth rising rents and low vacancy.

I'll now turn the call over to Robert will provide details on our operating performance [laughter]. Thank you Dale good afternoon, everyone.

Robert Richardson: Thank you, Dale. Good afternoon, everyone. As shown on slide 11, Killam continues to execute its strategy of increasing unitholder value. Specifically, we continue to focus on increasing funds from operations and net asset value based on three strategic priorities. One, increase Killam's earnings from its existing portfolio. Two, expand the portfolio, diversifying geographically through accretive acquisitions with an emphasis on newer properties. And three, since 2010, Killam has developed high-quality properties in Killam's core markets. I will focus on Killam's operating performance year-to-date and detail a number of key revenue and expense management initiatives before turning the call back to Philip to discuss our year-to-date acquisitions and development progress. Killam's existing portfolio of 16,000 apartment units, 5,400 MHC sites, plus 750,000 sq ft of commercial space, is focused on maximizing unitholder value.

Shown on slide 11 come continues to execute its strategy of increasing unitholder value specifically, we continue to focus on increasing funds from operations and net asset value based on three strategic priorities. One increase comes earnings from its existing portfolio.

To expand the portfolio diversifying geographically through accretive acquisitions with an emphasis on newer properties.

Entry says.

Only 10 killed has developed high quality properties and kilns core markets.

I will focus on comes operating performance year to date in detail a number of key revenue and expense management initiatives before turning the call back to fill up to discuss our year to date acquisitions and development progress.

Companies. This existing portfolio of 16000 apartment units 5400, MHC sites, plus 750000 square feet of commercial space is focused on maximizing unit holder value how strong same property NOI performance in 2018 and year to date 29 King.

Robert Richardson: Our strong same property NOI performance in 2018 and year-to-date 2019 is largely attributable to our ability to grow revenues. Slide 12 charts the rental rate trends over the past three years. We have generated consistent revenue growth each quarter for the past seven quarters as we execute Killam's revenue-enhancing programs. For Q3 2019, we delivered overall same property rental rate growth of 3.4%. A 90 basis point increase versus Q3 2018. Broken down, renewing tenants, which annually represent plus or minus 70% of our apartment portfolio, delivered an average gain of 2.1%, up 40 basis points over Q3 2018. However, Killam's best rental return is with units rented to new tenants on turnover.

Is largely attributable to our ability to grow revenues.

Slide 12 charts, the rental rate trends over the past three years, we have generated consistent revenue growth each quarter for the past seven quarters as we execute Jones revenue enhancing programs.

For Q3 29 team, we delivered overall same property rental rate growth of 3.4%.

90 basis point increase versus Q3 2018.

Broken down renewing tenants, which annually represent plus or minus plus or minus 70% of our apartment portfolio delivered an average gain of 2.1% up 40 basis points over Q3 2018.

However comes best rental return is with us rented to new tenants on turnover this quarter kilo delivered 5.7% rental growth on new leasing a 70 basis point improvement versus the same period in 2018.

Robert Richardson: This quarter, Killam delivered 5.7% rental growth on new leasing, a 70 basis point improvement versus the same period in 2018. Please refer to slide 13. Killam's value proposition and market conditions have never been stronger. As we experience record occupancy levels in many of Killam's core markets, we have seized the opportunity to optimize rents as units turn by executing on two key strategies. First, 78% of Killam's apartment units are open market, meaning Killam can bring rents to market at renewal time instead of exclusively when a unit becomes vacant, as is the case in Ontario, for example. Secondly, this year we will invest between CAD 7 and 8 million to renovate and upgrade select units to generate, on average, an all-cash return of 13%.

Please refer to slide 13.

Some of the value proposition a market conditions have never been stronger.

As we experienced record occupancy levels in many of films core markets. We have sees the opportunity to operate optimize rents as units turned by executing on two key strategies first 70% of comes apartment units are open market, meaning Kim can bring rents to market at renewal time instead of exclusively when a unit.

Becomes vacant as is the case in Ontario for example.

And secondly, this year, we will invest between seven.

And $8 million to renovate and upgrade select units to generate on average and all cash return of 13%.

Market demand for accounts, new and newly renovated.

Robert Richardson: Market demand for Killam's new and newly renovated rental units is healthy across the portfolio, and in response, Killam has accelerated its suite repositioning program. For 2019, we will deliver 300+ reposition units that should generate an aggregate CAD 1 million in additional net operating income. With 250 suite renovations completed, we are executing to plan. So far in 2019, the average monthly rental increase for a reposition unit was CAD 280, generating an unlevered return of 13% on an average investment of CAD 26,000. Given these metrics, Killam plans to increase its unit repositioning program to complete 400 to 500 units in 2020. We expect this to improve our top-line annualized revenue by approximately CAD 1.5 million.

Rental units is healthy across the portfolio and then response, Jim has accelerated its suite repositioning program.

For 2019, we will deliver 300, plus reposition units that should generate an aggregate $1 million an additional net operating income.

250 suite renovations completed we are executing to plan.

So far and 29 team the average monthly rental increase for a repositioning unit was $280.

[noise] generating an unlevered return of 13% on an average investment of $26000.

Given these metrics, killing plans to increase its unit repositioning program to complete 400 to 500 units in 2020, we expect us to improve our top line annualized revenue by approximately $1.5 million.

Robert Richardson: Unit-enhancing upgrades deliver outstanding returns, and this reality is not restricted to specific geographies or properties, but is virtually universal across Killam's portfolio when we upgrade any unit older than 10 years. Killam has identified approximately 3,000 additional units for repositioning. Once these are completed, we expect to earn an estimated CAD 10 million in additional annualized rental revenue, representing an approximate CAD 195 million increase in net asset value. The average cost to reposition a unit is approximately CAD 25,000 or CAD 75 million for these 3,000 units. I'd also want to highlight that once these 3,000 units outlined here are completed, the cycle starts again on a portion of the remaining 13,000 units in our portfolio that will by then have reached their ten-year threshold. The cycle is continuous.

Using enhancing upgrades deliver outstanding returns and this reality is not restricted to specific geographies or properties, but it's virtually universal across comes portfolio. When we upgrade any unit older than in years.

Almost identified approximately 3000 additional units for repositioning. Once these are completed we expect to earn an estimate at $10 million, an additional annualized rental revenue representing an approximate 195 million dollar increase and net asset value.

The average cost to reposition the unit is approximately $25000 were $75 million for these 3000 units.

I also want to highlight that once these 3000 units open mind here are completed the cycle starts again on a portion of the remaining 13000 units in our portfolio that will buy then have reached their tenure threshold the cycle is continuing.

As in past quarters, I will quickly profile one of comes properties undergoing a Renaissance please turn to slide 14.

Robert Richardson: As in past quarters, I will quickly profile one of Killam's properties undergoing a renaissance. Please turn to slide 14. Fort Howe in Saint John, New Brunswick, has commanding views overlooking the Saint John Harbor. It was constructed 50 years ago and is still one of the largest apartment buildings in New Brunswick with 153 units. This mid-rise property is being upgraded with new cladding, a new heating system, and most importantly, newly renovated units. At Fort Howe, Killam on average invests CAD 36,000 per unit to upgrade kitchens, bathrooms, and flooring, and generates CAD 390 or 41% more rent per month. Overall, a 13% all-cash return on investment. In conjunction with driving revenue growth, Killam is actively managing expenses to optimize net operating income.

And how in Saint Honor Brunswick.

Has come any views overlooking the same John Harbor.

It was constructed 50 years ago and is still one of the largest apartment buildings in new Brunswick with 153 units. This mid rise properties being upgraded with new cladding, I know heating system and most importantly, newly renovated units at Fort how kill him on average invested $36000 per unit to upgrade kitchens and bathrooms and.

Flooring and generated $390 or 41% more rent per month overall is 13% all cash return on investment.

In conjunction with driving revenue growth Killman's actively managing expenses to optimize net operating income.

Robert Richardson: Killam is executing its 5-year, CAD 25 million energy efficiency plan focused on energy savings, such as installation of ultra-low flow toilets, LED lighting retrofits, and heating system upgrades. These projects help to lessen Killam's carbon footprint and mitigate the impact of expense increases from rising energy rates and other inflationary pressures. This year, we are on target to complete CAD 5 million in projects having an average 5.6-year payback on an 18% return. For the past four years, Killam has tracked its portfolio's energy intensity on an expense per square foot basis, along with its carbon dioxide emissions.

Ken was executing its five year 25 million dollar energy efficiency plan focused on energy savings such as installation of ultra low flow toilets, LTV lighting, retrofits and heating system upgrades.

These projects helped to lessen films carbon footprint and mitigate the impact of expense increases from rising energy rates and other inflationary pressures. This year. We're on we are on target to complete $5 million and projects, having an average 5.6 year payback for 18% return.

For the past four years film has attracted it's portfolios energy intensity on an expense per square foot basis, along with its carbon dioxide emissions.

Robert Richardson: As slide 15 details, we're now taking monitoring further by working with a third-party supplier to complete a full baseline audit of our greenhouse gas emissions, ensuring our metrics are consistent and benchmarked against the leading green multi-res companies in North America. We are fully committed to being among the leaders in ESG for multi-residential REITs and working diligently to reduce our environmental footprint, ensure effective and ethical governance, and invest to maintain sustainable economic growth. Slide 16 profiles Killam's strong same-property rental rate growth and NOI growth by region for Q3 2019. The importance of geographic diversification is evident in this slide, as it highlights the NOI growth of not just Ontario at 7.8% this quarter, but also Halifax, all three New Brunswick cities, and Charlottetown.

Slide 15 details were now tracking.

Good morning, sort of taking monitoring further by working with a 3% with a third party supplier to complete a full baseline audit of our greenhouse gas emissions.

Sure I have metrics are consistent and benchmarked against the leading green multi rest companies in North America.

We are fully committed to being amongst the leaders in ESG for multi residential retail and working diligently to reduce our environmental footprint ensure effective and ethical governance and invest to maintain sustainable economic growth.

Slide 16 profile shown strong same property rental rate growth and I know why growth by region for Q3 2019.

The importance of geographic diversification is evident in this slide as it highlights the NOI growth not just Ontario at 7.8% this quarter, but also Halifax, all three new Brunswick cities and Charlottetown.

Our properties in Ottawa, London, and Cambridge, GCA maintain excellent occupancy and rental growth for both routine and reposition units this quarter, delivering and why growth of 9.9%, 8.5% and 5.4% respectively.

Robert Richardson: Our properties in Ottawa, London, and Cambridge GTA maintained excellent occupancy and rental growth for both routine and repositioned units this quarter, delivering NOI growth of 9.9%, 8.5%, and 5.4% respectively. Once Killam's leading market for rental growth for many years, the Newfoundland economy has been challenged for the past three. For Q3 this year, vacancy increased nominally by 20 basis points quarter over quarter, but average rents improved by 80 basis points, so there are signs of encouragement in the market. St. John's economy remains dependent on oil, so when the Atlantic Provinces Economic Council states Newfoundland's GDP should grow 2.7% for 2019 and an additional 2.4% in 2020, bolstered by the ramp-up at Hibernia and Husky's White Rose projects, we expect St. John's occupancy to improve noticeably next year.

Once Jones, leaving Mark for rental growth for many years, the new plan economy has been challenged for the past three.

For Q3, this year vacancy increase nominally to 20 based by 20 basis points quarter over quarter.

But average rents improved by 80 basis points. So there are signs of encouragement in the market.

St. John's economy remains dependent on oil so when the Atlantic provinces Economic Council states, new plants that GDP should grow 2.7% for 29 team and an additional 2.4% in 2020 bolstered by the ramp up at Hibernia and Huskies.

Flight rose projects.

We expect Saint John occupancy to improved noticeably next year.

Robert Richardson: In Alberta, Edmonton same-property results consist of two properties acquired in 2017, Waverley and Tisbury. These properties are taking longer to stabilize than expected. Their combined occupancy for Q3 2019 was 85.4%. However, I am pleased to report that their current occupancy in November is now 90%. As well, Killam's 176-unit Vibe Lofts property also located in Edmonton, which is not part of the same-property numbers having been acquired mid-year 2018, is 97% occupied, giving Killam a combined Edmonton occupancy of 93%. We are optimistic this trend will continue into 2020. We are pleased with our 531-unit Calgary portfolio this quarter. Same-property occupancy was up 60 basis points, and average rental rates improved a healthy 3.9%. Calgary feels like it's stabilizing with overall occupancy at 95% this quarter.

In Alberta Edmonton same property results consists of two properties acquired in 2017, where we're very into very these properties are taking longer to stabilize unexpected their combined occupancy for third quarter 2019 was 85.4%. However, I'm pleased to report that's our current occupancy in November is now 90%.

As well count was 176 unit Vibe loft property also located in Edmonton, which is not part of the same property numbers have you been acquired midyear 2018 is 97% occupied getting killed them, a combined advent and occupancy of 93%.

We are optimistic this trend will continue into 2020.

We're pleased with our 531 unit Calgary portfolio. This quarter same property occupancy was up 60 basis points and average rental rates improved a healthy 3.9%.

Calgary feels like a stabilizing.

And with overall occupancy at 95% this quarter.

I will now hand, you back to fill up to provide details on our acquisitions and new developments this quarter. Thank you.

Robert Richardson: I will now hand you back to Philip to provide details on our acquisitions and new developments this quarter. Thank you.

Thank you Robert Slide 17 details are annual acquisition history and year to date activity.

Philip Fraser: Thank you, Robert. Slide 17 details our annual acquisition history and year-to-date activity. Killam has acquired CAD 145 million of assets in the first nine months of 2019. We have exceeded our minimal acquisition target for the year, and with the recently closed public equity offering, we will continue to look for accretive opportunities to add to our portfolio. During Q3, Killam purchased a 48-unit property in Fredericton, New Brunswick, as shown on Slide 18. The purchase price of this 48-unit building was CAD 9.25 million with an all-cash yield of 5.4%. The building is currently 100% occupied. Subsequent to the end of Q3, we purchased a 359-site seasonal manufactured home community located in Shediac, which is located just outside Moncton, New Brunswick, for CAD 3.8 million.

Killen has acquired a $145 million of assets in the first nine months.

I have 2019.

We have exceeded our minimal acquisition target for the year and with the recently closed public equity offering we will continue to look for accretive opportunities to add to our portfolio.

During Q3, killing purchase a 48 unit property in credit and New Brunswick as shown on slide 18. The purchase price. This 40 unit building was $9.25 million with an all cash yield of 5.4%.

The building is currently 100% occupied.

Subsequent to the end of the of Q3, we purchased the 359 site seasonal manufactured home community located in Shetty Act, which is located just outside Monkton, New Brunswick for $3.8 million.

Since our development project program started eight years ago.

Philip Fraser: Since our development project program started 8 years ago, we have completed 11 development projects in 5 provinces, consisting of 1,200 units at a cost of about CAD 300 million. Our most recently completed development, Frontier, is shown on slide 20 and 21, co-developed with RioCan, opened on 1 June. Frontier was completed on budget and on time, and is currently 90% leased. We expect to be fully leased in the next 2 to 3 months. The all-cash yield on this development is approximately 5.25%, a healthy 125 basis points above current cap rates. This has resulted in a CAD 9.7 million gain in fair value to date on our 50% interest. Slide 22 shows a rendering of Frontier and Latitude.

We have completed 11 development projects.

In five provinces, consisting of 1200 units at a cost.

$300 million.

Our most recently completed development frontier is shown on slide 2021.

Codeveloped real can open on June Onest frontier was completed on budget and on time and is currently 90% leased.

We expect to be fully leased in the next two to three months.

The all cash yield on this development is approximately 5.25% healthy 125 basis points above current cap rates.

This has resulted in a $9.7 million gain in fair value to date on or 50% interest.

Slide 22 shows a rendering of frontier in latitude.

Although.

Philip Fraser: Although project development costs have increased per unit on the second phase, the expected rents have also increased due to strong market demand in the Frontier. The expected all-cash yield is still 5.2%. We broke ground in Q2 on the Latitude, and progress photos of this 209-unit project are shown on slides 23. The expected completion date is in late 2021. The progress photos of our Shorefront development located in Charlottetown, PEI, are shown on slides 24 and 25. We are pleased to have broken ground on the Quay in Mississauga. This 128-unit development, as shown on slides 26 and 27, has a CAD 56 million budget with an anticipated all-cash yield of 5%, approximately 150 basis points higher than the current market cap rates.

Jay development costs have increased per unit on the second phase.

Expected rents have also increased due to strong market demand in their frontier.

We expect that all cash yield is still 5.2%.

We broke ground in Q2 on the latitude.

In progress photos of this 209 unit project.

As shown on slide 23.

Aspect to completion date is in late 2021.

The progress photos over shorefront development located in Charlestown Pete.

As shown on slide 22, four and 25.

We're pleased to have broken ground on the K Mississauga.

Just 128 unit development as shown on slide 26 in 27.

Had a 56.

As a $56 million budget with an anticipated all cash yield of 5% approximately 150 basis points higher than the current market cap rates.

Philip Fraser: Construction will take 24 months, and the expected completion date is in mid-2021. Finally, we continue to refine and advance our development pipeline. A full list of our development pipeline is included on slide 28. It's worth noting that over 90% of Killam's future development pipeline that is scheduled to be completed in the next five years is located in Ontario and Alberta. To finish, Q3 has been a very good quarter with strong operating and financial performance. Our focused strategy is leading to increased earnings, a stronger balance sheet, more geographical diversification, and one of the highest quality apartment portfolios in Canada. This concludes the formal part of the presentation, and we will now open up the call for questions.

Instruction will take 24 months and the expected completion date is in mid 2021.

Finally, we continue to refine and his answer development pipeline.

A full list of redevelopment development pipeline is included on slide 28.

It's worth noting that over 90% of Kellems future development pipeline that is scheduled to be completed next five years dislocated in Ontario in Alberta.

To finish Q3 has been a very good quarter with strong operating and financial performance.

Our focus strategy is leading to increase earnings stronger balance sheet more geographical diversification and one of the highest quality apartment portfolios in Canada.

This concludes the file part of the presentation and we will now open up the call for questions.

Thank you ladies and gentlemen, we will now begin the question answer session should you have a question. Please press the star followed by the one on your Touchtone phone.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Jonathan Kelcher at TD Securities. Please go ahead.

Here are three Tom Tom to acknowledging a request and your questions will be pulled in the order their received should you wish to decline from the pulling process. Please press the star followed by the too if you are using a speaker phone. Please lift the handset before passing any keys.

Your first question comes from Jonathan Culture.

D. Securities. Please go ahead.

Jonathan Kelcher: Thanks. Good afternoon.

Thanks, Good afternoon.

Jonathan Kelcher: Thanks. Good afternoon.

Philip Fraser: Good afternoon.

First question just on the repositioning program, what what markets are you generally doing not in.

Jonathan Kelcher: First question, just on the repositioning program. What markets are you generally doing that in?

You know what actually most markets because we're doing those units come vacant. So we were not take any properties offline. Jonathan So it is broad broadly based through the portfolio.

Philip Fraser: You know what? Actually, most markets. Because we're doing it as units come vacant, so we're not taking any properties offline, Jonathan. It is broad, broadly based through the portfolio.

Jonathan Kelcher: Okay. If I look at your 2020 target and do a little bit of the math on slide 13, it looks like the expected yield on your cost goes up a little bit from 2019. Is there anything to that, or am I just being too fine with the details there?

Okay, and then if I look at your 2020 target.

And do a little bit of the math on on slide 13, it looks like the expected yield.

On your cost goes up a little bit from 29 team.

Deserve.

Is there anything to that or my just being too fine with the details or.

We think it's just arrangement, we're going to be in the same range I think last or we would have reported when if I recollect properly 14%. This year is tracking a 13, but I think we're in the same range more or less.

Philip Fraser: We think it's just a range. We're gonna be in the same range. I think last year we would have reported, if I recollect properly, is 14%. This year is tracking at 13%, but I think we're in the same range, more or less.

Jonathan Kelcher: Okay. 'Cause it looks like sort of 16 to 19 for next year based on what you have there. Just switching gears. The gap between renewals and turnover, how much of a difference is there in that in the rent-controlled markets versus non-rent control markets?

Okay, because it looks like sort of 16 to 19 for texture based based on what you have there.

And then just just switching gears.

The gap between.

Renewals and turnover is there how much of a difference is there is not in the controlled markets versus non rent control markets.

Well.

Philip Fraser: Well, I don't have the answer right off. I do know one of the markets was 2.1%. Oh.

I don't have the answer right off I do know one of the markets has was 2.1%.

Yeah, No I can speak to the hi, Jonathan Nancy I can speak to the turnover that most of that we have seen some tightening in Ontario market on turnover, that's mostly you know and our other open markets.

Nancy Alexander: Hi, Jonathan, it's Nancy. I can speak to the turnover, most of which we have seen some tightening in our Ontario market on turnover. That's mostly, you know, and our other open markets, our number has, you know, pretty much stayed consistent this whole, you know, two-thirds every new and one-third turn. It had come down slightly as we've seen some more demand here, but I would say mostly we've seen a lot of tightening in Ontario.

Number has pretty much stay consistent this held two thirds every now and one third Germany has come slightly as they come down slightly as you've seen some more demand here, but I would say, mostly we've seen a lot of tightening in Ontario.

Jonathan Kelcher: Okay. I actually was trying to get-

Okay, I actually I was trying to get the rent increases.

Dale Noseworthy: You're asking about the rent increases?

Jonathan Kelcher: Yeah, the rent changes.

The rest changes burn.

Dale Noseworthy: You know, I mean, it's certainly they've been high in those markets, but they're high in our other markets too. When you look at the weighting of our portfolio and to be at the, you know, kind of 5.5% range, you know, we're seeing it. We're seeing those higher increases in Halifax and in New Brunswick, and in Ontario. I'd say those are the areas, all of those. Ontario probably stands out a little bit higher than that, but those markets are all strong because offsetting that a bit is a bit more of the weakness that we would have talked about in Newfoundland and Alberta too. We're seeing very healthy numbers in most of our markets.

It's certainly been high high in those markets, but they're high in or other markets to sell when you look at the weighting of our portfolio and to be at that kind of five in half percent range. We're seeing it we're seeing those higher and higher increases in Halifax, and in New Brunswick, and in Ontario, I'd say those in the areas all of those Ontario power.

Hey stands out a little bit higher than that but those markets are all strong because offsetting that a bit is a bit more of the weakness that we would have talked about in Atlanta, and Alberta too. So we're seeing very healthy numbers and most of our market.

Jonathan Kelcher: Okay. Just following up on that, are you finding that you're able to start to push on renewals in Halifax? Or do you just sort of keep them in the 2% range and get the

Okay, and just following up on that or you are you.

Fighting that you're able to start to push on renewals in Halifax.

Or is it or do you just sort of Q2 percent range and <unk> the gates on turnover.

Dale Noseworthy: Well, I mean.

Jonathan Kelcher: Get the gains on turnover.

Dale Noseworthy: I'd say that we are. When you look at what you know, we provide those numbers to say to get to 2%, well, that's a healthy increase from what we were seeing even just a year ago, and certainly compared to two years ago. We look at it market by market and building by building, and where there's opportunity, we look at that, but certainly we're getting more on the churn.

I'd say that we are when you look at but yeah. We provide those numbers so to say to get to 2% well that's a healthy increase from what we were seeing even just a year ago and certainly compared to two years ago. So we we look at it market by market and building by building and and where there is opportunity we look at that but certainly Ah.

We're getting more on the churn.

Okay, you mentioned the Halifax market.

Jonathan Kelcher: Okay.

Robert Richardson: You mentioned the Halifax market in particular.

In particular, we averaged around the market about 1100 to a $150. So getting to present is 2020 $2 or so so there's there's the ability to probably moving a little higher in that market because those rents are still reasonable when you compared to only a house, but not a value delivery on two bedrooms that 11 50.

Jonathan Kelcher: Yep.

Robert Richardson: The average rent in this market is about CAD 1,100 to 1,150. Getting 2% is, you know, CAD 20 to 22 or so. There's the ability to probably move it a little higher in that market because those rents are so reasonable when you compare it to owning a house. The value delivery on two bedrooms at CAD 1,150, all you have to pay is electricity 'cause we would cover the heat. That's good value.

Jonathan Kelcher: Yep.

All you have to pay is electricity because we cover the.

That's good value.

Okay. Thanks, I'll I'll turn it back.

Jonathan Kelcher: Okay, thanks. I'll turn it back.

Thank you. Your next question comes from Joanne Rodriguez at Raymond James. Please go ahead.

Operator: Thank you. Your next question comes from Johann Rodrigues at Raymond James. Please go ahead.

Dale Noseworthy: Hi, Johann.

[laughter] close enough.

Johann Rodrigues: That's close enough. I was just wondering, looking at the appendix, I don't know, maybe it's just the scale of the graph, but it doesn't seem like there's a dramatic drop-off in incentives in Halifax and New Brunswick, but it doesn't seem like Ontario is dropping. Given how strong that market is, I don't know, maybe can you add some color on that?

I was just wondering looking at the appendix.

I don't know maybe is the scale of the graph, but it doesn't seem like.

There's a dramatic drop off in incentives in and how fast New Brunswick, but it doesn't seem like Ontario is dropping given how strong that market is.

I don't know maybe get some color on that.

Yes, as the rental incentives I think on that graph the way it showing Ontario, there had to do any property that we had supplements for.

Dale Noseworthy: Yeah. The rental incentives, I think on that graph, the way it's showing in Ontario there, has to do with a property that we have supplements for, in Toronto, in the GTA, our Ossington property. We have some rental supplements that we consider as incentives. You'd see that's pretty flat. Other than at that one specific property, their rental incentives are virtually, you know, they're minimal in Ontario as well.

In a in Toronto energy Carrington property.

We have some rental south supplements that we consider as.

Incentive so you'd see that's pretty flat so other than I thought one specific property.

Their rental sensors are virtually no <unk> they are minimal in Ontario, as well and those subs that relates to a long term agreement.

Johann Rodrigues: Those subs, though, that relates to a long-term agreement.

Dale Noseworthy: That's right. Yeah. It's not-

So it's.

Johann Rodrigues: Oh, it's more like a sub-subsidy, not an

More like a subs subsidies not yes correct.

Dale Noseworthy: Yes, correct.

Operator: Oh, okay.

Johann Rodrigues: Oh, okay.

Robert Richardson: It's part of the contract on the property.

Further contract on the property.

Okay.

Operator: Okay. Just in terms of acquisitions, focusing on outside of Atlantic Canada, are you guys looking at Quebec or Montreal at all?

Johann Rodrigues: Okay. Just in terms of acquisitions, focusing on outside of Atlantic Canada, are you guys looking at Quebec or Montreal at all?

And then just in terms acquisition is focusing on outside of.

Outside of Atlantic, Canada are you guys like can't cut back or much at all at all.

Our primary focus is Ontario and out west.

Robert Richardson: Our primary focus is Ontario and out west.

Okay.

Johann Rodrigues: Okay, I'll turn it back.

Oh, Okay, I'll turn it back.

Johann Rodrigues: Okay, I'll turn it back.

Robert Richardson: Thank you.

Thank you.

Ladies and gentlemen, as a reminder, should you have a question. Please press the star followed by the one.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Matt Kornack at National Bank Financial. Please go ahead.

Your next question comes from Matt Cormac <unk> National Bank Financial Please go ahead.

Matt Kornack: Hi, guys. With regards to your suite repositioning program, just wondering how you think of building improvements more generally, and if you would do those in advance of the suite repositioning, or if you reposition the suites and then look at common areas thereafter?

Hi, guys.

With regards to years Sweet repositioning program. Just so just wondering how you think of building improvements more generally.

And if you would do those in advance of the sweet repositioning or if you reposition suites and then look at common areas thereafter.

Okay.

We would typically run those on their own programs. What we found is the exterior work.

Robert Richardson: We would typically run those on their own programs. What we found is the exterior work certainly is revenue enhancing, but most importantly to our tenants when we survey them, it's about their unit. If we can get in and get the unit done, we can come back and finish the rest if that's necessary. There's not really a requirement that they have to be aligned. We don't see a big lift there. With a renovated unit in an older property, that unit on its own can command a fairly decent rental return.

These revenue enhancing but most importantly to our tenants when we surveyed how many so both are unit.

So we can get Didnt get the unit then we can come back and finished the rest that's necessary. So there's not really a requirement that you have they have to be aligned we don't see a big lift there without renovated units in an older property that unit on its own can command a fairly decent rental return.

Matt Kornack: Would you say, I mean, obviously turnover governs your ability to renovate these, but at this point, I would assume there's money to be made on pretty much every suite that you own, or are there still assets that you wouldn't necessarily look at, suites obviously in the older product, not the newer product.

Okay and would you say I mean, obviously turnover governs your ability to renovate these.

But at this point I would assume there's money to be made on pretty much every suite.

You own are there still assets that you wouldn't necessarily lead look good.

So it's obviously in the older product on the newer product but.

So in the older product. So the 11, new builds you wouldn't touch those for some you're right now because there are current.

Robert Richardson: In the older product. The 11 new builds, you wouldn't touch those for some years now because they're current. But the other properties, it's interesting how much the appetite is in the marketplace for renovating units. It could be, you know, it could be anywhere in any market. If we renovate a unit, there's a return to be had, and it's typically in double digits. We're motivated to turn units, if we can get in there to do that.

But the other properties, it's interesting how how much the appetite is in the marketplace for renovated units and it could be can be anywhere in any market. If we renovate a unit. There's a return to be had and typically double digits and so were motivated to on turn units that we can get in there to do that.

Matt Kornack: In terms of the spec that you're putting in these, obviously it's probably more expensive to replace, but does it last longer than what you had previously in the units?

And in terms of the spec that you're putting in these obviously, it's probably more expensive to replace but does it last longer than what you had previously in the units.

Matt Kornack: In terms of the spec that you're putting in these, obviously it's probably more expensive to replace, but does it last longer than what you had previously in the units?

We haven't had them all done long enough I will say that's about the flooring. So in some of the buildings, especially the Ontario market, where they would have had hardwood flooring. That's very durable at last a long time. These days we've landed on a newer product for flooring that I think has a much longer life than we've seen with others.

Robert Richardson: We haven't had them all done long enough. I will say this about the flooring. In some of the buildings, especially in the Ontario market, where they would have had hardwood flooring, that's very durable. It lasts a long time. These days, we've landed on a newer product for flooring that I think has a much longer life than we've seen with others.

Philip Fraser: Carpets don't last as long as they used to, so and they're not popular in any event. But really, this. It's called luxury vinyl tile, and it's a very good product, durable, easy to install and not affected by water. That'll last a long time.

Karbinal as long as they used to so and they're not popular in any event a really this the its called luxury vinyl tile and a it is.

It's a very good product durable easy to install and not affected by water. So it's it's a real so that'll last a long time.

Matt Kornack: Okay, great. Thanks.

Okay, great. Thanks.

Thank you. Your next question comes from Kyle Stanley <unk> days are done capital markets. Please go ahead.

Operator: Thank you. Your next question comes from Kyle Stanley at Desjardins Capital Markets. Please go ahead.

Thanks, Hi, everyone. Just one quick question for me.

Kyle Stanley: Thanks. Hi, everyone.

Philip Fraser: Hello.

Kyle Stanley: Just one quick question from me. Would you be able to disclose the NOI contribution from Frontier during the quarter?

Philip Fraser: Hello.

Kyle Stanley: Just one quick question from me. Would you be able to disclose the NOI contribution from Frontier during the quarter?

Would you be able to disclose the NOI contribution from frontier during the quarter.

That will depend on NOI.

Dale Noseworthy: Well, I don't wanna give a lot of details, but I would say that when you look at, I know the FFO contribution is pretty slim in the quarter when you look at the interest expense that we would have had and because of the lease-up, so it's marginal.

Well I don't want give a lot of details, but I would say that when you look at I know the FFO contribution it's pretty slim in the quarter. When you look at the interest expense that we would have had them because of the lease up so it's marginal.

Kyle Stanley: Okay.

Okay. So certainly.

Dale Noseworthy: Certainly I would say it was positive from an FFO perspective, but we have not yet really seen the juice from that acquisition in this quarter. I'd say Q4 is when we're really gonna start to see that. When we look at 2020, that's when we're gonna see some the real benefit from that from an earnings perspective.

The Navajo perspective, but we have not yet really seen that use from that acquisition in this quarter. I'd say Q4 is when we're really going to start to see that and we would look at 2020, that's where I see.

Hey, real.

The real benefit from that from an earnings perspective.

Okay that sounds good thanks very much.

Kyle Stanley: Okay, that sounds good. Thanks very much.

Thank you. Your next question comes from broad Sturgis <unk>. Please go ahead.

Operator: Thank you. Your next question comes from Brad Sturges at iA. Please go ahead.

Hi, there.

Brad Sturges: Hi there. Just in terms of the acquisition opportunity you see today, obviously, your preference is the new builds. But are you seeing any portfolios or smaller portfolios that would be of interest today that you're looking at? Is it, you know, if we're thinking about acquisitions it's still more the one-offs?

In terms of the the acquisition opportunity you see today.

Obviously your preferences the newbuilds.

Hi, how are you seeing any any portfolios are smaller from one of the would be of interest.

Today that you're looking at or is it.

If we're thinking about acquisitions is still more as the one offs.

Right, it's still here the acquisition environment, there's still a lot of product.

Philip Fraser: Brad, it's Phil here. The acquisition environment, there's still a lot of product. Everything is very competitive in terms of trying to buy it, but there's a number of opportunities that just consist of a single asset, whether they're out West or in Ontario. There is also probably known to every sort of multifamily REIT out there and pension fund, that there's three-plus mid-size portfolios in Ontario, and there's one large portfolio for sale currently here in Halifax that's attracting a lot of attention right across the board. Very big picture from our point of view, big purchase items. We're looking at it, but it's way too early to tell if we're gonna be the eventual winner on any of them.

Everything is very competitive in terms of trying to buy but theres a number of opportunities that are just consist of a single asset whether they're at west or in Ontario.

But there is also.

Probably known to every sort of multifamily.

Read out there and pension fund that Theres three.

Plus mid size portfolios in Ontario, and there was one large portfolio for sale currently here in Halifax.

It's attracting a lot attention read across the board.

Very big pits and from our point of view big purchase items.

We're looking at it but it's it's way too early to tell is we're going to be the essential winter on any of them.

Got it and wood.

Brad Sturges: Got it. Would those be more of a value creation opportunity, or would they have a component of that does have the new build that would kind of fit into, you know, some of the assets you have been buying recently?

Would those be more of a value.

Value creation opportunity or would they have a component of that does have the new build that.

What kind of fit into.

Some of the assets you have been buying recently.

Well I mean, I can speak to the Halifax, one which is public information it's.

Philip Fraser: Well, I mean, I can speak to the Halifax one, which is public information. It's seven or eight buildings, 1,500 units with really just one new property. Most of the portfolio, if not all of it, is very well located, very well-maintained. That's just good product. The question is, we do have a lot here already.

Seven or eight buildings 1600 units.

It was really just one new property, but.

Most of the portfolio is not all of it is very well located.

Very well maintained.

That's just good product, but the question is is.

We do have a loss here already.

Brad Sturges: Mm-hmm.

Philip Fraser: Um.

Okay, great. Okay color portfolios are older stock first time right coming available in many many years.

Brad Sturges: Okay, great. That's good color.

Philip Fraser: Portfolios are older stock.

Brad Sturges: Right.

Philip Fraser: First time coming available in many, many years.

Brad Sturges: Yep. You said Ontario, correct?

Yeah.

You said, Ontario, correct, yes, yes.

Philip Fraser: Yes. Yes.

In.

Brad Sturges: I guess whereabouts in Ontario are the portfolios generally speaking? Are there larger markets or smaller markets?

I guess were about to know, Ontario, or the portfolios generally speaking other larger markets are smaller markets.

Brad Sturges: I guess whereabouts in Ontario are the portfolios generally speaking? Are there larger markets or smaller markets?

Philip Fraser: They are all in between Oshawa and Kitchener-Waterloo.

They are all been between US you on Kisner Waterloo.

Brad Sturges: Oh, okay. Great. Thank you.

Okay, great. Thank you.

Okay.

Ladies and gentlemen, as a reminder, if you have a question. Please press the star followed by the one.

Operator: Ladies and gentlemen, as a reminder, if you have a question, please press the star followed by the one. Your next question comes from Troy MacLean at BMO Capital Markets. Please go ahead.

Your next question comes from Troy Mclean at BMO capital markets. Please go ahead.

Troy MacLean: Good afternoon. Just on Ottawa, it was, you know, very strong this quarter. Can you talk about some of the things that are driving that and how much more room you think there is to push rents and occupancy in that market?

I'm good afternoon, just on Ottawa, Yeah. It was very strong this quarter can you talk with some of things that are driving that and how much more room. You think there is to push rents and occupancy in that market.

I think auto it's a bigger than center and if it's in Ontario in really is wrong. If it is driven by job creation and also.

Philip Fraser: I think Ottawa, it's a big urban center and it's in Ontario, and really it's a lot of it is driven by job creation and also the immigration increases in population. Those two things alone are driving the multifamily market.

The immigration increases in population and those two things alone are driving.

The multifamily market.

Yes feel before you mentioned a you know your target markets for acquisitions, but are there any new markets you're looking at entering you know Montreal's a big one that you know a lot of people seem to try to get exposure to yeah is that something that's on your radar screen and if you were to look at a new market you know what kind of scale would you need you know kind of going in would you need a big port.

Troy MacLean: Phil, before you mentioned, you know, your target markets for acquisitions, but are there any new markets you're looking at entering? You know, Montreal is a big one that, you know, a lot of people seem to try to get exposure to. Is that something that's on your radar screen? If you were to look at a new market, you know, what kind of scale would you need, you know, kind of going in? Would you need a big portfolio or do something through maybe on the development side?

For the or do something through maybe on the development side.

Well if.

Philip Fraser: Well, I'll try to answer all those questions that you posed right there. I mean, Montreal is a market that we've all obviously looked at over many years, over the years as we've been in business. Right now it's a sought after market for sure. The new markets that potentially we might get into for us would be sort of the Western part of Canada. Obviously we're in the two cities in Alberta, and the other market that eventually we think has great opportunities and also the future of it would be the southern part of BC, eventually. How do you get into a new market? Just like we got into the markets in Alberta.

The.

I will try to answer all those questions that you pose right there I mean.

Montreal as a market that we've all obviously had looked at over many years over the years as we've been business.

And right now it's is it.

It's a softer market for sure.

The new markets, then potentially might enter into.

For us would be sort of the the west western part of the candidate.

And obviously, we're in the two cities in Alberta, and the other market that eventually we think has great.

Opportunities and also the future of it would be the.

Southern part of DC.

Okay actually.

And then how do you get into a new market just like we got into the markets in Alberta is done by one asset at a time.

Philip Fraser: It's done by one asset at a time. Right now we have a base in both of those cities, and it's just basically getting one asset and then growing it from there. The opportunity to go in and get a midsized portfolio or a large portfolio in a new market, I think is very limited, for us these days.

Right now we have a base in both of those cities and it's just basically getting one asset and growing it from there the opportunity to go in and get a a mid size portfolio or a large portfolio portfolio in a new market I think is very limited.

For us these days.

Thank you that's it for me I'll turn it back.

Troy MacLean: Thank you. That's it for me. I'll turn it back.

Philip Fraser: Thank you.

Thank you.

There are no further questions at this time. Please proceed.

Operator: There are no further questions at this time. Please proceed.

I would like to thank everybody for participating in listening today, and we look forward to reporting our Q4 results in February of 2020. Thank you.

Philip Fraser: I would like to thank everybody for participating and listening today, and we look forward to reporting our Q4 results in February 2020. Thank you.

Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and I say you. Please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Okay.

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