Q3 2019 Earnings Call
Good morning, ladies and gentlemen, and welcome to the Boardwalk real estate investment trusts third quarter results conference call at this time, a land spend in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call you require assistance. Please press star zero for the operator.
This call is being recorded on Friday November 15th 2019, and no now, let's turn the conference over to Jim Thompson. Please go ahead.
Thank you Joe and welcome agenda Boardwalk reach 2019 third quarter results Conference call with me here, Jay It's Sam Coleus, Chief Executive Officer, Rob Jeremiah President.
What are you more on Chief Financial Officer, Lisa Russell Senior Vice President corporate development, and we suspended <unk> Chief Accounting officer.
That's it that's called being broadly disseminated by way of life.
If you're not done already please visit the walks dotcom slash investors, where you will find a link to today's presentation as well as PD files with the trust financial statements Mdna as well supplemental information package.
Starting on slide two we'd like to remind our listeners that certain statements in this call and presentation, maybe considered forward looking statements. Although the expectations set forth in such statements are based on reasonable assumptions boardwalks future operational actual performance may differ materially from there wasn't any forward looking statements.
Additional information that could cause actual results to differ materially from these statements are detailed in boardwalks publicly filed documents.
In conclusion of today's presentation, we will be opening up for my question.
I'd like to now turn the call over to sample.
Thank you James and thank you everyone for joining us. This morning, starting on slide three we're pleased to report our six consecutive consecutive quarters of growth in AFFO per unit deliveries, 18.6% broken that that's all for trust your niche for the third quarter rents market fundamentals in our core Alberta markets continued to improve and art.
Team continues to deliver exceptional service product quality and experience.
Moving onto slide four displaying more great news or <unk> per unit growth for the third quarter, the 23.4% and for the nine months or AFFO per unit and Dan football per unit grew 16.2, and 19.5% respectively look you need to our same property portfolio performance our NOI.
Grew by 10.7% corridor with 4.6% revenue girls and a drop in expenses of 3.3%.
For the nine month, I know I grew 7.1% with our revenue growing by 4% our expenses relatively flat decreasing 5.2%.
Moving on to slide five we illustrate for rental market fundamentals for each other markets, where we operate walk strives to create value to all stages as a reps market cycle, approximately 60% boardwalk portfolios and Albert where rental market fundamentals continue to improve imbalance major refining upgrading.
And all transportation investments were made earlier in the year along with a continued construction work on the Trans Mountain pipeline in the recent corridor offset by some court appeals with two appeals recently being dropped.
Burn economy continues to diversify along with increased international migration continuing to increase the population and demand housing.
First stats, Canada website, I'll, Paris population growth year over year up 1.7% is above the national Canadian average and below Ontario at 2%.
Grand Prairie is already seen benefits from an improved economy continues to move into a strong rental market almost fully occupied with the strong demand for rentals Fort Mcmurray remains in a soft rental market Red deer continues to see significant improvement as a result of our successful value add investment in this region.
For the third quarter had mentioned rent market fundamentals continue to improve and N O I girls jumped ahead of Calgary and it's slightly less for the nine nine month.
Our focus on a carrying peak performance culture, along with significant value add capital investment continues to deliver significant gains in you know why our value add lessons learned in our Calgary markets are helping us better allocate value add investments into our other markets in particular in our larger.
Edmonton market, our says catch one region continues to remain in a softer rental market with green shoots up higher occupancy revenue and recent quarter and Hawaii increase, particularly in Saskatoon, we continue to focus in on gaining market share with targeted value at capital improvements and increasing.
Operating efficiencies, which should continue to provide a positive and alike girls.
To that foreseeable future.
Ontario, Quebec represent over 25% of Port box portfolio with both province is showing strong <unk>.
Ontario continues to deliver solid results, which market rents, increasing and vacancies decreasing we have increased our value add investment in our portfolio here to further enhance returns with strong demand in London, and Kitchener and to better position that competes with any new future supply.
Back rental market fundamentals have improved boardwalks Nines island portfolio in Montreal is nearly fully occupied and is reflected in our sequential revenue for the last quarter, which has increased 1%.
Moving on to slide six Alberta continues to see high population growth, reflecting a world class standard of living and multi decade high affordability calorie wasn't fat rank the world's fit most livable city by the economist intelligence units ranking almost a perfect score and stuff.
Any health care culture environment education and infrastructure.
Job growth continues to reflect the diversifying the economy with one at the highest average weekly earnings in Canada.
Let's see forecasting proving rental market fundamentals.
Our recently elected government, it's working hard to attract top talent to our province by offering more accessible visa foreign students targeting top U.S. University graduates as well as creating an attractive tax environment for biotech and start up from.
Moving onto slide seven Boardwalk offers an exceptional combination of growth and at that FFO per unit revenue and NOI and value.
Can I ask whereas net asset value $65 in 15 cents is significantly higher than our current unit trading price presenting an exceptional opportunity for our investor.
Word walks high quality overall portfolio equates to approximately 153000 per apartment door at current unit price recent transactions in Calgary and Edmonton have averaged over 200000. The door further replacement costs are significantly higher than d.'s apartment trading prices are except.
No value provides for a unique opportunity for our partners and stakeholders as we continue to focus in on delivering solid girls.
Slide eight shows our strategy of reengineering, our corporate culture and team up compassionate peak performers to deliver the best product service and experience building on our brand our three sources of growth organic value add brand diversification expansion recycling.
Hi, creating and geographically diversified building upon our solid financial Foundation further which in turn produces optimal unitholder value.
Now I'll turn the call over.
The Russell.
Thank you Sam Slide nine provide a brief update on their current development project. All three developments continue to progress well real in Calgary remains on time and on budget like interior, finishing underway.
Livery upbeat 162 units is expected in the optimal period of Q2 2020.
45 railroad, which is located in Brampton, Ontario is well underway with shoring and excavation complete structure, including foundation slabs in called are currently under construction estimated completion.
Two tower 365 unit development remains plan for 2022 in 2023, respectively.
Continuing with our strategic partnership with real can Sandalwoods, where in Mississauga, Ontario is our second development project in the GTH planning for 16, and 25 storey mixed use development totaling an estimated 470 residential units as we progress.
The owning approval for this development it is anticipated in early 2020.
The timing of Boardwalk current development projects are well staggered that's balance our resources.
Our plan developmental appeal region provide an attractive entry into the GT, where market fundamentals remain strong, allowing boardwalk to ensure high growth undersupplied markets, providing continued progress towards our long term strategic plan.
Further information on each of these developments as well as our previously announced sale in closing of Chancellor gate, and non core asset and Saskatoon, which was sold at a premium to the trust fair value can be found in our appendix. This presentation I would now like to turn the call over to William Wallace.
Thank you Lisa.
Slide 10 highlights boardwalks liquidity position at the end at the third quarter to find here as cash on hand committed up financing subsequent to the quarter in place to trust line of credit.
Boardwalks liquidity of approximately 270 million represents 9% they trust total debt.
Debt net of cash was 47% September thirtyth reported asset value.
Boardwalks interest service coverage based on a rolling four quarter basis improved to 2.74 times compared to 2.702 0.7 times at the end of Q2 and 2.68 times at this same period last year.
The next slide slide 11 shows boardwalks mortgage some rate since the start of the 2019 year.
As this slide shows the charts has renewed or four were locked approximately 453 million or 87% of mature or maturing mortgages for the year at a weighted average interest rate of 3.08%, while extending the term maturity to eight years.
Included in November 2019 single mortgage on the Trust 3100 unit not entirely portfolio and then you wait or 3.27% for an eight year term.
What work has also added close to 111 million of new financing at rates ranging from 2.22, 0.9%.
Current five and 10 year. She may see interest rates are approximately 2.4 or five and 2.5% respectively.
The next slide shows boardwalks announced distribution for the next three months.
Continuing with the strategy of capital allocation optimization for November December and January record date.
Boardwalk has maintained maintaining its distribution of 8.34 cents per trusts units, which equates to an annualized basis on a dollar per trusts unit.
I would now like to turn the presentation over to Bob Jeremiah Rob.
Thanks, William Boardwalk continues to target its value added divestment program to enhance the overall experience offered to our resident members as we continue to selectively invest back in our communities. We are constantly exploring for ways to deliver these programs and more efficient and cost effective ways.
Slide 13 highlights one of the more recent value added projects.
Madison villages at 360, 60 apartment community located in Calgary, Alberta.
It at this community we've upgraded the leasing office with an investment of approximately 78400. Upon completion of this project. The project rents were adjusted upward by $10 per apartment per month.
Based on our past experience with this type of investment we are anticipating our stabilized return well into the double digits.
Slide 14, as another example of a modest renovation to one of our living brand buildings located in spruce Grove, Alberta, just outside of them into.
This investment is in its integrated leasing office resulted in an it and an increase of $10 per month to all 160 units and once again, we anticipate the stabilized returns to be well into the double digits.
Currently we estimate that about 10% to 20% we had about 10% to 20% complete this type of renovation program. Each of our communities are unique and will require a different level of renovation. However, we're confident that we will be able to continue to deliver a similar returns on these type of investments.
Moving on to slide 15.
Boardwalks rental that renewal because we'll continue to show strong growth overall boardwalks lease renewals and new lease leases increases continue to be in line with our overall annual target range at 40%.
Listeners should note, 40%, 40% range is focused on all new leases and renewals unrest control markets. Although we do target above guideline inclusion in the renewals of these rent control markets. These are not included in our target as left side of this slide shows upper continues to achieve increases in our target range even in the seasonally.
Lower demand seasons.
Slide 16 shows boardwalks, a quarterly sequential revenue growth.
First quarter's results if you will see the overall trend of posting growth in excess of a 1% Q3 reported growth of 1.1% as compared to the previous quarter.
Slide 17 highlights key revenue metrics.
Q3, 2019 marks the eighth consecutive quarter of rental revenue growth for the trust Boardwalk total about the revenue for Q4, Q3, 2019 rose to over 111 million with occupancy levels above 96% as occupied rents continue decline.
Q3 vacancy loss was lower than as compared to the prior quarter, while incentives continue to see decrease.
Slide 18 shows more detail on board luck stabilized portfolio.
For Q3, 2019 that trust stabilized portfolio oppose the into why growth in excess of 10% on revenue growth of 4.6% and cost being reduced by 3.3% boardwalks, Alberta portfolio NOI growth over 16%, let all regions also of note to Scott's one posted over 8% NOI for the current quarter.
On year to date basis, our stabilized portfolio reported revenue growth of 4% and NOI growth in excess of 7%.
Slide 19 shows that shows a review of the trust 2019 financial guidance.
As we have in the past is our policy I'd Love to trust to review and updated financial guidance on a quarterly basis and weren't necessarily make any revisions based on our view of the key inputs variables and taking into account. The actual results. We are revising our reported 2019 financial guidance to an f. EFO and asked that full range of 258.
55 and to all three to two eight respectively.
The revision represents a tightening of the lower end of the reported full range to 45 and an increase in the top end of the ranges from 252, which both of which were revising Q2 2019.
In addition, we've adjusted our stabilized building in NOI growth rates to be between 6% to 8% from the original 49%.
The trust will continue its property improvement program investing between 95 to 122 million on existing projects depending on anticipated returns. In addition, we anticipate our new development investments to be consistent with the amount show it.
This concludes the presentation of the apart part of the conference call. We'll open it up for questions now operator, 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 you will hear three Tom problems acknowledging everquest.
She Jewish declined from the pulling process. Please press star followed by too.
If you are using a speakerphone, please love to have set before passing any Keith.
One moment. Please my first question.
Your first question is found that Jonathan to kill check from TD Securities. Jonathan. Please go ahead.
Thanks, Good morning.
I'm wondering.
First question just on the CE Mark to market $70, Mark to market looks like Ontario, and Qubec are really driving not are those the market rents there is that you're getting those on turnover.
John It's Rob Yes, yes, we are actually you the strength of the Ontario market ankle back continues to be very strong we are getting those physical market rents on the actual turnovers does the challenge Donald is the renewal is the renewals because of direct control market were not able to get those but on the positive side. There. We recently just one a bunch of.
Bump guide on increases in Ontario, So the the court has awarded us due to spread those increase over two years or we're going to see some good renewal growth on top of the average law firms couple years, most properties that we did when those.
Okay are you spending much capex on on the turnover.
Not particularly a lot. We are upgrading we are finding that upgraded product does get even even a more premium rent value and better returns. So yes, we are spending some but by no means I'm going to the highest level of renovation partials in where appropriate. Some full renovations that is all we're doing which range from 15 to 30 35000 to high end.
Okay, and then similar like on the same talk we pick up in Edmonton, It's pretty small right now do you still think you're going to get.
4%.
Average growth there.
Yeah, we do and if it is particularly on a renewal side, we are seeing a very strong renewal side and the emitted sandwiches, which is a big part of the portfolio. So we are able actually able to unwind faster than we anticipated in the emerging market on that so yes, we still are targeting the 4% to 8% range. When we are achieving at.
The current quarter in certain particularly the fourth quarter does seasonally slow down, but when I look at their Alberta numbers, an isolation like they are and that's on slide. So if that's the number on it right now.
Does show that even these periods, we're getting in the lower end of the range that we still are getting that range on in those areas.
Okay. So is the seasonality on that slide.
Typically what you see for for a balanced market.
Oh, yes, we always have had in the winter months, it's always been a slower market even in high demand periods is that just a little slower level of demand. So we're doing that so we're actually altering our strategy a little bit too and try to increase the number amount of turnover in the summer months, which we do have and renewals and every month and we actually do have higher demand. So we're actually getting stronger renewals mills timeframe.
Yes.
Okay, and then do you have a dollar value or number of sweets or something to sort of quantify the amount of age you guys you haven't Ontario.
I'm talking my head no I know, we've had about three or four different properties in the process right now we just actually.
It seems cheap one at a Kitchener now we did but we know we have three or four still in the hopper waiting to get approval.
Okay, and all that the kitchen or what are you guys did you get the full a 9%.
We got some got 7%, but you have to allocate it over a number of years because it will equal over 3% range, but we were very we got we asked for.
Okay. Thanks, I'll I'll turn it back.
Do you.
Thank you, ladies and gentlemen, as a reminder, should you have any questions. Please press star one now.
Your next question, if I'm not corner from National Bank. Please go ahead.
Hi, guys just on the expense I had another good quarter of cost constraints I Wonder. If you can you provide in terms of operating expenses, the 24 and a half million.
Good run rate or or were there any onetime items in that figure.
It's actually quite a good run rate on the operational expense side for throughout Q4, particularly you know our focus on cost reduction and staffing levels that you lose on slide 49 really is paying off.
As well on the and.
But but in general I think it's a good run rate for operating expenses for Q4, and moving Florida, but very very proud of our team other other able to take a look at the whole thing and but.
Well, we are very very proud of it we there has been material reductions and again I again, just focus on slide 49 goes you'll see that they actually head count reductions are quite quite high Jerry I know you've saved quite a bit and then I guess.
Property taxes, there's a general trend higher and that would be.
Respected to continue although I think you've done better than expected there as well and then for GE in a 10 million or so as well as a good run rate.
Yes, its Williams, yes.
Property taxes is going up that's.
That's the municipalities.
Let's look into.
Maintained or surface isn't all that and the men $10 million is a good run rate.
The difference between didn't just a slight increase between Q3 in Q2 is really related to our bonus you profit sharing the cool.
Okay and.
And just to add on to Jonathan's question with regards to Edmonton.
Yeah, Yeah, and you you mentioned that you're getting good renewals there is that that you're seeing the incentive fall off the are you still offering some incentive or in that market.
We need to offer some incentives however, again, the unwinding, you're still giving us 40% revenue grow okay.
So you're getting 0.4% on mark to market, but then there's 10% or so upside potential to get you to market if incentives forget where to go away.
Yeah, we believe it's more of a win if okay fair enough and then any concern about the provincial government.
The there none of us thirtys the word, but it sounds like they're gonna be a little bit more cost conscious.
The Edmonton as the government town any feeling that things could potentially get worse, there and the government employment side.
Oh really good question, Matt Salmon, we really have to stress the.
News is missing that big.
The big changes our Premier is making is lowering our taxation over the next three years to the lowest taxes in the country and we can't stress. How this is helps quite back in the past and it's helped other jurisdictions like Texas, and Florida, and so our are a pre.
Here is particularly.
Allowing zero taxes in some municipalities similar to what Texas has done in the past as well and so our premier as being extremely competitive and and strategic with respect to reducing taxes and that's one one big big Miss.
In the press and media is a huge in migration that's cannot take place with respect to.
Companies moving in and we're already seeing companies move in because of the affordability and and the.
Taxing that will be a significantly dropped going forward over the next three years their jobs, we want to stress.
He is approximately in and the.
Provincial governments news approximately 1500, all 1500 jobs over the next several years. So it's it it's a meaningful amount of jobs, but it's a lot less than what.
The perception as and it will absolutely be.
Overshadowed by the new jobs that will be created with business is coming in because of the affordability and the lower taxation base. So we're we're very pleased and happy with our new Premier.
He's very experienced and he's doing a lot more than he is getting credit for in media and so we just want to stress how how amazing job, our premier is doing and and what a big difference our premier's, making.
Already.
Fair enough and hopefully we can get a pipeline built so we don't need a passport to come and visit you guys [laughter].
Were very very clear our premier and we are Canadian first and foremost and that's really important for all Canadians to realized it's our pipeline, it's our resources and it is essential for our entire Canadian economy that we continue supporting our producers.
That produce approximately $185 billion of our GDP the largest contribute a contribution to our GDP as our resources and so their Canadian resources, we're proud Canadians and it's a matter of educating.
All Canadians about the importance of are essential industry, and how essential energy is everything and and the more education and facts that all Canadian see the more everybody's going to support our producers.
That are Canadian and Canadian jobs in Canadian economy, It's it's all about.
Supporting cameras are right now.
Great. Thanks, that's it for me.
Great. Thanks.
Thank you. Your next question it sounds like Nike, That's some day shutdown. Please go ahead Mike.
Hi, everybody.
With the I'm just curious on the development pipeline now that you've got your your stable staggered deliveries set up.
Is there anything do you feel that you've got a good sort of runway here, where or are you continuing to focus on expanding not immaterial fashion.
We continue to look at even again, our core internal pipeline and deals that are constantly coming across our plate.
Again, it's gonna be very measured and we have we're very excited to be cutting or our relationship with real can and again just looking out into the future.
Definitely we will be continuing to develop and in all account it it's going to be across Canada and in Anderson side markets. We will continue to focus so as the opportunities come up well.
He updating you okay and in terms of diversifying out of Alberta is development still I mean, you've been doing it through development. Thus far just curious if that would be the primary fashion going forward or do you actually think that acquisitions might be an avenue of growth.
Relative character.
It's all of the about a again, it's gonna be it's gonna be on opportunities that come that are that present ourselves and again just based on our capital allocation and the development pipeline that we currently have but Ah.
We will be developing and diversifying and we will be acquiring and diversifying.
Okay.
Last one for me before I turn it back just on the AG guys I'm, just trying to get an understanding of as this.
Step change per Se, where you haven't really been focused on trying to persuade you guys over the last little wire, while or is it a continuation of something you've always been doing it not in those.
But over the last couple of years, who stepped up our investment in those properties in Ontario. So as a result, you. After you have to prove you've spent the money to get the AG eyes that was going to a much more focused and we've increased our expenditures in Ontario quite substantially last couple of years, that's driving the ice.
Okay, and I guess, they said one property got 7% with a similar amount be that target for the three or four others you haven't hopper.
Yes, that's what we're targeting we're hoping again this and we were very successful long, we're anticipating that will continue but we are fine has a massive backlog in the system right. Now. So we are comfortable going again, it we still know when now.
Okay excellent great quarter and thank you.
Thank you.
Thank you. The next question if I'm Mario Saric sub Scotiabank. Please go ahead while.
Hi, good morning.
Maybe I'll just turning back to slide 15 of the presentation I know, it's not disclosed in the term, but it might be held for would be helpful. On my end to get a sense for what.
The percentages looked like last year from a comparative ability perspective.
So for example last year.
Roberta did you also see a kind of a trending lower.
Rent increase as are the your purchased from April onwards.
Yeah, Yeah, we did great maybe it's Rob so I'm very similar trend and actually if I go back to look at the annual numbers to date on a year over year basis. We're actually 2019 is eating 2018, mostly renewal percentage is up by about 50 basis points on both sides. So we are seeing that there will be some monthly seasonality, we understand that but we are seeing a consistent improvement in both areas.
Yeah Mariano last year, our sequential revenue in Q3 was 0.3%.
Sure as over 1%, so weve beaten by quite a margin.
Just add summer, it's James our vacancy isn't for versus last year as well. So we are better positioned going.
And we were even last year, but to answer your question I've got a trend that we've seen or that you're seeing.
For 2019 is very similar to what we would have seen for 20.
We've got a big high fives for our design and value added repositioning teams in house capital, our our trades and aren't operations is firing on all cylinders says, we really have to come and our entire team for an extraordinary.
Performance and and it's all about people and our performance is proof and testimony on how amazing our team is doing a big high fives to all our team.
Doing such a remarkable and on the amazing job see incredible reviews on our net promoter scores were seeing.
Score as we've ever seen the best and NOI growth we've ever seen.
Our team has stopped has to have all the credit here.
Market is very competitive and the economy still.
Very very challenging out want it's growing but albeit at a slower pace. So we are absolutely gaining market share and it's a result, and complete credit to our entire team for being innovative creative and completely committed.
To our resident.
Member service product quality and experience and again, we just words can express how amazing our team is there near remarkable.
And where so grateful.
Right.
Lot of a saw about during you do I, probably two or this year as well.
Just a run just to clarify the 50 basis point or comment year to date is up on renewal and new leasing.
Yeah, a little stronger on renewals and then there's not losing but it's I'd, probably say 0.75 on renewals in about on about a new leases against pain has some years always tough on new leases, but it's a brown 0.75 yep.
Okay.
Presumably are going from three months free rent too.
Speaker 1: Is.
Easier than going from two months free rent to one which maybe easier from one month free rent to zero Oh sequel notwithstanding.
An improving economy, but it doesn't seem like that's necessarily what your experience.
Well, we are seeing constant increasing demand art I guess as James mentioned, our occupancy levels are higher than what drives a lot of the ability to increase the renewals and a new leases. The fact that much vacancy you have to be able to do that so it is getting better we're seeing new supply coming to market, but it's being staggered. It's looking quite nicely demand is increasing we're still seeing that new Mike.
Ration to Alberta.
So you know, it's starting to line up nicely ill it'll <unk> I I, just I know, it's a small market, but we look at Grand Prairie. It went from three months readers euro literally overnight. So demand took over so demand is better than it was last year. So we're not expecting a lot to push back on the.
Three to two in two to one, particularly that Sam mentioned as we are investing back in the properties and the customer sees the value that we're putting in it.
Right.
Okay, and then just a on the expense or.
Okay.
Matt asked a question on on that side as well, but just a within the apartments, Bruce we do tend to see variability in the same property expense numbers.
Quarter over quarter. So for example, a this quarter.
Almost 6%.
Last quarter was up 1% in terms of your same property expense.
Looking forward for portfolio with what do you think is just generally weaker good.
<unk> expense growth.
Number to think about it because it inflationary cost increases from a springboard.
I think it I think Q3 and then the operating expense line is a good Gulf War because in the last year, we've been focusing on getting better at operations streamlining our teams focusing internally on doing better job.
Offsite on that obviously going to utilities going into Q4 and property taxes as William mentioned as well too, but I. You know Q3 is a good runway like this has got to one close some good numbers. Unfortunately, they had a couple of they had a couple of a large expenses in Q1 in Q2 of this year that push their numbers into negative, but Q3 was a clean quarter for them when they posted 8%.
Why growth.
So it it's really moving forward a good run rate to look there always will be some choppiness no essentially buts about it. So we do want to focus on year to date numbers on it but I put a heavier weighting on Q3 s and what else you want.
Understood. Okay, and then you've also highlighted the effect of streamlining.
In terms of employee count and whatnot.
It.
Is this a pretty good kind of go forward level four euros.
It gets better and demand gets better.
I think we're even luckily become better to be honest with you I think there's more efficient use of against driveline. We're very proud of our team they're doing the same amount of work not more than they did 12 months ago with 10% less human resources, but we do think there's more efficiency that we can drive we're always looking for it.
Merial were.
Seeing big six asking combining positions and an example is a resident manager. That's also leaner and does some landscaping roles as well. So so where we used to have three individuals. We've got one so that there is a perfect example on the one individual.
It's a manager and we've increased the pay up that individual and offering them a much better renew moderation.
And share into savings at the other two positions that.
We no longer need and use so that that's a perfect example, and we're rolling that out across our entire portfolio because it's been very successful to date and working really really well and managers come with more flexibility and that's another big discovery is flexibility we have to be.
Where and when our resident members want us to be there's no use having somebody sitting in an office when there's nobody or any need for that person to just sit in that office and so we're seeing a lot lot better service levels as a result at the flexibility of our team being where our.
Resident members in winter resonant members need our team to be.
Got it Okay makes sense. Thank you.
Yes.
Thank you. Your next question as far back then even from Canaccord Genuity. Please go ahead Brandon.
Hi, good morning.
Most my questions have enough, but maybe just following up on Marios question with respect to a cost control obviously.
Yeah.
Down down quite quite significantly a this quarter year over year, maybe you could just provide.
Maybe one or two examples of how you know you're able you're managing the portfolio with a oh head count that will be about 10% down I.
He talked about maybe combining physicians, but.
Maybe just one or two examples there.
Oh.
Let's say a sky gate is one of our communities here, we've got an amazing.
I knew manager Frank he is.
Helping with the cleaning the landscaping piece very flexible and its time.
You know that that is a perfect example.
Have a combination we got time Bretton matters in Edmonton. This another example, where we've got a an amazing new associate that is doing a number of overalls and we can go on and on and these are these examples that the one big Big change.
That we've made Brendan it's weve graft and used data analytics and Grafton pitchers and colors as we discussed before to show our entire team. So we've got everybody's eyeballs on our expenses and when everybody is focused in on our expenses as a whole lot.
More efficient and having leaders only look at our budgets and our expenses so.
Magnifying glass is on our expenses everybody's looking and asking one another how we can do more with less. Good example, the other day one of our painters called the Sop and said you know we're using all of his.
These green garbage bags to preserve our paint rollers and and painting brushes for the next day. So we don't have the wastewater and in Washington, and a good example, west you we could replace all these garbage bags were using it throwing away with tupperware.
And I wonder if our Laurence from I read your called this out the other day and shared his savings idea on savings on all of these garbage bags were throwing away by buying tupperware as to enclosed our rollers and our paint rushes overnight and he says they even last over an entire weekend. These tupperware is or so.
Airtight that a Monday, we come into work and we use the same rollers and brushes without the expensing up these garbage back same thing with our cleaning supplies were.
It's just it's all nickels and pennies and dimes to be honest since its a.
You know our Eyedropper, where are we walk around with an eyedropper that that.
We use to spend our our our capital with and and so everybody's really got to get all the credit for all these savings because everybody is coming up with amazing ideas and again, we can't give enough credit to our entire team.
We can stress that but we're still never going to be able to give enough credit to our entire team, whose more more cost conscious and we've ever ever been.
And maybe on a just this topic of employee engagement and what not a as the economy recovers.
Is there are risks that put pressure on staffing in terms of turnover or wage inflation and you know you could see.
<unk> costs related to that reverse.
Well.
When the economy again, there's always a hedge.
That offsets a stronger economy with stronger occupancy and reduced incentive incentives are still the biggest line item in our revenue and profit last statement.
Higher Oh financials and so.
That that's a big big line item that that can offset a wage and cost pressure when the economy does it turned around and new job market tightens and improves. So you do have a a natural offset brendan.
Maybe just on the topic of buyback.
You know clearly fundamentals.
And you to improve in your and your core markets and.
I'm just thinking to look at slide 50.
We're highlighting the value even with the stock up today, they're still about a 30%.
This county, or Iflorist have you have liquidity.
Clearly believe in the long term prospects of Alberta.
You know why not not necessarily doubling down but why not make.
By back at least.
A partial mix.
Your capital allocation strategy going forward, maybe you could just provide some color on that.
Well the slides, we shared with respect to the repositioning and to our improvements in our community are double digit returns that quickly provide exceptional.
Performance and delivery on that investment and so our investment with respect to our value added program is exceptional there, but there is no better returns than our value out investment at this point in time. The other positive is it improves our community.
And the value proposition to our residents and and.
A buyback will not improve.
The level of surface it won't improve are experiencing it won't improve our common areas.
Like our value right program will and so we believe providing that most exceptional.
Product quality and investing in our residents homes is by far the best investment in our results really reflect that Brendan our growth in AFFO per unit, it's really a very strong reflection of the success of our value add and repositioning efforts that are in time.
Our team is working tirelessly on on delivering and so it really makes a difference it's a timeline provide the best product quality service and experience.
And our residents will reward us and continue to and that's that's really really the biggest reason we continue to focusing on our value add.
And improvement in our communities more than anything else.
Okay. That's good color I'll turn it over thank you.
Thanks, Brian Thank you.
Thank you, though no further questions at this time I will now turn it back well that's a closing comments.
Thank you operator, we would like to end this call by thanking again, our amazing team loyal residents and to all our stakeholders were pleased with the improving rental market fundamentals. The exceptional value. We continue to provider residents and investors and for the continued great service of our entire team.
Thank you again for joining us. This morning, we hope you have a great day golf left.
Ladies and gentlemen, this concludes the conference call for today, we thank you for participating I may ask that you. Please disconnect your lines.