Q4 2019 Earnings Call
All participants please standby your conference is ready to begin.
Ladies and gentlemen, thank you for standing by welcome to the first capital Realty Q4, 2019 and year end results conference call. During the presentation. All participants will be in listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your telephone keypad.
I would now let's turn the conference over to Alison. Please proceed with your presentation.
Thank you and good afternoon, everyone.
In discussing our financial and operating performance and in responding to your questions. During today's call. We may make forward looking statements. These statements are based on our current estimates and assumptions many of which are beyond our control.
And are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward looking statements.
Summary of these underlying assumptions risks and uncertainties is contained in our various securities filings.
Today, our mdna for the year ended December 31st 2019.
And our current area.
Most of which are available on SEDAR and on our website.
These forward looking statements are made as of today's date and except as required by Securities law.
Undertake no obligation to publicly update or revise any such statements.
During today's call. We will also be referencing certain financial measures that are non IRS measures.
You do not have standardized meanings prescribed by a for us and should not be construed as alternatives.
Management provides these measures as a complement the IRS measures to aid in assessing the company's performance.
Non I have for US measures are further defined and discussed in our mdna, which should be read in conjunction with this call.
I'll now turn turn the call over to Adam.
Thank you very much Allison good afternoon, everyone and thank you for joining yesterday for our yearend conference call.
2019 was a pivotal year for first capital.
To be successful change has to be built on a solid foundation.
EPS yours evolution into an urban platform is not a recent phenomenon it's evolved over the past decade plus.
Today, as we celebrate our 20 year anniversary and start this new decade.
Our foundation is a very solid.
In 2019, we took several bold steps to on Earth, the true potential value of Fcr.
We launched our suburban strategy and a new brand identity that depicts the importance of community at the center of our real estate portfolio and solidifies our purpose to create striving urban neighborhoods.
We also address that gets eat overhang my facilitating an initial 1.2 billion dollar reduction of their ownership interest, including Fcr acquiring $742 million at a price well below or any abbey.
'cause eats ownership now stands at 4.4%, resulting in Fcr being a widely held company for the first time.
After a lot of work by our tax accounting and legal teams. We successfully completed our previously announced conversion to a real estate investment trust near year end.
Our focus on improving the people and culture side of our business came through loud and clear on our high engagement survey scores and led to Fcr being named the top employer in greater Toronto why the global mail for the first time.
We were honored to be Canada's only public real estate company to receive this distinction in 2019.
Our longstanding commitment as a leader in U.S.G. garnered several accolades for our team.
Including receiving our third consecutive AAA, Yes, do you reading from M.S. <unk>.
The highest rating possible.
Well, perhaps most importantly, whether you advances we made executing our super urban strategy and in turn enhancing the quality of our real estate portfolio.
The composition of our portfolio underwent a significant shift in 2019 through $1.4 billion of investment activity and over 9 million square feet of zoning submissions, which six and a half million square feet were in Toronto.
This $1.4 billion of investment activity included $835 million of dispositions in our least urban neighborhoods.
We also had a very busy fourth quarter in which over half of our total dispositions close with the majority of the proceeds used to reduce debt following the temporary spike from our share buyback.
Well I selling our entire portfolios in markets like Qubec city toward year end Readier, we have almost no exposure to secondary markets and in turn have increased our exposure to our most super urban positions, most notably those in Toronto.
We continue to develop strong partnerships with fcr as the managing partner in portfolios that are urban but not supervision.
Roughly 20% of our properties or 10% by value fall into this partnership category now and growing.
For example.
Auto was a market we want to continue to participate in.
Black some of the Super urban attributes that we look for.
We now own a 50% interest in virtually all of our properties in Ottawa.
It allows us to benefit from their future upside.
Enhance our returns through fee income.
And grow together with our partners using less capital.
Well consider this for other markets and properties that we believe have further upside, but that lack super urban attributes were targeting.
Throughout 2019, we also invested we invested over $550 million of capital into Super urban neighborhoods with roughly 85% of them in Toronto.
Neighborhoods like Liberty village young in Eglinton, and Yorkville, where are we expanded our position and acquired a key development site adjacent to Yorkville village and the Hazelton Hotel.
All three of these York full properties will benefit from being under Fcr common ownership.
We're already seeing the impact of our recent investment activity on our key Super urban metrics.
Our average population density within five kilometers of our properties improved by 16%.
250000 people at the beginning of the year to 290000 people today.
We're confident that we will achieve our objective of 300000 people sometime during 2020, which is ahead of schedule.
Transit connectivity is also an important part of our real estate strategy.
Over 99% of our portfolio is now within a five minute walk a public transit.
Well now make some comments on our density pipeline, which we believe is the most mispriced element of our company in the capital markets. So surfacing its value is a very important objective for our team.
And we took meaningful steps in 2019 to project progressed this objective.
First off the pipeline group.
This is important because it's an indication of the relative upside inherent in our business through densification.
And also protects the downside.
We started the year within existing portfolio of 23.9 million square feet of leasable area.
We also had an identified incremental density pipeline of 22.5 million square feet.
Representing 94% of our existing portfolio at the time.
These numbers are all at Fcr ownership share.
Owing to dispositions, our existing portfolio actually shrunk to 20.9 million square feet by the end of the year.
However, our density pipeline grew it grew to 25 million square feet now representing 120% of our built portfolio.
Growing the pipeline is one thing surfacing its value is another.
An important initial step towards this is through the entitlement process.
Heading into 2019, we had approximately three and a half million square feet of our pipeline zone.
In 2019, we submitted news owning entitlements for an additional 9 million square feet of density.
As you'll hear from change we have significantly enhance our disclosure related to our density pipeline.
Theres owning submissions made in 2019 are detailed by property in this disclosure as well as our current high for us value for the group.
By applying even the most conservative assumptions, it's clear that there is material value to be realized including for the portion we have conservative we included in our eye for us now.
Well 2019 was no doubt our biggest you're ever for rezoning submissions, we were planning an additional 4 million square feet more in 2020, taking your two year total roughly 13 million square feet.
Our Mdna now provides insight into the individual properties that comprise our 25 million square foot density pipeline.
It also highlights at certain properties and haven't been included in our pipeline yet.
Properties, such as Pemberton Plaza in North Vancouver.
Well the 42 acres, we own under Middleby, All town center in Mississauga, among many others.
It's reasonable to assume that these properties will be densified in the future, but our vision and plans having evolves to the point of inclusion yet. So this is a future growth opportunity.
Looking forward to 2020, we're very focused on unearthing the true value of Fcr.
As we pursue our Super urban strategy, we come face to face with the paradox of a successful real estate strategy in the arena of the public markets.
Quarterly metrics versus midterm and long term value creation.
We're well aware that selling our higher yielding properties to reduce debt pressures f. AFFO initially.
We're also well focused on the future value creation that are Super urban strategy represents in the mid term.
So we will strive to balance metrics like F. all over the short term as we surface the unrealized value in or 25 million square for density pipeline all of which is located in the strongest urban growth markets of Canada and have visible runway for continued and material and they'd be Roe.
Our management team has up to this challenge.
We intend to deliver on our promise to de lever.
And then told we do so.
Future investments will be aimed at enhancing properties, which are core to our strategy.
We'll continue our efforts to obtain additional entitlements and we're ramping up our efforts to secure partnerships with partners, who share our vision of creating thriving urban neighborhoods.
The world this witnessing many new challenges and the call for increased attention to U.S.G. matters is increasing rapidly.
Our super been strategy meshes perfectly with increasing demands from stakeholders related TSG.
Creating a thriving urban neighborhoods requires a different vision and managing traditional grocery anchored shopping centers, one which is extremely well aligned with our approach to sustainability and will enable us to make even more progress in this area.
[noise] transit oriented locations.
Parks and public realm within our mixed use developments minimizing shadow impact and pedestrian friendly projects or as important as our quest for lead and BOMA best certifications.
Fcr as proud to have always taken a leadership position in sustainable practices, both for new and existing properties and we're determined to maintain our leadership position.
I want to conclude by acknowledging the incredible efforts of the Fcr team in 2019.
It was a tremendous year and it's amazing to see how they have rallied behind our super been strategy, our new reach structure.
And our new brand.
Most importantly, our team has never been stronger.
And I know, they're up to the challenge of executing our new vision.
I'll now pass things over to Kt will speak to our fourth quarter and annual results in more detail.
Right.
Thank you Adam good afternoon, everyone and thank you for joining us on our call today.
As Adam mentioned, it was a transformational and very busy year at STR, we're quite pleased with all of the progress we made towards achieving our strategic objectives and the strong operating metrics, we posted for the year.
I would like to highlight some of the key strategic milestones and then take you through the results in more detail.
Early in 2019, we introduced our Super urban strategy and the metrics, we used to measure our progress in advancing the strategy.
These metrics include the average population density within a five kilometer radius of our properties.
The proximity of our properties to transit.
Our portfolios Walkability score.
Growth in our average rental rate.
Increasing our density pipeline.
In achieving our disposition targets.
We made very good progress across all of these objectives in 2019.
As Adam mentioned, our average population density reached 290000 and is well on track to achieve our target of 300000.
Over 99% of our properties are now located within a five minute walk to public transit up from our Q3 level 90%.
This improvement was primarily due to Q4 dispositions of 468 million of properties that were inconsistent with our Super urban strategy.
Our portfolios Walkability score is 78, which is considered very walkable and where most aaron can be accomplished on site.
Our average rental rate grew a record 5% in 2019, well above our five year historical average growth rate of 2.4%.
During the year identity pipeline grew by 2.5 million square feet to 25 million square feet.
Currently 7.1 million square feet or 28.4% of this density up from 12.9% last year is included in our now.
Yeah, I'll point 6 million square feet is included as part of our active developments in the remaining 6.5 million square feet is valued at 506 million or $78 per square foot.
This is an increase of 349 million over the prior year.
Due primarily to acquisitions of property with meaningful incremental density potential as well as entitlements received during the year.
We included in this 506 million any vacant land parcels or properties. We report we purchased for development, including properties like Christy Cookie.
10, 71 King Street last.
400, King Street West.
Young in Roseland, and one for New York sell.
We also include land parcels adjacent to existing I.P.T. centers, such as though is that plan supported Belo and Platts Seattle.
Zone density that is not encumbered by lease such as phase one of Hopper town and Plas Panama are also include it.
Last Panama wouldn't be the largest property in terms of density. That's included here as its own for 2 million square feet.
Notwithstanding that these properties are currently included in our NAV. This does not mean that there's less upside here than in the rest of our pipeline.
For example, our Christy Cookie asset, which is not yet zone for our intended use.
Included here at cost with an incremental density of only 300000 square feet, which is based on the current in place so winning versus the 3.5 million square feet, we submitted for.
Both of these numbers at our our at our 50% ownership interest in this asset.
In April of 2019, we became a widely held company. This was accomplished via our repurchase of 36 million common shares from Dizzy combined with the closing of the secondary offering I guess eat for an additional 22 million shares.
Upon closing of these transactions because each ownership and fcr declined from 33.3% to 9.9%.
And since that time, because he has sold a portion of its remaining interest in fcr, reducing its current ownership to 4.4%.
Following the share repurchase we've been focused on reducing our leverage back to similar levels as that you're in 2018 through our disposition program.
In 2019, we completed 835 million in dispositions and made good progress towards our de leveraging objective.
One of our key strategic objectives for 2019, what's converting from a corporation into a real estate investment trust or a read.
On December Thirtyth, we successfully completed the conversion and began trading on the GSX under the symbol Fcr Dot UN.
As a result of the conversion we expect to be included in the S&P TSX Khatri index in March of this year.
It's part of our year end reporting we enhanced the disclosures around her density pipeline in our mdna by including a breakdown of the density by urban market.
We've also showing the individual list of properties, where we have already submitted entitlement applications or plan to submit in 2020.
These properties make up roughly 16 million.
The 25 million square feet of incremental density within our portfolio.
We have disclosed our active developments as we always do as well as the list of the additional properties that largely account for the remaining incremental density within our portfolio.
As discussed previously based on current market conditions, we expect to recognize meaningful increases to our I FRS values. Once approvals for these submissions are received.
We have also highlighted properties with meaningful incremental density that are not at this stage, where we would include them in our pipeline and are likely to be included at some point in the future.
That's summarizes the significant progress we made during 2019 in advancing our Super urban strategy.
Now turning to the financial results.
On slide six of our conference call deck, which is available on our website in the Investor section under earnings and reporting.
We outlined factors driving the year over year change NFL.
For 2019, we achieved AFFO growth of 2% or two cents on a per unit basis.
Excluding the cost related to our reconversion essence <unk> per diluted unit increased 3.3% over the prior year.
Moving to slide seven our same property NOI increased by 3% for the fourth quarter and 3.3% for the year driven by rent escalations higher occupancy levels and higher lease surrender fees.
On slide eight we show our lease renewal activity for the fourth consecutive quarter, we achieved double digit increases on our lease renewal rate when comparing the rental rate in the last year of expiring term to the first year other renewal term.
And for the seventh consecutive quarter when comparing the rental rate in the last year of expiring term to the average rental rate in the renewal term.
Our total portfolio lease Reno lift for 2019 was a very solid 10.7% on 2.5 million square feet of renewals using the first year of the renewal term and at 12.4% when using the average rental rate and the renewal term.
Moving to slide nine our average net rental rate grew a record 5% over the prior year to $21.25 per square foot.
This growth was primarily due to renewal lifts rent escalations development completions and dispositions of our least urban properties.
Our development completions for 2019 included 201000 square feet of new commercial jelly and 247 Residentially units.
The completions were primarily in our mixed use King Heinlein project located in Liberty village in Toronto.
On slide 10, our total portfolio occupancy rate increased by 20 basis points over the prior year to 96.9%.
Slide 11 highlights are 2019 developments span the vast majority of this investment totaling 166 million wasn't super urban neighborhoods.
Slide 12 shows the factors impacting epicel and the year over year changes.
Slide 13 touches on our other gains losses and expenses, which are included in Africa. So.
For the fourth quarter, we recognized 3.1 million of other expenses, primarily due to reconversion cost and 3 million.
For 2019, we recognize 2.4 million in net other expenses.
Primarily due to read conversion costs.
And transaction costs related to the kids eat secondary offering being partially offset by a 4 million gain on a prop tech investment and the additional proceeds we received from target.
Slide 14 summarizes our eighth CFO metric.
During 2019, we generated 252 million in adjusted cash flow from operations.
Slide 15 summarizes our 2019 financing activities.
To fund the share repurchase transaction, we put in place 850 million of unsecured bank term loans in the first half 2019.
And repaid 100 million at these loans in the fourth quarter with proceeds from our disposition activity.
Additionally in July.
We completed the issuance of 200 million of 7.5 year unsecured debentures with an interest rate of 3.5% and use the proceeds to repay other debt, including 150 million of maturing dense debentures with a much higher interest rate of 5.6%.
Slide 16 summarizes the size of our operating credit facilities, and our unencumbered asset pool as well as our key financial ratios.
At year end 7 billion EUR, 69% of our assets were unencumbered.
And we had approximately 800 million availability under our revolving credit facility.
As previously stated we haven't cool return our leverage metrics to similar levels as at year end 2018 within two years of the share repurchase transaction.
We made good progress in the quarter with debt assets declining quarter over quarter from 48.9%.
46.7%.
And debt to EBITDA declining from 10.8 times to 10.0 times.
Our path to achieve our target will show a steady decline in our debt to asset ratio.
However.
This will not be the case for debt to EBITDA given EBITDA is calculated on a trailing 12 month basis and debt is at a point in time.
We expect an uptick in this metric in the first half of 2020, but that it will remain below Q3 2019 levels.
Followed by a decline in the second half the year to below Q4 2019 levels.
Slide 17 shows our term debt ladder over the course of 2019, our weighted average interest rate declined from 4.2% to 4%.
Looking forward to 2020, we expect same property NOI growth to be in the range of 2% to 3%.
We expect our 2020 lease renewal lift to the in the range, 8% to 10%.
We plan to invest between 150 million to 200 million in development.
And we expect our development completions to be a similar amount at 150 to 200 million.
We expect to take a small amount of space offline for development approximately 40000 square feet of jelly, primarily in phase two of our wheels are 10 project as construction continues.
At the start of our disposition program. We stated we were targeting approximately 1.5 billion in dispositions.
During 2019, we completed 835 million of dispositions.
Based on the strategic acquisitions, we made in Q3 2019 together with the success, we've had thus far with our disposition program.
And the fact is the remaining asset should garner even more interest we expect to exceed our 1.5 billion dollar target.
As a result of the progress we made in 2019 against our disposition program and related de leveraging targets.
Our portfolio today has higher quality assets with increased density and stronger growth profiles.
And less downside risk.
Making it more desirable and more attractive than ever before.
All of this is very positive, but in the short term there isn't impact SSL and as such we do expect episode to decline in 2020.
Notwithstanding this we do expect continued growth in NAV during the year and growth in episodes resumed in 2021.
Overall, we're very pleased with the progress we made in 2019. It was a truly remarkable year for Fcr and I would like to congratulate and thank our entire team for their outstanding accurate efforts and accomplishments during the year.
We're very proud of all the milestones zones that our team achieved and look for it to executing on our strategy and objectives in the are ahead.
At this time, we would be happy to answer any questions. You have operator can you. Please open the call for questions.
[noise].
Thank you we will now take questions from the telephone line.
You have a question Andrew using a speakerphone, please with cancer from making your selection. If you have the question. Please press star one on the telephone keypad.
At anytime you wish to cancel your question. Please press the pound time. Please press star one at this time if you have a question there will be a brief pause for the participants register thank you for your patience.
[noise] you first question is from Mark Russell. Please go ahead.
Thanks, Good afternoon, everyone.
In regard to your same property NOI to what extent was 3% impact it from asset sales that may have been a slower growth assets and I'm looking forward you expect leasing spreads to accelerate time be stronger and 2020 following.
The large number of asset sale.
Hi, Mark Thanks for a thanks for your questions in 2019, there is very little impact on same property NOI.
From asset sales so.
Our view longer term is that.
The assets, we're investing in have a better growth profile than the assets, we're selling although the assets were selling do have up to have a growth profile I'm just not as a stronger compelling based on what we see over the longer term, but as you know year to year.
Sometimes things happen and you can you can read too much into trends one year to the next 2019 was an example that so there was actually very little impact on same property NOI based on.
That's moving buckets as a result of dispositions.
And sorry, <unk> just unclear on your second question would you mind repeating it.
Yeah in regards to leasing spreads that had been around the low double digit range do you expect that to be stronger in 2020. Following the asset sales that you completed last year.
Yes, again, it's hard to say in any one one year, but you know Cape provided.
I guess soft guidance on kind of 8% to 10% expected for 2020, you know I can tell you aware leasing group budgets, we've consistently exceeded what they have budgeted in terms of.
Lease renewal lifts, we'll see if that's the case in 2020.
So I would say we've had we've seen an acceleration in a in the lifts on renewals over the past year and so our expectation is that we continue to hang in there at around that range.
Okay, great. Thank them my other question in regards to the entitlements and the different tables on DNA into the 9 million, but you submitted this past year.
Maybe quantify somewhat on what would the value be in the market to the extent one of these assets would trade now on it maybe on a billable person, but on the residential side and then how would that change pre and post entitlement.
Well I mean look we've got a pretty wide range. When you look at the properties that are included in that list.
So we have we have some density and so suri, that's kind of at the low end of the range and.
You know that would be mid double digit.
Values today, and then we've got.
Density at the opposite end of the range. That's in the neighborhood of 300 always had buildable foot for for that type of density I'm talking residential density the commercials typically higher.
But the residential density is the lions share of it so.
So the reason we put this disclosure in you know as again to support our.
Our objective of trying to surface. Some of this unrecognized value that we see in the pipeline.
And so we think that.
For stakeholders. They can take a look at this list you know they can go into the actual submissions which is public information.
They can form a view on.
Based on work that if there are prepared to do or the knowledge of the market or they can form of view on the rough value of.
Each of each of these properties on the density and how much density.
You know as expected and then compare that to to the IRS NAV. So.
Our goal was to provide disclosure that can get people into a ballpark with an educated set of assumptions.
And so we obviously have our view.
We've got to be careful given these are zoning submissions not completions and so we're we're in some cases in some circumstances were insensitive discussions with stakeholders like the city in communities. So we're reluctant to to talk more about that at this stage, but we think we've provided the information that Oh.
How's investors to get into the ballpark.
Okay. Thanks.
Okay. Thank you Mark.
Thank you.
The following question is from at Dean Wilkinson. Please go ahead.
Thanks, Good afternoon, everyone.
I.
Maybe just a follow on Mark's question on on the six and a half million density. That's currently valued at 506.
That's that's 78 per square foot give a range of sort of below the low when the high on on where those density fingers are I mean, you've seen some numbers.
Core gay, where you might be pushing as high as $200 per square foot for some of these and.
I'm just trying to get a sense of the range of that in looking at the 9 million that's sort of in the hopper.
I mean do you you could say 200, Toronto proper, which is where a majority of this is located and many of these neighborhoods, it's well north of that.
So.
I mean, I mean, it's very tough to put a specific value on it and they again, we've we've tried to lay it out the one thing that I think is very important to flag is that because it's included in our I've for US now does not mean that we've taken on market value for the density and apply that by the expected density in fact, the majority of it is carried out our costs right.
If we buy a piece of land you know Christy cookies, a great example, it's sitting in our eye for US now, but it's sitting at our eye for stab at our at our at our cost and the density that's been included.
And in the NAV is the in place zone density, which is about 300000 square feet at Fcr share. So.
Well I want to major very clear, though while it's included in our area for US now that should not be directly linked to the expected zone values. So in fact, there are some properties that are included on our eye for US now that on successful zoning. We think we'll have more of an increase in value than some of the properties that.
Aren't even included in the NAV. So I think it's an important distinction we are policy on how we value. This density and when it gets included in the pipeline. When it gets included in <unk> for US NAV I would say you know given the options is more on the conservative side.
And and so until we have a lot of clarity around the zoning that will be achieved a I would say, there's there's a pretty big gap between what is carried out on our balance sheet. If its carried at all and what that values.
And then in terms of the process of that market. So as soon as you've got sort of the entitlement in the approval in hand do you then go back and look at Okay. So now we'll put a value per square foot on those buildable approved.
Our digital investment so the market, Okay, let's say look yeah, yeah, that's what that's what we do and in some cases like in the case, a 400 King Street, we reached a settlement with city Council and so.
In our view, we've we've now remove the rezoning risk and so that did trigger a right up to the formal rezoning will take place sometime in the next couple of months Jody in March Okay. So so technically it's not resolved, but from a practical perspective, we have a settlement with the city on what the zone.
We will be in so that was good enough for us to.
How are you are our appraiser factor that into the valuation that triggered a write up got it. It can you remind us when you get those approvals and you get that that write up in place is there an increase component of carry vis-a-vis.
Tax assessment or anything to that it does that affect or it's just evaluation exercise.
Yeah, It's just evaluation exercise I mean depends on the municipality some will charge your taxes on the highest and best use whether youve.
Pursued a passive rezoning to that that use or not and others. Other so it depends on the municipality, but typically.
Typically there is not a correlation between.
Carrying costs tax assessment versus when we included in our eye for US now however, when we write things up based on resulting progress got it.
And then in terms of how you're looking at those the debt metrics have you incorporated any of this forward view of that zoning or would that tends to sort of be accretive to your debt measures at least on book value basis as they come in.
Yeah, we havent <unk> I mean, unfortunately, or Fortunately the majority of this densities in Toronto. Unfortunately, there's a bit of a backlog in the city getting the zoning done so.
Our expectation is that the rezoning for the majority of of Ah of this density will.
Be achieved.
Pass they you know I guess the initial milestone date that we set which was.
Two years from last April so so we have not baked that in.
But if we fast forward past that time period, our expectation is that some of those density will get developed by our some of it will sell a partial interest a strategic partner and co develop in some of it I would expect we will sell outright and so obviously the sale of outright Air Air rights is very positive for debt metrics with little to no.
No earnings accretion, so that bodes very well for starting to look at 2021 2020 to 2023, but we haven't factored it into.
What we've been talking to the market about in terms of our shorter term debt metric objectives. Okay. Great and then just a final small housekeeping for me looking at the Montreal assets looks like the.
[music].
Calendar to maybe the rest of your markets. The average rents in place there went down a tick from last year was there a big lease renewal or something that happened in there or was that sale of assets that that would have driven that difference.
The only thing that no. The we didn't have rents go down in Montreal, we sold assets, but the assets, we sold had a lower our average rent than.
Than what we hung hey hung onto so.
Yeah, you hate this offline Dean and you can't always what you're looking at I don't will help walk through it because.
That's just disclosure on page eight that okay second line item. So okay, well take a look at a rate after this and get back to sounds good I'll hand, it back thanks, everyone.
Thank you very much.
Thank you.
The following question is UN Rodriguez. Please go ahead.
Sorry, just.
A couple clarifications that five or 6 million or.
6.5 million.
<unk>.
That's made up of.
All of the pre 2019 entitlement.
In 2019 or.
Hi, how are you on Johan SK in terms of what I said in my script I'll, just kind of go back to that so any vacant land parcel or property that we purchased for redevelopment is included in that 506 million. So that certainly a portion of it and I.
Reference some assets like Christy Cookie 10, 71, King Street, West Young and Roseland 140, Yorkville. So that's one component excess land parcels adjacent to I.P.P. centers. That's another component because we've got a value those land parcels that something there's their value separately than the IP centers and I mentioned last quarter.
Hello, placebo as both having examples of that.
And then the third one would be the zone density and so I mentioned phase one of Humber town and Plas Panama both of those are unencumbered by leases. So they would be included in this number.
Okay, so and so on a pre 2019 entitlement applications, you've got eight properties there.
The first you.
And 110 are included in that figure and then the remaining.
Six or not.
The majority would be included there because they are zoned as referenced in the table above I'm not all of these are zone. So something like Applebee's village is one of the properties that's not zoned so it would not be included.
This stage.
Okay. Okay. That's helpful.
And then.
I just want to make sure I heard you guys correctly in terms of the 1.5 billion you mentioned and.
Expected take that total was that.
Because you expect better pricing on the sales or.
Selling additional properties.
Both.
Oh got both I mean part part of it is when we set the billion five target.
That was strictly related to getting our leverage back to where it was.
Little expected in the way of acquisitions and then a couple of.
Very strategic ones materialized in Q3, which you would've seen and so.
So part of it as an uptick from that.
Part of it is arc and our conviction in the ability to continue to execute because.
If you say were half done the first half in terms of assets steps of.
The market for buyers pricing et cetera are the first half.
We expect it to be tougher than the second half a given the quality the assets and the.
The way the environment isn't where there's capital and demand for for the types of different properties and various markets. So so it's a combination of the acquisitions, we did which kind of required that to go up a bit slightly better pricing expected.
And that's the main reason.
Okay.
And then the stuff guidance of 2% to 3% same property NOI.
Stable.
So.
Development.
Yeah, why as you know we Theres development of any consequence, it's not included in same property at all so.
So that other bucket that you're referring to.
Is the one we look at and in some cases, it's you know we end up demolishing space. So we see we see development trigger or reduction in the leasable area. So.
So if there's any development of any consequence, the properties not in same property period in any bucket. So it's the but we look at total same property. That's the reference it's it's been made too.
Okay.
Okay, I'll turn it back.
Okay. Thanks Joanne.
Thank you.
The following question is from Sam Damiani. Please go ahead.
Thank you good afternoon, everyone, everyone I'm just on the full guidance a aside from being down a little bit a year over year 2020 could you be a little more specific on the quantity, we're talking one or two cents three to four cents.
Well look at what Rick I'm sure K wants to jump in on this one vote for foot before she does.
You know, we sold $835 million of real estate. This year the majority not all but the majority is IBP a you know I would describe this as the bottom of our portfolio hey use that word because.
Most as real estate is actually good real estate.
But the average cap rate was about 6%.
Okay. So I.
I mean, if you just run the simple math on the spread between the 6% in the cost of debt.
You can get into a certain level of dilution.
Pretty quickly so I think that's an important starting point okay.
Yes, I'm happy to jump in so within the Mdna, we've made disclosure on the NOI I lost from dispositions.
Ill and a life from acquisitions.
We show you development completions, we show you development yield we've given you soft guidance on same property NOI growth and you know there's an impact from the weighted average unit change given the share repurchase transaction I think if you triangulate on that data you can come very close to coming up with a good estimate for effort. So next year.
That's where the oppose this big Bucks.
[laughter] up big Bucks, but yeah, well I'm, just as another matter or what's the I guess when we looked at dispositions I mean 800 million last year, that's pretty fulsome pace.
You see.
You mean that level in 2020, or perhaps a transacting a little more.
In the near term.
Oh look at this stage, we're still early in the year, but.
I would say that based on what we see now we think we think it's likely we would come in in the same type a neighborhood.
The assets are a little better that we're looking to divest those ah theres going to be more partial interest than over last year.
Which actually makes it easier for us we actually have a a number of institutional investors that are much more keen to buy a partial interest with us as their partner than 100% interest and the environment in general there appears to be more capital.
Looking for investment in the type of real estate that we'd be looking to divest and there was last year at this time.
So based on what we see now it's likely to be similarly active year in 2020.
What's works well for us because we know where there's a clear relationship between the level of dispositions, we do and the de leveraging and you know, we're we're confident that especially based on the assets. We saw that dilution to earnings from selling these properties given the growth profile of the business on what remains we think we.
Should get adequate multiple expansion to offset that.
Okay. That's helpful. In the added disclosure this quarter is very helpful. So so thank you for that and just to finish off all the $506 million back to that.
The handful of properties that you mentioned.
Most of which were in Toronto and they only want it seems that actually has or effectively has its a zoning in place is foreigner king.
So.
Is it fair to say that's actually the one that's actually the one that doesn't have oh on that one we expect will have its full zoning in March applebee village does not have his own and yet we expect that are relatively soon.
But the rest do so Panama Zonings in place Humber towns in place. We'll do 10 is in place a long street actually is not in place and then the last two rather for it and 200 West Esplanade.
Our in place.
Okay. It was actually referring to I think was Kate mentioned, a handful of properties in that bucket or being Christy Cookie 10, 71, King for to King Yoga, Roselawn 140 or Phil.
Okay. So yeah. This is they fit this is a group of properties out we submitted for in 2019, Okay, sorry, Yes and Sam.
Those are very five minutes isn't that right.
That's correct and some of those are recent acquisition. So you take 140 York Phil.
And it would be included at the cost we acquired at that right.
And what square footage would you have for that asset.
Because you don't have as Christie.
No for 140 orphan.
Well 140 or fill we have it actually technically his own we're looking for rezoning to change things so the.
Well, we would have adopted as the zoning that's in place.
Okay.
It was $78 a foot does seem on the low side for most of the properties that you mentioned.
So it was one of the yeah. Yeah. It is it is but yeah. This is why we wanted to put the disclosure out because I'm just.
Just because we say it's in our eye for US now doesn't mean, there's not a lot of value to be realized on rezoning. So.
Obviously 140 York Phil is in our NAV at a higher number than $78 a foot yeah.
But when you look at the group and that's why it was important for us to put this out and you use reasonable assumptions, it's clear that there's a lot of value to be realized on rezoning. So we're not telling you. The 70 Bucks a foot is current market value or trying to give you a data point that you know people can make assumptions on.
And you don't get basically get into a ballpark on what what is expected in terms of value creation on the fall a successful zoning of these properties.
Okay and just finally, then I'll turn it back is on the on the list of 29 team applications.
Sure the first one or two larger properties, where you expect to receive approval.
I Sam it's Joe you good afternoon.
Hi, So we have that we submitted for 13 applications in 2019, the ones that are I think more advanced than the others that tenseventy when king is pretty well advanced so we expect to see a that I complete itself very soon following that I'd say young and roselawn. It would be the next one that should happen.
And then over and not Montreal that size of age or pay I will come later on as wells I'm sort of giving you a general idea of what we expect to happen I 10, 71 at King and a young roselawn being I'd say the very next wave that will come through and then following that Oh, we have things like 70, M. you are larger.
You know one York Mills in Toronto, and that'll come following its a further down the list and Christy Cookie is a big process as you know and so.
We submitted official plan application last year 2020 will be the crunchy cookie zoning submission and so we have a big process, where there's not a bit further down the line, but the rest of them or.
Over the next.
12 months, what we should see some of these early when.
That's great. Thank you very much.
Thank you Sam.
Thank you.
The following question is from <unk>. Please go ahead.
Thanks, and good afternoon.
Most of my questions were answered just maybe one to clarify.
On the I guess recognition of value for for zoning.
Just clarify so once its own you you will then or success. We resumed you would then recognize value, but then do they also need to be unencumbered by leases because I do recall plus some commentary and I think you made reference to that in the past.
Absolutely yes they.
Look there's a couple of catalysts and triggers for a variety of milestones that range from being included in the pipeline to begin with because I could tell you the pipeline I for calling all the properties is much bigger than 25 million square feet, but until we have.
In our view a credible visible plan that can be executed it doesn't it doesn't get included and then once it gets resolved owned.
Rezoning is great, but there's other things that impact the value and leasing conferences, one and so to the extent there isn't encumbrance [noise], whether it's from leasing or otherwise then absolutely that will play into the overall valuation Fry for us purposes.
And then just on the 2019 applications that were filed I guess on the.
Almost 9 million square feet.
Any rough sense of what I guess that the weighted average lease term left on these properties is.
Most of them are pretty Queen.
I mean dufresne corners is probably one of them more encumbered ones.
Staples low he'd were.
You know were seven years Max of term.
Could be as low as to.
Coating Luke I have some encumbrances.
I think the rest are pretty clean.
Okay. So it looks like then you know with the exception of those two or three properties.
To your comment earlier that could take maybe a couple of years for this to get through the process maybe three.
Fair to say that you know maybe in 2020 theirs.
Perhaps not as much value recognized this year, but you know as it gets to you we it could be lumpy in other words, I guess 2021, and 2022 could be a bigger years for actual recognition of value.
Yeah look I think as time goes on over the next few years given.
We have entitlements 19, that's getting attitude and 20 that'll get attitude and 21.
Yeah, I'd say, it's safe to say as time goes on the the value.
Creation from this program is going to accelerate.
Got it.
The other thing that's worth noting the sorry upon the other thing that's worth noting that is tied to your question is.
Properties being encumbered is not a new thing for us so we.
We can go back to a lot of things we've developed over the last number of years and and they were encumbered, but.
We we find ways to unencumber them, we have good relationships with a lot of the you know national tenants I didn't cover some of these properties.
The value creation is such that you know we have some chips to work with to help facilitate it getting unencumbered.
And so so it's not that it's you know encumbered and there is nothing we can do about it right for for retailers that are there there's ways that and tenants that are there there's ways that we can deal with it in a in a way that's a win win for both sides and a lot of cases, you know we can offer a tenant and new format, whether it's bigger or smaller different location better.
Getting better access exposure.
The change in lease terms, all sorts of things all sorts of tools, we have to help facilitate that so.
If we have included it in an entitlement application you should definitely assume we have a vision.
To get at that density in a reasonable period of time, what you know including works encumbered.
Got it.
Just one last one as we are generally in a weaker tip typically weaker period of Q1 for closures.
You know your Paul.
Generally seen much if that can you maybe just comment on what you're seeing in the broader retail market in terms of I guess seasonal closures through Q1, so far.
Yeah, I'll have cars with us as well so he's kind of on the front line of I had a pass over to him well I'll caveat it by saying.
Our business as a very specific sub sector or retail and it's.
It's a it's we're far less exposed to retailers that sell discretionary goods and services and retailers that are.
Oh, you know more trouble if you'll get a lot of the bankruptcies that have happened over the last two or three years.
There's been almost no impact in the Fcr portfolio and if you look at what are our tenants, where we do have defaults, it's been pretty steady for many years now and not a lot of seasonality to it but all I'll turn it over to car.
To explain to you from his perspective, what he has been seen on the ground hard for me.
Hey, guys tend to close to the closures have been relatively consistent for US last three years, we've seen what we've seen in the marketplace is pretty much normal churn. We always do this is an opportunity in many cases to replace tired tenants with better offerings are not surprising some of the more active closure cat.
We are seeing or some of our most active new categories.
Such as full service restaurants, health and beauty QSR and medical offices many of these.
Minis or owner or franchise operated at many retiring many haven't invested in their businesses.
I haven't innovated and they're being replaced by quite frankly, just better operators. So we're not seeing and yet so costs.
Well I've times, we like to use we still believe in the use and we replaced the operator with the same use and with success, so, but but it's very tough in our business to that theres not a lot of seasonality.
When you look at the sales patterns. Obviously, you know you ended the year is a little higher than other parts, but not nearly a not nearly to the same magnitude of.
So like fashion type retail and more discretionary type retail.
Yeah, no understood just.
Trying to get a pulse on what you're seeing from the ground in the broader market, but that was a very helpful. Thanks very much.
Okay, well I'm surprised it was very helpful. But I'm glad you found it that way Bobby.
Thank you. The following question is fraud Jenny Maam. Please go ahead. Thanks good afternoon.
Just wanted to.
Clarify point about dispositions and the leverage so you say that you anticipate the leverage to go down to.
Around 2018 level is that assumption based on the 15% of asset sales or is it based on the additional sales that you talked about earlier in the call.
[noise] well, firstly, we're going to get back to where we were.
On debt to assets before debt to EBITDA up because of the.
Just the way our investment activities have evolved so.
Yeah, I would say it's in between it's also going to depend on where our investment spend comes in in 2020, So it's a little bit fluid and I don't think the goal posts are super wide on on the dispositions.
So I don't I don't that's all for a notch any but we I I don't.
We don't have like an exact debt metric matrix on 1.5 billion versus the other assumptions.
No, but I would assume that for your purpose ginnie that our target as I said is above the 1.5 billion. So you should be assuming a number above that for your debt metric calculations. Okay. Yeah. There's a lot of moving parts, obviously would it be would it be reasonable to assume a range because I'm a year ago used.
When I started at the 10% to 15% Mark what 15% to 20% be a reasonable range for total dispositions. This programs all said and done.
I think it's in that range I dealt we'll get to the top end of your range. Okay. And then I would say I would add Jenny that dispositions have always been a part of our business. So even when the disposition program concludes I wouldn't say that you should expect no dispositions going forward after that okay, and then I want to talk a little bit about.
Pricing so it looks like based on your disclosure that it came in at about 5.6% on the 2019th stuff, but if we if we just look at the much smaller held for sale buckets.
It looks like the implied cap on that it's closer to six and a half. So I'm just wondering you could talk about.
We expect a in the full some odd disposition program is six and a half is sort of indicative of that second half or if that's very specific to the held for sale buckets.
Yeah, it's specific to the held for sale bucket B.
I think what you're taking they get to the five six is the I know why that we've disclosed on dispositions divided by the 835 million, but the 35 includes a little bit of air rights.
So on our math they'd be the cap rates close to six <unk> five six so 6%, but that's that's what.
For the IBP dispositions, we made it's in that it's in that range just under 6%.
Okay, that's how I'd say at this stage, that's probably a.
Okay, and our internal models were using 6%.
I'll be disappointed if it's not slightly lower than 6%.
But for use in 6%.
Okay, Great and then you did mention that you expect some more JV institutional partners I just wonder if you can comment on up for some of the exit and a smaller markets what kind of buyer profile you're seeing for these assets like for example in red deer, or five of the air was coming to the table in those markets.
Try Revere was a private local investor.
Our red deer is.
Private right.
So we're seeing.
Maybe you'll get a broader program, it's been small public Reits, a small and medium size pension funds.
Ah private equity capital.
Large family offices that have a focus on specific geographic regions.
Life insurance companies.
Yeah.
Okay. So it's pretty broad base, that's where we continue to see demand. If there is the uptick we've seen is a little.
Deeper in what I would describe as more of the institutional bucket.
Where.
Institutions that we're quite adverse to investing additional capital and retail have now kind of analyze the various buckets of retail and found grocery anchored retail as a compelling place to be a and that was not the case a year ago. So.
Okay. That's a that's great to hear.
And the on my last question is can you provide an update on the leasing of the residential component of King High line.
Yes, we can.
Hi, Jenny Jody I'm happy to answer that question. So as of now at this week for AD Tech 263 out of 506 units and so we're very pleased with as well on track and where I, but more importantly, we're actually getting out of the leasing rates that were looking for which is north of $4.
And so it's going according to plan.
Yeah. We started it we started I really cap rate ARPU are our operating partner on the resi components started leasing that mid year.
2019, a we've had a lot of dialog with them, there's a clear relationship between leasing velocity and rent.
They they have a very strong conviction that we have the right balance right now so we could certainly lease it up quicker, but safety and we're very well aligned given the deal structure. So we defer to them on this a and they feel we have a very very.
Good balance between leasing velocity and the rental rates that we're achieving.
And just one more quick question remind me that if this one.
Doesn't get rent control because of the timing of completion it that the case.
No, we're not subject to rent control because the legislation changes and ER and the changed a at the perfect time for us So we're out of that.
Perfect. Thank you very much.
Thank you Jamie you.
Thank you.
Question is from Tao Levy. Please go ahead.
Hi, good afternoon.
No I don't I'm wondering.
Just a critical metric Jenny and you'll have questions as with dispositions are sort of talking about maybe upsizing the program a little bit over the longer term I'm. Just wondering if we go out even further like when you're talking to the board when you're talking amongst your management team like what is the right mix of grocery anchored retail versus mixed use for the future like what do you guys see that mix.
Committee being.
We talk about the mix of or not by asset class, but by quality of real estate and investment in Super urban neighborhoods.
So we that's where the focus is so we look at some retail and we say this is phenomenal retail we have a lot of conviction that a lot of money can be made on it.
Without densification just in its current form over the next 510 20 years.
And then we look at other retail and we say you know well we don't have the same level of conviction.
We look at some of the office space, we own same thing some of the residential space same thing so its really about the quality of the real estate, we don't have targets on.
No mixed use resi retail, we want phenomenal real estate and every year that goes by we want.
The bar on average portfolio quality to continue to rise.
So it's not a question of like you know if someone came in at bid for 20% of your retail at a 5% premium to NAV you'd be a take or is that right away, but given that that's not your view at all.
Sorry can you repeat that I was just gonna say if someone like if there were you know if we could take that sort of transaction cost from a timing and everything out of it if someone came in with a really solid bid for like a significant chunk of your your existing sort of retail portfolio, that's not necessarily a bit you would take today.
No it depends on the real estate okay.
On a.
The 506 million in densely value in the now what's the current.
Loan to value outstanding against those properties that are included in that.
Probably close to zero, but.
Yeah, I would have to take a look at it tell I don't know that number off the top of my head, but the majority of our assets are unencumbered. So high level I would say you can assume a small amount and where we have encumbered properties.
Generally their properties that are chunky in size, and where we don't anticipate making a lot of changes to them over the next 10 years.
So it's unlikely that we have dead on any of these properties.
Okay.
And then I guess just my last question.
We saw a fairly significant trade of urban focused portfolio of retail assets in the state and getting buttons. We do you have any thoughts feelings about how that when you look at that there was a set of very highly productive retail assets with good locations that could be redevelop obviously.
Talking with investors some parallels were drawn between yourself and they're like what was your sort of.
Looking at that transaction what did you how did you feel about how it should go.
Turns evaluation.
I like the Mark to markets very different there and that's a different retail asset class than what we own.
So we did and we didn't draw a lot of similarities or a lot of strong takeaways.
Our business or the environment in Canada.
Okay perfect. Thanks, very much guys.
Thank you very much.
[noise]. Thank you once again, please press star one at this time, if you have a question.
The following question is from Mike Mckee. This please go ahead.
Hi, Thanks [noise]. Thanks for taking my question, maybe just two parts here first looking at the entitlements that you had an outstanding in your existing.
Pipeline, that's actually active in in production what could we expect to get added over the next 12 months or so it would be the first part and then second part.
Just given the way that's expected to evolve how should we be thinking about your development investment and 2021 and 2022 versus the 150 to 200 million that you expect this year. Thanks.
Okay, Oh, all answer the second question and then or.
Joe do you feel mine.
Taking the first one so.
Look right now are the first step in this process of unearthing.
Some of those unrecognized value for us is through the rezoning process and that's going to take the better part to two years. So once we've realized that.
Uplift from securing entitlements that then we're gonna have various options we can.
We can most of these are income producing properties. So we can.
Do nothing for a period of time and continue to grow the cash flow from the existing tenants and these are generally neighborhoods that are getting better and better overtime. So we can we can do that we can initiate developing the density on our own.
We can sell a partial interest to strategic partners and in some cases, we cannot rights all the density where there isn't a strong of a strategic fit for first capital.
We're likely to do all of those the mix of the various buckets is going to have to be determined as we get closer and we'll make decisions for each property and and the overall program.
I will get a bunch of factors.
Besides the strategic fit of the properties in the amount of development profit to be realized by taking you through a full development process. Our overall capacity, both human resource wise, but also capital and balance sheet wise.
And if you look at how much has changed over the last two years you can understand why would be reluctant to commit to.
What the magnitude will look like in two or three years from now.
Well, we know is it's a great road that leads to great things, where we go from there we have walk who will have watched the options, but it'd be premature for us to start indicating at this stage, what what's concrete steps will take how much our development spend will change by if any at that time, it's just a little too early.
Okay, and then just in terms of any of the pre 2019 that you think might get put into production in the next 12 months or so or is that still too early at this point.
No I think we can give you some color around at least some of those.
Hi, Mike It's Tony So in terms of the pre 19 at the age that are on the list and you know these or other than as he mentioned 400, King which is I got that settled with has city of Toronto Council last last July and its sorry, Jody I think I'm correct. That's if we're wrong way, but I think your question is what what are these will actually going to pay.
Reduction in terms of construction correct without your question. It was thank you.
Okay I get okay. So on the pre 19 list that we got we're looking at are just well just didnt just generally sure channeling. Okay. So well what we have there's some that we have had partnerships already established so those are going to go into production very soon so at first phase of hunger town. So that's a pre 19 in don't for awhile and our partner is try.
I'd also we expect that to go at Ian you de next year in 2021, the in the first quarters that the early part of next year, a 400 King would move into production as well that's getting zones I will dirksen HQ I will also be a 2021 I've seen it saved one is complete ace to get to start and we have a partner as well.
Builders in phase two longstreet already has some base zoning, but we partnered with a a local developer and we're going to increase or zoning asset. We're trying to try and get them more density and I would expect that'll be in production in the next couple of years, rather freight market place out that's a 50 townhomes, where we partnered with Greenparks a those have done very.
Well, if presales and so the those homes are going to start construction as soon as our out of winter and I will close on those probably in the first quarter of next year and do you under less Esplanade also we expect to be able to local partner, a there and north Vancouver, Cressey and will be a in UGI on that one at the end of this you're probably Q4 so falling.
Not that 2019 submissions are obviously those have to go to the zoning process, but as I mentioned earlier things like young and rose long intend 71, King or well advanced 10, 71, King we have.
A partner already and so as soon as we go to get our entitlements, it's sad to making piece of land. So that will be in production I would say in that 2021 and then the list will continue from there. So I would expect that we have a sizable amount that will start in 2021 and there'll be a probably too that will start later this year.
I also expect Panama phase one could start at the end of this your early next year.
Well I'm not a mixed use development lease side adjacent to our lease I'd shopping center retail at them extension of the shopping center is already in your AG and that will be competes in the next year and 2021.
That was very helpful. Thank you.
Okay, great. Thank you.
Thank you.
Following question is from Sam Damiani. Please go ahead.
Thanks, just a follow up on the leasing.
Other for carbon I'm not sure if George isn't the room, but how is the lease up of the root district and also one.
[music].
Okay. There both in the room, but I think you're going to get to hear from both of them on this one.
I said.
With respect to start with respect to when we were I would say the lease up as you know has been slower than we would've liked.
But I would say to you in light of the performance of of Nordstroms MCU and.
And the opening of Chick Fil, a which has received a lot of a lot of attention by virtue of that we are starting to get a tremendous amount of inbound calls.
And I would suggest you we are confident about the prospects going forward. It's it's a great piece of real estate as you know, it's one that we have strong conviction about and so we know at the end of the day.
It's going to be worth more than we pay for it.
So here, there's a talk you spoke of putting up at one blurs that said affirmed dealer or the.
I think there that isn't from deal yeah. They are in possession in fact paying rent.
What's the what unit are they taking.
They're taking the blue or street frontage or a portion of the bursary frontage at great.
Great Okay.
And so we don't we don't have much left there now and we.
Like to already said, we're in negotiations actually with a couple of groups for the balance, but there's not there's not much left at this point.
Okay Brewery District, Alright grew district, Hi, Sam.
I was reminded this project is a 300000 square foot mixed use project retail and office.
As you would typically typically expect early on we experienced very strong leasing velocity, we finalized significant deals loblaw shoppers drug Mart Mack good life winners TD Bank.
Deal velocity has slowed.
The centers continuing to draw interest and second half the year, we actually finalize about three 5000 square feet the deals consistent some office tenants medical use.
Fast food.
And a 23000 square foot second floor retail box, which was the toughest space to lease because it could not be demised.
So we're also an active negotiations with additional restaurants and other large retail format group.
So things are good and so very I took arms point to it took a little longer than we expect to get through the final space, but credit to him and his team that they did a lot of Ah.
Oh, I work and really broke the back on the balances towards the second half of the year. So we would've thought it would happen earlier, but but a lot of progress towards the end of last year.
That's great. Good good update thank you very much.
Thank you Sam.
Thank you.
There are no further questions registered at this time I'll now turn the meeting back over to Mr. Bob.
Okay. Thank you very much operator, thank you everyone for your time. This afternoon. Your continued interest in first capital clearly continues to be a very busy time, a and we look forward to updating you on our progress in the near future. Thank you very much have agreed afternoon.
Thank you.
The conference has now ended please disconnect your lines at this time, we thank you for your participation.
This conference is no longer being recorded no. This is putting all this in Oklahoma.
It does does.
[music].
Office depot.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay, and that's because it had been.
Yes.
She was pending.
[music].
Uh huh.
This conference call has ended please disconnect your lines at this time. Thank you.
Good thing and that's because at that.
I mean.
She was pending.
[music].
Yes, I don't process before.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
If anything that's good for that.
We need.
Yeah, she was pending.
[music].
<unk> Office depot.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay, and that's because it had been.
Yeah.
She was funding.
[music].
Uh huh.
This conference call has ended please disconnect. Your line is this time thank you.
Okay, and that's because at that.
I mean.
She was pending.
[music].
Got it sounds like I said before.
Please note that this call.