Q4 2019 Earnings Call
Good morning, welcome to <unk>.
[music].
Good morning, welcome to the H. I know, our real estate investment Trust 2019 fourth quarter's earnings conference call.
Before beginning to call age and all I would try to remind listeners that certain statements, which may include predictions conclusions forecasts or projections in the remarks that follow may contain forward looking information, which reflect the current expectations of ma'am you may recall in a big events and performance and.
I think only as of today's date.
Forward looking information May requires management to make assumptions I rely on certain material factors and is subject to inherent risks and uncertainties and actual results could differ materially understate Miss in the forward looking information.
And discussing H. indoors financial and operating performance and they're responding to your questions. We may weapon certain financial measures, which do not have amini recognize Boston are nice under <unk> GAAP ours, our Canadian general acceptance.
Accounting principles and are therefore unlikely to be comparable to similar measures presented by all the reporting insurance [laughter] non-GAAP measures should not be considered as attorneys to to net income or comparable matches determined in accordance with Oh, yes as indicators of H. endorsed performance.
[laughter] liquidity cash flows and possibility.
18 hours management uses these measures to aid in the system and the rest on in wanting performance and provide us. These additional measures. So the ambassadors can do the same.
Additional information about the material factors assumptions risks and uncertainties that could cause actual results could differ materially from the state Miss in the forward looking information and the material factors assumptions that may have been applied and making such statements together with details on Asian or use of non gap.
Financial measures are described in more details in age and all its public filings, which can be found on our website at www Dot S. E D. Our dot com I would now like to introduce Mr., Tom Hassfurther, Chief Executive Officer of age in our rents. Please.
Go ahead sorry.
Hi, everybody. Thanks for joining us today, it's Mike welcome everyone.
Joining me today, let me throw our CFO, Patrick Sullivan C O primaries.
The point you unless.
There is Larry will summarize a quarterly in any of my answer is no capital that's why not teach our retail portfolio followed by police, we'll update us on our multi bench portfolio.
<unk> closing remarks, we followed by questions.
Right.
Thanks, Good morning, everyone.
I'll begin with some.
Never remarks, starting with its a phone.
Funds from operations at both Q4, 2019 basic diluted and normalized AFFO was 44 cents, so you're not compared to 43 cents per unit in Q4 2018.
Well the a normalized AFFO was 174 for you're not compared to 173 for United in 2018.
Although these are small increases <unk>, we view them as quite an achievement given that the competed approximately $1.8 billion of asset sales level, the cost 24 months compared to $645 million off property acquisitions during the same period.
Part of these acquisitions, what's a newly constructed U.S. residential properties that go in lease up during 2019.
Expected to generate approximately $4.8 million more in its a fall in 2020 and they did in 2019.
Part of the proceeds from asset dispositions were used to fund agent all development pipeline. During the course of the euro invested over $300 million into development that will provide future interest loan growth has now completed and stabilized.
We have three U.S. development projects scheduled to be completed in 2020 rubber landing in Miami phase one of their killing in San Francisco and the pool in Austin.
And in Canada in Ontario, well see so now we recently released.
Based on T. leased the largest of the three industrial buildings are currently under construction today. It's a closed for 10 years occupancy is expected to commence in Q3 2020.
Additionally, part of the asset disposition proceeds were invested in redeveloping. The former targeting two stores in our portfolio. We are expecting growth in rental income of approximately 4.3 million from new tenants occupying those sites.
Okay Perfect development in long Island City, New York Jackson, Paul was completed during the year and generated $10 million Oh, you 10 million in US dollars will never fall at all 50% dissented share.
In September and just any financing a $1 billion was secured by the property for 10 years at an annual interest rate of 3.25%.
Oh, the repayment of the construction financing HR received 195 million U.S. solid distribution from the joint venture, which is used to repay other dance the project and the yield on budgeted cost is expected to be 6% on an 11 year old nationals net cash contribution.
Yes that is expected to be approximately 50%.
Well at least the majority of the vacancies in our office and industrial segment.
And in addition committed retail occupancy at December was 94.1% first the actual occupancy of 91.5%.
Jason total assets for the financial statements that Joe and was 44.4%, but subsequent to you and the 256 million dollar Mobiuss receivable that is secured by the atrium was received these funds are used to repay debt. This adjusted debt to total answered ratio to 43.4% and with that I'll now turn the call over.
That should give us an update on our retail division.
Larry and good morning.
Leasing activity during the past two years, it's been very strong with our leasing team leading more than 400 transaction during each year.
Putting 250, new lease deals I wish it were 35, new large format transaction.
Well, our occupancy rate and net operating income had been negatively impacted by the closure of Sears and other tenant bankruptcies, we're starting to realize the positive momentum as tenants began to open from their redevelop boxes.
During the last quarter of 2019 more than 220000 square feet a box stores opened in the portfolio at approximately 280000 square feet of new box stores will open in 2020.
There continues to be tenant demand for space within our portfolio and we anticipate strong leasing activity. Once again in 2020 occupancy rate at the end of 2019 was 91.5% compared to 89.3 at the ended the third quarter well occupied committed rate rose to 94.1% from 93.8%.
Well, that's rolling same store sales within our enclosed mall portfolio or 545 per square foot a decline from the end of 2018, but in line with the productivity fingers posted in both 2016 in 2017.
With respect to alter a sales volumes, we have been reducing the amount of C or you area for the past few years, which is a result for the most part of expanding existing tenants are leasing space.
In both cases, the large format and were not included in our sales reporting area. Many of these new large format and such as winter as Mark Urban planet and old Navy have been great additions to our properties and generate significant traffic.
With our anchor development projects nearing completion, we are exploring opportunities to diversify our shopping center site to include office and residential usage by way of example, with the city of auto our planning for light rail transit to stop Foster Orleans in auto wondering the in the next few years.
We have relocated the food court the main level them all with the goal utilizing the second floor for office use as recently we completed.
To long term leases went public works, one for 53000 square feet and the other for 9500 square feet.
In addition, we are in the preliminary planning stages for residential domestication at Orchard Park in Florida. The on road involved and Foster Orleans at all.
And all the approval process that significant residential density is in progress and we expect to start construction on that project in approximately two years.
Thank you and I'll now turn the discussion over to sleep [noise].
Good morning, everyone goes in the local updates for this quarter I'm, so glad to share the latest news from whereas our residential.
As mentioned in previous quarters, one of our strategic initiatives is to examine our existing portfolio to determine if any reallocations would be accretive to the overall folio.
As we alluded on our last quarter's call we were under contract to sell to legacy assets landfills portfolio in January as your successfully as opposed to make really grow at 94 vintage property in Houston, Texas and trying to back up in 2008 cents is property in Dallas, Texas.
Really grown purchased for $16.7 million in 2014 sold on January 20 burn for 23.9 million.
Brazilian iron ore 0.4, 0.2%.
As far back on purchased for 52.3 million in 2015 sold on January nine for 66 million, representing an IR 17.6%.
In light of these dispositions, we expect this close in direct position next quarter.
On the portfolio from the Landstar residential portfolio consisted of 7500 for 7500 someone harvest across 23 properties.
The fourth quarter when excluding Jackson.
Following the recent dispositions in January and her portfolio, Excluding Jackson Park.
As a weighted average vintage of 2014, representing one of the newest portfolios in our sector and underscores our intent to maintain a quality portfolio supportive of long term growth potential.
On the operations.
For the fourth quarter, where her portfolios approximately 90% occupied and over 90% occupied when excluding or at least so far.
On the financial frame or CMS, a quarter and operating income increased in us dollars from $9 million 559004 quarter became to 11.165 million the fourth quarter 29.
This equates to CMS a quarter over quarter operating income growth of 16.8%.
We're seeing rapid operating income increased again in the west enrollment as your stores from 40 million 456 million during the year end in 2018 to 42.912 million during the year ended in 2009, representing an annual operating income growth of 6.1 oversight.
The above average 16.8% quarter over quarter operating income growth, primarily due the rental growth, but most notably the stabilization that you asked as our portfolio.
Well, there's always front for phase one Sunrise project to 321 unit cost safeguards for multifamily project in Orlando, Florida, that's kind of break ranks first quarter. This year.
Fourth expanding our social Florida development pipeline disclosing more exciting cost in development opportunities and 20, Twond and without I will pass long conversation pockets.
Really really again thats una portion of the call I'd like to highlight a few items firstly leverage continues to trend lower debt to total assets pro forma the receipt of the $206 million well then to take that mortgage on Asia was 43.4% down 120 basis points from 44.6% your earlier prudent leverage is all.
These forward to our strategy and the trend to lower leverage over the past few years allows the need to prudently invest more in development and I'll provide us with significant strategic flexibility.
Second our development pipeline has value creating projects largest site in 2019, we delivered our flagship Jackson for example, which was 96% occupancy in Q4 Securities Larry as mentioned, a 10 year interest only mortgages mature.
Turning to all about 31 million use of our original investment, resulting in that 50% Levered return on our net equity investors logic.
Atlantic is nearing completion public is scheduled to open in April this year and being the first tended followed by a bounce the retail space I was residential leasing commencing very shortly we are advancing our intensification plans it doesn't grow village 145 Wellington cities.
And 320 front street in Toronto, and where to BBC phase one of our to prop 7 million square Caledon Industrial development was complete this year. The chart in industrial market has effectively zero latency and rents continue to rise augmenting counter than we have a number of additional industrial development opportunities the Toronto market, providing attractive opportunities to grow our exposure to the strong.
The market with state of the our properties.
In December 2019, we issued a mortgage receivable for US $124.1 billion secured against 12.4 acres of land in Jersey City, New Jersey for to your term loan is expected to increase up to us $160 million. It bears interest at 10% rat land adjacent to Liberty safe part with views of downtown Manhattan and.
Remember this project zones 1.7 million square feet of commercial space in 1544 residential units for the full residential development option the comps in 2835.
Relocations access will come off in terms of transportation grocery pass station.
Miles away direct access to Manhattan to Penn station and Wall Street, and an 11 mysterious transcribed schools in the headcount was as well as assets had little west side. The meat has an option to the bridge loans and 8% equity ownership interest in the project.
In the U.S., our pipeline of smoke event and mixed use development projects will see deliveries this year, which are the landing in Miami Q2. This year based one of our Hercules project in San Francisco. It also in Q2 and a Q3 the drilling off you will be delivered in 2021 decent leases, we followed by short line in Los Angeles Sunrise Orlando.
Phase two atricure lease Mr. Part in Seattle, All these developments are expected to increase NAFTA unit and multi unit as they reach completion of the next couple of years.
Lastly, we feel the number of questions over the past six months or guidance on category, our tenant as CFO, Vince just recently Vietnam salvage business. The U.S., we confirmed that lease obligation as opposed to see whether new leads on sale events as evidence of as required but in terms of lease JD further developments regarding the will rise we provide more detail as appropriate time today, we don't have anything further.
Part of the spot we've made significant progress on our goals enhancing our general growth profile, reducing leverage we expect investments. We've made in these areas to contribute to growth in our financial performance year ahead with that I'll turn it over the past the operator for your questions.
Operator.
[noise] at this time, if he would like to ask a question Press Star then the number one on your telephone keypad that started in the number one.
And your first question comes from gene booking.
Thanks, Good morning, everybody.
Morning doing its Larry first one's probably for you on river landing as that flips over from pod IBP well, we see the same kind of lack lack of capitalized and like what we saw Jackson parks, where you have that a bit of dilution and then as you lease up you catch that back up over the course the next year.
Sure and a half.
Yes, it should be exactly laclede disclose the Jackson talk and we'll talk at the same kind of disclosure for the lending doesn't happen.
Okay, and with the magnitude of that be about the same given given what you're.
Full interest is that versus what it was in Jackson Park.
No objection talk as big or.
The retail retail leasing will occur Philips quick that one time as part of the residential leasing will be over the next 18 months to 24 months. So the residential part will be the same comically suffers jackson offer whereas the retail will be Uh huh.
Okay, great and how much is that that the quarterly capitalization of interest right now.
The quarterly capitalization of interest on river lending specifically yep.
In the effect of Macquarie.
So.
As we said to us.
[noise] [noise], maybe while you're Lucky I think we're running at around three 3.5 million a corner 2.5 million of quarter. Okay.
Quintiles 3.5.
All right.
And on the built the loan Advanced Jersey City, I'm, just trying to triangulate that exact location.
Would that be the lot, which is currently being used for the Zeppelin Hall beer garden.
No it's onto Jersey bar, this and marinas right. There it's right. It's one of the Marina So whats right at the full in marine while that is a fantastic location.
In my new role that's being built though there's new highway it's about the highway and balance the Marina, which we will have the very both breaks Manhattan and you have the Jersey barbecue, how you're breaking up the the past two of downtown that hundred Midtown.
So you'd be able to come out of that residential development right into into the ferry.
Okay is there zoning in place right now is that something that's going through sort of an application and permitting process and then the only gets in place. It's it's as we as I mentioned, it's a mixed use any or all residential is totally flakes everything is good to go we have no.
Affordable housing component ended at all we're just doing or master planning and permitting so the first phase of the residential we'll be ready to go around a year and do you all residential commercial it's really a question marks that we will not billing commercial build spec building and either it and life sciences as a potential there as well.
Great location can you disclose who the partner is on that.
I think so as ours ours adventures from international Okay.
And last question for me is maybe for for Felipe as you sort of as your I was your rounding out the markets that you're in Atlanta or are there any other markets or perhaps markets outside of specifically the U.S. that you maybe looking at and how big do you need to be in any given market for first for the scale to make sense.
So it's a very good question when I think as of right now obviously, we have nothing to announce.
Regarding anything on some of the U.S. as it relates to entering a new marketing in image was.
Oh, it's something that we're always kind of patients you I would say, though that we believe that is more attractive acquisition or development opportunities are into markets that we are currently in <unk>. So I'd love to expand our position in Tampa and Orlando bottom I'd like to for US the consolidated some of our markets in Texas.
And Raleigh, and Charlotte just keep.
Doing very very well and opportunities there are few and far between but we obviously when volumes aggregating a more solid position those markets. So I think our focus is more productive on that and then going stage, one Atlanta, Georgia Phoenix.
Okay, great well, we're looking forward to Alex hosting a property tour down and river landing sometime in the near future I will hand, it back thanks guys.
Okay.
Your next question comes from Sam diminished.
Thanks, Good morning, everyone I'm just to start off all the introduce city project to a couple other questions I had there will be the budgets on the first phase of residential that you're talking you're saying you could start texture.
And we don't have those numbers yet we don't happen once we have hurt when there was that they were basically 90 to share the first phase site.
All of last within a 13 acre site not to be first allocated figured out. We also have a 2.2 acreage park that we have two which is a waterpark that has to be considered so we're not at that stage at the two announced the budget on for space or the size of listening, okay, and like what would be I guess, what next steps you mentioned, you're doing some planning permitting and whatnot.
But is there a sort of next major step that we could look forward to with the next few months.
Yeah, exercising our option would be smart [laughter].
All right now demand, we have nine month to look at that.
Thats what were towards the end of year will now.
I would actually pulling the trigger on it we're going to go through the entire a master planning process fighting and good luck with giving us optionality on the commercial so we're not able to trigger on yet so there's med okay.
It was finally, the your partner Arjun ventures, or what sort of experienced so they have in this type of developed but historically.
Known them for like to make that we used into telco hotels.
I'm used to build across America.
They reacted and that business as well.
The answer your questions are currently busy building in Jersey, some residential and they've been very active in redevelopment of Penn station area office EBIT around or passed 40 years in Africa lug experienced both within the residential and commercial Youre area of Mark did you see it would need to bring in other partners on this project.
Given the size at all.
Hi, Good actually limited life Sciences and are all.
There is strong New Jersey life science market, so that would involve a partner to shorten intercept red cells attribute interviewing brokers. So go ahead in the life Sciences and assist US case Theres a campus potential for some of the big Big companies out there.
I was just over to Miami River I noticed the cost went up this quarter.
You can provide their as to the reason why.
Oh, sorry.
Couple of reasons one of the major reasons as though we are currently negotiating with a very very large attractive funding the largest 20 of them elsewhere restaurant space.
Yes in the restaurant space are substantially more contemplated. We also are negotiating on the office space with the user that again, you guys have gone up.
It could go up and not necessarily infrastructure for the development and just a few cost overruns nothing to significant it's really more that the overall quality of the outside of the retail is gone. After the its has gone up there's a cost back into that.
And then I also noticed the budget with up a bit on the Sunrise development in Orlando any or any particular reason there.
The numbers you, but I think that's the right now we we're doing our best socially engineer the cost down, but I see candidly. Once we're also done those differences will be negligible.
Okay.
One more question just on the debt maturities, there's a good chunk of mortgages coming up in 2021, what's sort of rates on refinancing that Oh should we expect is reasonable I don't I'm, not sure, which properties, which locations those are skewed by.
Sorry, opting what current what we'd expect to get currently on those mortgages. Yeah. If you would have listened today.
We would be actually we did a tenure financing would probably be.
Spread off 180, beeps call it would be conservative together and they may not be wrong, maybe doing unsecure, it's just with announced few markets universe.
And were below those mortgages in the U.S., Canada like would you do more U.S. mortgages were can be mortgages.
Most of those coming up are in Canada.
Okay. Thanks, I'll turn it back.
Excellent.
Next question comes from Ginnie Mae.
Thanks, Good morning.
Just wanted to dig into your development a little there's been a number of new project that Youre you've identified I'm just wondering if you've actually mine through the entire portfolio to look for densification or redevelopment opportunities or you're really going at this on a on a property by property basis.
I don't really understand the question, we're looking at the macro going the other properties like 70 properties under scrutiny to see where potential was essentially even with as.
Well I guess my questions have you looked at the entire portfolio for us.
For all the potential projects down the road.
So.
We've announced that Cronto official Densification was working on which are real and pass announced some education is also I think answers today, they dangerfield properties being looked at four intensification potential.
Between the announcements were downtime portfolio 145 willing to 55 yards to be 310 front Street, a suite in front of Street, Burnaby, which is substantial.
AFS portfolio has a lot of potential densification as Pat mentioned, a few a jump in most of the education I think any answer your questions every single properties and we looked as far as we anticipation.
I guess I'm getting at is can we expect to see potential new development being announced on road or I mean, this is a lotta chuan, so they're going to be more coming down the pipe or okay. So specifically the in the office property Defatted bran it'd be which we intend to do something sooner than later, we bought it makes Atlanta there other partner Underestimating limited time, because the reason for process.
Okay. So right now they weren't prepared on that front as you will know more recently you taking advantage of starting a front street visits.
They those take time deals FNC potential silver cash and replaced the office and add into the story tower exists and most of all those properties. So there is great potential and we're going to be this potential to add 11 units. So again those are all real very real a very successful new but when it will do we actually launched redevelopment.
I think the answer is that some takes some time tendencies.
I would say they release you can see and 60 540 viber batteries bye bye.
Okay, that's actually a goodly into my next question so specific to the downtown Toronto properties I don't want to fortify Wellington your but you're looking to replace the the office space and add residential but just given how tight the office market is on in some of these properties. How are you looking at whether or not you expand the office component and balance it with but you can do with residential.
Or is it really just trying to maximize the residential indeed properties well the quandaries downtown Toronto as rates simple in round numbers.
Switching to the button officers 125 foot. So it's only the miss density for reads and pension funds and insurance southeast to occur.
Cash flow continues cash flow that they'd actually pay more for the Austin one of the but then just want to resin just want to always was more with more for the past number of years and Sean within office doesn't talk mapping and I think the simple answers as the world has now shifted if you look at all of our peers are not from shopping centers to being shopping center slash.
Essential the the mixed use development diversification within the real World has now become the norm and therefore is acceptable to go and developed residential I think that the recurring income can happen to essential just as much as it has from office an ice investors is usually residential they stated.
So whole slew new office product coming to the market now Toronto, which will.
Relieve some of the pressure on on the rents and.
Right now the essential components to returning a higher and higher numbers Resid land values are going up the inched up to 325 downdraft, Joe for some of the better sites and apps basically is really leveled off so I I think the asked the question at this stage of game all of our developments or use are going to be mixed use every time, we talking about whereby the obvious.
One we replaced and then I'll hop it will be a residential.
Okay. So I guess, if you look at front Street for example would it make sense actually eliminate the office component and maximize rise or is there. She became some of that office no need, but we wouldn't do that I think that goes way down the road, but there is the ability to go ahead and take out of the smallest the towers and replaced that with a with a large tower and we've actually had plans.
It wouldn't be submitting to the city do that and actually leads to a balance of the complex intact and creates a business wondering if nothing else.
Okay, and do you have a sense of what the remaining lease term on the downtown Toronto, that's it quite well.
Well they have area in every single building, but there are they said.
Listen we skipping five years out five years, okay, well I look forward seen the plant I'll turn it back.
Your next question comes from a line, Matt cornet or another number.
Good morning, guys.
Yeah on or not.
With regards to a your U.S. residential developments, where you're a minority interest have you have you at this point given that they're coming up in terms of completion of construction.
Decided on which ones you you'd like to keepers and sell or at what point do you think will know what that decision as we have partners and then now Greg My husband's parmesan for many many years and we haven't made those decisions, which will be flip decision I think that philosophy ration hours. This gives us.
The opportunity to an entry at a higher cap rate on the Ark, one of the beyond but actually first rights to go again purchase our our partners that should they wish to so we really dictated by a collective decision of all the three partners.
Plan It gives us access to markets, which we are which are much more expensive more towards a book to bill. This is a San Francisco Los Angeles type to another I haven't had a better pricing in person should lead to purchase. So we have not made the decision. That's a good it's pretty early on in the game up a long Beach, California is probably two years out San Francisco's sooner than later for one.
Per se, but not necessarily that we want to cope with regard to persist. So no I mean at this time.
Fair enough, but net net it doesn't sound like a it sounds like it maybe a self funding program to some extent in terms of what you sell versus buy anyways, because it doesn't sound like you necessarily keep everything that's correct.
Okay.
On the industrial side and I mean, congrats on the leasing it seems like that project is going ahead, well or does that sort of.
Got you more keen to expedite the process and the rest of the phases or how are you thinking about that project going forward. We have them back we're very comfortable in front of I think there's anybody movie billing essential into other projects in Toronto, a they wouldn't be the loan space as well so were totally comfortable to talk more.
Okay.
On the Capex side, it's been elevated for for a while now I guess, it's it's probably largely related to the retail re tenanting of the target in two years, but to do should we anticipate that come down in 2020 are or will it continue through 2020, and then come down subsequently.
I think it'll continue in 2020, and then let's say 2021, we should see a deep.
Okay.
Last question with regards to the same property NOI growth. Obviously this year you had a few things go against you, but you don't have many lease maturities in terms of percentage of the total portfolio.
Also you've got some upside in terms of occupancy it seems like with the trajectory coming out of this quarter or should we expect a pretty good your next years or is there anything.
In the existing lease profile that we should.
See isn't that negative against those positive trends.
We expect thing a positive trends from on our segments Nexgen contacting each on should be up.
And there's no smaller fun as far as Lisa living leases buyers.
That are causing us any yet.
Okay, and then no early a sort of renewals and extensions similar to bell the Youd anticipate is here.
I wouldn't say that we're always to.
Just like Bill, we look to do others and it's also tenant driven as well so nothing right now right now, but it never never say no to that fair enough. Okay. Thanks, guys and congrats on the core.
Thanks, Matt.
Your next question comes from Mario Sorry.
Hi, good morning.
Uh huh.
Just sticking to the or the mix do some kinds of occasion.
Team, which is ramping up over the next year's as noted.
And your I like how do you think about recognizing some of this.
In principle arable land and you're right for US and argues pardon me.
Got it varies across the street in terms of or companies are dealing with it so how should we think about.
Oh, you're recognition policy going forward.
At this stage of the game, we have not to if any the builds put everything into it. The question is when it's fully zone and right I don't know look at it then I guess what type of industry does but at this stage of the gave you don't have any densification values recognize an actress.
Not gonna be dependent not so much it will be dependent on what the sales of the game or whatever what everyone's doing what the what the auditors basically say should be done.
But nothing in our numbers right now for identification.
Thanks.
Okay, and then maybe switching gears to.
Holder letter.
You can highlighted the or the substantial corporates are made in terms of brand portfolio quality diversifying.
The U.S. rosy balance sheet leverage just come down as you know Nicole I'm, just kind of highlighted pursuing further opportunities to simplify the investment profile original I'm. Just curious if you can elaborate on.
On what you mean dry dock.
What are some nice things or whatever.
Yes.
Okay, and we want to ask that question.
Okay and everybody else.
[laughter].
Well I think it's just on the team Mariano that'd be calling and trying to always simplify.
The the disclosures we've done simplify the buckets, if we have the supposed to segments and we're trying to simplify that that.
Vacation or a lot easier to understand 10 minutes huh.
[noise] [noise] nothing nothing more than that.
Okay.
I Love My last question.
Our capital allocation governments and no no good on the bull today.
But with a balance sheet leverage having come down what to cause or where are you seeing kind of the best opportunities from a risk adjusted return perspective to redeploy capital.
Today should you.
See for your liquidity.
So we're growing our Latin America Division as you all know.
Jersey opportunities, we have industrial opportunities and some of the industrial deals that were looking at we don't see any real opportunities in the office development and my marriage is basically going to go ahead. Please money into every intensifying its own properties and definitely in capital upgrades as problems. So I think the asked the question is really the focus is.
Residential growth industrial growth and cabinets vacations, or where we need it wasn't like square.
Whatever happened to keep the demos and [laughter] not exactly that that's a pretty bullish putting a hole in our hakan.
Right right, how do you like how do you think about the risk adjusted returns roads.
Of buying back units today versus a development.
Expanding your portfolio.
We have a lot of ideas and a lot of things on the Doe and until we make sure those ideas, we're not the pull the trigger and necessarily buyback. The stocking we have Oh, we were very focused on the discount NAV and I don't solution is just a sense just sinbad doing nothing that being said snack nuts the balance sheet.
Give us the flexibility afforded afford us the luxury of.
Master planning.
Our structure going forward to the strong balance sheet. So right now to answer. Your question is we're going to keep the strong balance sheet to use it for implemented for our overall strategic initiatives going forward.
Okay, all right I would concur with a gains are coming through the Jersey City.
Project.
Quite interesting thank you that.
All right I.
Okay and I wanted to ask a question Chris starts in the number one on your telephone keypad best stock and the number one.
Your next question comes from Sam Damiani.
Thanks, just a couple of quick follow up so Tom you mentioned two other industrial projects in the GE to you're looking at two or those that landed on the books today were led you're looking at acquiring if it were both to the Juicy are there.
And we're looking to acquire there the western part of this it.
They are off market there not a because I don't mean by land they dropped so and make the numbers were different market values for to fill them at the moment.
So were looking we're looking at some relationships that we have to go ahead and are still upset but again. It if you think to importantly noticed number somewhere right.
Great before to that in the second question is on tougher Grove, Pat you mentioned constructions essentially two years from now what gives you the call from itself is opening up the I guess, just the timing of general.
Especially with the project to the North also going to have.
I think.
We've been in the.
Preliminary planning stages, we've got with community that's moving to the process right now. It's just it's an estimate but I think we're I think we've got pretty good guidance on.
The timing given where the projects to the north or how long it took to get through the process for that.
And they're just focused buses right yeah.
Great. Thank you.
Thanks.
There are no further questions at this time.
[noise], Thank you everybody and How's nice happy family that we got cool.
[noise]. This concludes today's conference call you may now disconnect.
[music].