Q4 2019 Earnings Call

March 5, 2020

Good morning, ladies and gentlemen, and welcome to the Northwest Health care properties Real estate investment Trust fourth quarter 2019 results in conference call. At this time all lines are in listen only mode.

Operator: Good morning, ladies and gentlemen, and welcome to the Northwest Healthcare Properties Real Estate Investment Trust Q4 2019 Results and Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 5 March 2020. I'd now like to turn the conference over to Paul Dalla Lana. Please go ahead.

Presentation, we will conduct a question and answer session. If at any time. During this call you require a media assistance. Please press star zero for the operator. This call is being recorded on Thursday March 2020, I'd now like to turn the conference over to Paul.

Please go ahead.

Thank you operator, and good morning, everyone. Appreciate you joining us today.

Paul Dalla Lana: Thank you, operator, and good morning, everyone. Appreciate you joining us today. I'm joined by Bernard Crotty, the REIT's President, Peter Riggin, the REIT's Chief Operating Officer, and Shailen Chande, the REIT's Chief Financial Officer. Together, we are pleased to share with you our results for Q4 2019. First, I'd like to point out that during today's call, we may make forward-looking statements, as defined under Canadian securities law. While such forward-looking statements reflect management's expectations regarding our business plans and future results, they are necessarily based on assumptions that are subject to uncertainties and risks, which could cause actual results to differ materially. We direct all of you to the risk factors outlined in our public filings. Before getting into the details of the quarter, though, I thought I would provide some perspective on our business and this moment.

I'm joined by Bernard reached President Peter rig in the rates Chief operating officer and show in China data rates Chief Financial Officer together, we're pleased to share with your results for the fourth quarter of 2019.

First I'd like to point out that during today's call. We may make forward looking statements.

As defined under Canadian Securities Law.

Such forward looking statements reflect management's expectations regarding her business plans a future results. They are necessarily based on assumptions that are subject to uncertainties and risks, which could cause actual results to differ materially we direct you to the risk factors outlined in our public filings.

Before getting into that he is also the quarter, though I thought I would provide some perspective on our business and this moment today northwest isn't the best position in its history building expressly upon the strategy we put in place in 2015.

Paul Dalla Lana: Today, Northwest is in the best position in its history, building expressly upon the strategy we put in place in 2015. In large part resulting from executing on key 2019 strategic initiatives, including expanding our global asset management platform. The REIT has increased committed fee-bearing assets and capital from $3.5 billion to more than $8 billion today, including a $1.6 billion upsize of the initial Australian institutional JV announced in 2018, and an agreement in principle for an additional $3 billion JV focused on Europe. These increased commitments leave the REIT with $4.5 billion of available capacity to pursue continued growth across Australasia and Europe and generate accretive promoted returns. De-leveraging.

A large part resulting from executing on key 2019 strategic initiatives, including.

Expanding our global asset management platform.

I read as increased committed fee bearing cash that's in capital from three I have $2 billion to more than $8 billion today, including a 1.6 billion dollar.

Upsizing the initial Australian institutional JV.

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For an additional 3 billion dollar JV focused on Europe. These increased commitments leaves three four and a half billion dollars available capacity to pursue continued growth across Australasia, and Europe and generate accretive promoted returns.

De leveraging driven by more than 644 million of equity capital raised in 2019, and a further $725 million of contracted portfolio asset sales expected to occur late in the first quarter an early in the second quarter of 2023 capital platforms are expected to close.

Paul Dalla Lana: Driven by more than CAD 644 million of equity capital raised in 2019 and a further CAD 725 million of contracted portfolio asset sales expected to occur late in Q1 and early in Q2 of 2020, the REIT's capital platforms are expected to close with a consolidated leverage decreasing by almost 1,300 basis points to 42.5%, supporting pro forma net EBITDA ratio of 8x, consistent with investment-grade credit metrics. We further evolved our platform in Australia and New Zealand, notably highlighting the acquisition of the Healthscope portfolio for CAD 1.2 billion, including 11 significant core private hospitals on long-term net lease basis with fixed annual rent increases, and establishing a business in that region with more than CAD 4 billion of assets.

With a consolidated leverage decreasing by almost 1300 basis points to 42.5% supporting pro forma net EBITDA ratio at eight times consistent with investment grade credit metrics.

We further.

Evolved our platform in Australia, New Zealand.

Notably highlighting the acquisition of Oh school portfolio for $1.2 billion, including 11 significant core private hospitals on long term net lease basis with fixed annual rent increases.

And establishing a business in that region with more than $4 billion of assets.

Paul Dalla Lana: Finally, we've broadened our geographic profile, adding to the Netherlands and Germany and Europe with the recent expansion into the UK and the acquisition of six high-quality private hospitals for approximately CAD 167 million, representing a good opportunity to expand the REIT's European platform into a new market with attractive demographics and a small but dynamic private health sector that should lead to near-term growth opportunities and potential for further institutional capital partnerships. For the quarter, our results were in line with our expectations, noting the above deleveraging, including annualized quarterly adjusted funds from operations of CAD 0.92 per unit on a normalized basis, implying a payout ratio of 87%.

And finally, we broadened our geographic profile, adding.

To the Netherlands in Germany in Europe, with the recent expansion into the UK and the acquisition of six high quality private hospitals.

Locksmith, battered and $67 million, representing a good opportunity expanding the reach European platform into a new market.

Active demographics, and a small but dynamic private health sector should lead to near term growth opportunities.

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For the quarter our results were in line with our expectations, noting the about de leveraging a including analyze quarterly adjusted funds from operations of 92 cents per unit normalized basis, implying a payout ratio of 87% earnings accretion from recent investment in financing activity.

Paul Dalla Lana: Earnings accretion from recent investment and financing activity was as expected, although foreign exchange movement saw the Canadian dollar appreciate by approximately 1% over the last quarter relative to the REIT's average foreign currency exposure, which continues to slow earnings. In fact, over the past 12 months, we estimate the relative strength of the Canadian dollar has reduced annualized FFO by approximately CAD 0.04 per unit. In the context of a lower for longer Canadian interest rate environment, we expect that these trends may begin to ease and unwind in 2020, providing a tailwind to the REIT's future earnings.

Bad debt, although foreign exchange movements saw the Canadian dollar appreciate by approximately 1% over the last quarter relative to the reach average foreign currency exposure, which continues to slow learnings in fact over the past 12 months, we estimate the relative strength for the Canadian dollar has reduced anyway. The AFFO by approximately four cents per unit in the car.

Context of a lower for longer Canadian interest rate environment. We expect these trends may begin to ease in unwind in 2020, providing a tailwind to their reach earnings.

Paul Dalla Lana: Net asset value also increased by 7% to CAD 13.17 per unit, driven by an increase in the value of the REIT's asset management platform, strong property revaluation gains, and in particular, taking into account some of our new European institutional joint venture of CAD 3 billion to acquire new opportunities in that region. They were partially offset by a higher Canadian dollar relative to the REIT's foreign currency exposure. In 2020, the REIT expects to increase in momentum in our asset management platform, centered around strong regional operating platforms, growing institutional demand for alternative assets, such as healthcare real estate, and ultimately, a very constructive acquisition environment. Over the next 12 months, the REIT sees the ability to add significant additional third-party capital, potentially approaching CAD 10 billion in aggregate from the CAD 8 billion we are today.

Asset value also increased by 7% to 13 17 per unit driven by increasing the value of their each asset management platform strong property valuation gains.

And in particular are taking into account some of our new.

European institutional joint venture of $3 billion to acquire new opportunities in that region.

They were partially offset by higher Canadian dollar relative to the reads foreign currency exposure and 2020, either he expects to increasing momentum in our asset management platform centered around strong regional operating platforms growing institutional demand for alternative assets, such as healthcare real estate and ultimately a very constructive acquisition environment.

Over the next 12 months three sees the ability at significant additional sort of Cabot party capital attaching approaching $10 billion an aggregate from the billion dollars we are today.

Operationally our results derived from an expanded 175 property 6.5 billion dollar defensive health care infrastructure portfolio, most having long term inflation index leases at leading health care operators. This strategy is reflected in the reached 2019 year over year source currency cash recurring S.P.I. NOI growth.

Paul Dalla Lana: Operationally, our results derive from an expanded 175-property, CAD 6.5 billion defensive healthcare infrastructure portfolio, most having long-term inflation index leases with leading healthcare operators. This strategy is reflected in the REIT's 2019 year-over-year source currency cash recurring SPNOI growth of 3.8%, largely driven by contractual rent indexation and underpinned by a 97% occupancy rate and a weighted average lease term of almost 14 years. In all regards, a highly defensive portfolio. In Europe, we continue to execute on our growth programs by developing new strategic relationships in both the medical office and hospital segments, which have seen accelerated deal flow that our team is converting into accretive acquisitions. This includes over 300 or 290 million dollars of transactions closed in Q4 and subsequent to quarter end, including the expansion into the UK previously announced.

3.8%, largely driven by contractual rent indexation and underpinned by 97% occupancy rate at a weighted average lease term of almost 14 years and all regards a highly defensive portfolio.

In Europe, we continue to execute on our growth programs by developing new strategic relationships in both the medical office at hospitals segments, which if you see an accelerated deal flow that our team is converting into accretive acquisitions. This includes over 301 or $290 million and transactions closed in Q4 and subsequent to quarter end.

Putting the expansion into the UK previously announced.

Paul Dalla Lana: The portfolio fits the REIT's core investment strategy, and we see the UK as a natural extension for NorthWest's growing European platform. Importantly, the REIT's European platform continues to successfully scale, with its investment portfolio growing by over 65% since the end of 2018. The REIT continues to also scale in the Canadian capital markets and broaden its institutional investor base, and in Q4, executed its largest equity offering with a successful issuance of CAD 275 million of equity and increased the cumulative raise in 2019 to CAD 644 million. Proceeds from the financing were deployed to repay higher cost corporate debt, including redeeming 2 series of convertible debentures. Segmentally, I note the following.

The portfolio fits the reads core investment strategy and we see the UK as a natural extension for northwest growing European platform importantly, the rates European platform continues to successfully scale.

Investment portfolio growing by over 65% since the end of 2018.

Three continues to also scale in the Canadian capital markets and broaden its institutional investor base and in Q4 executed as largest equity offering with a successful issuance of $275 million of equity and increase the cumulative raise in 2019 to 644 million.

Proceeds from the financing were deployed to repay higher costs corporate debt, including including redeeming two series a convertible debentures.

Sick mentally I don't fall.

Paul Dalla Lana: In Brazil, we are on plan with steady 100% occupancy and continued strong year-over-year source currency cash SPNOI of 3.9%. Operationally, the REIT's major tenant, Rede D'Or, continues to deliver exceptionally strong results and expand its business, thereby creating potential opportunities for further partnerships with the REIT. Of note, two existing developments totaling approximately $10 million at our largest Brazilian asset were completed in 2019 at a 7.5% yield. Market interest rates in Brazil, driven by a stabilizing economy and progress on domestic fiscal reforms, have stabilized at substantially lower levels, historically low levels, as noted in the REIT's recent accretive refinancing in Q2 2019. The REIT is also focused on gaining traction with additional high-quality operators in Brazil and sees a very constructive market in that region.

In Brazil, we are on plan was steady 100% occupancy and continue a continued strong year over year source currency cashless piano why a 3.9%.

Operationally the rights major tenant region door continues to deliver exceptionally strong results and expand its business, thereby creating potential opportunities for further partnerships with the Reid.

Note two existing developments totaling approximately $10 million at our largest Brazilian asset were completed in 2019 at a 7.5% yield.

Okay interest rates in Brazil, driven by stabilizing economy and progress on domestic fiscal reforms have stabilized at substantially lower levels historically low levels and as noted in the recent accretive refinancing in the second quarter of 2019.

Three is also focused on getting traction with additional high quality operators in Brazil, and she's a very constructive market in that region.

Paul Dalla Lana: In Canada, we were also on plan, continuing solid performance with positive year-over-year cash recurring SPNOI growth of 2.1% and portfolio occupancy remaining healthy at 93%. During the year, the REIT completed 267,000 sq ft of renewal leasing at an average renewal rate of 2.7% above expiring rents. We continue to focus on our ambulatory care initiatives, building on commitments to Lakeridge Health that were announced in Q2 of 2019, with additional projects under consideration in Ontario and Alberta. In Europe, we were on plan, performing as expected, with year-over-year source currency SPNOI growth of 3.1% and occupancy increasing to 97.3%.

In Canada. We were also on plan continuing solid performance was positive year over year cash recurring s. piano why growth of 2.1% and portfolio occupancy remained healthy at 93% during the year. The Recompleted 267000 square feet of renewal leasing at an average renewal rate of 2.7% above expire.

Hiring rents we continue to focus on our ambulatory care initiatives building, our commitments to Lightbridge house that were announced in the second quarter 2019 with additional projects under consideration in Ontario in Alberta.

And in Europe, we were on plan performing as expected with year over year source currency espionage growth of 3.1% and occupancy increasing to 97.3% as mentioned earlier, we continue to find good investment opportunities in Europe, allowing us not only to build scale and critical mass in both Germany, the Netherlands and now the UK.

Paul Dalla Lana: As mentioned earlier, we continue to find good investment opportunities in Europe, allowing us not only to build scale and critical mass in both Germany, the Netherlands, and now the UK, but to also pursue opportunities in adjacent markets. Lastly, in Australia, our largest market, occupancy remained steady over the year at 99% and delivered consistent year-over-year source currency SPNOI growth of 4.6%, with a weighted average lease term of 16 years. At Vital, the business reported similar results, with SPNOI growth of 2.5% and again occupancy at 99% and a weighted average lease term of more than 18 years. Continuing in Australia, the REIT closed two investments totaling approximately CAD 160 million. Including the Burnet Institute, a Melbourne-based life sciences research facility in the Alfred Health precinct, and Waratah Private Hospital.

But to also pursue opportunities in adjacent markets.

And lastly in Australia, our largest market occupancy remained steady over the year at 99% and delivered consistent year over year source currency espionage growth of 4.6% with a weighted average lease term 16 years at vital the business reported similar results.

No I growth of 2.5% and again occupancy at 99% at a weighted average tenant lease term up more than 18 years.

Continuing in Australia, three close to investments totaling approximately $160 million, including the Burnett Institute.

Well done based life Sciences research facility in the offered house precinct and wore a top private hospital.

Paul Dalla Lana: REIT sees the life sciences side of healthcare real estate as another growth-oriented segment that we will be pursuing in select markets. I am pleased with the progress made during the quarter, which advanced a number of the REIT's key long-term strategic objectives and also produced solid operating results. With deep relationships, best-in-class regional operating platforms, and strong access to public and increasingly attractively priced private capital, the REIT is well positioned to continue executing on its strategy. I'll now ask the operator to open up the call for questions.

She's the life Sciences side of healthcare real estate as another growth oriented segment that we will be pursuing in select markets I'm pleased with the progress made during the quarter, which advanced a number of the key Greensky long term strategic objectives and also produced solid operating results with deep relationships best in class regional operating platforms and stuff.

Long access to public and increasingly attractively priced private capital the read is well positioned to continue ex executing on its strategy.

I'll now ask the operator to open up the call for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by one on your telephone keypad. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. If you wish to decline. If you're using a speakerphone, please mute that before pressing any keys. Your first question comes from Chris Couprie from CIBC. Please go ahead.

Thank you ladies and gentlemen, we will now begin the question answer session. So do you have a question. Please press star followed by one on your telephone keypad, you'll hear us retail and acknowledging it request and your question.

We pulled in the order they are received.

If you will.

To the cloud.

Speakerphone.

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Your first question comes from Chris You Barry from RBC. Please go ahead.

Chris Couprie: Good morning, guys. Just wanted to maybe just touch on Europe first. Just in terms of the JV.

Good morning, guys.

Just wanted to maybe just touch on on Europe's first just in terms of the the JV.

Operator: Go ahead.

Chris Couprie: Hello?

Hello.

Well, let's go ahead that okay, well have you had a chicken.

Operator: Yes, go ahead. You had a-

Chris Couprie: Okay.

Operator: Just go ahead. You had a choppy connect.

Chris Couprie: Okay. Hi. Just with respect to Europe, the joint venture, you're seeding it EUR 300-odd million. When you just look at your total European portfolio that you have today, how much of that do you think could ultimately end up in the JV? Then just from an operating perspective, sequentially, the region saw an NOI decline. I'm just wondering if there's anything one-time in there that happened, given that you did have impact of acquisitions that I thought would've helped boost the run rate. Thanks.

Hi, just with respect to out Europe, the joint venture.

You're sitting at a 300 odd million.

What do you just look at your your total European portfolio that you have today, how much of that do you think could ultimately end up in in the JV and then just from an operating perspective sequentially the region.

So on N.Y. decline Im just wondering if there's anything one time in there that happened given that.

You did have the impact of acquisitions that I thought what else would have helped boost the up the run rate.

Thanks.

Okay. Thanks, Chris I'll take the first part of that question and maybe you could you could focus or address the second part.

Paul Dalla Lana: Okay. Thanks, Chris. I'll take the first part of that question, and maybe Shailen, you could focus or address the second part. On the first part, Chris, I think in terms of the European JV, significant progress in the quarter. We certainly see the closing of that JV coming either late in this quarter or early into the next quarter, roughly, as you said, with just under CAD 300 million of assets moving over. For the moment, I think that's probably all the assets we're gonna move over in Europe per se. You know, and I'll speak to the UK separately.

On the first part Chris I think in terms of the European JV significant progress in the quarter, we certainly see a the closing of that JV coming either late in this quarter.

Early into the next quarter.

Roughly as he said was just under $300 million of assets moving over.

For the moment I think that's probably all the assets were going to move over in Europe per Se you know what I'll speak to the UK separately, we've targeted a new initiative in the UK and not to is progressing but likely to be you know later in the half year. If you will and would involve a potentially the initial.

Paul Dalla Lana: We've targeted a new initiative in the UK, and that is progressing, but likely to be, you know, later in the half year, if you will, and would involve potentially the, you know, the initial investments we've made in the UK, but that would be a separate initiative to Europe. I think more broadly, though, in terms of sort of looking at Europe and thinking about prospects there, you know, we in the same way of taking the decision to establish the Australian joint venture, you know, we clearly see a number of very meaningful and interesting opportunities.

The investments we've made in the UK, but that will be a separate initiatives.

To Europe so.

I think brought more broadly, though in terms of sort of looking at Europe and thinking about prospects. There you know we I mean in the same way of are taking the decision to establish the Australian joint venture.

You know, we clearly see a number of very meaningful and interesting opportunities and I would just say that you know as a 2 billion Euro Oh.

Paul Dalla Lana: I would just say that, you know, of the EUR 2 billion JV capacity or, you know, CAD 3 billion or so, you know, we have 90% of that ready to go, and we would certainly see that, you know, coming, you know, well within the four-year investment horizon that JV will have and possibly much quicker than that. So I think that gets your question on the first part. Shailen Chande, to the second.

JV capacity or 3 billion Canadian or so you know we have 90% of that ready to go and and we would certainly see that you know.

Coming you know.

Well within the four year investment horizon, the that JV will have and possibly much quicker than that says I think that gets your question on the first part shall into the second.

Yeah. Good morning, Chris in respect of your comment in respect to a Europe, and presumably you're referring to the quarter over quarter sequential decline in Hawaii in Europe, which is specific Q4, we would note that if you look it's a European in Hawaii over the course of the year, we did I in fact, a complete several acquisition.

Shailen Chande: Yeah. Good morning, Chris. In respect of your comment in respect of Europe, and presumably you're referring to the quarter-over-quarter sequential decline in NOI in Europe, which is specific to Q4, we would note that if you look at European NOI over the course of the year, we did in fact complete several acquisitions, which you noted, and SPNOI on a normalized cash recurring basis is just over 3%, 3.1%. You would note that in Q3, on a quarterly basis, we saw a very substantial SPNOI of almost 10% on a reported basis, and that fell off a little bit in Q4, which is what's driving that quarter-over-quarter sequential decrease that you see.

Which which you noted NSP Hawaiian and normalized cash recurring basis.

Just over 3%, 3.1% you wouldn't know that in Q3 on a quarterly basis, we saw a very substantial SDN all I have almost 10% on reported basis and that fell off a little bit in Q4, which is what's driving that quarter over quarter sequential decrease that you see the specific caused there was a I was just the portfolio catch.

Shailen Chande: The specific cause there was just a portfolio catch-up in terms of some of the tenant reconciliation items, you know, at an operational level. It's really a quarter-over-quarter swing, but on an annual basis, the SPNOI number of 3.1% is very reflective of the underlying operation.

In terms of some of the.

A reconciliation items I had on an operational level. So it's really a quarter over quarter sling, but on an annual basis I. Yes, you know I number of 3.1% is very reflective of the underlying operation.

Chris Couprie: Got it. Thanks. Just in terms of the JVs broadly, what type of LTVs are typically being undertaken in the JVs? With respect to the life sciences opportunity in Australia, just wondering if you can elaborate on that a little bit, in terms of how big you see that opportunity in that region specifically, and if you would be looking to buy these type of assets in your other target markets.

Got it thanks, and then I'm just a in terms are they the JV is broadly what type of what type of.

Ltvs are typically I'm being undertaken in the Jvs and then with respect to the life Sciences opportunity in Australia I'm. Just wondering if you can elaborate on that a little bit how big you see that opportunity in that region, specifically and if you would be looking to buy these type of asset.

And your other target markets.

Yeah. That's a that's a good question. So as you recall and Australian JV you know, we have targeted LTV in 60% range with our partner there and I'm certainly that's.

Paul Dalla Lana: Yeah, that's a good question. As you recall in our Australian JV, you know, we have targeted LTV, you know, in the 60% range with our partner there. Certainly that's likely to be consistent in Europe, given, you know, sort of market availability of financing in terms. I think that's probably a pretty good benchmark number for us. Clearly we find, you know, a sweet spot in terms of pricing in terms, you know, in and around that range for the types of things we're doing, particularly you know, with our partners as they are. Short answer there. That's roughly where we expect to be.

Likely to be consistent in Europe given.

The market availability of.

Financing in terms I think that's probably a pretty good.

Spark number.

For us and thirdly, we find you know a sweet spot in terms of pricing and terms you know in and around that range for the types of things we're doing particularly.

With our partners as they are so.

I would answer there, but thats roughly where we expect to be I thinking in terms of life Sciences. You know it's early days for us.

Paul Dalla Lana: I think in terms of life sciences, you know, it's early days for us. But I would say that, you know, again, the opportunity in Australia in any event is probably more akin to Canada than it might be to America, where the industry is a little more evolved and more private sector funded. I mean, these are still largely public sector funded, you know, research facilities as opposed to, you know, more broadly what we might see in the US. So we see, you know, a meaningful opportunity, you know, very much in the healthcare campus nodes that we're focused on in the major markets of Australia.

But I would say that you know again the opportunity in and Ah.

In Australia in any of that is probably more akin to Canada than it it might be to America, where the where the industry is a little more involved in and more private sector funded I mean, these are still largely public sector funder public sector funded you know research facilities as opposed to you know more broadly.

What we what we might see in the U.S. So we see you know a meaningful opportunity you know very much in in the healthcare campus nodes that we're focused on in the major markets of Australia. So we like that Super consistent with our core strategy of owning.

Paul Dalla Lana: We like that, it's super consistent with our core strategy of owning, you know, a continuum of assets within those, you know, those campuses, if you will. Certainly in the case of the Burnet Institute, you know, we have both major hospitals, you know, federal and state governments and related, you know, institutions, I guess, that are broadly, you know, publicly funded as the core tenants, you know, in that initial portfolio. Certainly we see that we have a major, you know, health precinct strategy in Australia. You know, we certainly see, you know, a number of other precincts having assets like this that involve that, you know, combination of education, of research, and of healthcare.

Continuum of assets within those you know those campuses if you will and certainly in the case as of the Burnett Institute you know we have both major hospitals, you know a federal and state governments and related.

You know related institutions I guess that are broadly publicly funded as the core tenets you know in that initial portfolio. So certainly we see that we have a major health pricing strategy on in Australia. So we certainly see you know a number of other pieces having assets like this that involve that you know that caused you know.

Nation of.

Education of research and health care and and so you know we like we like that combination of thing. So we certainly see things in Australia, it hasn't quite broad and as a strategy to on that its a little bit more AD hoc I think in or other markets and you know certainly looking to think about it but again you know in Australia, where you know the bid.

Paul Dalla Lana: You know, we like that combination of things. We certainly see things in Australia. It hasn't quite broadened as a strategy beyond that. It's a little bit more ad hoc, I think, in our other markets and, you know, certainly looking to think about it. Again, you know, in Australia where, you know, the business is a little bit more evolved, our precinct, our campus strategy is quite evolved, and we see, you know, a nice constellation of opportunities. We can see some growth in it. Just remind that that asset has been acquired into our institutional JV, so it's likely to have. You know, we have a lot of capacity there to pursue additional opportunities.

This is a little bit more evolved our precinct or campus strategy is quite involved and we see you know a nice constellation of opportunities. We can see some growth in it just remind that that asset has been acquired into our institutional JV. So it's likely to have seen we have a lot of capacity there to pursue additional opportunities and certainly within that JV there.

Paul Dalla Lana: Certainly within that JV, there's, you know, a commonality of agreement around the investment opportunity. Broadly speaking, we're funded to get after it as we speak.

You know there's commonality of.

Remit around the.

Investment opportunity. So broadly speaking were funded to get after as we speak.

Chris Couprie: Okay, thanks very much.

Okay. Thanks very much.

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

Operator: Your next question comes from Troy MacLean, BMO Capital Markets. Please go ahead.

Troy MacLean: Good morning.

I'm good morning.

Troy MacLean: Good morning.

You just given your comments on one Big America, you're not in right now is the U.S. and I was wondering you know is that market, especially with the increased he when you'd look at it either the post acute rehab hospital.

Paul Dalla Lana: Morning, Troy.

Troy MacLean: I'm interested in your comments on, you know, one big market you're not in right now is the US, and I was wondering, you know, is that a market, especially with the increased, you know, AUM, you'd look at in either the, you know, post-acute rehab or a hospital?

Yeah I'm sure I think we've been consistently messaging that you know we have a very selective approach to new markets I think having.

Paul Dalla Lana: Yeah. Troy, I think we've been consistently messaging that, you know, we have a very, you know, selective approach to new markets. I think having targeted and focused, you know, particularly in Europe, you know, over the last 12 months to scale and broaden our horizon there, our near-term focus is probably still in that direction to grow and scale those markets. We see lots of capacity there. Of course, in Australia, we know, and New Zealand, you know, we have a large established platform with lots of capacity, so we'll always be active there.

You know targeted and focused particularly in Europe, you know over the last 12 months to scale and and broaden our horizon. There are near term focus is probably still in that direction to to to growing scale those markets, we see lots capacity there.

Yes in Australia, we know and New Zealand you know we have a large established platform with lots of capacity. So we'll we'll always be active there, but I think in the mid term you know the businesses now getting to a stage, where you know that say in the three to five year window. You know we have the capacity to consider another major market.

Paul Dalla Lana: I think in the midterm, you know, the business is now getting to a stage where, you know, let's say in the 3 to 5 year window, you know, we have the capacity to consider another major market. You know, clearly, the US has a lot of attractive merits to it. I think for us, it's still a couple of years away. I think in reality, you know, our focus is gonna be really on using our existing resources and scaling out, you know, quite quickly over the next couple of years, a bit of a guidance around where we see, you know, the pacing of our opportunities. I think a market that we've, you know, sort of not talked enough about in our business is Canada.

And you know clearly the U.S. has a lot of attractive.

Merits to it but but I think for us it's still a couple of years away and I think in reality.

You know, where our focus is going to be really on using our existing resources and and and scaling out you know you know quite quickly over the next couple of years a bit of a guidance around where we see the pacing of our opportunities I think a market that weve, you know sort of not talked enough about in our businesses, Canada and again, you know through CEMEA, you know weve been.

Paul Dalla Lana: Again, you know, through some, you know, we've been active in Canada this year. It's not been, you know, as prominent as other markets, but we've added some very nice opportunities in Toronto and in Alberta, really sort of core campus-oriented medical and related facilities. We're quite focused as well on the ambulatory care strategy, which we see, you know, certainly in the near and midterm in Canada as one having a lot of legs. I think, you know, those continue to be our one to two-year focuses. I think as the business grows and evolves and as we make progress against those initiatives, you know, we'd like to be able to think that we could, you know, consider, you know, an additional market.

An active in Canada. This year, it's not been Oh, you know as prominent as other markets, but we've added some very nice opportunities in ER.

In Toronto and in Alberta.

I'm really sort of core campus oriented medical and related facilities, and we're quite focused as well on the ambulatory care strategy, which we see you know certainly in the near and midterm in Canada as one having a lot of legs. So I think you know those continue to be our went into your focus is I think as the business grows interval.

All in as we make progress against those initiatives you know, we'd like to be able to think that we could you know consider you know what additional market and ensure the U.S. be greater than it has defined as far as we do all the time, but that's in competition with lots of other good markets as well. So you know what we'll see how that goes.

Paul Dalla Lana: Sure, the US would be great to not have to fly as far as we do all the time. That's in competition with lots of other good markets as well. You know, we'll see how that goes.

Troy MacLean: On the new investments in Canada this year, you know, does that signal there's really been a change in that market or that you know it is making an investment opportunity more ample? You know, either, or is it just the opportunities happen to come up, it's more timing related, that there hasn't been a change, it's just those specific opportunities are unique?

On a in new investments in Canada. This year, you know does that signal, there's really been a change in that market or the that you know, it's making it an investment opportunities Mart more ample you know either <unk> or <unk> or is it just the opportunities happy to come up its more timing related that there has been rising many changes those specific opportunities.

Nick.

Paul Dalla Lana: Yeah, no. I think there are two answers. As you know, just recall our Canadian portfolio over time has been, you know, heavily optimized, and it's really come from all of our learnings over the last, you know, 15 years in the space. Really, you know, our the way to sum it up would be, you know, major market, more major assets within those markets and more fundamental assets within those places. You know, that's resulted in a fair bit of portfolio work over the last, you know, 5 years for sure, which has led us to trim things down a bit. Obviously, looking down the line, you know, we continue to see, you know, tuck-in acquisitions and growth. It's still places to go in Canada and good fundamental additions to our business.

Yeah, No I I think there there I mean, two answers as you know just recall our Canadian portfolio over time has been heavily optimized and it's really come from all of our learnings over the last 15 years in the space and really know are the way to sum it up would be.

No major market no more major assets within those markets and more fundamental assets within those those places. So you know that's resulted in a fair bit of portfolio work over the last five years for sure I'm, which has led us to trim things down a bit obviously looking down. The line you know we continue to see you know tuck.

In acquisitions in growth, it's still places to go in Canada, and good fundamental additions to our business will always have that I think.

Paul Dalla Lana: We'll always have that. I think just start with that comment that probably Canada has reached sort of its moment of, you know, here's the portfolio we like, and broadly speaking, you know, we can see adding to that in select places in the normal course, in any event. Some of the things we've done in 2019 reflect that. Probably where the change is coming in Canada, and I think this is coming, you know, around the world, so it's not a profoundly different answer to what's happening in most of our markets, is really, you know, what's happening in hospitals is changing. You know, clearly, you know, we see a very significant movement to outpatient and, you know, and I think that's around cost.

Just start with that comment that probably Canada has reached sort of its moment of here's the portfolio, we like and broadly speaking you know, we can see adding to that and slight places in the normal course in any of it and some other things we've done in 2019 reflect that.

Probably where the changes coming in in Canada, and I think this is coming you know around the world. So it's not a profound lee different to answer to what's happening in most of our markets is really you know what's happening in hospitals is changing and a you know clearly you know we see a very significant movement to outpatient.

And you know and I think that's around costs, SR, and you know the type of demand or that people want to have access to different facilities.

Paul Dalla Lana: It's just around, you know, the type of demand that people want to have access to different facilities and more convenient and different environments. You know, Canada's a bit slow to respond to that trend relative to other markets, but certainly it's coming. What that allows for us is that, you know, these assets tend not to be directly on campus, and as a result, you know, it opens up the do I need to own it discussion, which really is the discussion we have with private operators every day. You know, we're starting to have those with you know, health regions and you know, larger hospital players in Canada, both in Ontario and Alberta, as we've alluded to.

And and more convenient.

Different environments, and so you know Canada's a bit slow to respond to that trend relative to other markets, but certainly it's coming and what that allows for US is that you know these assets tend not to be directly on campus and as a result, you know it opens up they do I need to over that discussion, which really is the discussion we have with private authors every day so.

You know starting to have those with with a you know health regions and you know larger hospital players in Canada, both and Ontario, Alberta, as we've alluded to.

Paul Dalla Lana: I think this is a very big trend, so it's coming, you know, across the board, and it'll be in fits and starts. You know, certainly we do see a very nice case, and we can see, you know, adding. You know, again, if we had to estimate, I think I've said this before, we'd like to see ourselves over the next number of years add five or 10 more Lakeridge Health to our mix of things. So it's not gonna, you know, be a double of the size of the portfolio, but it could be a meaningful addition. The nice thing about that is they come with those long term, you know, arrangements with, you know, really core health regions or hospitals with government backing.

I think this is a very big trend so it's coming across the board and it'll be in fits and starts but certainly we do see a very nice case, and we can see you know adding.

Again, if we had to estimate I think I've said this before we'd like to see ourselves over the next number of years at five or 10 more they crutches to ARX, our mix of things and that's not going to be a double over the size of the portfolio, but it could be a meaningful addition, and and the nice thing about that as they come with those long term you know arrangements with you know really.

Core health regions or hospitals with government backing and so it has a lot of the attributes of our or more international portfolio, which is a long term index cash flow and you know low capital and and all the things we'd like about that business that doesn't grow. So you know that's kind of my my forecast to yeah.

Paul Dalla Lana: It has a lot of the attributes of our more international portfolio, which is that long term index cash flow and, you know, low capital and all of the things that we like about that business and built in growth. You know, that's kind of my forecast to the ambulatory care market in Canada.

Military care movement in Canada.

Troy MacLean: Well, that's great color. Then, just in Europe, you know, especially with the decline in interest rates, you know, are you seeing more people, an increased number of players looking at the assets that you're looking at? You know, I know you've entered a couple different markets, but you know, in like the Netherlands and Germany, like are you seeing more competition, just people attracted by their really incredibly low rates?

That's great color and then just in Europe, but especially the declining interest rates are you seeing more people are more more an increased number of players looking at the assets that you're looking at I know you've added a couple of different markets, but you know like that Adelington, Germany like you see more competition just people attracted by they're really increase.

Hello rights.

Paul Dalla Lana: Yeah. I mean, I think this is a global trend in all real estate asset classes. You know, and so for sure, the movement to alternatives is well established across the board. As sort of one of the leading alternatives, if you will, or maybe not even an alternative anymore, you know, people are certainly looking to healthcare for its, you know, defensive long-term, you know, cash flow elements. I think the thing that gives us a leg up right now, and so yes, I think like all investors we're competing, and I think, you know, we don't mind to do that at all. Where, you know, we've positioned ourselves I think is in two specific directions. Number one, you know, we've got the relationships.

Yeah, I mean I think this is a is a global trend and all real estate asset classes, you know and and so for sure.

Moving to alternatives is well established a across the board and so as sort of one of the leading alternatives. If you will or maybe not even an alternative anymore. You know people are certainly looking to health care for its you know defensive long term.

Cash flow.

Elements I think the thing that gives us a leg up.

Right now and and so yes, I think like all investors, we're we're competing and and I think you know, we don't mind to do that at all.

But where you know we've positioned ourselves I think isn't too specific directions number one you know we've got the relationships. We've invested very very heavily in our local and market presence you know any building relationships with key operators and tenets and those are long term relationships, where we have a lot of credibility.

Paul Dalla Lana: We've invested very, very heavily in our local and market presence, you know, and in building relationships with key operators and tenants. Those are long-term relationships where we have a lot of credibility, you know, and an ability to execute for them in more than just capital. Number one, we've really positioned ourselves to be a partner of choice. I think number two, and this is part of the story of 2019 of course, is that we've said, let's make sure we have maximum capacity because, you know, we wanna be able to do a number of things at the same time, you know, that are getting to be increasingly bigger.

And the ability to execute for them in more than just capital. So number one we have really positioned ourselves to be a partner of choice I think number two and this is part of the story of 2018 of course is that we've said, let's make sure. We have maximum capacity because you know we want to be able to do a number of things at the same time, you know that are getting to be.

Increasingly bigger and and so you know to the original JV that we did in Australia and very much to the similar approach we've taken to Europe. The fact is that we wanted to have what we thought could be.

Paul Dalla Lana: So, you know, to the original JV that we did in Australia and very much to the similar approach we've taken to Europe, the fact is that we wanted to have what we thought could be, you know, both in size and cost of capital, a leading ability to pursue things. Again, yes, there's gonna be lots of competition, but with our combination of relationships, with our cost of capital and our scale of capital, we think we're pretty well suited to look at, you know, all of the good things that we wanna look at.

Both in size and cost of capital, a leading ability to to pursue things and so I think we've been successful again.

In bringing that to Europe, and again, yes, there's going to be lots of competition, but with our combination of relationships with our cost of capital in our scale of capital. We think we're pretty well suited to to look at any and all the good things that we want to look at.

Thank you I'll turn it back now.

Troy MacLean: Thank you. I'll turn it back now.

Your next question comes from tell Woodley National Bank financial Please go ahead.

Operator: Your next question comes from Tal Woolley, National Bank Financial. Please go ahead.

Tal Woolley: Hi. Good morning.

Hi, good morning.

Paul Dalla Lana: Morning, Tal.

Right.

Tal Woolley: Just on the life sciences avenue in Australia, what would the sort of difference in cap rates kind of be between what you've seen with the hospital transactions and with the life sciences transactions?

I'm certainly at life Sciences, <unk> Avenue in Australia, what would that sort of the difference in cap rates kind of be between what you've seen with hospital turned back actions and with the life Sciences transactions.

Yeah. Good question I think in our one answer you know just call up that it's it's a pretty specific investment where it's at a structured land lease on in the middle of a major precinct campus. So you know it has some different attributes, but you know we saw that about 200 basis points above saw you know this.

Paul Dalla Lana: Yeah. Good question. I think in our one answer, you know, I just call out that it's a pretty specific investment where it's a structured land lease in the middle of a major precinct campus. You know, it has some different attributes. You know, we saw that about 200 basis points above. You know, this deal we were able to do north of a 7 cap, if you will.

Yeah, we were able to do you know north of a seven cap if you will.

Tal Woolley: Okay.

Paul Dalla Lana: You know, we've been seeing, you know, our Healthscope transaction, as you know, was done at 5, as an example, and the market's probably tighter than that today. You know, that's a sense here. Again, partly around structure and partly around it's a slightly different asset class. A little bit wider, but you know, with some maybe specific characteristics that go with being in the middle of a big campus and having these relationships with, you know, governments, universities, and the like.

We've been seeing you know or how scope transaction as you know was done at five as an example in the markets probably tighter than that today and so you know that that's a sense here again, partly around structure and partly around it's a slightly different asset class so little bit wider but you know with settling.

If a characteristics that that go with being in the middle of the Big campus.

Yeah, and having these relationships with you know governments and universities in Atlanta.

Okay and.

Tal Woolley: Okay. Maybe, can you just talk about, broadly, what your sort of expected FFO budget and tax, and cash taxes would be this year?

And then maybe I can you talk to.

Broadly, what you're sort of expected a fee budget and tuck in cash taxes would be this year.

Somebody might turn that as Sheila okay with that.

Paul Dalla Lana: I might turn that to Shailen if you're okay with that.

Yeah. Thanks, Paul I, you know in terms of specific guidance ramseys, probably not a couple of discussion I'd really guide you to.

Shailen Chande: Yeah. Thanks, Paul. You know, in terms of specific guidance around fees, Tal, we've had a couple of discussions, and I'd really guide you to, you know, our view on the stabilized level of fees out of this platform. So today, we have CAD 8 billion of commitments as part of our global asset management platform, and we see the stabilized level of fees coming out of that at about CAD 80 million. As we ramp up to that level, there'll be a level of activity-based fees to get there. Obviously, as it's fully deployed, that gets replaced with the base asset management fees. I'd say as you're building out your model and looking forward, the deployment period on these commitments is 4 to 5 years.

Ours I mean are you on the stabilized level of fees that are this platform. So I. So today, we have $8 billion of commitments I as part of our little less management platform and we see the stabilized level of fees coming out of that ended up $80 million, but as we ramp up to that level of they'll be a level of activity based fees.

Yes, there and obviously as its fully deployed that gets replaced with.

These asset management fees, so I'd say as you're building out your model that looking forward I you know the deployment period on these on these commitments is four to five years Ive Historic track record has been to probably outpace that but I'd say over the four to five years to reach that stabilized level that you probably see the ramp up.

Shailen Chande: You know, our historic track record has been to probably outpace that. I'd say over the 4 to 5 years to reach that stabilized level, and you'd probably see the ramp up, you know, on activity-based fees as we get there. In terms of cash taxes, it is a fairly nuanced question. There's lots going on in the business, and there's lots that we do to balance our tax exposures. I might suggest we go offline on that and just get a little bit more specific into that question.

Got it can be based fees as we get there.

In terms of cash taxes. It is a fairly nuance question, there's lots going on in the business and then there's lots that we do do a two to balance our tax exposures I might suggest we go offline on that and just get a little more specific question.

Tal Woolley: Okay. I think, Paul, you had mentioned earlier in your comments just, you know, that the FX impact obviously had been a drag, you know, through a good chunk of the last couple years, and that it could be a tailwind going forward. I do wonder though, like in the short run, you know, if you marked your NAV and like this quarter to where rates are today, and I appreciate it's very volatile out there. You know, is it more likely we would see a little bit of pressure in the short run, a little more pressure in the short run than relief?

Okay.

And then I think Paul you had mentioned earlier in your comments just.

That.

[noise] FX impact obviously have been a drag.

You know through a good chunk of the last couple of years and that it can be a tailwind going forward.

You have you wonder, though like in the short run.

If you marked your NAV and.

Like this quarter to where rates are today and I. Appreciate it's very both healthcare is it more likely with you a little bit of pressure in the short run a little more pressure in the short run than relief.

Paul Dalla Lana: You know, sorry. I think we do report sort of post quarter what's come into NAV. I think it's moved a few percent since December 31st against us. But probably offsetting any of that would be we see very strong continued movement in cap rates in the business. If I was to look down to 2020 again, and this has been a multi-year trend for us, clearly our assets are becoming more valuable. We have a very significant development pipeline completing with 2020. Already we've seen our Grey Street center project in Melbourne reach substantial completion. You know, that's CAD 100+ million development.

Yeah, sorry, so I think we do report sort of post quarter, what's come into now I think it's a you know it's moved a few percent since December 30, onest against us, but probably offsetting any of that it would be yeah, we see very very strong.

Can you movement in cap rates in the business. If I was to look down to 2020 again and this has been a a multiyear trend for US you know clearly our assets are becoming more valuable.

Have a very significant development complaint pipeline completing with 20 have twenties when they already we've seen.

Our Green Street Center project in Melbourne reached substantial completion, Yeah. That's 100 plus million dollar development, we've got to more of those coming online later in the year and so lots of lots of you know sort of offsetting and maybe even more than offsetting value creation against some of the near term currency.

Paul Dalla Lana: We've got two more of those coming online later in the year. Lots of, you know, sort of, offsetting and maybe even more than offsetting, you know, value creation against some of the near-term currency movement. That's my general feeling. You know, again, I think if we get to the ultimate question around, you know, very difficult to hedge a balance sheet. Our approach to that has really been just to be diversified and have a basket of currencies around the balance sheet and obviously income statement. You know, I think we feel pretty comfortable that the business is more diverse than ever, and that those underlying growth elements, both in terms of earnings and NAV, are well in place.

Movement. That's my General feeling you know again I think we if we get to the ultimate question around you know very difficult to hedge the balance sheet. So our approach to that has really been just to be diversified and and have a have a basket of currencies around the balance sheet and income statement, but you know I think we we feel pretty comfortable that the business.

This is more diverse than ever and that those underlying growth elements, both in terms of earnings and and.

And of our well in place and so you know that would be my guidance and and where we probably have been conservative. Although you know Shelly mentioned around the asset management model and they really we have a business now that's growing from that one plant just a vital business that we own now too you know, what we expect to be closer to $8 billion to $10 billion in.

Paul Dalla Lana: You know, that would be my guidance. Where we probably have been conservative, although you know, Shailen mentioned around the asset management model, I mean, really, we have a business now that's grown from, at one point, just the Vital business that we own now to, you know, what we expect to be closer to, you know, CAD 8 to 10 billion in AUM and you know, CAD 80 million in stabilized fees, you know, as another offsetter. You know, I'd just call out those data points. I think we feel the business is in a really good place and certainly, you know, any near-term currency movements, I think you know, we see well beyond that in terms of its opportunity set.

In the U.M., and and you know $80 million in stabilize fees.

You know.

Another offset or so.

This call those data points I think we feel the businesses in a really good place and certainly.

You know any any near term currency movements I think we we see well beyond that in terms of its opportunity set one thing I would just pick up and just reminding that.

Paul Dalla Lana: One thing I would just pick up and just reminding that, you know, in that asset management model, obviously in 2019, those fees were just under CAD 40 million. You know, that's already a substantial business that, you know, has a very long-term history, you know, again, over our management in it. I think that's kind of a collective answer. No, we're not-

In in that asset management model, obviously in 2018 those fees were just under $40 million. So you know that are already a substantial business that you know that has.

A very long term history, you know again over.

Management. It so I think that's kind of a collective answer but nowhere yep.

Tal Woolley: Yeah.

Paul Dalla Lana: You know, we're not worried about near-term things. We're very much thinking about the mid to long term. What I would say from a, you know, maybe an earnings standpoint, just to riff on that, obviously we have CAD 750 million transactions closing in the next, you know, from us now, 60 to 75 days here. You know, that's gonna drive very meaningful fees through the business in H1. You know, we'll be significantly above as a result of some of those numbers. Those transactions to perhaps our last call or discussions, you know, we had thought some of them might come into Q4. They've, you know, they're all gonna come now into Q1 and early Q2.

We're not worried about near term things, where we're very much thinking about them into long term, what I would say from a you know maybe an earning standpoint, just a rough on that obviously, we have $750 million transactions closing in the next from US now 60 to 75 days here.

Yeah, that's going to drive very meaningful sees through the business in the first half year. It will be significantly above as a result of some of those numbers those transactions to perhaps or last call or or or discussions.

We had thought like some of them might come into Q4 <unk>.

I'm going to come now into into Q1 and in early Q2.

Paul Dalla Lana: I think as we look at that, in addition to the rest of the business, you know, new things that we might do, these are all contracted things that we know are happening, you know, is gonna be a pretty clear supporter of where we are. You know, when we start to think about the business, you know, feel pretty confident of seeing, you know, our normalized AFFO numbers around CAD 0.92 into that CAD 0.95 range. That would be our guidance for the year around AFFO. I think we'll be very comfortable in that range. The vast majority of that is normalized and in place.

So I think as we look at that in addition to the rest of the business.

New things that we might do these are all contracted things that we know are happening who is going to be a pretty clear.

Supporter of where we are so you know when we start to think about the business you know feel pretty confident of seeing you know our normalized FFO numbers around 92 cents into that 95 range that would be our guidance for the year around AFFO and I think we'll be very comfortable that range. The vast majority of that as normal.

That's in place.

And then you know and then in terms of the portfolio and thinking about half I mean again.

Paul Dalla Lana: You know, in terms of the portfolio and thinking about NAV, I mean, again, we see some strong drivers to NAV growth that, you know, will more than offset, you know, any short changes in the currency markets. I'd call out and maybe to be specific, Tal, but really to challenge, you know, challenge the audience here to remind everyone that all of this is on a business that's going to be 1300 basis points lower in leverage. So very meaningful earnings accretion.

We see some strong drivers to NAV growth it will more than offset.

Any.

Yeah sure changes in the in the currency markets I'd call out and maybe talk to be specific tell but really to challenge yeah challenged the audience here to remind everyone that all of this is on a business is going to be 1300 basis points lower and leverage.

So very meaningful earnings accretion.

Paul Dalla Lana: On a business that's become much more conservative and has much more capacity than it's ever had. I think that's really the tale of 2019 and our moment in 2020, which is, you know, full normalization and really playing to the, you know, the full set of opportunities in front of us. I think that's the message that we feel, you know, really needs to be called out.

On a business it's become much more conservative and has much more capacity than it's ever had and I think that's really the tale of 2018 in our moment in 2020, which is.

Full normalization and really playing to that the full set of opportunities in front of us and I think that's that the message that we feel.

Although.

Okay.

Tal Woolley: Okay. Just finally, the last question. In the quarter you took, in the PNL about CAD 4.2 million in transaction expenses, but in the FFO walk reconciliation, there was a CAD 19 million reversal. Was there some sort of? Can you just explain how we ended up reversing out so much more than what was actually accrued this quarter?

And then just finally the last question in the quarter you took.

In a PML about 4 million 4.2 million in transaction expenses, but in the AFFO walk a reconciliation.

There was a 19 million dollar reversal was there some sort of cues explain how we ended up reversing out so much more than what was actually occurred this quarter.

Yes, Hello, again quite know whats question only when we can get offline, but big picture it related to a.

Shailen Chande: Yeah. It's how it would be, again, quite a nuanced question. We can get offline, but big picture, it related to you know, some capital gains taxes related to some of the Australian assets that we sold into the JV earlier in the year.

Got you know some.

Capital gains taxes related to the Australian assets to be sold into the JV earlier in the year I stuff that was front end the year that comes out.

Shailen Chande: Okay.

Shailen Chande: That was front end of the year, and then comes out in FFO through the back end of the year. We can get into a bit more detail on that offline.

Through the back on a year, but we can get into that more detail on that.

Okay perfect. Thanks, very much going.

Tal Woolley: Okay, perfect. Thanks very much, gentlemen.

Thank you.

Paul Dalla Lana: Thank you.

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

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. There are no further questions at this time. Please proceed.

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

Well. Thank you operator, and appreciate everyone's time today have a good or a good rest of the week. Thank you.

Paul Dalla Lana: Well, thank you, operator, and appreciate everyone's time today. Have a good rest of the week. Thank you.

Ladies and gentlemen, this concludes your call for today.

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

Just the bidding and I've said you. Please disconnect your lines have a great day.

[noise].

Q4 2019 Earnings Call

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